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Notes to Accounts of National Aluminium Company Ltd.

Mar 31, 2016

Note No.1: Renewable Purchase Obligation (RPO)

In terms of Notification dated 1st August 2015 issued by the Odisha Electricity Regulatory Commission (OERC), the Company has the obligation to generate power equal to 3% (previous year 6.5%) of its total consumption from renewable sources comprising 0.5% (previous year 0.25%) from Solar Renewable Source, 2.5% (previous year 1.8%) from Non-solar Renewable Source and 0% (previous year 4.45%) from Co-generation.

a) Company has fulfilled its non-solar obligation through wind power generation for the current year and also part obligation for previous years. Provision has been made for accumulated non-solar obligation amounting to Rs.2.75 Crore (previous year Rs.4.21 crore) towards 18,297 (previous year 28,080) numbers of Non-solar REC valued @ Rs.1,500 (previous year Rs.1,500) per REC.

b) In respect of Solar Renewable Source, the Company has accumulated liability of Rs.23.24 crore (previous year Rs.14.22 Crore) towards 66,413 (previous year 40,637) numbers of Solar REC valued @ Rs.3,500 (previous year Rs.3,500) per REC due to non-fulfillment of the obligation to generate required quantum of power. The liability has been provided for.

Note No.2: Performance Related Pay

Consequent upon finalization of Performance Related Pay (PRP) of Executives for the year 2012-13 and 2013-14, the liability provided in excess in earlier years on this account amounting to Rs.26.60 crore is written back. The reduction of estimated liability of PRP for the years 2012-13 and 2013-14 is primarily attributable to determination of the profit before tax without considering income from surplus fund as per clarification by the Department of Public Enterprises (DPE) of the Govt. of India.

Note No.3: Renewal of Bauxite mining lease

Renewal of Bauxite mining lease (North & Central Block for 1315.264 Ha and South Block for 528.262 Ha) has been sanctioned upto 31.3.2020. For renewal of lease the Company paid stamp duty amounting to Rs.6.11 crore and Rs.1.00 crore respectively, which is capitalized as part of lease- hold land to be amortized over the respective lease life. The amount disclosed as contingent liability towards the demand made by Govt. of Odisha is correspondingly reduced on payment of the above stamp duty.

Note No.4: Contribution to DMF & NMET

In terms of The Mines and Minerals (Development and Regulation) Amendment Act, 2015 and as per the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 & Mines and Minerals (Contribution to National Mineral Exploration Trust) Rules 2015 framed thereunder and notified on 17th September 2015 by the Ministry of Mines, Government of India, effective from 12th January 2015 the Company is liable to contribute to the District Mineral Foundation (DMF) & National Mineral Exploration Trust (NMET) sums equal to 30% and 2% respectively of its royalty expenses. Accordingly a sum of Rs.34.04 crore and Rs.2.27 crore (including Rs.6.10 crore and Rs.0.41 crore for earlier period) have been recognized as expenses in the current year and taken as liability towards contribution payable to DMF & NMET respectively.

Note No.5: Exceptional Item

The Company has received an amount of Rs.53.45 crore (USD 8.05 million) from M/s Peak Chemicals towards final settlement of risk and cost claim on them due to non-supply of Caustic Soda. The income is recognized as exceptional item.

Note No 6: Impact of ICDS

Income Tax Computation and Disclosure Standards (ICDS) issued by CBDT and made effective from FY 2015-16 have been considered for the purpose of computing tax expenses. However, there is no impact on tax liability of the Company on account of introduction of ICDS.

Note No.7: CSR Expenditure

In terms of Sec 135 of the Companies Act 2013 the CSR obligation of the Company for the year 2015-16 is Rs.26.24 crore against which, the Company has spent Rs.27.17 crore on various CSR activities

Note No 8: Allocation of Coal Mines

i) The Ministry of Coal, Govt. of India, allotted Utkal D & E coal blocks to Nalco in accordance with the provisions of the Coal Mines (Special provisions) Act 2015 and has directed the Nominated Authority to execute the allotment order in favour of the Company on 11th September 2015.

ii) The allotment agreement has been executed by and between the Govt. of India and Nalco in respect of said Utkal D&E coal blocks. As per the terms of allotment agreement, the Company has paid fixed amount of Rs.8.21crore and 1st installment (50%) of the upfront amount of Rs.18.11 crore to the Govt. of India. These are considered as capital advance.

iii) The Company is in the process of acquiring lease-hold and free-hold land required for carrying out mining activities at Utkal D&E coal blocks and has so far paid Rs.91.57 crore to Odisha Industrial Development Corporation towards acquisition of land and to other Govt. agencies for development of infrastructural facilities. The title deed and possession is yet to be passed on to the Company, pending which the amount paid is treated as capital advance.

iv) The amount of Rs.39.34 crore spent till date for development of coal blocks including Rs.34.75 crores spent till the date of earlier de- allocation and expenditure thereafter during deallocation period pursuant to decision of Hon''ble Supreme Court, is included in expenditure during construction under capital work-in-progress.

Note No.9: Leases

a) The Company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha. In connection with the lease, the Company has paid NPV and other related claims, which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per Accounting Policy of the Company.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the Company. The Company has spent an amount of Rs.0.27 crore (previous year Rs.0.26 crore) towards surface and dead rent, which is charged to the statement of profit and loss.

c) The Company performs its port operations on the land taken on lease from Vizag Port Trust. The amount paid towards lease rent Rs.2.63 crore (previous year Rs.2.53 crore) is charged to the statement of profit and loss.

Note No.10: Deposit with Income Tax Authority

The Company has paid demands made by the Income Tax Authority from time to time although disputed in appeal. The aggregate amount of disputed demand is Rs.702.06 crore (previous year Rs. 653.48 crore) which is treated as deposit with income tax authority. Disputes involving demand of Rs.52.14 crore relate to AY 2003-04 & 2006-07 and are pending before Hon''ble Orissa High Court. Disputes involving balance demand amount of Rs.649.92 crore pertain to AY 2005-06 & AY 2007-08 to AY 2013-14 and are lying either before CIT (Appeals) or Income Tax Appellate Tribunal.

Note No.11: Liability for Interest on Water Charges

The Water Resources Department, Government of Odisha, having territorial jurisdiction over the Government water sources raised claims on the Company for water charges and interest on unpaid water charges in terms of The Orissa Irrigation Rules, 1961. While the Company has cleared water charges dues, payment of interest, although provided for, is pending for settlement.

Note No.12: Dues payable to Micro, Small and Medium Enterprises

Dues payable to micro and small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act is as under.

Note No.13: Dividend for the year

Company paid interim dividend @ Rs.1.25 (previous year Rs.1.25) per equity share of Rs.5/- each for the year 2015-16 and provided the liability for payment of proposed final dividend @ Rs.0.75 (previous year Rs.0.50) per equity share for the year. The total amount of dividend for the year is Rs.515.45 crore (previous year Rs.451.02 crore), which is subject to approval by the shareholders in the ensuing Annual General Meeting.

Note No.14: Change in Accounting Policy/ Practice

The employee benefit expenditure on account of contributions towards Nalco Employees'' Benevolent Scheme, Nalco Retirement Welfare Scheme and Nalco Superannuation Gift Scheme were hitherto recognized on the basis of actual contributions made by the Company. The above items are henceforth considered as part of long-term employee benefits and liabilities are provided as per actuarial valuations. Had there been no such change, profit for the year would have increased by Rs.23.99 crore.

Note No.15: Buyback of Shares:

The Board of Directors in it''s meeting held on 25th May 2016, have approved buyback of not exceeding 64,43,09,628 equity shares of the Company at a price of Rs. 44/- per share subject to approval of shareholders of the Company by way of a special resolution through Postal Ballot and all other applicable statutory approvals.

Note No.16: Regrouping of previous year''s figures

Previous year''s figures have been regrouped or rearranged wherever considered necessary to make them comparable.

