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Accounting Policies of National Aluminium Company Ltd. Company

Mar 31, 2016

1. BASIS OF ACCOUNTING.

The financial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India,relevant provisions of the Companies Act, 2013 and applicable accounting standards prescribed under Sec. 133 of Companies Act, 2013.

2. USE OF ESTIMATES.

In preparing the financial statements, the estimates and assumptions that may have bearing on the amount of assets or liabilities or contingent liabilities reported as at the date of financial statements and/or the amount of income or expenses declared during the period, have been made. Variation with the actual is recognized in the year in which the same is crystallized.

3. CLASSIFICATION OF ASSETS AND LIABILITIES.

Based on the nature of business, operating cycle of 12 months has been taken for the purpose of current and non-current classification of assets and liabilities. Accordingly, all assets and liabilities have been classified as current or non-current as per Company''s operating cycle and other criteria set out in Schedule-III of the Companies Act 2013.

4. FIXED ASSETS.

4.1 All tangible fixed assets are stated at historical cost net of accumulated depreciation and accumulated impairment loss, if any. Cost includes all direct expenditure of acquisition net of CENVAT/VAT credit, attributable indirect expenses and borrowing cost, wherever applicable.

4.2 Expenditure on existing tangible assets towards renovation and modernization resulting in increased life and/or efficiency is added to the cost of related assets.

4.3 Expenditure on development of land including leasehold land is capitalized as part of cost of land.

4.4 Intangible Assets are stated at acquisition cost less accumulated amortization.

Mining Rights (including payments made to Government Authority towards restoration of land, forest, wildlife etc. in relation to the bauxite mines), User Right for Jointly Controlled Asset, ERP& RDBMS and other Software User Rights, License & Franchise (Technical Knowhow Right) and R&D knowhow are treated as intangible assets.

4.5 Machinery spares (insurance spares) that are specific to a fixed asset valuing more than Rs.1 lakh per unit are capitalized along with the fixed asset.

4.6 Fixed assets retired from active use and held for disposal are stated at net book value less provision for doubtful realization, if any, and considered as other current asset till the time of its disposal.

4.7 Components of Plant & Machinery having different useful lives are separately recognized. The cut-off value of each component for such separate recognition is Rs.1 Crore. Value of component with different useful life crossing the threshold limit when replaced is recognized as a separate component.

5. DEPRECIATION.

5.1 Depreciation on tangible fixed assets is provided on straight-line method over the useful life of the asset as prescribed in Schedule II of the Companies Act 2013 or life assessed by the Management whichever is lower.

5.2 In respect of the following assets, a higher rate of depreciation is considered based on the lower useful life ascertained by the Management. Depreciation and amortization method, useful life and residual value are reviewed periodically including at each financial year end:

a) Life of immovable fixed assets at Bauxite Mines is limited to the period up to which Bauxite reserve is available at respective block of mines.

b) Life of thermal power generation plant at CPP and Steam Power plant at Refinery is considered as 30 years and 25 years respectively.

c) Lives of Red Mud Pond & Ash Pond at Alumina Refinery and Ash Ponds at Captive Power Plant are based on their estimated remaining useful life, evaluated on the basis of technical estimates made periodically.

5.3 Fixed assets which are subject to componentization, comprises of main assets, componentized assets and remainders if any. Main assets have the life as prescribed under Schedule-II of the Companies Act 2013 or life assessed by the technical committee whichever is lower. Componentized assets having value of Rs.1 crore or above have the life as assessed by the Technical Committee whereas the remainders, if any, carry the life of main assets.

5.4 The residual values of plant & machinery, vehicles, mobile equipments, earth moving equipments, railway facilities, rolling stock and residential quarters are considered to be 5% of the original cost. For all other assets, the residual value is considered to be Nil as per technical estimation.

5.5 Intangible assets are amortized on a straight-line basis as follows

a) Software classified as intangible assets are amortized over a period of 3 years.

b) Mining Rights (i.e NPV and other incidental payments) is amortized over the period for which the mining right is available. Other incidental payments in connection thereto are amortized over a period of 20 years from the date of payment.

c) License for Technical Knowhow is amortized over 10 years from the date of capitalization of corresponding process plant.

d) User Right for cluster projects is amortized over 10 years from the date of commissioning.

5.6 Imbedded Assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the Port Authority on which these assets are installed.

5.7 Assets costing Rs.10,000/- or less individually are depreciated fully in the year in which they are put to use.

5.8 Subsequent expenditure related to an item of fixed asset is prospectively depreciated over the revised useful life of related asset.

5.9 Assets laid on land not owned by the Company are depreciated over a period of five years from the date on which the asset is ready for use.

5.10 Depreciation on value adjustment is provided prospectively.

6. BORROWING COST.

6.1 General and specific borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset until such time the assets are ready for their intended use.

6.2 Other borrowing costs are recognized as expenses in the period in which these are incurred.

7. IMPAIRMENT.

Carrying amount of cash generating units is reviewed at each Balance sheet date where there is any indication of impairment based on internal/external sources of information. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units.Impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

8. INVESTMENTS.

Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments. Current investments are stated at cost or market value whichever is lower. Long-term investments are carried at cost, after providing for permanent diminution, if any, in the value of such investments.

9. INVENTORY.

9.1 Raw-materials, stores and spares are valued at cost net of CENVAT / VAT credit wherever applicable or net realizable value whichever is lower. Cost is determined by using moving weighted average price method on real time basis.

9.2 Stores and spares other than insurance spares held but not issued for more than 5 years are valued at 5% of the cost.

9.3 Shortage of coal up to 1% of the receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

9.4 Materials and other supplies held for use in the production (other than considered as non-moving) are valued at cost, if the finished products in which they are used are sold at or above cost.

9.5 Finished goods, semi-finished goods,intermediary products and work in process including process scrap except anode butts and rejects are valued at lower of cost and net realizable value. Cost is generally determined by using moving weighted average price on real time basis, appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.

9.6 Scrap of various nature internally generated is valued at estimated net realizable value.

10. GOVERNMENT GRANTS.

10.1 Fixed assets acquired out of financial grant from Government are shown at cost.The grant-in-aid received is credited to subsidy reserve account. Depreciation on the corresponding asset is adjusted against subsidy reserve.

10.2 Revenue grants are recognized as income over the period to which these are related.

11. FOREIGN CURRENCY TRANSACTIONS.

11.1 All foreign currency transactions are recorded by applying the exchange rate as on the date of transaction.

11.2 Monetary assets and liabilities in foreign currency are restated at Year-end exchange rates. Exchange difference on restatement is recognized in the statement of profit and loss.

12. FORWARD EXCHANGE CONTRACT.

Forward exchange contracts outstanding at the year-end relating to firm commitment and highly probable forecast transactions, loss due to exchange difference or arising on marking to market is recognized in the statement of profit & loss whereas gains are ignored.

