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Union Budget 2017-18
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Accounting Policies of NMDC Ltd. Company

Mar 31, 2016

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation.

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the useful life of the assets as prescribed in Schedule II of the Companies Act 2013. Wherever there is no suitable life in Schedule II, the same shall be determined by technical assessment.

2.2 Residual value of all the assets is considered as Nil, except vehicles, which is considered at 5% of the original cost.

2.3 Fixed Assets costing Rs.5,000 or less are fully depreciated in the year of purchase.

2.4 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.5 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.6 Cost of leasehold land is amortized over the period of lease.

2.7 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3. DEVELOPMENT EXPENSES:

Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual installments from the date of commencement of production.

4. INVESTMENTS:

Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5. INVENTORIES:

5.1 Raw materials, Stores and spares (including loose tools and implements), work in process and finished products are valued at lower of cost and net realisable value of the respective units.

The basis of determining the cost is

Raw materials : Weighted average cost

Stores and spares : Weighted average cost

Stores in Transit : At cost

Work in process and Finished goods : Material cost plus appropriate share of labour, related overheads and levies

5.2 In case of identified Obsolete/Surplus/Non-moving items necessary provision is made and charged to revenue.

5.3 Stationery, Medical, Canteen, School Stores, Cotton Waste, Hospital Stores and Lab stores (excluding for R & D Lab) charged off to Revenue on procurement.

5.4 No credit is taken in respect of stock of run of mine ore, embedded ore, Iron ore slimes, partly used stores and spares.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions.

6.2 Fixed Assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of Profit and Loss.

6.3 The monetary items in foreign currencies are translated at the closing exchange rate on the date of Balance Sheet and gains / losses thereon adjusted in the Statement of Profit and Loss.

C. STATEMENT OF PROFIT AND LOSS

1. REVENUE RECOGNITION:

1.1 Export Sales: Export sales are recognized on the date of Bill of Lading. However, final adjustments are made in the year of receipt of discharge port analysis.

1.2 Domestic Sales: Domestic sales are accounted on the date of Forwarding Note (Rail dispatches) / Lorry receipt / Delivery challan.

However, in case of spot auction under electronic mode, the sale is recognized on conclusion of the auction.

1.3 Obsolete Stores & Scrap: Income is accounted on realization basis in respect of used / surplus / obsolete / unserviceable materials / waste products and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees'' Family Benefit Scheme:

Under the NMDC Employees'' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate Trust.

2.2 Gratuity & Provident fund:

2.2.1 Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.

2.2.2 The Company''s contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees'' salary. Further, the Company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuarial valuation basis.

2.3 Pension Fund:

Defined contributions to NMDC Employees'' Contributory Pension Scheme are made on accrual basis at a rate as approved from time to time to a fund which is administered by a separate Trust.

2.4 Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

2.5 Other Benefits:

Liability towards Long Service Award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post Retirement Medical Benefits are administered by a separate trust.

3. GENERAL:

3.1. Research & Development Expenditure:

The expenditure on Fixed Assets relating to Research & Development is capitalized and depreciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged off to Statement of Profit and Loss.

3.2. Mine Closure Obligation:

The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Statement of Profit and Loss on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC.

3.3 Pre-paid Expenses:

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.10,00,000/- in each case.

3.4 Prior period adjustments:

Income/expenditure relating to prior period of over Rs. 10,00,000/- in each case arising out of errors and omission are accounted as prior period adjustment.

3.5 Insurance Claims:

Insurance claims are accounted as under :

In case of transit insurance - on the basis of claim lodged with the Insurance Company.

In case of other Insurance - on the basis of Survey reports received.

Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement.


Mar 31, 2015

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation.

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the useful life of the assets as prescribed in Schedule II of the Companies Act 2013. Where ever there is no suitable life in Schedule II, the same shall be determined by technical assessment.

2.2 Residual value of all the assets is considered as Nil, except vehicles, which is considered at 5% of the original cost.

2.3 Fixed Assets costing Rs. 5,000 or less are fully depreciated in the year of purchase.

2.4 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.5 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.6 Cost of leasehold land is amortized over the period of lease.

2.7 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3. DEVELOPMENT EXPENSES:

Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual installments from the date of commencement of production.

4. INVESTMENTS:

Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5. INVENTORIES:

5.1 Raw materials, Stores and spares (including loose tools and implements), work in process and finished products are valued at lower of cost and net realisable value of the respective units.