Note No.17: Related Party Disclosures

53.1 Related Parties

A) Joint Ventures

a) Angul Aluminium Park Pvt. Ltd.

b) NPCIL-NALCO Power Co. Ltd

c) GACL-NALCO Alkalies & Chemicals Pvt Ltd.

B) Co-venturer/ Investors in Joint Venture Company

a) Gujarat Alkalies & Chemicals Ltd.

C) Key Managerial Personnel:

i) Whole-time Directors

(a) Shri Ansuman Das (upto 30.04.2015) Chairman-cum-Managing Director

(b) Dr. T K Chand (w.e.f. 27.07.2015) Chairman-cum-Managing Director

(c) Shri N R Mohanty Director (Project & Technical)

(d) Shri S C Padhy Director (Human Resources)

(e) Shri K C Samal Director (Finance)

(f) Ms. Soma Mondal Director (Commercial)

(g) Shri V Balasubramanyam Director (Production)

ii) Others

(a) Shri K N Ravindra Executive Director-Company Secretary

D) Part-time Official Directors: (Nominee of Govt. of India):

(a) Dr. N K Singh, IFS (upto 22.12.2015)

(b) Shri R Sridharan, IAS

(c) Shri N B Dhal, IAS (w.e.f. 23.12.2015)

E) Part time non official (Independent) Directors:

(a) Shri Qaiser Shamim (upto 09.07.2015)

(b) Shri Sanjiv Batra (upto 09.07.2015)

(c) Shri S Sankararaman (w.e.f. 21.11.2015)

(d) Shri Pravat Keshari Nayak (w.e.f. 21.11.2015)

(e) Shri Maheswar Sahu (w.e.f. 21.11.2015)

(f) Shri Dipankar Mahanta (w.e.f. 21.11.2015)

(g) Prof. Damodar Acharya (w.e.f. 21.11.2015)


Mar 31, 2015

Particulars Figures as at the Figures as at the end end of current of previous reporting period reporting period

Note 1 : Contingent Liabilities not provided for

Claims against the company not acknowledged as debts :

1. Sales tax 445.60 438.02

2. Excise duty 83.35 142.55

3. Customs duty 5.77 7.99

4. Service tax 2.26 1.62

5. Income tax 1,079.37 817.55

6. Entry tax and Road tax 214.46 186.01

7. Land acquisition and interest there on 43.83 50.73

8. Stamp duty 211.64 211.64

9. Demand from Dept. of mines Govt. of Odisha 90.05 0.48

10. NPV and related expenses under mining lease 106.04 106.04

11. Claims of contractor''s suppliers & others 163.27 114.06

12. Employee state insurance 0.32 0.32

13. Provident fund commissioner 0.05 0.08

Total : 2,446.01 2,077.09

Claims against the company not acknowledged as debts includes:

a. Demand from various statutory authorities towards Income Tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, Entry Tax and other government levies. The company is contesting the demand at appealate authorities. It is expected that the ultimate outcome of these proceddings will not have any material adverse effect on the company''s fnancial position and results of operation.

b. Claims ofcontractors'' for supply of material/services pending with arbitration/courts those have arisen in the ordinary course of business. The company reasonably expect that these legal actions when ultimately concluded and determined will not have material adverse effect on the company''s results of operation or fnancial condition.

Note 2 : Capital and other commitments

a) Capital Commitments

Estimated amount of contracts on capital account and not provided for, remaining to be executed. 207.54 357.15

b) Other Commitments

The company has imported capital goods under the Export promotion capital goods scheme(EPCG) of the Govt. of India at concessional rates of duty under the scheme to fulfill quantified exports for duty saved Rs. 8.90 crore(previous year Rs. 53.34 crore). 53.41 423.84

Total : 260.95 780.99

D. General description of various defined benefit schemes are as under

(i) Provident Fund : The company pays fxed contribution to Provident Fund at predetermined rates, to a separate trust, which invests the funds in permitted securities.On contributions, the trust is required to pay a minimum rate of interest, to the members, as specified by Govt.of India. Where the trust is unable to pay interest at the declared rate for the reasons that the return on investment is less or for any other reason, then the deficiency shall be made good by the company.

(ii) Pension Fund : The company pays fxed contribution to the trustee bank of PFRDA,which in turn invests the money with the insurers as specified by the employee concerned.The company''s liability is limited only to the extent of fxed contribution.

(iii) Gratuity : Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of Rs. 10,00,000/-. The gratuity scheme is funded by the company and is managed by a separate trust.The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit : The benefit is available to retired employees and their spouses who have opted for the benefit.Medical treatment as an inpatient can be availed from the company''s hospital/Govt.Hospital/ hospitals as per company''s rule.They can also avail treatment as out patient subject to ceiling limit of expenses fxed by the company.The liability under the scheme is recognised on the basis of actuarial valuation.

(v) Settling-in- Benefit : On superannuation /retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family for the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible.The liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA.The liability for the same is recognised on the basis of actuarial valuation.

(vii) NEFFARS : In the event of disablement/death,the company pays monthly benefit to the employee/ nominee at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation.The liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment : The accumulated earned leave,half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the company.During the service period encashment of accumulated leave is also allowed as per company''s rule.The liability for the same is recognised on the basis of actuarial valuation.

Note No. 3. Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power equal to 6.5% (Previous year 6%) of its total consumption from renewable sources comprising of 4.45% (Previous year 4.20%) from Co- generation, 0.25% (Previous Year 0.20%) from Solar renewable source and 1.80% (previous year 1.60%) from Non solar renewable source.

a) The company has fulfilled the Co-generation obligation for the year 2014-15 through generation of power from Steam & Power Plant at Refinery Plant.

b) The company has also fulfilled its Non solar obligation (through wind power generation) for the current year and part obligation for previous years. Cumulative Non solar obligation as on 31.3.2015 is Rs.4.21 Crore (previous year Rs.15.54 crore) towards 28,080 (previous year 1, 03,656 ) numbers of Non-solar REC.

c) Due to non-fulfillment of the obligation to generate required quantum of power from renewable source of Solar the company has provided cumulative liability up to 31.3.2015 for Rs.14.22 crore (previous year Rs.24.98 Crore) towards 40,637 ( previous year 26,855) numbers of Solar REC valued @ Rs.3,500 (previous year Rs.9,300) per certificate.

Note No. 4. Settlement of Disputed Electricity Duty and Interest thereon

During the year, there was out of court settlement by the Company with Govt of Odisha with regards to disputed Electricity duty, Interest on unpaid Electricity Duty and Electricity duty on Transmission and Transformation loss. As per settlement, the unpaid electricity duty in respect to auxiliary consumption and differential duty is fully paid amounting to Rs. 520.02 crore after adjustment of Electricity duty on Transmission and Transformation loss of an amount of Rs. 38.81 Crore.

Out of the Interest liability on the unpaid electricity duty and interest earned on FD/ Escrow (deposited as per court order) up to the date of settlement amounting to Rs. 355.08 Crore, an amount of Rs. 352.11 Crore has been paid leaving Rs. 2.97 crore to be paid subsequently.

After the settlement, the excess amount provided in the accounts over and above the settled amount is written back, thereby increasing the profit by Rs. 196.82 Crore (current year Rs. 48.40 crore and earlier years Rs. 148.42 Crore). The expenditures for earlier years it is treated as exceptional items (Ref Note 30).

Note No 5. Asset Componentization:

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 and above in each case except Hydrate process at Alumina Refinery and thermal power generation plant at CPP For Hydrate process the componentization under each sub process is based on % of its constituent elements and for Thermal power generation plant at CPP, the componentization is based on broad billing break up by the equipment provider M/s BHEL.

Note No 6. Effect of schedule-II-Transitional provision

In accordance with Schedule-II of the Companies Act, 2013, the company has revised the useful life of the fxed assets. As per the transitional provision the company has adjusted Rs.160.46 crore towards carrying amount of assets where the remaining useful life is nil to opening balance of Reserve & Surplus and deferred tax liability by Rs.105.92 crore and Rs.54.54 Crore respectively.