13. REVENUE RECOGNITION.

13.1 Sales:

a) Alumina &Alumnium :Sales in the domestic market are recognized at the time of dispatch of materials to the buyers. Export sales are recognized on issue of Bill of Lading. Domestic Sales include excise duty and are net of rebate and price concessions and do not include value added tax (VAT).

b) Renewable Power: Sale of wind power is recognized on the basis of power transmitted to power distribution companies (DISCOMs) at the price notified by respective authorities. Solar power generated is consumed for captive use in office and township and hence not recognized as income as well as expenditure.

c) Thermal Power : Sale of power from CPP is considered on the basis of quantity supplied to state grids less wheeling to refinery at the price notified by appropriate authority.

13.2 Receivables/ Incentives:

a) Claims receivables are accounted for in the statement of profit and loss based on certainty of their realization.

b) Interest income on term deposits is recognized on a time proportion basis taking in to account the amount outstanding and the rate applicable.

c) Export incentives i.e.duty draw back and MEIS are recognized on accrual basis on the shipping quantity as per Bill of Lading / export invoice.

d) Income from Renewable Energy Certificates (REC) is recognized on the basis of power billed to DISCOMs at the weighted average of quoted prices of recognized power exchanges on the last trading day of the reporting period.

e) Generation Based Incentive (GBI) is recognized on the invoiced quantity at the applicable rate as per scheme.

f) If there is uncertainty in realization, revenue recognition is postponed.

14. LONG TERM EMPLOYEE BENEFITS.

14.1 Defined Contribution Plan: Contributions towards Provident Funds & Pension Scheme are charged to the statement of profit and loss of the period for which the contributions to the Funds are due.

14.2 Defined Benefit Plan: Liabilities towards gratuity, accrued leave, long service awards, post retirement medical and settling-in benefits, future payments to the legal heirs of deceased employees under the NEFFARS scheme, contribution towards welfare on superannuation (NRWS), benevolent contribution and expenditure on superannuation gift are made based on the actuarial valuation as at the end of the year and charged to statement of profit and loss after considering actuarial gains/losses.

14.3 Expenditure on voluntary retirement compensation is charged off in the year in which it is incurred.

15. PRIOR PERIOD /PREPAID ITEMS.

Income/ Expenditure relating to prior period and prepaid expenses not exceeding Rs.5 lakh in each case is treated as income/expenditure of the current period.

16. EXPENDITURE ON NEW PROJECTS.

Expenses for assessment of new potential projects incurred till and for the purpose of making investment decision are charged to revenue. Expenditure incurred for projects after investment decisions are accounted for under capital-work-in progress and capitalized subsequently.

17. EXPENDITURE ON RESEARCH AND DEVELOPMENT.

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research.

Development expenditure except of capital nature is charged to statement of Profit and Loss in the year incurred after setting of incidental income, if any.

18. EXCEPTIONAL ITEMS.

Exceptional items are items of income and expenses within profit or loss from ordinary activities but of such size, nature or incidence whose disclosure is felt necessary for better explanation of the performance of the Company.

19. TAX EXPENSES.

Tax expenses for the period, comprising of current tax and deferred tax are included in the determination of net profit or loss for the period.

19.1 Current tax is measured at the amount expected to be paid to tax authorities in accordance with the prevailing taxation laws.

19.2 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax Assets (DTA) are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such DTA can be realized.

19.3 Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

20. JOINT VENTURES.

Interest in a jointly controlled entity is accounted for as investment in accordance with Accounting Standard (AS) 13, "Accounting for Investments" with disclosures in line with Accounting Standard (AS) 27, "Financial Reporting of Interests in Joint Ventures".

21. PROVISIONS AGAINST DOUBTFUL DEBTS AND RECOVERABLES.

Provision for doubtful debts and receivables are made where sums receivable from parties other than Govt. Dept. / Govt. Companies are not realized for more than 3 years. In the case of Government Departments / Government Companies, the same is made on case-to-case basis depending upon the merit of the case.

22. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS.

22.1 Provision for contingent liability is recognized when there is present obligation and it is probable that an out flow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year and adjusted to reflect the best current estimate.

22.2 Liabilities of contingent nature are disclosed in the financial statement as contingent liabilities when there is a possible obligation or a present obligation that may, but probably will not, require any outflow of resources. No disclosure is made where likelihood of outflow of resources is remote.

22.3 Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2015

1. BASIS OF ACCOUNTING.

The fnancial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, relevant provisions of the Companies Act, 2013 and applicable accounting standards.

2. USE OF ESTIMATES.

In preparing the fnancial statements in conformity with accounting principles generally accepted in India, the company makes estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of fnancial statements and the amount of revenues and expenses during the reported period. Actual result in some cases could differ from those estimates. Any revision of such estimates is recognized in the period in which the result is crystallized.

3. CLASSIFICATION OF ASSETS AND LIABILITIES

All assets and liabilities have been classified as current or noncurrent as per Company''s operating cycle and other criteria set out in Schedule-III of the Companies Act 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current-noncurrent classification of assets and liabilities.

4. FIXED ASSETS.

4.1 All tangible fxed assets are stated at historical cost net of accumulated depreciation and accumulated impairment loss, if any. Cost includes all direct expenditure of acquisition, attributable borrowing cost and net of CENVAT/VAT credit, wherever applicable.

4.2 Expenditure on existing tangible assets towards renovation and modernization resulting in increased life and / or efficiency of an existing asset is added to the cost of related assets.

4.3 Expenditure on development of land including leasehold land is capitalized as part of cost of land.

4.4 Intangible Assets are stated at acquisition cost less accumulated amortization.

Mining rights (NPV and related payments made to Govt. authorities for bauxite mines), User Right (Jointly controlled asset), Software (Application Software packages like ERP and application development tools like RDBMS), License& Franchise (Technical know-how right) and R&D knowhow are treated as intangible assets.

4.5 Machinery spares (insurance spares) that are specific to a fxed asset valuing more than Rs.1.00 lakh per unit are capitalized along with the fxed asset.

4.6 Fixed assets retired from active use and held for disposal are stated at net book value less provision for doubtful realization if any and considered as other current asset till the time of its disposal.

4.7 In pursuant to Schedule-II of the Companies Act 2013, the fxed assets (Plant & machinery) of significant value are componentized with separate useful life. The cut off limit of Component value to capitalize separately with different useful life is considered as Rs. 1 Crore.

5. DEPRECIATION.

5.1 Depreciation on tangible fxed assets is provided on straight-line method over the useful life of the asset in the manner prescribed under Schedule II of the Companies Act 2013. The asset life is considered as prescribed under Schedule-II of the Companies Act 2013 or life assessed by the technical committee whichever is lower.

5.2 Fixed assets which are subject to componentization, comprises of main assets, componentized assets and remainders if any. Main assets have the life as prescribed under Schedule-II of the Companies Act 2013 or life assessed by the technical committee whichever is lower. Componentized assets having value of Rs.1 crore or above have the life as assessed by the Technical Committee whereas the remainders if any carry the life of main assets as explained above.