The basis of determining the cost is

Raw materials : Weighted average cost

Stores and spares : Weighted average cost

Stores in Transit : At cost

Work in process and Finished goods : Material cost plus appropriate share of labour, related overheads and levies

5.2 In case of identified obsolete/Surplus/Non-moving items necessary provision is made and charged to revenue.

5.3 Stationery, Medical, Canteen, School stores, Cotton Waste, Hospital stores and lab stores (excluding for R & D Lab) charged off to Revenue on procurement.

5.4 No credit is taken in respect of stock of run of mine ore, embedded ore, Iron ore slimes, Partly used stores and spares.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions.

6.2 Fixed Assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of Profit and Loss.

6.3 The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains / losses thereon adjusted in the Statement of Profit and Loss.

C. STATEMENT OF PROFIT AND LOSS

1. REVENUE RECOGNITION:

1.1 Export sales: Export sales are recognized on the date of Bill of Lading. However, final adjustments are made in the year of receipt of discharge port analysis.

1.2 Domestic sales: Domestic sales are accounted on the date of Forwarding Note (Rail dispatches) / Lorry receipt / Delivery challan.

However, in case of spot auction under electronic mode, the sale is recognized on conclusion of the auction.

1.3 Obsolete Stores & Scrap: Income is accounted on realization basis in respect of Used / Surplus / obsolete/unserviceable materials/waste products and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees' Family Benefit Scheme:

Under the NMDC Employees' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate Trust.

2.2 Gratuity & Provident fund:

2.2.1 Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.

2.2.2 The company's contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees' salary. Further, the company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuarial valuation basis.

2.3 Pension Fund:

Defined contributions to NMDC Employees' Contributory Pension Scheme are made on accrual basis at a rate as approved from time to time to a fund which is administered by a separate Trust.

2.4 Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

2.5 Other Benefits:

Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post retirement medical benefits are administered by a separate trust.

3. GENERAL:

3.1. Research & Development Expenditure:

The expenditure on Fixed Assets relating to Research & Development is capitalized and depreciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged off to Statement of Profit and Loss.

3.2. Mine Closure Obligation:

The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Statement of Profit and Loss on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC.

3.3 Pre-paid Expenses:

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.10,00,000/- in each case.

3.4 Prior period adjustments:

Income/expenditure relating to prior period of over Rs 10,00,000/- in each case arising out of errors and omission are accounted as prior period adjustment.

3.5. Insurance Claims:

Insurance claims are accounted as under :

In case of transit insurance-on the basis of claim lodged with the Insurance Company.

In case of other Insurance - on the basis of Survey reports received.

Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement.


Mar 31, 2013

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation.

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the life of the assets determined by technical assessment. The rates are equal to or higher than those prescribed in Schedule-XIV to the Companies Act, 1956. In the case of assets acquired before 01.04.1987 depreciation is continued to be provided at the rates based on the lives adopted earlier.

2.2 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.3 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.4 Cost of leasehold land is amortized over the period of lease.

2.5 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3. DEVELOPMENT EXPENSES:

Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual installments from the date of commencement of production.

4. INVESTMENTS:

Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5. INVENTORIES:

Items of inventories as certified by the Management are valued on the basis mentioned below:

5.1 Finished Goods : At cost OR Net Realisable value whichever is lower.

5.2 Work-in-process : At cost OR Net Realisable value whichever is lower.

5.3 Raw materials : At cost on weighted average method

5.4 Stores & Spares : At cost on weighted average method. However, Stationery, Medical, Canteen, School stores, Cotton Waste, Hospital stores and lab stores (excluding for R & D Lab): charged off to Revenue on procurement.

5.5 Stores & spares not moved for 5 years and above and identified as obsolete by technical assessment : At Re.1 per unit.

5.6 Stores-in-Transit : At cost.

5.7 Loose Tools & Implements : At cost on weighted average method.

5.8 No credit is taken in the Accounts in respect of :

5.8.1 Stock of run of mine ore, embedded ore and slimes in case of Iron Ore.

5.8.2 Partly used stores and spares kept in stores.

5.8.3 Surplus/Obsolete stores and spares determined and not disposed of.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions.

6.2 Fixed Assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of Profit and Loss.

6.3 The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains / losses thereon adjusted in the Statement of Profit and Loss.

C. STATEMENT OF PROFIT AND LOSS

1. REVENUE RECOGNITION:

1.1 Export sales: Export sales are recognized on the date of Bill of Lading. However, final adjustments are made in the year of receipt of discharge port analysis.

