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Notes to Accounts of NMDC Ltd.

Mar 31, 2015

Additional notes to 2.9 & 2.10 :

TANGIBLE AND INTANGIBLE ASSETS

1. 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.

2. 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.

3. 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) Only Provisional allotment letters issued for the land to the extent of 13.43 acres purchased from M/s APIIC at Industrial park, Paloncha. However, on physical survey found only 10.23 acres of land. No effect is given in books, pending confirmation from M/s APIIC.

(g) Land to the extent of 26.39 acres purchased at Patancheru, Hyderabad from the Official Liquidator of Allwyn Watches Ltd. However, on physical survey found only 24.23 acres of land. No effect is given in books, pending confirmation from the Official Liquidator of Allwyn Watches Ltd.

(h) Final forest clearance yet to be received from Ministry of Environment and Forests for the 84.36 hectares of forest land at Arki.

1.A. Contingent liabilities

(Rs. in Crore)

Particulars As at As at 31-MAR-15 31-MAR-14

1.1 Claims against the company not acknowledged as debts consisting of:

A Disputed claims under Property tax, Export tax, Conservancy Tax, Sales tax, Service Tax, Income tax etc., 462.29 819.00

B Claims by contractors under arbitration 0.16 0.16

C Other claims on company not acknowledged as debts 221.79 70.39

1.2 Contingent liability on bills discounted under LCs 6.21 2.94

1.3 Corporate Guarantee given to Citi Bank, Sydney for the loan given to M/s Legacy Iron Ore Limited (AUD 3 million) – 16.81

1.4 Disputed claims under Income Tax Act:

During the Financial year 2011-12, assessment for financial year 2008-09 and re-assessment for financial year 2007-08 was done by IT department and an amount of Rs.278.03 crore & Rs.2,517.21 crore respectively was included in the income alleging under-invoicing of exports and corresponding demand notices for Rs.102.85 crore & Rs.1,255.83 crore were raised.

Similarly, during the Financial year 2012-13, assessment for financial year 2009-10 and re-assessment for financial year 2006-07 was done and an amount of Rs.255.03 crore and Rs.506.11 crore respectively was included in the income and corresponding demand notices for Rs.94.36 crore and Rs.177.91 crore were raised.

The Company has contested the allegations and filed appeals before the appellate authorities.

Honourable ITAT has delivered the order during the Financial Year 2014-15 in favour of the Company for all the four financial years. Refunds w.r.t Financial Years 2006-07 & 2009-10 have been received and for 2007-08 & 2008-09 the refund orders are yet to be issued. An amount of Rs.956.37 crore paid earlier under protest is continued under "Amount Recoverable".

1.5 Disputed claims under Forest Development tax Act:

Government of Karnataka introduced Forest Development Tax (FDT) @ 12% on the sale value of iron ore with effect from 27.08.2008. NMDC preferred an appeal before Hon'ble High Court of Karnataka and the court passed an interim order directing the Company to pay 50% of FDT, consisting of 25% in Cash and balance 25% in the form of Bank Guarantee. Accordingly, the company has paid an amount of Rs.121.84 crore (Previous year Rs.119.71 crore) in cash and submitted a bank guarantee for Rs.121.84 crore (Previous year Rs.119.71 crore).

The balance liability of Rs.243.69 crore (Previous year Rs.247.96 crore) is included under disputed taxes under 1.1.a Contingent liabilities.

B. Commitments:

(Rs. in Crore) Particulars As at As at 31-MAR-15 31-MAR-14

1.1 Estimated amount of contracts remaining to be executed on Capital account 8,116.28 9,886.85

1.2 Other commitments- commitments to subsidiaries and JV 54.70 55.14

Note-2 : Revision of Accounting Policies:

The Company has during the year revised the following Accounting Policies:

1. Depreciation: (Accounting Policy No. B.2.1)

Depreciation is calculated based on the useful life of the assets as prescribed in Schedule II of the Companies Act, 2013, as against the earlier practice of charging depreciation based on the life of assets determined by Technical assessment or rates prescribed by schedule XIV, whichever is higher. However, where ever there is no suitable life prescribed in Schedule II, the same is determined by technical assessment.

The said revision has resulted in increase in depreciation by Rs.12.10 crore with a corresponding decrease in profit. The transition impact on the assets where the remaining useful life has become nil, is Rs.8.96 crore (net of tax) and the same is adjusted in Reserves and Surplus.