Apart from the above, due to revision of useful life of the fxed assets in compliance to Schedule-II of the Companies Act, 2013, on account of lower depreciation, profit for the year increased by Rs 130.13 crore.

Note No.7. CSR Expenditure

In terms of Sec 135 of the Companies Act, 2013, the CSR obligation of the Company for the year 2014-15 works out to to Rs.20.14 crore, the Company has spent Rs.19.09 crore (includes capital expenditure of Rs. 0.83 Crore towards renewable energy) on various CSR activities leaving an obligation of Rs.1.05 crore to be spent in the succeeding years which has been provided in Accounts.

Note No 8. Utkal E Coal Block

Utkal E Coal Block was allotted to Nalco by Govt. of India. The Company has paid Rs. 91.57 Crore to M/s Odisha Industrial Development Corporation for acquisition of land and other Govt. Agencies for development of infrastructural facilities. Besides the company has spent Rs. 34.75 Crore towards infrastructural development expenses for Utkal E Coal Block. The process of alienation of land in the name of Nalco is yet to be completed. Pursuant to The Coal Mines (Special Provisions) ordinance, 2014 issued by GOI dated 21st October 2014, consequent upon de-allocation of Utkal E Coal Block, the amount of Rs. 34.75 crore spent on development of infrastructure expenses till the date of de-allocation has been put under claim with Government of India. Such expenditure incurred after the date of de-allocation is charged to revenue.

The company has applied for reallocation of Utkal E Coal Block in its favour and the matter is being pursued with Government of India.

Note No. 9: Jointly Controlled assets

The Company has entered in to an MOU with M/s Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for drawing power for their plants.

The facility shall be used exclusively by the beneficiaries. The operation and maintenance expenses shall also be shared proportionately by the co-beneficiaries. Following are the disclosure in compliance to AS27.

a. Name of the asset 220 KV switching at Laxmipur

b. Nature of Asset Electrical Installation

c. Nature of benefit envisaged Drawing power for plant operation through Feeder

d. Total Value of the work Rs.53.97 Crore ( previous year Rs.45.70 crore)

e. Nalco''s share in joint asset 33.33% (1/3rd)

f. Value of asset capitalized Rs.17.99 Crore (previous year Rs.15.23 crore)

g. Liability as on 31.3.2015 Rs.4.40 Crore (previous year Rs.3.99 crore)

h. Income from sale/use of output Nil

i. Expenses in respect of Nalco''s interest Nil

Note No.10 Operating Leases:

a) The company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha. In connection with lease renewal, the company has paid NPV and related payments which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per the Accounting policies of the company.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the company. The company has paid an amount of Rs.0.26 crore (previous year Rs.0.19 Crore) towards surface and dead rent and charged to statement of profit and loss of the respective year.

c) The port facilities is being operated on the land taken on Lease from Vizag Port Trust. The amount spent during the year is T2.53 crore (previous year Rs.2.58 Crore).

Note No.11. Dividend for the year:

11.1 The Company has paid interim dividend of Rs.1.25 per equity share of Rs.5/-each for the year 2014-15 (previous year Rs.1.10 per equity share of Rs.5/- each).

11.2 The provision for fnal dividend of Rs.0.50 per equity share of Rs.5/- each is made for the year 2014-15 (previous year Rs.0.40 per equity share of Rs.5/- each) .

11.3 Total dividend for the year 2014-15 works out to Rs.1.75/- per equity share of Rs.5/- each (previous year Rs.1.50 per equity share of Rs.5/- each).Total amount of proposed dividend for the year 2014-15 is Rs.451.02 crore (previous year Rs.386.59 crore).

Note No.12. Change in Accounting Policy/ Practice:

12.1. a) Increase in the minimum asset value for 100% depreciation in the year of acquisition from Rs.5,000 to Rs.10,000 in each case. The above change in accounting policy has led to increase in the depreciation expenditure for the current year by an amount of Rs.4.27 Crore.

b) Life of Intangible Assets License (RTA technical knowhow) has been changed from 18 years to 10 years. Besides, life of 220 KV switching station (jointly controlled Assets) earlier considered as tangible fxed assets to be amortized over 5 years has been changed as Intangible assets (User License) to be amortized over 10 years. The above change in accounting policy has led to net increase in the depreciation expenditure for the current year by an amount of Rs.0.17 Crore.

Note No.13. Regrouping of previous year''s fgures:

Previous year''s fgures have been regrouped/rearranged wherever necessary to make them comparable.


Mar 31, 2014

(Rs. in Crore) Particulars Figures as at the Figures as at the end of current end of previous reporting period reporting period

Note 1 : Contingent Liabilities not provided for

Claims against the company not acknowledged as debts :

1. Sales tax 438.02 534.81

2. Excise duty 142.55 169.17

3. Customs duty 7.99 0.92

4. Service tax 1.62 -

5. Claims of contractor''s suppliers & others 114.06 185.83

6. Land acquisition and interest there on 50.73 49.30

7. Income tax 817.55 486.19

8. Entry tax and Road tax 186.01 147.92

9. Employee state insurance 0.32 0.32

10. Provident fund commissioner 0.08 0.08

11. Royality 0.48 0.48

12. Stamp duty 211.64 -

13. NPV and related expenses under mining lease 106.04 106.71

Total : 2,077.09 1,681.73

D. General description of various defined benefit schemes are as under :

(i) Provident Fund : The company pays fixed contribution to Provident Fund at predetermined rates, to a separate trust, which invests the funds in permitted securities. On contributions, the trust is required to pay a minimum rate of interest ,to the members, as specified by Govt. of India. Where the trust is unable to pay interest at the declared rate for the reasons that the return on investment is less or for any other reason, then the deficiency shall be made good by the company.

(ii) Pension Fund : The company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insurers as specified by the employee concerned. The company''s liability is limited only to the extent of fixed contribution.

(iii) Gratuity : Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of Rs.10,00,000/. The gratuity scheme is funded by the company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit : The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the company''s hospital/Govt.Hospital/hospitals notified by the company. They can also avail treatment as out-patient subject to ceiling limit of expenses fixed by the company. The liability under the scheme is recognised on the basis of actuarial valuation.

(v) Settling-in-benefit : On superannuation /retirement/termination, the employees who have opted for the benefit and/or family shall be entitled to get travelling allowance as fixed by the company (as per TA rule) from the last headquarters to the home town or any other place of settlement. The liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA. The liability for the same is recognised on the basis of actuarial valuation.

(vii) NEFFARS : In the event of disablement/death,the company pays monthly benefit to the employee/legal heir(s) at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation. The liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment : The accumulated earned leave, half pay leave & sick leave is payble on separation, subject to maximum permissible limit as prescribed in the leave rules of the company.During the service period encashment of accumulated leave is also allowed as per company''s rule.The liability for the same is recognised on the basis of actuarial valuation.

Note No.2.Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power 6% (Previous year 5.5%) of its total consumption from renewable sources comprising of 4.20% (Previous year 3.95%) from Co- generation, 0.20% (Previous Year 0.15%) from Solar renewable source and 1.60% (previous year 1.40%) from Non solar renewable source.

a) The company has fulfilled the requirement of its Co-generation obligation for the year 2013-14 through co-generation of power fromSteam & Power Plant at Refinery Unit.

b) On complete commissioning and generation of wind power at Gandikota (AP) and Jaisalmer (Rajsthan) the company has fulfilled its Non solar obligation (through wind power generation) for the current year and part obligation for previous years. Cumulative Non solar REC obligation as on 31.3.2014 is Rs.15.54 Crore towards 1, 03,656 numbers of Non-solarREC.

c) Due to non-fulfillment of the obligation to generate power from renewable source of Solar the company has provided cumulative liability up to 31.3.2014 for Rs.24.98 Crore towards 26,855 numbers of Solar REC.