1.2 Domestic sales: Domestic sales are accounted on the date of Forwarding Note (Rail dispatches) / Lorry receipt / Delivery challan.

1.3 Obsolete Stores & Scrap: Income is accounted on realization basis in respect of Used/Surplus/obsolete/ unserviceable materials/waste products and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees'' Family Benefit Scheme:

Under the NMDC Employees'' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate trust.

2.2 Leave Travel Concession: (Encashment / Availment):

Liability towards encashment / availment of Leave Travel Concession is accounted for on the basis of actuarial valuation.

2.3 Gratuity & Provident fund:

2.3.1 Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.

2.3.2 The Company''s contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees'' salary. Further, the Company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuarial valuation basis.

2.4 Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

2.5 Other Benefits:

Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post retirement medical benefits are administered by a separate trust.

3. GENERAL:

3.1 Research & Development Expenditure:

The expenditure on Fixed Assets relating to Research & Development is capitalized and depreciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged off to Statement of Profit and Loss.

3.2 Mine Closure Obligation:

The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Statement of Profit and Loss on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC.

3.3 Pre-paid Expenses:

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.2,00,000/- in each case.

3.4 Prior period adjustments:

Income/Expenditure relating to prior period of over Rs 2,00,000/- in each case arising out of errors and omissions are accounted as prior period adjustments.

3.5 Insurance Claims:

Insurance claims are accounted as under :

In case of transit insurance-on the basis of claim lodged with the Insurance Company.

In case of other Insurance - on the basis of Survey reports received.

Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement.


Mar 31, 2012

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the Company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation.

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the life of the assets determined by technical assessment. The rates are equal to or higher than those prescribed in Schedule-XIV to the Companies Act, 1956. In the case of assets acquired before 01.04.1987 depreciation is continued to be provided at the rates based on the lives adopted earlier.

2.2 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.3 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.4 Cost of leasehold land is amortized over the period of lease.

2.5 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3. EXPENDITURE DURING CONSTRUCTION:

3.1 Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual instalments from the date of commencement of production.

3.2 Expenditure incurred on supervision during the construction period in respect of projects for expansion of existing facilities or creation of new facilities are treated as period costs and charged to revenue. Further, all administrative expenses incurred during the period of delay in the construction and commissioning of facilities beyond the period contemplated by Detailed Project Report are similarly treated as revenue and charged to the Statement of Profit & Loss.

3.3 In respect of those projects under construction necessitating selection of a different technology than originally envisaged, for the reasons beyond the control of the management, the cumulative administrative expenses incurred on such projects having no other useful purpose till the date of the decision to go in for the new technology are charged to the statement of profit and loss for the year during which the relevant decision is taken. Further, all administrative expenses incurred on such projects subsequently till the new technology is identified are also treated as revenue and charged to the statement of profit and loss of the year in which they are incurred.

3.4 In the case of projects abandoned in the mid way due to unforeseen circumstances beyond the control of the management, the cumulative administrative expenditure incurred on such projects up to the date of abandonment are charged to the statement of profit and loss during the year of abandonment.

4. INVESTMENTS:

Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5. INVENTORIES:

Items of inventories as certified by the Management are valued on the basis mentioned below:

5.1 Finished Goods : At cost OR Net Realisable value whichever is lower.

5.2 Work-in-process : At cost OR Net Realisable value whichever is lower.

5.3 Raw materials : At cost on weighted average method.

5.4 Stores & Spares : At cost on weighted average method. However, Stationery, Medical, Canteen, School stores, Cotton Waste, Hospital stores and lab stores (excluding for R & D Lab): charged off to Revenue on procurement.

5.5 Stores & spares not moved for 5 years and above and identified as obsolete by technical assessment : At Re.1 per unit.

5.6 Stores-in-Transit : At cost.

5.7 Loose Tools & Implements : At cost on weighted average method.

5.8 No credit is taken in the Accounts in respect of :

5.8.1 Stock of run of mine ore, embedded ore and slimes in case of Iron Ore.

5.8.2 Partly used stores and spares kept in stores.

5.8.3 Surplus/Obsolete stores and spares determined and not disposed of.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions.

6.2 Fixed Assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to statement of profit & loss.

6.3 The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains / losses thereon adjusted in the Statement of Profit & Loss.

C. STATEMENT OF PROFIT & LOSS

1. REVENUE RECOGNITION:

1.1 Export sales: Export sales are recognized on the date of Bill of Lading. However, final adjustments are made in the year of receipt of discharge port analysis.