5.3 The residual value of Plant & Machineries, vehicles, mobile equipments, and earth moving equipments, Railway facilities, Rolling stock and residential quarters are maintained at 5% of the original cost and for all other assets the residual value is considered as Nil.

5.4 For the following assets a higher rate of depreciation is considered based on the lower useful life ascertained through technical estimation which is further subject to lower component life:

a) Life of immovable fxed assets at Bauxite Mines is limited to the period up to which Bauxite reserve is available at respective block of mines.

b) Life of thermal power generation plant at CPP and Steam Power plant at Refinery is considered as 30 years and 25 years respectively.

c) Depreciation at higher rate is provided on Red mud pond &Ash Pond at Alumina Refinery and Ash ponds at Captive power plant based on their estimated remaining useful life, evaluated on the basis of technical estimates made periodically.

5.5 Intangible assets are amortized on a straight line basis as follows

a) Software classified as intangible assets are amortized over a period of 3 years.

b) Mining Rights is amortized over 20 years from the date of payment or date of renewal / deemed renewal of mining lease whichever is earlier.

c) License (Technical knowhow) is amortized over 10 years from the date of capitalization of corresponding process plant.

d) User Right (jointly controlled assets) is amortized over 10 years from the date of commissioning.

5.6 Certain assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the Port Authority on which these assets are installed.

5.7 Assets costing Rs.10,000/- or less individually are depreciated fully in the year in which they are put to use.

5.8 Subsequent expenditure related to an item of fxed asset is prospectively depreciated over the revised useful life of related plant & machinery.

5.9 Assets laid on land not owned by the Company are depreciated over a period of fve years from the date on which the asset is ready for put to use.

5.10 Depreciation on value adjustment is provided prospectively.

6. BORROWING COST.

6.1 General and specific borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset until such time the assets are ready for their intended use.

6.2 Other borrowing costs are recognized as expenses in the period in which these are incurred.

7. IMPAIRMENT.

The carrying amount of cash generating units is reviewed at each Balance sheet date where there is any indication of impairment based on internal/external indicators. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units.

An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

8. INVESTMENTS.

Investments that are readily realizable and are intended to be held for not more than one year from that date, on which such investments are made are classified as current investments. All other investments are classified as long term investments.

Current investments are stated at cost or market value whichever is lower. Long-term investments are carried at cost, after providing for diminution in value, if it is of a permanent nature.

9. INVENTORY.

9.1 Inventory of raw material, stores and spares are valued at cost net of CENVAT/VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis.

9.2 Stores and spares other than insurance spares held but not issued for more than 5 years are valued at 5% of the cost.

9.3 Shortage of coal up to 1% of the receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

9.4 Materials and other supplies held for use in the production (other than considered as non-moving) are not written down below cost, if the fnished products in which they will be incorporated are expected to be sold at or above cost.

9.5 Inventories of fnished goods, semi-finished goods, intermediary products and work in process including process scrap except anode butts and rejects are valued at lower of cost and net realizable value. Cost is generally determined at moving weighted average price of materials on real time basis, appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.

9.6 Scrap of various nature internally generated is valued at estimated net realizable value.

10. GOVERNMENT GRANTS.

10.1 Fixed assets acquired out of fnancial grant from Government are shown at cost by crediting the grant-in-aid received to Subsidy Reserve.

10.2 Grants related to revenue are recognized as revenue over the period to which these are related.

11. FOREIGN CURRENCY TRANSACTIONS.

11.1 All foreign currency transactions are recorded by applying the exchange rate as on the date of transactions

11.2 Monetary assets and liabilities in foreign currency are restated at year-end exchange rates. Exchange difference on restatement is recognized in the statement of Profit & Loss.

12. FORWARD EXCHANGE CONTRACT.

In respect of forward exchange contracts relating to frm commitment and highly probable forecast transactions, loss due to exchange difference is recognized in the statement of profit & loss in the reporting period in which the exchange rate changes.

Forward exchange contracts outstanding at the year end on account of frm commitment/ highly probable forecast transactions are marked to market and the losses if any are recognized in the statement of profit & loss and gains are ignored.

13. REVENUE RECOGNITION.

13.1 Sales:

a) Alumina & Aluminium : Sales in the domestic market are recognized at the time of dispatch of materials to the buyers. Export sales are recognized on issue of Bill of Lading. Domestic Sales include excise duty and are net of rebate and price concessions.

b) Renewable Power: Sale of wind power is recognized on the basis of power transmitted to DISCOMs at the price notified by respective authorities. Solar power generated is consumed for captive use in office & townships and hence not recognized as separate item of income.

c) Sale of Thermal Power: Sale of power from CPP is considered on the basis of quantity injected to state GRID excluding wheeling to refinery but including inadvertent power sale at the price notified by appropriate authority.

13.2 Receivables/ Incentives:

a) Claims and interest receivables are accounted for in the statement of Profit and Loss based on certainty of their realization.

Interest income on term deposits is recognized on a time proportion basis taking in to account the amount outstanding and the rate applicable.

b) Export incentives i.e Duty draw back & Focus marketing license are recognized on accrual basis on the shipping quantity as per BOL/ export invoice.

c) Income from Renewable Energy Certificates (REC) is recognized on the basis of power billed to DISCOMs at the weighted average of quoted price of recognized power exchanges on the last trading day of the reporting period.

d) Generation Based Incentive (GBI) is recognized on the invoiced quantity at the applicable rate as per scheme.

e) If there is uncertainty in realization, revenue recognition is postponed.

14. LONG TERM EMPLOYEE BENEFITS.

14.1 Defined Contribution Plan: Contributions towards Provident Funds & Pension Scheme are charged to the statement of Profit and Loss for the period as and when the contributions to the Funds are due.

14.2 Defined Benefit Plan: The provisions/liabilities towards gratuity, accrued leave, long service awards, post retirement medical and settling- in benefits, future payments to the legal heirs of deceased employees under the NEFFARS scheme, are made based on the actuarial valuation as at the end of the year and charged to statement of Profit and loss after considering actuarial gains/losses.

14.3 Expenditure on voluntary retirement compensation is charged off in the year in which it is incurred.

15. PRIOR PERIOD /PREPAID ITEMS.

Income/ Expenditure relating to prior period and prepaid expenses not exceeding Rs. 5 lakh in each case is treated as income/ expenditure for the current year.

16. EXPENDITURE ON NEW PROJECTS.

Expenses on account of new potential projects incurred till investment decision, are charged to revenue. Expenditure incurred thereafter in case of successful projects are accounted for under capital-work-in progress and capitalized subsequently.

17. EXPENDITURE ON RESEARCH AND DEVELOPMENT.

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research.

Development expenditure except capital nature is charged to statement of Profit and Loss in the year incurred after setting of incidental income, if any.

18. EXCEPTIONAL ITEMS.

Exceptional items are the items of income and expenses within profit or loss from ordinary activities of such size, nature or incidence whose disclosure is felt necessary.

19. TAX EXPENSES.

Tax expenses for the period, comprising of current tax and deferred tax are included in the determination of net profit or loss for the period.