2. Revenue Recognition - Domestic Sales: (Accounting Policy No. C.1.1.2)

In case of spot auction under electronic mode, the sale is accounted on conclusion of the auction, as against the previous practice of accounting on the date of despatch.

The said revision has resulted in an increase in turnover of Iron Ore by Rs.94.35 crore and Diamonds by Rs.11.52 crore with an overall increase in profit by Rs.65.34 crore.

3. Employee Benefit Expenses: Pension Fund (Accounting Policy No. C.2.3)

Consequent to approval of the Defined Contribution Pension Scheme of the employees, by the Ministry of Steel with effect from 1st Jan 2007 expenditure on this account pertaining to the period from 1st Jan 2007 to 31st Mar 2014 amounting to Rs.113.01 crore is shown under 'Exceptional items' and expenditure of current year is Rs.22.98 crore.

4. Prepaid Expenses: (Accounting Policy No. C.3.3)

During the current year, the limit for recognising 'Prepaid expenses' has been enhanced to Rs.10 lakhs from Rs.2 lakhs resulting in an increase of current year expenditure by Rs.0.32 crore with a corresponding decrease in profit.

5. Prior Period Adjustments: (Accounting Policy No. C.3.3 & 3.4)

During the current year, the limit for recognising 'Prior period adjustments' has been enhanced to Rs.10 lakhs from Rs.2 lakhs resulting in an increase of current year expenditure by Rs.0.10 crore with a corresponding decrease in profit.

Note-3.: Mining Issues at Donimalai Complex in Karnataka

"The Monitoring Committee has retained 10% of sale proceeds for the period from 04/10/2011 to 31/03/2015, amounting to Rs.907.78 crore (previous year Rs.622.60 crore) pending finalisation of R&R Plans. This amount is included under 'Trade receivables'.

The Rehabilitation and Reclamation (R & R) Plans were prepared by ICFRE and submitted to the Central Empowered Committee appointed by the Hon'ble Supreme Court for consideration. As the draft R & R plans prepared by ICFRE is not made available, the company is not in a position to make any reliable estimate of any financial implication involved.

Hence no liability has been provided for towards the implementation of R & R plans in the accounts upto 2014-15", which is in line with As 29.

OTHER DISCLOSURES :

i) Provident fund :

The company has conducted Actuarial valuation of its PF trust and the trust do not have any deficit as on 31st Mar 2015.

Note-2.34.2 : Segment Reporting as per AS-17

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.

The Company has identified the primary and secondary segment reporting under AS-17 as under:

Corporate guarantee was provided to Citi Bank, Perth as security against the loan granted to Associate Company M/s Legacy Iron Ore Limited, Perth to the extent of AUD 3 million (INR 16.81 crore) as on 31/03/14. As the loan amount is fully repaid by Legacy in the month of Aug'14, the Guarantee as on 31/03/2015 stands Nil.

During the current year, the Company has acquired additional stake in M/s.Legacy Iron Ore Limited, Perth through rights issue resulting in increase in the share holding of company to 78.56%. Hence, the above Company has been classified as 'subsidiary' as against the previous year classification as 'Associate Company.'

4. Discontinuing Operations (AS-24) :

On 25/02/2008 the Board of directors had announced a plan to dispose off the plant and machinery of Silica Sand Project, Lalapur which is included in the segment of "Other minerals and services." Pending disposal, the unit is kept under care & maintenance.

1. The Recoverable amount of the assets of SSP, Lalapur unit has been arrived at considering the 'value in use'. Since the value in use has resulted in negative cash flows, the recoverable amount has been taken as nil without applying any discount rate.

2. In the case of SAF plant at the Sponge Iron Unit, the impairment is based on net selling price as assessed by the approved valuer.

3. In respect of supplementary mining lease, the Forest clearance for diversion of 74.018 hectares of forest land which is in Panna (Gangau) Sanctuary in Panna District is available up to June 2015. The Monitoring Committee constituted by Hon'ble Supreme court of India in its 6th meeting held on 6th Aug 2014 has recommended that the extraction and production process of Diamond Mining Project at Majhgawan should come to an end by 30th Jun 2016 and that the reclamation and rehabilitation process and handing over the area to Panna Tiger Reserve should be completed by 30th Jun 2018.