Note No. 3: Electricity Duty

As per the Judgment of Hon''ble High Court of Orissa dated 6th May 2010 (OJC No 966 of 2001), Electricity duty is a consumption based levy. Power lost in the course of transmission from the point of generation to the point of consumption is not subject to levy of Electricity duty.

Electricity Duty on power consumed out of generation from Captive Power Plant,Angul and Steam & Power Plant at Refinery is considered after allowing transmission loss @ 5.421% and 12.47% of gross generation respectively based on in-house technical estimation. The technical estimation is not accepted by the State Govt. The claim for refund of duty paid up to 31.3.2014 amounts to Rs. 94.55 Crore (up to previous year Rs. 90.17 Crore) which could not be pursued due to Interim Order of Hon''bleSupreme Court.

Note No. 4: Jointly Controlled assets

The Company has entered in to an MOU with M/s Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for drawing power to their respective premises.

The facility shall be used exclusively by the beneficiaries. The operation and maintenance expenses shall also be shared proportionately by the co-beneficiaries. Following are the disclosure in compliance toAS27:

a. Name of the asset : 220KV substationat Laxmipur

b. NatureofAsset : Electrical Installation

c. Natureof benefit envisaged : Drawing power for plant operation through feeder

d. Total Valueofthe work : Rs.45.70 Crore

e. Nalco''s shareinjoint asset : 33.33% (1/3rd)

f. Valueofasset capitalized : Rs.15.23 Crore

g. Liabilityason31.3.2014 : Rs.3.99 Crore h. Income from sale/useofoutput : Nil

i. Expenses in respect of Nalco''s interest : Nil

NoteNo.40 Operating Leases:

a) The company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha renewable after every 20 years. In connection with lease renewal, the company has paid NPV and related payments which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per the Accounting policies of the company for intangible assets.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the company. The company has paid an amount of Rs. 0.19 crore (previous year Rs. 0.16 Crore) towards surface and dead rent and charged to statement of profit and loss of the respective year.

Note No.5. Dividend for the year:

5.1 The Company has paid interim dividend of Rs. 1.10 per equity share of Rs. 5/- each for the year 2013-14 (previous year Rs. 0.75 per equity share of Rs. 5/- each).

5.2 The provision for final dividend of Rs. 0.40 per equity share of Rs. 5/- each is made for the year 2013-14 (previous year Rs. 0.50 per equity share of Rs. 5/- each) .

5.3 Total dividend for the year 2013-14 works out to Rs. 1.50/- per equity share of Rs. 5/- each (previous year Rs. 1.25 per equity share of Rs.5/-each).Total amount of proposed dividend for the year 2013-14 isRs.386.59 crore (previous yearRs.322.15 crore).

Note No.6. Change in Accounting Policy/ Practice:

6.1. InclusionofCaptive power generationinAluminium Segment.

Nature of Change:

Captive generation of power is an integral part of Aluminium metal production in the Smelter plant. Aluminium smelting is power intensive and accordingly the project was conceived with adequate captive generation of power as the aluminium smelter is not viable without captive power support. Every capacity increase in CPP is directly related to capacity increase in aluminum smelter. Of late Smelter operation with purchase of power from State (Grid) will not be economically viable and is not part of the business model. Sustained power supply at reasonable cost is one of the predominant sources of risk and return for Aluminium smelter. It can influence the risk and return to a larger extent.As such, major strategic or managerial decisions concerning either of the plant are interdependent.

Accordingly, the policy of reporting Captive power generation as a separate reportable segment has been dispensed. Power generation at CPP for captive consumption for Aluminium production is included in Aluminium segment.

Previous year''s figures have been recasted accordingly to make it comparable.

6.2. Change in price for transfer of Alumina from Chemical Segment to Aluminium Segment and transfer of powerfromAluminiumsegmenttoChemicalsegment

Nature of Change:

Inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. In other words, the price that is actually used in the books of account to reflect the transaction between different segments and the price that is used to reflect segment results for the purpose of segment reporting under AS 17, should be same.Accordingly the following change in policy has been brought from current year.

a) Transfer price ofAlumina from Chemical segmenttoAluminium Segment Old: Lower of average price from export sales during the period less freight and cost plus 15.50% return on investment on gross fixed assets

New: Average sales realization from export sales during the period less freight from Refinery to Port at Vizag plus export incentive.

b) Transfer of Power fromAluminium Segment to Chemical segment Old: Lower of average sales price to GRIDCO and cost plus 15.50% return on investment on gross fixed assets. New:Annual/ periodic average purchase price of power from state GRID at Alumina Refinery. Previous year''s figures have been recasted accordingly to make it comparable.

Note No.7. Regrouping of previous year''s figures:

Previous year''s figures have been regrouped/rearranged wherever necessary to makethem comparable.

Note No.45 RelatedParty Disclosures:

7.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below:-

i) Whole timeDirectors:

(a) ShriAnsuman Das

(b) Shri B.L. Bagra (up to 01.05.2013)

(c) Shri S.S. Mahapatra

(d) Shri N.R. Mohanty

(e) Shri S.C. Padhy

(f) Shri K C Samal (from 3.1.2014)

(g) Ms Soma Mondal (from 11.3.2014)

ii) Part timeOfficialDirectors: (NomineeofGovt.ofIndia):

(a) Ms. Gauri Kumar, IAS (up to 1.7.2013)

(b) Shri R Sridharan, IAS (from 30.8.2013)

(c) Shri D S Mishra,IAS (Upto 22.04.2013andfrom 04.07.2013)

iii)Part timenon official (Independent) Directors:

(a) Shri Ved Kumar Jain ( up to 20.3.2014)

(b) Shri P.C. Sharma, IAS (Retd.) (up to 20.3.2014)

(c) Shri G.P. Joshi, IAS (Retd.)

(d) Shri S.S. Khurana

(e) Shri Madhukar Gupta, IAS (Retd)

(f) ShriGHAmin

(g) Shri Qaiser Shamim

(h) Shri Sanjiv Batra

iv) The company has interest in joint ventureAngul Aluminium Park Pvt Ltd. and NPCIL-NALCO Power Company Ltd. with 49.5% and 26% share holding respectively. During the year the company has not made any transaction with the JVs (Previous year Nil)


Mar 31, 2013

Note No.1. Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power for 5.50% (Previous year 5.00%) of its total consumption from renewable sources comprising of 3.95% (Previous year 3.70%) from Co-generation, 0.15% (Previous Year 0.10%) from Solar renewable source and 1.40% (previous year 1.20%) from Non-solar renewable source. The company has fulfilled the requirement of its Co-generation obligation for the year 2012-13 through co-generation of power from Steam Power Plant at Refinery Unit.

The Company has provided an amount of Rs. 19.59 Crore (Previous Year Rs. 29.29 crore) towards Renewable Purchase Obligation (RPO) for the year due to non-fulfillment of the obligation to generate power from renewable source of Solar and Non-solar. The obligation towards Solar and Non-solar obligation as on the end of the year has been valued at weighted average price of respective certificates quoted at I EX and PXIL.

Note No 2: Extra claim by GRIDCO towards billing @ 15 minutes slot:

During the year M/s. GRIDCO has raised claim of Rs. 15.56 crore ( from Dec'' 2011 to Jan 2013) on the company towards extra charges on account of billing @ 15 minutes slot (injection by CPP and drawal at Refinery at every 15 minutes slot). The extra amount is claimed by GRIDCO considering the part of power wheeled by the Company for its Refinery Unit as inadvertent power. While recognizing the amount, the inadvertent power as claimed by GRIDCO is considered as sale of Power by the company at the price considered by GRIDCO. To that extent the quantity of Power drawal at Refinery has been considered as Purchase power. The company has recognized the above claim of GRIDCO including estimated additional liability up to the month of March 2013 amounting to Rs. 17.12 Crore.

Note No. 3:Jointly Controlled assets:

The Company has entered in to an MOU with M/s. Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for supply of power to their respective premises. Each beneficiary shares the capital expenditure in equal proportion. Total amount of investment in jointly controlled asset by the Company as on 31.3.2013 is Rs. 8.13 crore and included in Capital work in progress. The facility shall be used exclusively by the beneficiaries and the operation and maintenance expenses shall also be jointly shared.