19.1 Current tax is measured at the amount expected to be paid to tax authorities in accordance with the prevailing taxation laws.

19.2 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

20. JOINT VENTURES.

20.1 Interest in a jointly controlled entity has been accounted for as an investment in accordance with Accounting Standard (AS) 13, Accounting for investments. However necessary disclosure is made in line with Accounting Standard (AS) 27, Financial Reporting of interests in Joint ventures.

20.2 Interest in a jointly controlled asset is classified and disclosed separately.

21. PROVISIONS AND CONTINGENT LIABILITIES & CONTINGENT ASSETS.

21.1 A provision is recognized when there is present obligation as a result of a past event and it is probable that an out fow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year and adjusted to reflect the best current estimate.

21.2 Provision is made /written back in respect of balances on account of sums payable/receivable for more than 3 years, in respect of parties other than Govt. Dept./ Govt. Companies. In case of Govt. Dept./ Govt. Companies, the same is made on case to case basis depending upon the merit of the case.

21.3 Disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require any outflow of resources.

21.4 No provision is recognized or disclosure for contingent liability is made, when there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote.

21.5 Contingent assets are neither recognized nor disclosed in the fnancial statements.


Mar 31, 2014

1. BASIS OF ACCOUNTING.

The financial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, relevant provisions of the Companies Act, 1956 and accounting standards notified there under.

2. USE OF ESTIMATES.

In preparing the financial statements in conformity with accounting principles generally accepted in India, the company makes estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amount of revenues and expenses during the reported period. Actual result in some cases could differ from those estimates. Any revision of such estimates is recognized in the period in which the result is crystallized.

3. FIXED ASSETS.

3.1 All tangible fixed assets are stated at historical cost net of accumulated depreciation and accumulated impairment loss, if any. Cost includes all direct expenditure of acquisition, attributable borrowing cost and net of CENVAT/VAT credit, wherever applicable.

3.2 Expenditure on existing tangible assets towards renovation and modernization resulting in increased life and/or efficiency of an existing asset is added to the cost of related assets.

3.3 Expenditure on development of land including leasehold land is capitalized as part of cost of land.

3.4 IntangibleAssets are stated at acquisition cost less accumulated amortization. Mining rights (NPV and related payments made to Govt. authorities for bauxite mines), Software (Application Software packages like ERP and application development tools like RDBMS), License& Franchise (Technical know-how right) and R&Dknowhow are treated as intangible assets.

3.5 Capital expenditure on jointly controlled assets having exclusive user right is reflected as CWIP to the extent of Company''s share in the asset and on completion considered as tangible fixed assets.

3.6 Machinery spares (insurance spares) that are specific to a fixed asset valuing more than Rs.1.00 lakh per unit are capitalized along with the fixed asset.

3.7 Fixed assets retired from active use and held for disposal are stated at net book value less provision for doubtful realization if any and considered as other current asset till the time of its disposal.

4. DEPRECIATION.

4.1 Depreciation on tangible assets is provided on straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956 except in respect of the following assets, where depreciation at higher rate is provided based on their estimated remaining useful life, evaluated on the basis of technical estimate made periodically. Earth work portion of:

a) Red mudpond atAlumina Refinery;

b) Ash pond atAlumina Refinery;

c) Ash ponds at CaptivePower Plant.

4.2 Intangible assets:

a) Software classified as intangible assets are amortized over a period of 3 years.

b) Mining Rights is amortized over 20 years from the date of payment or date of renewal / deemed renewal of mining lease whichever is earlier.

License (Technical knowhow) is valid for the full life of the related plant & machinery. Accordingly, the useful life of intangible asset "Technical knowhow right – RTAlicense" is amortized over the useful life of related plant & machinery.

4.3 Depreciation in respect of railway sidings and wagons are provided at the rate of 5.28% in line with continuous process plant.

4.4 Certain assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the PortAuthority on which these assets are installed.

4.5 Assets costing Rs. 5,000/- or less individually are depreciated fully in the year in which they are put to use.

4.6 Where the life and/or efficiency of an asset is increased due to renovation, modernization or major replacement the depreciable value is prospectively amortized over the revised useful life of related plant & machinery.

4.7 Assets laid on land not owned by the Company are depreciated over a period of five years from the date on which the asset is ready for put to use.

4.8 Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation is provided accordingly.

4.9 Depreciation on value adjustment is provided prospectively.

5. BORROWING COST.

5.1 General and specific borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset until such time the assets are ready for their intended use.

5.2 Other borrowing costs are recognized as expenses in the period in which these are incurred.

6. IMPAIRMENT.

The carrying amount of cash generating units is reviewed at each Balance sheet date where there is any indication of impairment based on internal/external indicators. An impairment loss is recognized in the statement of profit and loss where the carrying amount exceeds the recoverable amount of the cash generating units.

An impairment loss is reversed if there is change in the recoverable amount and such loss either no longer exists or has decreased.

7. INVESTMENTS.

7.1 Investments intended to be held for not more than one year from the date of such investment, are classified as current investments. All other investments are classified as long term investments. Long-term investments ( including investment in Joint ventures) are carried at cost, after providing for diminution in value, if it is of a permanent nature.

7.2 Current investments are stated at cost or market value whichever is lower.

8. INVENTORY.

8.1 Inventory of raw material, stores and spares are valued at cost net of CENVAT / VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis.

8.2 Stores and spares other than insurance spares held but not issued for more than 5 years are valued at 5% of the cost.

8.3 Shortage of coal up to 1% of the receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

8.4 Materials and other supplies held for use in the production (other than considered as non-moving) are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost.

8.5 Inventories of finished goods, semi-finished goods, intermediary products and work in process including process scrap except anode butts and rejects are valued at lower of cost and net realizable value. Cost is generally determined at moving weighted average price of materials on real time basis, appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.

8.6 Scrap of various nature internally generated is valued at estimated net realizable value.

9. GOVERNMENT GRANTS.

9.1 Fixed assets acquired out of financial grant from Government are shown at cost by crediting the grant-in-aid received to Subsidy Reserve.

9.2 Grants related to revenue are recognized as revenue over the period to which these are related.

10. FOREIGN CURRENCY TRANSACTIONS.

10.1 All foreign currency transactions are recorded by applying the exchange rate as on the date of transactions.

10.2 Monetary assets and liabilities in foreign currency are restated at year-end exchange rates. Exchange difference on restatement is recognized in the statement of Profit & Loss.

10.3 In respect of forward contracts relating to firm commitments and highly probable forecast transactions, loss due to exchange difference is recognized in the profit and loss account in the reporting period in which the exchange rate changes.

11. REVENUE RECOGNITION.

11.1 Sales:

a) Sale of Alumina & Alumnium : Sales in the domestic market are recognized at the time of dispatch of materials to the buyers. Export sales are recognized on issue of Bill of Lading. Domestic Sales include excise duty and are net of rebate and price concessions.

b) Sale of Wind Power: Sale of wind power is recognized on the basis of power transmitted to DISCOMs at the price notified by respective authorities.

c) Sale of Thermal Power : Sale of power from CPP is considered on the basis of quantity injected to state GRID excluding wheeling to refinery but including inadvertent power sale at the price notified by appropriate authority.