The request for extension is under active consideration of FAC, MoEF & CC. The State Govt. is also in the process of submitting the information as sought by FAC in this regard. As the Company is hopeful of getting the extension of forest clearance up to 2020, it is considered not necessary to provide for any impairment loss at this stage which is to the tune of Rs.13.75 crore.

5. Provisions, Contingent Liabilities and Contingent Assets (AS-29) : Necessary details in regard to provisions have been disclosed in notes 2.8.

6. There are no Investments by the loanees as mentioned in 2.35.1 in the shares of NMDC Ltd.

7. No loans and advances have been given to the Associate Companies.

8. There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.

9. CSR Expenditure :

a) Gross amount required to be spent of the company during the year is Rs.198.00 crore (2% of the last three years average PBT Rs.9,894.60 crore).

b) Amount spent during the year on account of CSR activities is Rs.188.65 crore.

10. MMDR Amendment Act 2015:

As per Section 8(A) of the MMDR Amendment Act, 2015, the existing mining leases in Bailadila sector which are due to expire in the year 2015 & 17 are deemed to have been extended up to 31st March 2020. Consequently, the unamortised amount is charged over the revised remaining useful life resulting in decrease in amortisation by Rs.18 crore with a corresponding increase in Profit.

Further, no provision has been made towards contributions to District Mineral Foundation and National Mineral Exploration trust pending notification of the rules by the Ministry of Mines.

11. Rehabilitation cess provided for earlier years u/s 441A of Companies Act, 1956 amounting to Rs.3.83 crore is withdrawn during the year as there is no corresponding provision in Companies Act, 2013.

12. Replies to some of the letters seeking confirmation of balances with regard to Trade receivables, Advances and Deposits are awaited.

13. Figures for the previous year have been regrouped wherever considered necessary so as to conform to the classification of the current year.


Mar 31, 2013

Note-1.1 : Contingent liabilities and Commitments

(to the extent not provided for)

A. Contingent liabilities

Rs. in crore

Particulars As at As at 31-MAR-13 31-MAR-12

1.1 Claims against the company not acknowledged as debts consisting of:

a Disputed claims under Property tax, Export tax, Conservancy Tax, Sales tax, Income tax etc., 905.40 1,297.76

b Claims by contractors under arbitration 0.16 6.06

c Other claims on company not acknowledged as debts 58.88 41.40

1.2 Contingent liability on bills discounted under LCs 14.20 9.13

1.3 Disputed claims under Income Tax Act:

During the Financial year 2011-12, Income Tax Authorities re-opened the assessment for the Financial year 2007-08 and further during the assessment of the Financial year 2008-09 included income of Rs.2517.21 crore and Rs.278.03 crore alleging under invoicing of exports and raised demand notices for Rs.1255.83 crore and Rs.102.85 crore for the respective years. Similarly, during the current year, Income Tax Authorities re-opened the assessment for the Financial year 2006-07 and further during the assessment of the Financial year 2009-10 included income of Rs.506.11 crore and Rs.255.03 crore for the same reasons and raised demand notices for Rs.177.90 crore and Rs.94.36 crore for the respective years.

The company has contested the allegations stating that all the transactions are transparent as well routed through Bank accounts and filed appeals before the appellate authorities.

Pending disposal of the appeals, an amount of Rs.1134.27 crore (Previous year Rs.341.42 crore) paid to IT authorities is shown as amount recoverable from the department (included in note 2.18) and the balance disputed amount of Rs.496.67 crore is shown under 1.1.a Contingent liabilities.

1.4 Disputed claims under Forest Development tax Act:

Government of Karnataka introduced Forest Development Tax (FDT) at the rate of 12% on the Sale Value of Iron Ore with effect from 27.08.2008. NMDC preferred an appeal before Hon''ble High Court of Karnataka and the court passed an interim order directing the Company to pay 50% of FDT, consisting of 25% in Cash and balance 25% in the form of Bank Guarantee. Accordingly, the company has paid an amount of Rs.119.71 crore (Previous year Rs.115.16 crore) in cash and submitted a bank guarantee for Rs.119.71 crore (Previous year Rs.115 crore).

The balance company''s liability after issue of Bank guarantee towards FDT is Rs.247.96 crore (Previous year Rs.257.16 crore) which is included under disputed taxes under 1.1.a Contingent liabilities.

Note-2.1 : Mining issues at Donimalai complex in Karnataka

The Hon''ble Supreme Court, in its judgement on the Karnataka illegal mining cases delivered on 18th April 2013, has not considered the Company''s submissions praying for exemption and consequently, the following amounts have been adjusted from the 20% of sale proceeds amounting to Rs.674.26 crore withheld by the Monitoring Committee as on 31/03/2013.