Note No.4.Dues payable to Micro, Small and Medium Enterprises:

Dues payable to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act is as under :

Note No.5.Dividend for the year:

5.1 The Company has paid interim dividend of Rs. 0.75 per equity share of Rs. 5/- each for the year 2012-13 (previous year Rs. 0.90 per equity share of Rs. 5/- each).

5.2 The provision for final dividend of Rs. 0.50 per equity share of Rs. 5/- each is made for the year 2012-13 (previous year Rs. 0.10 per equity share of Rs. 5/- each) .

5.3 Total dividend for the year 2012-13 works out to Rs.1.25/- per equity share of Rs. 5/- each (previous year Rs. 1/- per equity share of Rs. 5/- each).Total amount of proposed dividend for the year 2012-13 is Rs. 322.15 crore (previous year Rs. 257.72 crore).

Note No.6. Change in Accounting Policy/ Practice:

6.1. Increase in limit of prior period and prepaid expenses.

During the year, limit for Pre-paid transaction has been increased from Rs. 1.00 lakh in each case to Rs. 5.00 lakh in each case. This change in policy has resulted decrease in profit for the year by Rs. 0.19 Crore.

During the year, limit for Prior Period transaction has been increased from Rs. 1.00 lakh in each case to Rs. 5.00 lakh in each case. Due to this change in policy, there is no change overall profitability of the company for the current year. However the change in policy has resulted in regrouping of figures between current year expenses and prior period expenses by Rs. 0.43 Crore.

6.2. Change in treatment of Government Grant by transferring from capital reserve to subsidy reserve.

Fixed assets acquired out of financial grant from Government are shown at cost by crediting the grant in aid received to capital reserve up to last year and the corresponding depreciation on the said asset for each year was adjusted between capital reserve and General Reserve/surplus.

During the year the amount of depreciation on the said assets has been reduced by transferring equal amount from Subsidy Reserve.

Impact of this change in policy have resulted increase in profit by Rs. 0.05 crore.

Note No.7.Regrouping of previous year''s figures:

Previous year''s figures have been regrouped/rearranged wherever necessary to make them comparable.

Note No.8 Related Party Disclosures:

8.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below:-

i) Whole time Directors:

(a) Shri Ansuman Das

(b) Shri B.L. Bagra

(c) Shri S.S. Mahapatra

(d) Shri N.R. Mohanty

(e) Shri S.C. Padhy (w.e.f. 20.12.2012)

(f) Shri Joy Varghese (Up to 31.08.2012)

(g) Shri A.K. Srivastava (up to 11.12.2012)

ii) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri S.K. Srivastava, IAS (Up to 24.09.2012)

(b) Shri Arun Kumar, IAS (from 30.04.2012 to 26.02.2013)

(c) Ms. Gauri Kumar, IAS (w.e.f.24.09.2012)

(d) Shri Durga Shanker Mishra, IAS (w.e.f.26.02.2013)

iii) Part time non official (Independent) Directors:

(a) Shri Ved Kumar Jain

(b) Shri P.C. Sharma, IAS (Retd.)

(c) Shri G.P. Joshi, IAS (Retd.)

(d) Shri S.S. Khurana

(e) Shri Madhukar Gupta, IAS (Retd.)

(f) Shri G.H. Amin

(g) Shri Qaiser Shamim (w.e.f.10.07.2012)

(h) Shri Sanjiv Batra (w.e.f.10.07.2012)


Mar 31, 2012

Note 1: Share Capital

a) The Government of India holds 224,59,98,540 equity shares (87.15%) of the total equity shares of the Company and no toher shareholder of the Company holds more than 5 percent of the equity shares(Previous year same).

b) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

c) During the financial year 2010-11, the company has issued 128,86,19,256 equity shares as fully paid bonus shares. Other than the said bonus issues, the company has not issued/bought back any equity shares in the last 5 years. the bonus issues was made subsequent to splitting up of shares from the face value of Rs. 10/- each into 2 equity shares of Rs. 5/- each in the said year.

Note 2: Contingent Liabilities not provided for

Particulars Figures as at Figures as at the end of the end of current previous reporting reporting period period

Claims against the company not acknowledged as debits:

1. Sales Tax 470.37 456.67

2. Excise Duty 112.68 294.56

3. Customs Duty 0.62 0.68

4. Claims of Contractors' Suppliers & Others 98.90 153.42

5. Land acquisition and interest there on 47.89 46.50

6. Income Tax & wealth Tax 361.16 276.50

7. Entry Tax and Road Tax 110.09 78.20

8. Employee State Insurance 0.40 0.32

9. Provident Fund Commissioner - 0.05

10. Royalty 0.48 15.48

11. NPV and related expenses under mining lease 108.04 59.82

Total 1,309.08 1,382.20

Note 3: Employee Benefit Expenses

D. General description of various defined benefit schemes are as under:

(i) Provident Fund: The company pays fixed contribution to Provident Fund, at pre-determined rates, so a separate trust, which invests the funds in permitted securities. On contributions the trust is required to pay a minimum rate of interest, to the members, as specified by Govt. of India. The obligation of the Company is limited to the shortfall in the rate of interest on the contribution based on its return on investments as compared to the declared rate.

(ii) Pension Fund: The Company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insuries as specified by the employee concerned. The Company's liability is limited only to the extent of fixed contribution.

(iii) Gratuity: Gratuity payable to employees who render continues service of years or more, on separation at 15 days of last drawn pay (basic plus DA) for each completed years of service subject to a minimum of Rs. 10,00,000/-. the gratuity scheme is funded by the Company and are managed by a separate trust. the liability for under gratuity scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit: The benefit is available to retired employees and their spouses in the Company's hospital/Govt. Hospital/hospital notified by the Company. they can also avail treatment as out patient subject to ceiling fixed by the Company. the liability under the scheme is recognised on the basis of actuarial valuation.

(v) Retirement Benefit: on superannuation/retirement/termination the employees and/or family shall be entitled to get travelling allowance as fixed by the Company (as per TA rule) from the last headquarters to the home town or any other place of settlement. the liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward: The employees who complete 25 years of service are entitled for long service which is equal to one month basic pay. The liability for the same is recognised on the basis of actuarial valuation.

(viii) NEFARS: In the event of disablement/death, the Company pays monthly benefit to the employees/legal heir at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of national superannuation. the liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment: the accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed once in a calendar year subject to limits. The liability for the same is recognised on the basis of actuarial valuation.

Note No. 4 : Land & Building:

4.1 Title deeds have been executed tor freehold lend acquired through Stale Government, except for land measuring 17.25 acres. Process of conversion of freehold lend for Industrial use has been taken-up with Revenue Authorities.

4.2 Leasehold land Includes 1238.63 acres of land in respect of which lease deeds are yet to be executed. However, the Company has been permitted by the State Government to carry on its operations on the said land.

4.3 Registration formalities in respect of office space for 6,450 Sq.ft purchased from Kolkata Municipal Development Authority, valuing Rs. 5.50 Crore in Kolkata is under process.

Note No.5 : Compensation to land displaced persons:

In order to compensate substantially land effected persons (SAP's) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the area of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by State Government for the purpose. Compensation paid/payable to such SAPs as on 31.03.2012 is Rs. 7.69 crores.

Note No.6 : Investments Joint Ventures and New Projects:

6.1 The Company has entered in to a joint venture with IDCO (A Govt. of Odisha Undertaking) under the name and style "Angul Aluminium Park Pvt Ltd, in the share holding pattern between NALCO and IDCO in the ratio of 49.5% and 50.5% respectively. As on date, the Company has paid Rs. 0.99 crore towards equity contribution. The payment towards equity contribution has been shown under the head 'investments'.