11.2 Receivables/ Incentives:

a) Claims and interest receivables are accounted for in the statement of Profit and Loss based on certainty of their realization.

Interest income on term deposits is recognized on a time proportion basis taking in to account the amount outstanding and the rate applicable.

b) Export incentives i.e Duty draw back & Focuss marketing license are recognized on accrual basis on the shipping quantity as per BOL/ export invoice.

c) Income from Renewable Energy Certificates (REC) is recognized on the basis of power billed to DISCOMs at the weighted average of quoted price of recognized power exchanges on the last trading day of the reporting period.

d) Generation Based Incentive (GBI) is recognized on the invoiced quantity at the applicable rate as per scheme.

e) If there is uncertainty in realization, revenue recognition is postponed.

12. LONG TERM EMPLOYEE BENEFITS.

12.1 Defined Contribution Plan: Contributions towards Provident Funds & Pension Scheme are charged to the statement of Profit and Loss for the period as and when the contributions to the Funds are due.

12.2 Defined Benefit Plan: The provisions/liabilities towards gratuity, accrued leave, long service awards, post retirement medical and settling- in benefits, future payments to the legal heirs of deceased employees under the NEFFARS scheme, are made based on the actuarial valuation as at the end of the year and charged to statement of Profit and loss after considering actuarial gains/losses.

12.3 Expenditure on voluntary retirement compensation is charged off in the year in which it is incurred.

13. PRIORPERIOD/PREPAIDITEMS.

Income/ Expenditure relating to prior period and prepaid expenses not exceeding Rs.5 lakh in each case is treated as income/expenditure for the current year.

14. EXPENDITURE ON NEW PROJECTS.

Expenses on account of new potential projects incurred till investment approval, are charged to revenue. Expenditure incurred thereafter in case of successful projects are accounted for under capital-work-in progress and capitalized subsequently.

15. EXPENDITURE ON RESEARCH AND DEVELOPMENT.

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research.

Development expenditure except capital nature is charged to statement of Profit and Loss in the year incurred after setting of incidental income, if any.

16. EXCEPTIONAL ITEMS.

Exceptional items are the items of income and expenses within profit or loss from ordinary activities of such size, nature or incidence whose disclosure is necessary.

17.DEFERRED TAX.

17.1 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

17.2 Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

18. JOINT VENTURES.

18.1 Interest in a jointly controlled entity has been accounted for as an investment in accordance with Accounting Standard (AS) 13, Accounting for investments. However necessary disclosure is made in line with Accounting Standard (AS) 27, Financial Reporting of interests in Joint ventures.

18.2 Interest in a jointly controlled asset is classified and disclosed according to the nature of assets.

19. PROVISIONS AND CONTINGENT LIABILITIES & CONTINGENT ASSETS.

19.1 A provision is recognized when there is present obligation as a result of a past event and it is probable that an out flow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year and adjusted to reflect the best current estimate.

19.2 Provision is made /written back in respect of balances on account of sums payable/receivable for more than 3 years, in respect of parties other than Govt. Dept./ Govt. Companies. In case of Govt. Dept./ Govt. Companies, the same is made on case to case basis depending upon the merit of the case.

19.3 Disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require any outflow of resources.

19.4 No provision is recognized or disclosure for contingent liability is made, when there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote.

19.5 Contingent assets are neither recognized nor disclosed in the financial statement.


Mar 31, 2013

1. BASIS OF ACCOUNTING

The financial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, and the relevant provisions of the Companies Act, 1956.

2. USE OF ESTIMATES

In preparing the financial statements in conformity with accounting principles generally accepted in India, the company makes estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amount of revenues and expenses during the reported period. Actual result in some cases could differ from those estimates. Any revision of such estimates is recognized in the period in which the same is determined.

3. COMPLIANCE TO REQUIREMENT OF REVISED SCHEDULE-VI TO THE COMPANIES ACT, 1956

The Financial Statements are prepared in compliance with the provisions of revised Schedule VI to the Companies Act 1956.

All assets and liabilities have been classified as current and/ or non-current as per the Company''s normal operating cycle and other criteria set out in the revised Schedule VI to the Companies Act, 1956.

4. (A) FIXED ASSETS

4.1 All fixed assets are stated at historical cost net of accumulated depreciation and accumulated impairment loss, if any. Cost includes all direct expenditure of acquisition, attributable borrowing cost and net of CENVAT/VAT credit, wherever applicable.

4.2 Expenditure on development of land including leasehold land is capitalized as part of cost of land.

4.3 Intangible Assets are stated at acquisition cost, net of accumulated amortization and are amortized on a straight line basis over their estimated useful lives.

NPV and related payments made to Govt. authorities for bauxite mines, Application Software packages like ERP and application development tools like RDBMS and Technical know-how right are treated as intangible assets.

4.4 Insurance spares valuing more than Rs. 1 lakh per unit are capitalized .

4.5 Fixed assets retired from active use and held for disposal are stated at net book value less provision for doubtful realization if any and considered as other current asset till the time of its disposal.

4. (B) DEPRECIATION

4.1 Depreciation on tangible assets is provided on straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956 except in respect of the following assets, where depreciation at higher rate is provided based on their estimated remaining useful life, evaluated on the basis of technical estimate made periodically. Earth work portion of :

a) Red mud pond at Alumina Refinery;

b) Ash pond at Alumina Refinery;

c) Ash ponds at Captive Power Plant.

4.2 Intangible assets for application software is amortized over a period of 3 years and intangible assets for Mining Rights is amortized over 20 years from the date of payment or date of renewal / deemed renewal whichever is earlier based on respective lease life.

Technical know-how right is amortized over the useful life of related plant and machinery. As per the license agreement with M/s. Rio Tinto Alcan, the license is valid for the full life of related plant i.e Smelter and Alumina Refinery. Both the asset groups are continuous process plants. Accordingly, the useful life of intangible asset "Technical know-how right - RTA license" is amortized over the useful life of related plant & machinery.

4.3 Depreciation in respect of railway sidings and wagons are provided at the rate of 5.28% in line with continuous process plant.

4.4 Certain assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the Port Authority on which these assets are installed.

4.5 Assets costing Rs. 5,000/- or less individually are depreciated fully in the year in which they are put to use.

4.6 Assets laid on land not owned by the Company are depreciated over a period of five years.

4.7 Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.

4.8 Depreciation on value adjustment is provided prospectively.

5. BORROWING COST

5.1 General and specific borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of that asset until such time the assets are ready for their intended use.

5.2 Other borrowing costs are recognized as expenses in the period in which these are incurred.

6. IMPAIREMENT

The Company reviews the carrying amount of its fixed assets, whenever circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated discounted future cash flow expected to result from use of the asset is less than its carrying amount, the asset is deemed to be impaired. The impairment loss is measured as the difference between the carrying amount and recoverable amount.