1. 10% of sale proceeds at Donimalai complex amounting to Rs. 337.13 crore (includes previous year amount of Rs. 88.36 crore) towards contribution for the Special Purpose Vehicle to be created as per the directions of the Court and shown as part of ''other expenses'' in note no: 2.28.

2. An amount of Rs. 68.66 crore is provided towards penalty/compensation for encroachment of the mining area beyond the sanctioned lease area and shown as part of ''other expenses'' in note no: 2.28.

Further, no provision has been made towards cost of implementation of Rehabilitation and Reclamation Plans (R&R Plans) pending finalisation of the same by the Monitoring Committee.

After the above adjustments, the amount refundable (subject to recovery towards cost of implementation of R&R plans) by the monitoring committee as on 31/03/2013 is Rs.268.47 crore and is appearing under Trade receivables.

Note-2.1.1 : Segment Reporting as per AS-17

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.

The Company has identified the primary and secondary segment reporting under AS-17 as under:

2.1.2 Consolidated Financial Statements (AS-21) : The subsidiary of the Company Viz., NMDC SARL, Madagascar is under closure and in the process of winding up. The above subsidiary suffers from significant impairment in it''s ability to transfer funds to the parent company in terms of para 11 of AS 21.

The transactions during the period ended 31st MAR 2013 of the following subsidiaries are not material in terms of para 4.3 of Preface to the statements of Accounting Standards issued by ICAI.

a) J&K Mineral Development Corporation Ltd, Jammu

b) NMDC-CMDC Ltd., Raipur

c) NMDC Power Ltd., Hyderabad

d) Legacy Iron Ore Ltd., Perth, Australia

e) Jharkhand National Mineral Development Corporation Ltd, Ranchi (Incorporated on 06/08/2012)

Considering the above, consolidated financial statements of NMDC Ltd and its above subsidiaries have not been drawn up for the period ended 31-MARCH-2013 also, as per the practice followed in earlier years.

2.1.3 Accounting for Taxes on income (AS-22) : Necessary details have been disclosed in note no: 2.3.

2.1.4 Discontinuing Operations (AS-24) :

On 25/02/2008 and on 30/12/2010 the Board of directors had announced a plan to dispose of the plant and machinery of Silica Sand Project, Lalapur and UPFO Plant, Vizag respectively which are included in the segment of "Other minerals and services."

2.1.5 Intangible Assets (AS-26) : R&D

The Research & Development expenditure, charged to Statement of Profit & Loss during the year is Rs.15.45 crore (previous year Rs.14.31crore), including expenditure of Rs. 3.47 crore (previous year Rs.2.45 crore) on feasibility studies.

The amount of revenue expenditure incurred at Research & Development unit, Hyderabad is as under:

2.1.6 Provisions, Contingent Liabilities and Contingent Assets (AS-29) : Necessary details in regard to provisions have been disclosed in notes 2.8.

2.2.1 There are no Investments by the loanees as mentioned in 2.34.1 in the shares of NMDC Ltd.

2.2.2 No l oans and advances have been given to the Associate Companies.

2.2.3 There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.

2.3.1 The Board in its meeting held on 06/12/2012 has approved in principle to introduce Defined Contribution Pension Scheme for NMDC employees with employer''s contribution at 8% of salary, with effect from 1st Jan 2007, subject to the approval of Ministry of Steel, Government of India. Pending formulation of the Pension Scheme and submission to the Ministry, no provision has been made in the books.

2.3.2 A liability of Rs 0.54 crore has been made during the current year, towards Rehabilitation Cess u/s 441A of the Companies Act, 1956 at the minimum rate of 0.005% on the turnover (cumulative provision Rs.3.23 crore (Previous year Rs.2.69 crore)) and the same is not remitted to Central Govt., in the absence of any notification issued by the Central Govt. in this regard.

2.3.3 Replies to some of the letters seeking confirmation of balances with regard to Trade receivables, Advances and Deposits are awaited.

2.3.4 Figures for the previous year have been regrouped wherever considered necessary so as to conform to the classification of the current year.


Mar 31, 2012

Addl. Notes :

1) No new shares were issued during the current year. Hence, there is no change in number of shares outstanding as at the beginning and as at the end of the reporting period.