6.2 The Company has also entered in to a Joint venture with Nuclear Power corporation of India Limited (PJPClL) under the name & style of NPCIL-NALCO Power Company Limited incorporated on 2nd March, 2012 in which NALCO has 26% stake. No equity contribution has been made by NALCO till 31.03.2012.

6.3 The Company has paid Rs. 151 crore to Gujarat Mineral Development Corporation Ltd (GMDC) towards upfront payment while bidding for a new project for establishing Alumna Refinery and Aluminium Smeller with supply of Bauxite by GMDC. The decision of GMDC on the bid is awaited.

Note No. 7.: Exceptional Item:

7.1 Employee Benefit

Performance Related Pay (PRP) payable to Executives w.e.f. financial year 2007-06 was finalized during the year. The additional impact over and above the liability provided up to 31.03.2011 works out to Rs. 54.77 crore mainly due to certain new clarification issued by Govt of India during the year. As per the long term wage settlement for unionized employees, contribution for pension benefit under New Pension scheme up to 31.03.2011 has been provided in the current year amounting to Rs. 85.84 Qaiser

7.2 Electricity Duty:

Based on the Judgment of Hon'ble High Court of Odisha, Transformer end Transmission Loss of power is not subject to levy of Electricity Duty and amount paid, if any is refundable. The unpaid of liability provided on this account up to last year amounts to Rs. 118.71 crore, written back now.

The above amounts being material and relevant to users for understanding the financial performance, the same has been considered exceptional terms. The net impact is additional expenditure of Rs. 21.90 Qaiser

Note No. 8 : Pay Revision of Unionized Employees:

5th Long Term Wage Settlement of Unionized employees was finalized and implemented during the year. Additional amount of Rs. 45.54 crore over and above the liability provided up to last year (Rs. 395 crore) has been charged to current year accounts.

Note No.9 : Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, NALCO, being en obligated entity has the obligation to generate power for 5% of its total consumption from renewable sources comprising of 3.70% from co-generation. 0.10% from Solar renewable source and 1.20% from Non solar renewable source. The company has fulfilled the requirement of its co-generation obligation for the year 2011-12 through co-generation of power from Steam Power Plant at Refinery Unit.

The Company has spent and provided en amount of Rs. 29.20 crore towards Renewable Purchase Obligation (RPO) to the year due to non-fulfillment of the obligation to generate power from renewable source of Solar end Non-solar, as detailed below.

a) Procurement of REC against Non-solar obligation - Rs. 8.93 crore

b) Balance liability or Non-solar obligation - Rs. 12.81 crore

c) Liability for solar obligation - Rs. 7.46 crore

Total: - Rs. 29.20 crore

An appeal, however, is pending before OERC to postpone RPO for the year to next year.

Note No.10 : Dividend for the year:

10.1 The Company has paid interim dividend of Rs. 0.90 per equity share of Rs. 5/- each for the year 2011-12 (previous year Rs. 2/- per equity share of Rs. 10/- each before splitting and bonus Issue, which is equivalent Rs. 0.50/- per equity share of Rs. 5/- each).

10.2 The provision for final dividend of Rs. 0.10 per equity share of Rs. 5/- each is made for the year 2011-12 (previous year Rs. 0.50/- per equity share of Rs. 5/- each after splitting and bonus issue).

10.3 Total dividend for the year 2011-12 worts out to Rs. 1/- per equity share of Rs. 5/- each {previous year Rs. 1/- per equity share of Rs. 5/- each Total amount of proposed dividend for the year 2011-12 is Rs. 257.72 crore (previous year Rs. 257.72 crore).

Note No.11: Regrouping of previous year's figures:

Previous year's figures have been regrouped/rearranged wherever necessary to make them comparable.

Note No.12 : Related Party Disclosures:

12.1 As per AS-18 on "Related Party Disclosures* issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below.

i. Whole time Directors:

(a) Shri A.K. Srivastava

(b) Shri B.L. Bagra

(c) Shri Joy Varghese

(d) Shri A.K. Sharma (Up to 30.09.2011)

(e) Shri P.K. Padhi (Up to 31.01.2012)

(f) Shri Ansuman Das

(g) Shri S.S. Mohapatra (w.e.f 01.10.2011)

(h) Shri N.R. Mohanty (w.e.f. 01.02.2012)

ii) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri S.K. Nayak, IAS (Up to 05.09.2011)

(b) Shri S.K. Srivastava, IAS

iii) Part time Official (Independent) Directors:

(a) Shri Ved Kumar jain

(b) Shri P.C. Sharma, IAS (Retd.)

(c) Shri G.P. Joshi, IAS (Retd.) (w.e.f. 15.09.2011)

(d) SHri Madhukar Gupta, IAS (Retd.) (w.e.f. 27.12.2011)

(f) Shri G.H. Amin (w.e.f. 27.12.2011)


Mar 31, 2011

1. Balance Sheet:

1.1 Share capital:

As per approval in the Extra Ordinary General Meeting of the company held on 5th March 2011, the following changes in the share capital has taken place during the year:

i) Increase in authorized share capital of the Company from Rs. 1,300 crore to Rs. 3,000 crore.

ii) Splitting up of shares of the Company from the face value of Rs. 10/- each into two equity shares of Rs. 5/- each.

iii) Issue of Bonus share to the existing share holders of the Company in the proportion of l(one) Bonus Share for every 1 (one) existing fully paid up equity share held.

iv) Provision in Articles of Association for offer of shares to the employees of the Company under employee stock option plan (ESOP).

With the above change, the authorized share capital of the Company is 6,00,00,00,000 equity share of Rs. 5/- each and paid up equity share capital after the bonus issue is Rs. 1288,61,92,560/- comprising of 257,72,38,512 equity share of Rs. 5/- each.

The Employee Stock Option Plan is yet to be finalized.

Consequent upon splitting of shares and issue of bonus shares, EPS for the year is Rs. 4.15 and the previous Financial Year figure is restated toRs.3.16 (earlierRs. 12.64).

1.2 Land & Building:

a) Freehold land includes land acquired through Government of Odisha, for which relevant title deeds have been executed except for land measuring Rs. 17.25 acres. Process of conversion of freehold land for Industrial use has been taken-up with Revenue Authority.

b) Leasehold land includes 1256.84 acres of land in respect of which lease deed are yet to be executed. However, the Company has been permitted by the Government to carry on its operations on the said land.

c) Registration formalities in respect of office space for 6,459 Sq.ft purchased from Kolkata Municipal Development Authority, valuing Rs. 5.50 Crore in Kolkata is under process.

1.3 NPV and related payments.

The company has received demand of Rs. 196.46 crore towards NPV, being the present value of expenditure to be incurred by forest authorities in future on forest land leased to the company, and related payments at the time of renewal of lease. A sum of Rs. 104.68 crore has been paid on this account and is being 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. A sum of Rs. 46.23 crore has been paid under protest against the part lease surrendered in terms of Para 29 of Mines Concession Rules 1960 under direction of Central Empowered Committee (constituted by Supreme Court of India) under deposits (current assets). The balance unpaid sum of Rs. 46.23 crore has been shown as contingent liability.

1.4 In order to compensate substantially land affected persons (SAPs) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the quantum of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by Government of Odisha for the said purpose. Compensation paid/payable to such SAPs as on 31.03.2011 is Rs. 7.69 crore.

1.5 58 nos of EPCG licences have been obtained between the period from 18.10.2006 to 21.12.2010 for 2nd phase of expansion on payment of concessional import duty. The value of concession availed by paying duty at lower rate amounts to Rs. 220.48 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1* to 6* year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of issue of authorization.

Besides, there is specific export obligation against EPCG license obtained by Rolled Product Unit at angul established earlier as a 100% Export Oriented Unit (EOU) which was debonded w.e.f. 15.05.2007, as one time option to exit from 100% EOU Scheme to EPCG Scheme. The value of concession availed by paying duty at lower rate amounts to Rs. 27.83 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1* to 6* year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of EPCG license.