7. INVESTMENTS

7.1 Investments intended to be held for not more than one year from the date of such investment, are classified as current investments. All other investments are classified as long term investments. Long-term investments are carried at cost, after providing for diminution in value, if it is of a permanent nature.

7.2 Current investments are stated at cost or fair value whichever is lower.

8. INVENTORY

8.1 Inventory of stores and spares are valued at cost net of CENVAT / VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis.

8.2 Stores and spares other than insurance spares held but not issued for more than 5 years are valued at 5% of the cost.

8.3 Shortage of coal up to 1% of the receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

8.4 Materials and other supplies held for use in the production (other than considered as non-moving) are not written down below cost, if the finished products in which they will be incorporated are expected to be sold at or above cost.

8.5 Inventories of finished goods, semi-finished goods, intermediary products and work in process except anode butts and rejects are valued at lower of cost and net realizable value. Cost is generally determined at moving weighted average price of materials on real time basis, appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.

Anode rejects and butts are valued at lower of past realized value or 45% of direct material cost.

8.6 Scrap of various nature internally generated is valued at estimated net realizable value.

9. GOVERNMENT GRANTS

9.1 Fixed assets acquired out of financial grant from Government are shown at cost by crediting the grant-in-aid received to Subsidy Reserve.

9.2 Export incentives/Duty drawback on exports made during the year, are accounted for on accrual basis and shown as other operating income.

9.3 The saving on account of application of concessional rate of customs duty against EPCG licenses is disclosed as commitments towards its Export Obligation.

10. FOREIGN CURRENCY TRANSACTIONS

10.1 All foreign currency transactions are recorded by applying the exchange rate as on the date of transactions.

10.2 Monetary assets and liabilities in foreign currency are restated at year-end exchange rates. Exchange difference on restatement is recognized in the statement of Profit & Loss.

10.3 In respect of forward contracts relating to firm commitments and highly probable forecast transactions, loss due to exchange difference is recognized in the profit and loss account in the reporting period in which the exchange rate changes. Any profit or loss arising on renewal or cancellation of such contracts is recognized as income or expense for the period.

11. REVENUE RECOGNITION

11.1 Sales in the domestic market are recognized at the time of dispatch of materials to the buyers. Export sales are recognized on issue of Bill of Lading. Domestic Sales include excise duty and are net of rebate and price concessions.

11.2 If there is uncertainty in realization, revenue recognition is postponed.

11.3 Claims and interest receivables are accounted for in the statement of Profit & Loss based on certainty of their realization.

11.4 Interest income on term deposits is recognized on a time proportion basis taking in to account the amount outstanding and the rate applicable.

12. LONG TERM EMPLOYEE BENEFITS

12.1 Contributions towards Provident Funds & Pension Scheme are charged to the Profit and Loss Account for the period as and when the contributions to the Funds are due.

12.2 The provisions/liabilities towards gratuity, accrued leave, long service awards, post retirement medical and settling-in benefits, future payments to the legal heirs of deceased employees under the NEFFARS scheme, are made based on the actuarial valuation as at the end of the year and charged to statement of Profit & Loss after considering actuarial gains/losses.

12.3 Expenditure on voluntary retirement compensation is charged off in the year in which it is incurred.

13. PRIOR PERIOD /PREPAID ITEMS

Income/Expenditure relating to prior period and prepaid expenses not exceeding Rs. 5 lakh in each case is treated as income/expenditure for the current year.

14. EXPENDITURE ON NEW PROJECTS

Expenses on account of new potential projects incurred till investment approval, are charged to revenue. Expenditure incurred thereafter in case of successful projects are accounted for under capital-work-in progress and capitalized subsequently.

15. EXPENDITURE ON RESEARCH AND DEVELOPMENT

Expenditure incurred during research phase is charged to revenue when no intangible asset arises from such research. Development expenditure except capital nature is charged to statement of Profit & Loss in the year incurred after setting of incidental income, if any.

16. EXCEPTIONAL ITEMS

Exceptional items are the items of income and expenses within profit or loss from ordinary activities of such size, nature or incidence whose disclosure is necessary.

17. DEFERRED TAX

17.1 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

17.2 Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

18. SEGMENT REPORTING

18.1 The Company has considered Chemicals, Aluminium and Electricity as the three primary business segments. Chemicals include Calcined Alumina, Alumina Hydrate and other related products. Aluminium includes aluminium ingots, wire rods, billets, strips, rolled and other related products. Bauxite produced for captive consumption for production of alumina is included under chemicals. Wind Power Plant commissioned primarily to harness the potential renewable energy sources is included in the unallocated Common segment.

18.2 India and outside India are the two geographical segments. Since all production and other facilities are located in India, segment assets except export debtors are shown under one geographic segment i.e. India.

18.3 Inter-unit transfer of Calcined Alumina is considered at lower of average price from export sales during the period less freight and cost plus 15.50% return on investment on gross fixed assets. For electricity, lower of the average sales price to GRIDCO and cost plus 15.50% return on investment on gross fixed assets (as per CERC guidelines), has been considered for transfer pricing.

18.4 Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities. Revenue, expenses, assets and liabilities, which relate to the enterprise as a whole and are not allocable on a reasonable basis, have been included under Unallocated Common segment.

19. JOINT VENTURES

19.1 Interest in a jointly controlled entity has been accounted for as an investment in accordance with Accounting Standard (AS) 13, Accounting for investments.

19.2 Interest in a jointly controlled asset is classified and disclosed according to the nature of assets.

20. PROVISIONS AND CONTINGENT LIABILITIES & CONTINGENT ASSETS

20.1 A provision is recognized when there is present obligation as a result of a past event and it is probable that an out flow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year and adjusted to reflect the best current estimate.

20.2 Provision is made/written back in respect of balances on account of sums payable/receivable for more than 3 years, in respect of parties other than Govt. Dept./ Govt. Companies. In case of Govt. Dept./ Govt. Companies, the same is made on case to case basis depending upon the merit of the case.

20.3 Disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require any out flow of resources.

20.4 No provision is recognized or disclosure for contingent liability is made, when there is a possible obligation or a present obligation and the likelihood of out flow of resources is remote.

20.5 Contingent assets are neither recognized nor disclosed in the financial statement.


Mar 31, 2012

1.1 The Company is providing education faculties through its sponsored schools at plan sites for the children of employees as 'well as children from peripheral areas as a part of Corporate Social Responsibility. Proportionate expenditure Incurred tor students from peripheral areas amounting to Rs. 10.93 crore (previous year Rs. 10.12 crore) has been classified as CSR expanses which was included under employee benefits expenses up to last year.

1.2 Mining Rights represent amount pari towards Net Present Value (NPV) and other related payments in connection with renewal of mining lease which was earlier grouped under Lease hold land (Rs. 104.67 crore) now classified under Intangible assets in compliance with revised Schedule VI to the Companies Act 1956. Depredation on the said assets has been re-grouped accordingly.