2) The above issued, subscribed & paid up equity shares includes 2,64,31,44,000 shares issued by way of bonus shares in 2008-09.

3. 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.

4. 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.

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

6. 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.

7. The notes 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.

8. 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 97.26 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.

(h) Land to the extent of 26.39 acres purchased at Patancheru, Hyderabad from the Official Liquidator of Allwyn Watches Ltd.

11. Reconciliation of Depreciation and Amortisation as per Statement of Profit and Loss :

1. Aggregate amount of Quoted Investments Rs.99.63 crore (Previous year-Not applicable) Market value Rs.204.45 crore (Previous year- Not Applicable).

2. Aggregate amount of Unquoted Investments Gross Rs.155.45 crore and Net Rs.148.14 crore (Previous Year Gross Rs.146.95 crore and Net Rs.135.68 crore).

3. Aggregate amount of provision for diminution in value of the investments is Rs.7.31 crore. (Previous year Rs.11.27 crore)

4. All the above are long term investments.

Note-1.1.1 : 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.

The Company has identified the primary and secondary segment reporting under AS-17 as under:

Note-1.2 : Contingent liabilities and Commitments (to the extent not provided for)

A. Contingent liabilities

Rs. in crore

Particulars As at As at 31-MAR-12 31-MAR-11

1.1 Claims against the company not acknowledged as debts consisting of:

a Disputed claims under Property tax, Export tax, Conservancy Tax, Sales tax, Income tax etc., 1,297.76 45.23

b Claims by contractors under arbitration 6.06 6.06

c Other claims on company not acknowledged as debts 41.40 34.77

1.2 Contingent liability on bills discounted under LCs 9.13 25.66

1.3 Disputed claims under Income Tax Act:

Income Tax Authorities re-opened the assessment for the Financial year 2007-08 and further during the assessment of the Financial year 2008-09 included income of Rs.2517.21 crores and Rs.278.03 crores alleging under invoicing of exports and raised demand notices for Rs.1255.83 crores and Rs.109.89 crores for the respective years. The company has contested the allegations stating that all the transactions are transparent as well routed through Bank accounts and filed appeals before CIT (Appeals). Pending disposal of the appeals, an amount of Rs.341.42 crores paid to IT authorities towards 25% of the demand is shown as amount recoverable from the department and the balance disputed amount of Rs.1024.28 crores is shown under 1.1.a Contingent liabilities.

1.4 Disputed claims under Forest Development tax Act:

Government of Karnataka introduced Forest Development Tax (FDT) at the rate of 12% on the Sale Value of Iron Ore with effect from 27.08.2008. NMDC preferred an appeal before Hon'ble High Court of Karnataka and the court passed an interim order directing the Company to pay 50% of FDT, consisting of 25% in Cash and balance 25% in the form of Bank Guarantee. Accordingly, based on the demand received from the forest authorities, the company has paid an amount of Rs 115.16 crores in cash and submitted a bank guarantee for Rs 115 crores.

The balance company's liability after issue of Bank guarantee towards FDT is Rs.257.16 cr which is included under disputed taxes under 1.1.a Contingent liabilities.

Note-1.3 : Mining Issues at Donimalai Complex in Karnataka

a) Hon'ble Supreme Court has accepted the recommendations of the Central Empowered Committee (CEC) on the Karnataka illegal mining cases besides other issues with regard to

1) Penalty for encroachment of the mining area beyond the sanctioned lease.

2) Payment of 10% of sale proceeds to the special purpose vehicle to be created for undertaking socio-economic, infrastructure conservation, protection of forest etc.

The company has made its submissions before CEC and the Hon'ble Supreme Court, praying for exemption. Since the matter is sub-judice, no provision has been made for the above in the accounts.

b) Further, as per the Hon'ble Supreme Court order dated 23/09/2011, the Iron ore of Donimalai complex is being e-auctioned with effect from 04/10/2011 by the Monitoring Committee (MC) constituted by the CEC of the Supreme Court. Pending settlement of various issues by the Hon'ble Supreme Court, the sales have been accounted at full value of Rs. 883.55 cr. An amount of Rs.468.30 cr due from Monitoring Committee as on 31/03/2012 is appearing under trade receivables.(includes an amount of Rs.176.71 cr towards 20% of value of sale proceeds withheld pending decision).