1.2 Domestic sales: Domestic sales are accounted on the date of Forwarding Note (Rail dispatches) / Lorry receipt / Delivery challan.

1.3 Obsolete Stores & Scrap: Income is accounted on realization basis in respect of Used / surplus/obsolete/unserviceable materials/waste products and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees' Family Benefit Scheme:

Under the NMDC Employees' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate trust.

2.2 Leave Travel Concession: (Encashment / Availment):

Liability towards encashment / availment of Leave Travel Concession is accounted for on the basis of actuarial valuation.

2.3 Gratuity:

Gratuity payable to eligible employees is administered by a separate Trust, which has taken a Group gratuity policy with LIC.

Demands made by the Trust including the annual contribution and risk premium for the future service gratuity of the LIC policy are charged to Statement of Profit & Loss.

2.4 Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

2.5 Other Benefits:

Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post retirement medical benefits are administered by a separate trust.

3. GENERAL:

3.1 Research & Development Expenditure:

The expenditure on Fixed Assets relating to Research & Development is capitalized and depreciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged of to Statement of Profit & Loss.

3.2 Mine Closure Obligation:

The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Statement of Profit & Loss on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC.

3.3 Pre-paid Expenses:

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.2,00,000/- in each case.

3.4 Prior period adjustments:

Income/Expenditure relating to prior period of over Rs 2,00,000/- in each case arising out of errors and omissions are accounted as prior period adjustments.

3.5 Insurance Claims:

Insurance claims are accounted as under:

In case of transit insurance-on the basis of claim lodged with the Insurance Company.

In case of other Insurance - on the basis of Survey reports received.

Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement.


Mar 31, 2011

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the Company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation.

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular, are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the life of the assets determined by technical assessment. The rates are equal to or higher than those prescribed in Schedule-XIV to the Companies Act, 1956. In the case of assets acquired before 01.04.1987 depreciation is continued to be provided at the rates based on the lives adopted earlier.

2.2 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.3 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.4 Cost of leasehold land is amortized over the period of lease.

2.5 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3. EXPENDITURE DURING CONSTRUCTION:

3.1 Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual instalments from the date of commencement of production.

3.2 Expenditure incurred on supervision during the construction period in respect of projects for expansion of existing facilities or creation of new facilities are treated as period costs and charged to revenue. Further, all administrative expenses incurred during the period of delay in the construction and commissioning of facilities beyond the period contemplated by Detailed Project Report are similarly treated as revenue and charged to the Profit & Loss Account.

3.3 In respect of those projects under construction necessitating selection of a different technology than originally envisaged, for the reasons beyond the control of the management, the cumulative administrative expenses incurred on such projects having no other useful purpose till the date of the decision to go in for the new technology are charged to the profit and loss account for the year during which the relevant decision is taken. Further, all administrative expenses incurred on such projects subsequently till the new technology is identified are also treated as revenue and charged to the profit and loss account of the year in which they are incurred.

3.4 In the case of projects abandoned in the mid way due to unforeseen circumstances beyond the control of the management, the cumulative administrative expenditure incurred on such projects up to the date of abandonment are charged to the profit and loss account during the year of abandonment.

4. INVESTMENTS:

Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5. INVENTORIES:

Items of inventories as certified by the Management are valued on the basis mentioned below:

5.1 Finished Goods : At cost OR Net Realisable value whichever is lower.

5.2 Work-in-process : At cost OR Net Realisable value whichever is lower.

5.3 Raw materials : At cost on weighted average method.

5.4 Stores & Spares : At cost on weighted average method. However, Stationery, Medical, Canteen, School stores, Cotton Waste, Hospital stores and lab stores (excluding for R & D Lab): charged off to Revenue on procurement.

5.5 Stores & spares not moved for 5 years and above and identified as obsolete by technical assessment : At Re.1 per unit.

5.6 Stores-in-Transit : At cost.

5.7 Loose Tools & Implements : At cost on weighted average method.

5.8 No credit is taken in the Accounts in respect of :

5.8.1 Stock of run of mine ore, embedded ore and slimes in case of Iron Ore.

5.8.2 Stock of run of mine ore generated during construction period pending assessment of quality and saleability.

5.8.3 Partly used stores and spares kept in stores.

5.8.4 Surplus/Obsolete stores and spares determined and not disposed of.

6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions.

6.2 Fixed Assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to profit & loss account.

6.3 The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains / losses thereon adjusted in the Profit & Loss Account.

7. GRANT-IN-AID:

7.1 The grant-in-aid received from Government of India for feasibility studies and the expenditure incurred thereon are shown separately until the feasibility expenditure is adjusted against the grant on fruition or abandonment of the feasibility study.