1.3 Technological license represent payment of Rs 14.70 crore made to Rio Tinto Alcan (RTA) towards license right for use of technology for Alumina and Aluminium production (which includes Rs. 0.72 crore capitalized as plant and equipment in earlier years). There is no impact on the Profit of the Company due to above change in Accounting Policies/Practices.


Mar 31, 2011

1.1 BASIS OF ACCOUNTING:

1.1.1 The financial statements are prepared under historical cost convention on accrual basis of according, in accordance with the generally accepted accounting principles, accounting standards issued by the institute of Chartered Accountants of india, and the relevant provisions of the companies Act, 1956.

1.2 USE OF ESTIMATES:

1.2.1 In preparing the financial statements in conformity with accounting principles generally accepted in India, the Company makes estimates and assumptions that affect the reported amount of assets and "abilities and the disclosure of contingent liabilities as at the date of financial statements and the amount of expenses during the reported period. Actual result in some cases could differ from those estimates. Any revision of such estimates is recognized in the period in which the same is determined.

1.3 FIXED ASSETS:

1.3.1 All fixed assets are stated at historical cost less depreciation. Cost includes all direct expenditure of acquisition, attributable borrowing cost and net of CENVAT/VAT credit, wherever applicable.

1.3.2 Expenditure on development of land including leasehold land is capitalized as part of cost of land. NPV and related payments made to Govt, authorities for bauxite mines are capitalized.

1.3.4 Insurance spares valuing more than Rs. 1 lakh per unit are capitalized with the related fixed assets.

1.3.5 Application Software package like ERP and application development tools like RDBMS are treated as intangible assets and amortized over a period of three years or the period of license whichever is earlier.

1.3.6 Fixed assets retired from active use and held for disposal are stated at net book value and considered as current asset till the time of its disposal.

1.4 INVESTMENTS:

1.4.1 Long-term investments are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.

1.5 INVENTORIES:

1.5.1 Whenever the sale price of finished goods is more than the cost of materials, and other supplies incorporated in it, in line with Accounting Standard - 2 (Para 24), raw materials, stores and spares are valued at moving weighted average price on real time basis net of CENVAT/ VAT credit wherever applicable. Shortage of coal up to 1% of receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

1.5.2 Work in process is valued at moving weighted average cost. Cost is ascertained at moving average price of material on real time basis, appropriate share of labour and related overheads.

1.5.4 Semi-finished goods and intermediary products are valued at moving average price determined on moving average based on monthly production confirmation except for anode butts and rejects which are valued at lower of past realized value or 45% of direct material cost.

1.5.5 Scraps of various nature internally generated is valued at estimated net realizable value and inventorised periodically.

1.5.6 Stores and spares, other than insurance spares held not issued for more than 5 years are valued at 5% of the cost.

1.5.7 Unabsorbed purchase overheads lying at the end of the year are charged to Profit & Loss Account at the year end.

1.6 PROVISIONS:

1.6.1 A provision is recognized when there is present obligation as a result of a past event and it is probable that an out flow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year

1.6.2 Provision is made /written bTckTnTespect'ofValances on account of sums payable/receivable for more than 3 years, in respect of parties other than Govt. Dept./Companies. In case of Govt. Dept./ Companies the same is made on case to case basis depending upon the merit of the case.

1.7.1 Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end exchange rates.

1.7.2 The difference in translation of monetary assets and liabilities and realised gains and losses in foreign exchange transactions are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.

1.7.3 In all import cases, Bill of Lading/ Bill of Entry is considered as the date of transaction based on which Foreign Exchange liability is created in the books. Date on which amount is debited by Bank is considered as the settlement date. The exchange variation between sums of liability and settlement is charged to Profit & Loss Account.

1.8 DEPRECIATION AND AMORTISATION:

1.8.1 Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956 except in case of certain assets where depreciation at higher rates is provided based on their estimated remaining useful life, evaluated on the basis of technical estimate made annually in respect of the following assets.

Earth work portion of:

a) Red mud pond at Alumina Refinery

b) Ash pond at Alumina Refinery

c) Ash ponds at Captive Power Plant

1.8.2 Certain assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the Port Authority on which these assets are installed.

1.8.3 Assets costing Rs. 5,000/- or less individually are depreciated fully in the year in which they are put to use.

1.8.4 Assets on land not owned by the Company are depreciated over a period of five years.

1.8.5 Cost of leasehold land including development expenses thereon is amortized over the period of lease. However, where lease agreement is yet to be signed, such expenses are amortized over a period of 20 years commencing from the year of commercial operation.

The NPV and related payments to Govt, authorities at the time of renewal of mining lease is amortized over a period of 20 years from the date of payment or due date of renewal which ever is earlier on the basis of probable use.

1.8.6 Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.

1.9 IMPAIRMENT

1.9.1 The Company reviews the carrying amount of its fixed assets, whenever circumstances indicate that the carrying amount of the asset may not be recoverable. The company then estimates the future estimated discounted future cash flows expected to result from the CGU. If the estimated discounted future cash flow expected to result from use of the asset is less than its carrying amount, the asset is deemed to be impaired. The impairment loss is measured as the difference between the carrying amount and recoverable amount.

1.10 PRIOR PERIOD INCOME/ EXPENDITURE & PRE-PAID EXPENSES:

1.10.1 Income/ Expenditure relating to prior period and pre-paid expenses not exceeding Rs. 1 lakh in each case is treated as income/ expenditure for the current year.

1.11 RECOGNITION OF REVENUE:

1.11.1 Sales include excise duty and are net of rebates and price concessions. Sales in the domestic market are recognised at the time of despatch of materials to the buyers. Export sales are recognized on issue of bill of lading.

1.11.2 Claims and interest receivables are accounted for in the Profit and Loss Account based on certainty of their realisation.

1.11.3 Export incentives in the form of duty credit on exports made during the year, under Duty Entitlement Pass Book (DEPB) scheme, are accounted for on accrual basis after providing for expected shortfall in realization based on last sale.

1.12 REPAIRS AND REPLACEMENTS:

1.12.1 Pot relining expenses are charged to Profit & Loss Account as and when incurred.

1.13 EMPLOYEE BENEFITS:

1.13.1 Contribution to Provident Fund and Pension Scheme, defined contribution schemes, are charged to Profit & Loss Account on the basis of actual liability.

1.13.2 Liabilities towards Gratuity, leave encashment, post retirement medical facilities, retirement benefits, leave travel benefits (for non executives only), family rehabilitation scheme and long service reward are provided for on the basis of actuarial valuation.

1.14 RESEARCH & DEVELOPMENT EXPENDITURE:

1.14.1 Research expenditure is charged to Profit & Loss Account in the year in which incurred. Development expenditure except of capital nature is charged to Profit & Loss Account in the year incurred after setting off of incidental income, if any

1.15 BORROWING COST:

1.15.1 Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expenses in the period in which these are incurred

1.16 DEFFERED TAXATION:

1.16.1 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

1.17 BUSINESS DEVELOPMENT EXPENSES:

1.17.1 Expenses on account of new potential projects incurred till investment approval are charged to revenue. Expenditure incurred thereafter in case of successful projects are accounted for under Capital Work-in-Progress and capitalized subsequently.