Note-1.4 : Disclosures Under Accounting Standards

1.4.1 Employee Benefits (AS-15 - Rev): Necessary details have been disclosed in note no: 2.28.6.

1.4.2 Segment Reporting (AS-17): Necessary details have been disclosed in note no: 2.28.7.

1.4.3 Related Party Disclosures (AS-18):

(i) List of Related parties with whom transactions have taken place and their relationships:

A. Subsidiary Companies:

1. JK Mineral Development Corporation Limited, Jammu

2. NMDC SARL, Madagaskar

3. NMDC-CMDC Ltd., Raipur

4. Legacy Iron Ore Ltd, Perth, Australia

5. NMDC Power Ltd

B. Asssociate Companies:

1. Romelt- Sail (India) Limited, New Delhi (in the process of liquidation)

2. International Coal Ventures (Pvt) Ltd

3. Nilachal Ispat Nigam Ltd

4. Krishnapatnam Railway Co. Ltd

C. Key Management Personnel: (Directors)

1. Sri N K Nanda

2. Sri S.Thiagarajan

3. Sri Subimal Bose (w.e.f.17/06/2011)

4. Sri S K Das (w.e.f. 11/08/2011)

5. Sri Rabindra Singh (w.e.f.01/10/2011)

6. Sri V K Sharma (Up to 31/07/2011)

7. Sri G.B.Joshi (Up to 30/09/2011)

8. Sri Rana Som (Up to 31/12/2011)

1.4.5 Consolidated Financial Statements (AS-21): The subsidiary of the Company Viz., NMDC SARL, Madagascar is under closure and in the process of winding up. The above subsidiary suffers from significant impairment in it's ability to transfer funds to the parent company in terms of para 11 of AS 21.

The transactions during the period ended 31st MAR 2012 of the following subsidiaries are not material in terms of para 4.3 of Preface to the statements of Accounting Standards issued by ICAI.

a) J&K Mineral development corporation Ltd, Jammu

b) NMDC-CMDC Ltd., Raipur

c) NMDC Power Ltd., Hyderabad (incorporated on 12.12.2011)

d) Legacy Iron Ore Ltd., Perth, Australia (Investment made in Dec'11)

Considering the above, consolidated financial statements of NMDC Ltd and its above subsidiaries have not been drawn up for the period ended 31-MARCH-2012 also, as per the practice followed in earlier years.

1.4.6 Accounting for Taxes on income ( AS-22): Necessary details have been disclosed in note no: 2.3.

1.4.7 Discontinuing Operations (AS-24):

On 25/02/2008 and on 30/12/2010 the Board of directors had announced a plan to dispose of the plant and machinery of Silica Sand Project, Lalapur and UPFO Plant, Vizag respectively which are included in the segment of "Other minerals and services."

The company is actively seeking a buyer for both the units and hopes to complete the sale at the earliest.

1.4.8 Intangible Assets (AS-26) : R&D

The Research & Development expenditure, charged to Profit & Loss account during the year is Rs.14.31 crore (previous year Rs.14.18 crore), including expenditure of Rs. 2.45 crore (previous year Rs.2.21 crore) on feasibility studies.

1.4.9 Impairment of Assets (AS - 28):

Action has been initiated to sell the plant and machinery of Silica Sand Project, Lalapur and UPFO plant at Vizag.

The impairment of assets has been reviewed during the year in respect of the following cash generating units, included under the segment 'Other Minerals and Services' and necessary adjustments have been carried out as detailed below:

The Recoverable amount of the assets of the UPFO, Vizag, SSP, Lalapur unit and Windmills at Donimalai have been arrived at considering the 'value in use'. Since the value in use has resulted in negative cash flows, the recoverable amount has been taken as nil without applying any discount rate. In the case of SAF plant at the Sponge Iron Unit, the impairment is based on net selling price as assessed by the approved valuer.

1.4.10 Provisions, Contingent Liabilities and Contingent Assets (AS-29) : Necessary details in regard to provisions have been disclosed in notes 2.8.

1.5.1 There are no Investments by the loanees as mentioned in 2.33.1 in the shares of NMDC Ltd.

1.5.2 No loans and advances have been given to the Associate Companies.

1.5.3 There are no loans and advances in the nature of loans, to firms/companies, in which directors are interested.

Note-2.34 : Others

1.6.1 A liability of Rs 0.57 crore has been made during the current year, towards Rehabilitation Cess u/s 441A of the Companies Act, 1956 at the minimum rate of 0.005% on the turnover (cumulative provision Rs.2.69 crore (Previous year Rs.2.12 crore)) and the same is not remitted to Central Govt., in the absence of any notification issued by the Central Govt. in this regard.