7.2 The grant-in-aid received from Government of India in respect of Research & Development is shown after adjusting the amounts utilised.

C. PROFIT & LOSS ACCOUNT

1. REVENUE RECOGNITION:

1.1 Export sales: Export sales are recognized on the date of Bill of Lading. However, final adjustments are made in the year of receipt of discharge port analysis.

1.2 Domestic sales: Domestic sales are accounted on the date of Railway receipt / Lorry receipt / Delivery challan.

1.3 Obsolete Stores & Scrap: Income is accounted on realization basis in respect of Used / surplus/obsolete/unserviceable materials/ waste products and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees' Family Benefit Scheme:

Under the NMDC Employees' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate trust.

2.2 Leave Travel Concession: (Encashment / Availment):

Liability towards encashment / availment of Leave Travel Concession is accounted for on the basis of actuarial valuation.

2.3 Gratuity:

Gratuity payable to eligible employees is administered by a separate Trust, which has taken a Group gratuity policy with LIC. Demands made by the Trust including the annual contribution and risk premium for the future service gratuity of the LIC policy are charged to Profit & Loss Account.

2.4 Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

2.5 Other Benefits:

Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post retirement medical benefits are administered by a separate trust.

3. GENERAL:

3.1 Research & Development Expenditure:

The expenditure on Fixed Assets relating to Research & Development is capitalized and depreciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged of to Profit & Loss Account.

3.2 Mine Closure Obligation:

The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Profit & Loss account on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC.

3.3 Pre-paid Expenses:

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.2,00,000/- in each case.

3.4 Prior period adjustments:

Income/Expenditure relating to prior period of over Rs 2,00,000/- in each case arising out of errors and omissions are accounted as prior period adjustments.

3.5 Insurance Claims:

Insurance claims are accounted as under:

In case of transit insurance-on the basis of claim lodged with the Insurance Company.

In case of other Insurance - on the basis of Survey reports received.

Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement.

4. The value of lease hold land measuring 3021.35 Sq. Mts and 24719.49 Sq. Mts. (previous year 3021.35 Sq. Mts. and 24719.49 Sq. Mts.) taken from Vizag Port Trust Authorities for construction of Regional office buildings and Screening Plant respectively has not been brought into books as the exact amount payable to the lessor during the lease period of land is not ascertainable under the terms of lease agreement. However, the yearly rent payable in this regard is charged off in the accounts.

Depreciation in respect of Roads, Buildings, Culverts, Bridges, Plant & Machinery and Electrical Installations constructed on the land referred to above has been provided, restricting the life to the lease period.

5. The value of land of 114.01 hectares taken over from District Industries Centre, Jagdalpur for construction of Steel Plant near Nagarnar has not been brought into the books as the amount payable is not ascertainable in the absence of any demand from the concerned authorities.

7. The land on which Cess Fund Quarters were constructed prior to 1984-85 was leased out to Cess Fund Authorities.

8. The ownership of Cess Fund assets constructed prior to 1984-85 vests with the Cess Fund Authorities. However, as per agreement with Cess Fund Authorities, the quarters constructed after 1984-85 shall remain charged in their favour.

9. The schedule does not include assets of Rs. 436.62 lakhs and services of Rs. 394.71 lakhs received as grant from United Nations Development Programme by the erstwhile SIIL towards first plant at Paloncha.

10. Formal agreements / Transfer deeds remain to be executed in respect of the following:

(a) Renewal of Mining Leases at Deposit 10 (Float Ore) & Panna & Donimalai.

(b) Lease deeds in respect of parts of land for township at Bailadila-5, Bacheli and Bailadila-14, Kirandul.

(c) Lease deeds in respect of land for Screening Plant at Visakhapatnam.

(d) Mining lease to the extent of 22.00 hectares of Silica Sand Plant near Lalapur (Allahabad).

(e) Lease in respect of a portion of the total land at R&D Center measuring 10.96 acres has expired during Feb 07 (7.0 acres) and the balance in Feb 2010 (3.96 acres). The process of renewal of the lease is under progress.

(f) Land purchased at Paloncha to the extent of 100.27 acres from the official liquidator of AP Steels Ltd attached to Hon'ble High court of Andhra Pradesh.

(g) Only Provisional allotment letters issued for the land to the extent of 13.43 acres purchased from M/s APIIL at Industrial park, Paloncha.