Mar 31, 2010

1.1 BASIS OF ACCOUNTING:

1.1.1 The financial statements are prepared under historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, and the relevant provisions of the Companies Act, 1956.

1.2 USE OF ESTIMATES:

1.2.1 In preparing the financial statements in conformity with accounting principles generally accepted in India, the company makes estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amount of expenses during the reported period. Actual result in some cases could differ from those estimates. Any revision of such estimates is recognized in the period in which the same is determined.

1.3 FIXED ASSETS:

1.3.1 All fixed assets are stated at historical cost less depreciation. Cost includes all direct expenditure of acquisition, attributable borrowing cost and net of CENVAT/VAT credit, wherever applicable.

1.3.2 Expenditure on development of land including leasehold land are capitalised as part of cost of land. Expenditure of capital nature incurred on assets on land not owned by the company is capitalised under appropriate asset head.

1.3.3 Fixed assets acquired out of financial grant from Government are shown at cost by crediting the grant-in-aid received to Capital Reserve. Equivalent amount of depreciation provided on such assets each year is transferred from Capital Reserve to Profit & Loss Account.

1.3.4 Insurance spares valuing more than ? 1 lakh per unit are capitalized with the related fixed assets.

1.3.5 Application Software package like ERP and application development tools like RDBMS are treated as intangible assets and amortized over a period of three years or the period of license whichever is earlier.

1.3.6 Fixed assets retired from active use and held for disposal are stated at net book value and considered as current asset till the time of its disposal.

1.4 INVESTMENTS:

1.4.1 Long-term investments are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.

1.5 INVENTORIES:

1.5.1 Raw materials, stores and spares are valued at lower of weighted moving average price on real time basis net of CENVAT/ VAT credit wherever applicable. Shortage of coal up to 1 % of receipt quantity is treated as normal loss and beyond 1% is treated as abnormal loss.

1.5.2 Work in process is valued at lower of cost and net realizable value. Cost is ascertained at moving average price of material on real time basis, appropriate share of labour and related overheads.

1.5.3 Finished goods are valued at lower of cost and net realizable value. Cost is determined at moving average price of materials on real time basis, apportioned share of labour and related overheads.

1.5.4 Semi-finished goods and intermediary products are valued at moving average price determined on monthly basis based on production confirmation, except for anode butts and rejects which are valued at 45% of direct material cost.

1.5.5 Scrap of various nature is valued at estimated net realisable value and inventorised periodically.

1.5.6 Stores and spares, other than insurance spares not moved for more than 5 years is valued at 5% of the cost.

1.5.7 Unabsorbed purchase overheads lying at the end of the year are charged to Profit & Loss Account at the year end.

1.6 PROVISIONS:

1.6.1 A provision is recognized when there is present obligation as a result of a past event and it is probable that an out flow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. These are reviewed at end of each year and adjusted to reflect the best current estimate.

1.6.2 Provision is made /written back in respect of balances on account of sums payable/receivable for more than 3 years, in respect of parties other than Govt. Dept./Companies. In case of Govt. Dept./ Companies the same is made on case to case basis depending upon the merit of the case.

1.7 FOREIGN CURRENCY TRANSACTIONS :

1.7.1 Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end exchange rates.

1.7.2 The difference in translation of monetary assets and liabilities and realised gains and losses in foreign exchange transactions are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.

1.7.3 In all import cases. Bill of Lading/ Bill of Entry is considered as the date of transaction based on which Foreign Exchange liability is created in the books. Date on which amount is debited by Bank is considered as the settlement date. The exchange variation between sums of liability and settlement is charged to Profit & Loss Account.

1.8 DEPRECIATION AND AMORTISATION:

1.8.1 Depreciation on fixed assets is provided on straight-line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1 956 except in case of certain assets where depreciation at higher rates is provided based on their estimated remaining useful life, evaluated on the basis of technical estimate made annually in respect of the following assets.

Earth work portion of:

a) Red mud pond at Alumina Refinery

b) Ash pond at Alumina Refinery

c) Ash ponds at Captive Power Plant

1.8.2 Certain assets at Port Facilities are depreciated at rates calculated on the basis of balance lease period of land belonging to the Port Authority on which these assets are installed.

1.8.3 Assets costing ? 5,000 or less individually are depreciated fully in the year in which they are put to use.

1.8.4 Assets on land not owned by the Company are depreciated over a period of five years.

1.8.5 Cost of leasehold land including development expenses thereon is amortised over the period of lease. However, where lease agreement is yet to be signed, such expenses is amortised over a period of 20 years commencing from the year of commercial operation.

1.8.6 Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.

1.9 PRIOR PERIOD INCOME/ EXPENDITURE & PRE-PAID EXPENSES:

1.9.1 Income/ Expenditure relating to prior period and pre-paid expenses not exceeding Rs. 1 lakh in each case is treated as income/ expenditure for the current year.

1.10 RECOGNITION OF REVENUE:

1.10.1 Sales include excise duty and are net of rebates and price concessions. Sales in the domestic market are recognised at the time of

despatch of materials to the buyers. Export sales are recognized on issue of bill of lading 1.1 0.2 Claims and interest receivables are accounted for in the Profit and Loss Account based on certainty of their realisation. 1.10.3 Export incentives in the form of duty credit on exports made during the year, under Duty Entitlement Pass Book (DEPB) scheme, are

accounted for on accrual basis after providing for expected shortfall in realization based on last sale.

1.11 REPAIRS AND REPLACEMENTS:

1.11.1 Pot relining expenses are charged to Profit & Loss Account as and when incurred.

1.12 EMPLOYEE BENEFITS:

1.1 2.1 Contribution to Provident Fund and Pension Scheme, defined contribution schemes, are charged to Profit & Loss Account on the basis of actual liability.

1.12.2 Liabilities towards Gratuity, leave encashment, post retirement medical facilities, retirement benefits, leave travel benefits, family rehabilitation scheme and long service reward are provided for on the basis of actuarial valuation.

1.13 RESEARCH & DEVELOPMENT EXPENDITURE:

1.1 3.1 Research expenditure is charged to Profit & Loss Account in the year in which incurred. Development expenditure except of capital nature is charged to Profit & Loss Account in the year incurred after setting off of incidental income, if any.

1.14 BORROWING COST:

1.14.1 Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expenses in the period in which these are incurred.

1.15 DEFFERED TAXATION:

1.1 5.1 Deferred Tax expense or benefit is recognized on timing difference being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

1.16 BUSINESS DEVELOPMENT EXPENSES:

1.1 6.1 Expenses on account of new potential projects incurred till investment approval are charged to revenue. Expenditure incurred thereafter in case of successful projects are accounted for under Capital Work-in-Progress and capitalized subsequently.

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