It is expected that the export obligation over the block period of 1* to 6* year will be fully met out of increased export sales based on additional capacity from expansion plant and expected better market realization during 2011-12.

1.6 The Company has availed Bank Guarantees, Letters of Credit facilities, secured against stock and book debts from State Bank of India, HDFC Bank and ICICI Bank.

1.7 Contingent Liabilities not provided for:(Rs.in crore)

As at As at

31st March 2011 31st March 2010

a) Estimated amount of contracts to be executed on capital account (net of advances and L/Cs opened) 806.16 905.73

b) Letter of Credit Guarantees and counter guarantees 153.94 238.78

c) Claims against the Company not acknowledged as debts:

i) Sales Tax 456.67 442.74

ii) Excise Duty 294.56 253.55

iii) Customs Duty 0.68 3.66

iv) Claims of contractors, suppliers & others 153.42 122.90

v) Land acquisition and interest thereon 46.50 78.00

vi) Unrealized bank guarantees due to court injunctions 0.57 2.55

vii) Income Tax & Wealth Tax 276.50 231.35

viii) Entry Tax and Road Tax 78.20 69.72

ix) Employee State Insurance 0.32 0.32

x) Provident Fund Commissioner 0.05 0.05

xi) Water charges - 2.23

xii) Royalty on bauxite and interest thereon 15.48 15.48

xiii) NPV and related expenses under mining lease 59.82 144.00

TOTAL 1,382.77 1,366.55

1.9 Investment in Joint Venture:

The company has entered in to a joint venture with IDCO (A Govt, of Odisha Undertaking) under the name and style "Angul Aluminium Park Pvt.Ltd." registered on 30.07.2010 under the Companies Act, 1956 in the share holding pattern between NALCO and IDCO in the ratio of 49.5% and 50.5% respectively. As on date the company has paid Rs. 0.99 crore towards equity contribution and Rs. 0.16 crore to meet the preliminary expenses of the Joint Venture. The payment towards equity contribution has been shown under the head 'investments'. The shares are yet to be allotted.

2. PROFIT AND LOSS ACCOUNT:

2.1 Depreciation was charged in respect of main Plant and Machinery and related Factory Buildings and Storage godowns etc., at the rate of 5 per cent up to 31st March 1994, based on estimated useful life of assets being 20 years without retention of 5 per cent residual value. The useful life of these assets has been revised to 18 years to bring it at par with the life of "Continuous process plant" as envisaged in Schedule XIV to Companies Act, 1956. Such change in life of assets has been considered from 1.4.93 i.e. from the year of introduction of "Continuous process plant" in Schedule XIV to Companies Act, 1956. Depreciation rates on all such assets have been recomputed based on guidelines issued under Circular No.14/93 dated, 20.12.93 by Department of Company Affairs, by allocating the unamortized value over the remaining life after retention of 5 per cent residual value except for assets already written off fully.

2.2 The NPV and related payments to Govt, authorities 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. Excess amount amortized up to last year Rs. 8.34 crore has been written back.

2.3 Due to change in operating procedure after ERP implementation, freight and Entry Tax paid on alumina is loaded to cost of materials and charged to P&L Account through material consumptions expenses (internal consumption of alumina). In the last year accounts as per legacy practice freight and Entry Tax paid on alumina amounting to Rs. 60.60 crore was accounted as a separate item (freight inwards) under the head other manufacturing expenses. Due to change in procedure, in the current year the corresponding value is zero.

2.4 Liability on account of pay revision of non-executives w.e.f. 1.1.2007 has been calculated provisionally. Considering the development in the process of wage negotiation till date (which is yet to be concluded), the total liability for non-executives, so accounted, works out to Rs. 395 crore as on 31.03.2011 (during the year additional amount provided Rs. 128 crore).

2.5 Electricity power required for execution of project activity for expansion at all units of the company has been met from captive power plant.

2.6 Liabilities in respect of employees benefit as per AS-15 (Revised 2005) has been provided on the basis of Actuarial valuation.

3. IMPAIREMENT PROVISION:

3.1 In case of SGA (Special Grade Alumina) plant under chemical segment, impairment loss of Rs. 41.31 crore, comprising of book value of plant and machinery and corresponding plant building has been recognized, as its recoverable amount from discounted future cash flow, has been assessed to be less than its carrying amount due to economic non-viability and increased input prices.

4. CSR (CORPORATE SOCIAL RESPONSIBILITY) EXPENSES:

4.1 Apart from peripheral development expenses contributed @ 1% of net profit, another 1% of net profit of the Company for the year 2009-10 amounting to Rs. 8.14 crore has been provided as CSR liability for the year 2010-11. Expenditure from the additional contribution will be regulated through a separate trust named as "NALCO FOUNDATION".

5. SIGNIFICANT ADDITIONS/MODIFICATIONS:

5.1 The company has adopted ERP system of business process since last year. A few supporting modules such as (i) Sales and Distribution (ii) Quality Management (iii) Human Resource Management, not implemented last year has been implemented in the current year. There is no significant change in accounting practices due to implementation of these modules as because all changes were taken care of during implementation of Finance (Fl) and Materials Management (MM) module implemented last year.

6. RELATED PARTY DISCLOSURES:

6.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties

i) whole time Directrrs:

a) ShriAK.Srivastava

b) Shri B.L. Bagra

c) Shri Joy Varghese

d) ShriAK.Sharma

e) Shri P.K. Padhi

f) Shri Ansuman Das

ii) Part time Official Directors: (Nominee of Govt, of India)

a) Shri Vijay Kumar (Ceased to be director from 01.08.2010)

b) Shri S.K.Nayak, IAS

c) Shri S.K. Srivastava, IAS (joined on 30.08.2010).

iii) Part time non-official Directors:

a) Dr. A Sahay (Ceased to be director from 27.9.2010)

b) Shri S.S. Sohoni, IAS (Retired) (Ceased to be director from 27.9.2010)

c) Shri K.S. Raju (Ceased to be director from 27.9.2010)

d) Shri S.B.Mishra, IAS (Retired)

e) Shri N.R. Mohanty

f) Dr.JyotiMukhopadhyay

g)ShriR.K.Sharma

h)Maj. Gen. (Retired) Samay Ram

i) ShriPCSharma (joined on 21.3.2011)

j) Shri Ved Kumar Jain (joined on 21.3.2011)

Note: Only sitting fee is payable to part time non-official Directors.

6.2 Related party transactions:

Remuneration and loans to whole time directors are disclosed in Note No.l of Additional information forming part of accounts.

7. SEGMENT REPORTING:

7.5 Segment report of elertricity does not include electricity co-generated at Refinery Division, as it is an integral part of steam generation

8. Previous year's figures have been regrouped / rearranged wherever necessary to make them comparable.


Mar 31, 2010

1. Balance Sheet:

1.1 Land:

a) Freehold land includes land acquired through Government of Odisha, for which relevant title deeds have been executed except for land measuring 17.25 acres. Process of conversion of freehold land for Industrial use has been taken-up with Revenue Authority.

b) Leasehold land includes payment to the Government of Odisha in respect of which lease deeds are yet to be executed for 1 238.63 acres, though the Company has been permitted by the Government to use such land for industrial purposes.

1.2 In order to compensate substantially land affected persons (SAPs) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the quantum of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by Government of Odisha for the said purpose. Compensation paid/payable to such SAPs has been determined at Rs. 8.32 crore.

1.3 Registration formalities in respect of office space for 6,459 Sq.ft purchased from Kolkata Municipal Development Authority, valuing 5.50 Crore in Kolkata is under process.

1.4 Rolled Products Unit at Angul, established earlier as a 1 00% Export Oriented Unit (EOU), was debonded w.e.f 1 5.05.2007, as one time option to exit from 1 00% EOU Scheme to EPCG Scheme by paying additional import duty of Rs. 6.44 crore after furnishing legal undertaking to the Development Commissioner, FALTA special Economic Zone, Kolkata. As per the direction of the juridictional Commissioner of Central Excise, Bhubaneswar a Bank Guarantee of Rs. 14.31 crore and a bond of Rs. 143.08 crore has been furnished towards Central Excise Duty liability.