10. Segment Reporting

The Management evaluates the Company's performance and allocates the resources based on analysis of various performance indicators by business / product segments i.e.,

i) Iron Ore

ii) Other minerals & services

The inter segment transfers are accounted for at market prices as charged to other customers and the same are offsetted in consolidation.












Mar 31, 2010

A. BASIS OF ACCOUNTING

The Company prepares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles.

B. BALANCE SHEET

1. FIXED ASSETS:

1.1 Fixed Assets are stated at historical cost.

1.2 Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the Company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation,

1.3 The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset.

1.4 The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular, are capitalised and depreciated from the date of acquisition over the balance useful life of the respective assets.

2. DEPRECIATION:

2.1 Depreciation is charged on straight-line method based on the life of the assets determined by technical assessment. The rates are equal to or. higher than those prescribed in Schedule-XIV to the Companies Act, 1956. In the case of assets acquired before 01.04.1987 depreciation is continued to be provided at the rates based on the lives adopted earlier.

2.2 Depreciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals.

2.3 In respect of additions forming an integral part of an existing asset, depreciation is charged over the remaining useful life of the asset. In case the asset is already fully depreciated, such additions are depreciated in full.

2.4 Cost of leasehold land is amortized over the period of lease.

2.5 The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects.

3 EXPENDITURE DURING CONSTRUCTION:

3.1 Development expenses (pre-construction period expenses) and Expenses on removal of overburden and preparation of mining benches are amortized in ten annual instalments from the date of commencement of production.

3.2 Expenditure incurred on supervision during the construction period in respect of projects for expansion of existing facilities or creation of new facilities are treated as period costs and charged to revenue. Further, ail administrative expenses incurred during the period of delay in the construction and commissioning of facilities beyond the period contemplated by Detailed Project Report are similarly treated as revenue and charged to the Profit & Loss Account.

3.3 In respect of those projects under construction necessitating selection of a different technology than originally envisaged, for the reasons beyond the control of the management, the cumulative administrative expenses incurred on such projects having no other useful purpose till the date of the decision, to go in for the new technology are charged to the profit and loss account Tor the year during which the relevant decision is taken. Further, all administrative expenses incurred on such projects subsequently till the new technology is identified are also treated as revenue and charged to the profit and loss account of the year in which they are incurred.

3.4 In the case of projects abandoned in the mid way due to unforeseen circumstances beyond the control of the management, the cumulative administrative expenditure incurred on such projects up to the date of abandonment are charged to the profit and loss account during the year of abandonment.

4 INVESTMENTS:

Long-term investments are stated at cost, A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis.

5 INVENTORIES:

Items of inventories is certified by the Management are valued on the basis mentioned below:

5.1 Finished Goods : At cost OR Net Realisable value whichever is lower.

5.2 Work-in-process : At cost OR Net Realisable value whichever is lower.

5.3 Work in process-Consuitancy Contract job : At cost

5.4 Stores & Spares

At cost on weighted average method. However, Stationery, Medical, Canteen School stores, Cotton Waste Hospital stores and lab stores (excluding for R&D Lab): charged off to Revenue on procurement.

5.5 Stores & spares not moved for 5 years and above and identified as obsolete bv technical assessment At Re.1 per unit.

5.6 Stores-in-Transit : At cost.

5.7 Loose Tools & Implements : At cost on weighted average method.

5.8 No credit is taken in the Accounts in respect of :

5.8.1 Stock of run of mine ore, embedded ore low grade ore of Kumaraswamy Mine and slimes in case of Iron Ore.

5.8.2 Stock of run of mine ore generated during construction period pending assessment- of quality and saleability.

5.8.3 Partly used stores and spares kept in stores.

5.8.4 Surplus/Obsolete stores and spares determined and not disposed of. 6. FOREIGN CURRENCY TRANSACTIONS:

6.1 Foreign Currency Transactions are accounted for at the exchange rates prevailing on the date of transactions... t

6.2 Fixed Assets,are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to profit & loss account.

6.3 The monetary items in foreign cur encies are translated at the closing exchange rate on the date of balance sheet and gains /losses thereon adjusted in the Profit & Loss Account.

7. GRANT-IN-AID:

7.1 The grant-in-aid received from Government of India for feasibility studies and the expenditure incurred thereon are shown separately until the feasibility expenditure is adjusted against the grant on fruition or abandonment of the feasibility study.

7.2 The grant-in-aid received from Government of India in respect of Research & Development is shown after adjusting the amounts utilised.

 
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