1.5 52 nos of EPCG licences have been obtained between the period from 1 8.1 0.2006 to 31.03.201 0 for 2nd phase of expansion on payment of concessional import duty. The value of concession availed by paying duty at lower rate amounts to Rs. 272.46 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1st to 6th year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of issue of authorisation.

1.6 The Company has obtained plot of land measuring 1 8.21 0 acres at Gothapatna in exchange of plot of land measuring 1 1.700 acres at Chandaka Industrial Estate, both at Bhubaneswar for a lease period upto 30.1 1.2097 as per decision of a committee set up by Honble High Court of Odisha consisting of Cabinet Secretary, Government of India (Chairman), Secretary (Mines), Government of India, Chief Secretary, Government of Odisha, Secretary Industries, Government of Odisha and CMD of the Company. The lease deed is yet to be executed.

1.7 The Company has availed Bank Guarantees, Letters of Credit and PCFC credit facilities, secured against stock and book debts from State Bank of India, HDFC Bank and Axis Bank.

1.8 Contingent Liabilities not provided for:

(Rs. in crore)

As at As at

31 st March 2010 31 st March 2009

a) Estimated amount of contracts to be executed on capital account (net of advances and L/Cs opened) 905.73 1,015.98

b) Outstanding letter of credit. Guarantees and counter guarantees 238.78 217.83

c) Claims against the Company not acknowledged as debts:

i) Sales Tax 442.74 464.33

ii) Excise Duty 253.55 105.66

iii) Customs Duty 3.66 3.57

iv) Claims of contractors, suppliers & others 122.90 89.77

v) Land acquisition and interest thereon 222.00 39.84

vi) Unrealised bank guarantees due to court injunctions 2.55 2.55

vii) Income Tax & Wealth Tax 231.35 203.48

viii) Entry Tax and Road Tax 69.72 55.77

ix) Employee State Insurance 0.32 0.32

x) Provident Fund Commission 0.05 0.05

xi) Water charges 2.23 0.74

xii) Royalty on bauxite and interest thereon 15.48 13.71

xiii) NPV on forest land under Mining lease 144.00 -

TOTAL 1510.55 979.79

2. Profit and Loss Account:

2.1 Depreciation was charged in respect of main Plant and Machinery and related Factory Buildings and Storage go-downs etc., at the rate of 5 per cent up to 31st March 1994, based on estimated useful life of assets being 20 years without retention of 5 per cent residual value. The useful life of these assets has been revised to 1 8 years to bring it at par with the life of "Continuous process plant- as envisaged in Schedule XIV to Companies Act, 1 956. Such change in life of assets has been considered from 1.4.93 i.e. from the year of introduction of "Continuous process plant" in Schedule XIV to Companies Act, 1 956. Depreciation rates on all such assets have been recomputed based on guidelines issued under Circular No.14/93 dated, 20.1 2.93 by Department of Company Affairs, by allocating the unamortized value over the remaining life after retention of 5 per cent residual value except for assets already written off fully.

2.2 Liability on account of pay revision of non-executives w.e.f. 1.1.2007 has been calculated provisionally, considering the benefits extended to executive employees. The total liability for non-executives, so accounted, works out to Rs. 70.87 crore during the year.

2.3 Expenses on employees working exclusively for 2nd phase expansion project amounting to Rs. 32.08 crore charged to Profit & Loss Account upto the Financial Year 2008-09 and Rs. 9.30 crore for the Financial Year 2009-1 0 have been capitalized relating to units commissioned and those in progress. Depreciation on such capitalized amount has been charged prospectively.

2.4 The valuation of 7821.780 MT of Alumina valuing at Rs. 6.48 crore lying under Goods in Transit (GIT) was not valued last year which has been corrected.

2.5 Liabilities in respect of employees benefit as per AS-1 5 (Revised 2005) has been provided on the basis of Actuarial valuation.

2.6 As a result of amendment in Payment of Gratuity Act with effect from 24th of May 201 0, enhancing the maximum ceiling limit from Rs. 3,50,000/- to Rs. 1 0,00,000/-, the Company has provided an additional net liability of Rs. 92,40,43,063/- in respect of non-executive employees. In respect of executive employees, the enhanced ceiling of Rs. 1 0,00,000/- was already considered in previous year, based on Presidential Directives on revision of pay of executives.

2.7 Electricity power required for execution of project activity for expansion at all units of the company has been met from captive power plant.

2.8 SIGNIFICANT ADDITIONS / MODIFICATIONS:

The Company has adopted ERP system of business process during current year. The treatment of certain transactions in ERP system differ from the one adopted by the Company hitherto. These additions and modifications confirm to relevant Accounting Standards and are exhibited at Schedule-X (Significant Accounting Policies). The implication of these additions and modification is not material.

3. CHANGES IN ACCOUNTING PRACTICES DUE TO IMPLEMENTATION OF ERP:

3.1 Company has gone live to ERP system in February 201 0. The essential modules required for preparation of financial results namely (i) Finance (ii) Materials Management and (iii) Production Planning have been activated and these accounts have been prepared based on these modules under ERP. A few more supporting modules such as (i) Sales and Distribution (ii) Quality Management and (iii) Human Resource will be implemented in a phased manner. Due to implementation of ERP system, there have been a few changes in Accounting practices which has resulted in improved presentation of financial results whose implication on net result is not material, are enumerated here under:

a) In case of fixed assets, where gross value has undergone change due to value adjustment at subsequent date, depreciation has been accounted for prospectively over the residual useful life of the asset, in line with the provisions of AS-1 0.

b) Stock of steel (imported and indigenous) and cement for construction work was grouped under work-in-progress. On implementation of ERP system, steel and cement other than expansion project has been accounted under inventory.

c) Entry tax on raw-material was booked separately and charged against "other manufacturing expenses". In ERP, it is loaded to the cost of input materials at the time of receipt of goods.

d) Semi finished goods i.e. raw-water, clarified water, filter water, DM water, feed water. Steam, overburden, spent anode and dross have been inventorised and valued under ERP system as intermediary products.

4. RELATED PARTY DISCLOSURES:

4.1 As per AS-1 8 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties are given below:- i) Whole time Directors:

a) ShriA.K.Srivastava (joined on 01.10.2009)

b) Shri B.L. Bagra

c) Shri joy Varghese

d) Shri AX. Sharma (joined on 01.05.2009)

e) Shri PX. Padhi (joined on 03.09.2009)

f) Shri Ansuman Das (joined on 28.1 0.2009)

g) Shri C.R. Pradhan (superannuated on 30.09.2009)

h) Shri KX. Mallick (superannuated on 30.09.2009) and i) Shri PX. Routray (superannuated on 30.04.2009). ii) Part time Official Directors:

a) Shri S.Vijay Kumar, IAS

b) Shri VX. Thakral, IAS (ceased to be Director from 07.01.201 0).

c) Shri SX. Nayak, IAS (appointed as Director from 07.01.201 0). iii) Part time non-official Director:

a) Dr.ASahay

b) Shri S.S.Sohoni, IAS (Retired)

c) ShriK.S.Raju

d) Shri S.B.Mishra, IAS (Retired)

e) Shri N.R. Mohanty

f) Dr.jyotiMukherjee

g) Shri RX Sharma

h) Maj. Gen. (Retired) Samay Ram Note: Only sitting fee is payable to part time non-official Director.

4.2 Related party transactions:

Remuneration and loans to whole time directors are disclosed in Note No.l of Additional information forming part of accounts. 5. SEGMENT REPORTING:

5.1 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.

5.2 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.

5.3 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.

5.4 Segment report of electricity does not include electricity co-generated at Refinery Division, as it is an integral part of steam generation plant.

6. Previous years figures have been regrouped / rearranged wherever necessary to make them comparable.

 
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