1.6.2 Replies to some of the letters seeking confirmation of balances with regard to Sundry Debtors, Advances and Deposits are awaited.

1.6.3 Figures for the previous year have been regrouped wherever considered necessary so as to conform to the classification of the current year.


Mar 31, 2010

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 and scrap.

2. EMPLOYEES BENEFITS:

2.1 Payments under Employees Family Benefit Scheme: Under the NMDC Employeesfamily 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.

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 remitted to a fund maintained by LIC.

2.5 Other Benefits: Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities t6 employees as at the end of the year is recognized on the basis of actuarial valuation. The liability towards Settlement Allowance is remitted to a fund maintained by LIC.

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 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. Intangible assets: Computer software is capitalized and amortised over a period three years.

Bi Rates of Depreciation could not be specified in view of Accounting Policy No.B.2.1. 67 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.

7. 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.

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

10. 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.

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

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

9. Segment Reporting

The Management evaluates the Companys 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

1. Contingent liabilities:

Rs. in Crore

Particulars : Period ended Period ended 31-Mar-10 31-Mar-09

1.1 Claims against the company not acknowledged as debts consists of:

a Appeal pending in respect of levy of TDS -- 0.36

b Disputed claims under Property tax, Export tax, Conservancy Tax, Sales tax etc. 52.12 34.97

c Claims by contractors under arbitration 1.09 20.07

d Other claims on company not acknowledged as debts 26.28 4.08

1.2 Uncalled liability on Shares partly paid :

in Krishnapatnam Railway Company Ltd: 13.75 18.25

1.3 Estimated amount of contracts remaining to be executed on Capital account 395.88 373.22

1.4 Contingent liability on bills discounted under LCs/ counter guarantees given for BGs 8.92 15.54

2. Disclosures under Accounting Standards:

2.1 Employee Benefits (AS-15 - Rev): Necessary details have been disclosed in Schedule 22-Detailed information.

2.2 Segment Reporting (AS-17): Necessary details have been disclosed in Schedule 22-Detailed information.

2.3 Related Party Disclosures (AS-18):

(i) List of Related parties with whom transactions have taken place and their relationships:

A. Subsidiary Companies:

1. JK Mineral Development Corporation Limited, Jammu

2. NMDC SARL, Madagaskar

3. NIMDC (Pty) Ltd., Namibia (upto 28-08-2009)

4. NMDC-CMDC Ltd., Raipur

Consequent to decision of the Board of Directors and the approval of the Government of India, the wholly owned subsidiary Company at Namibia namely, Nam-India Mineral Development Corporation Limited (Registration No. 2001/039) has been deregistered in terms of Section 73(5) of the Companies Act, 1973 of the Republic of "Namibia as notified in the Government Gazette No 4329, dated 28th August 2009 (Notification No 169). The entire amount of interest free loan accorded to the Subsidiary Company has already been written off in the books of parent. Company as irrecoverable loss. Hence NIMDC (Pty) Ltd., ceased to exist w.e.f. 28th Aug 2009.

B. Asssociate Companies:

Romelt-Sail (India) Limited, New Delhi

C. Key Management Personnel: (Directors)

1. Sri Rana Som

2. Sri VK Sharma

3. Sri K. R. Venkateswarlu (till 30/06/09)

4. Sri S:Venkatesan

5. Sri N K Nanda

6. Sri. S.Thiagarajan (from 09/07/09)

2.5 Consolidated Financial Statements (AS-21): The subsidiary of the Company Viz., NMDC SARL, Madagascar is under closure and in the process of winding up. The other subsidiary, NIMDC (Pty) Ltd., Namibia has been wound up during the year. There are no significant transactions in respect of another subsidiary, J&K Mineral Development Corporation Ltd., Jammu.

All the above subsidiaries suffer from significant impairment in their ability to transfer funds to the parent company in terms of para 11 of AS 21. The Company has been writing off the loan advanced to these subsidiaries and de-rated the equity investment of these subsidiaries accordingly.

The transactions during the period ended 31st MAR 2010 of NMDC-CMDC Ltd., Raipur, a subsidiary incorporated during 2008-09, are not material in terms of para 4.3 of Preface to the statements of Accounting Standards issued by ICAI.

For the above said reasons, consolidated financial statements of NMDC Ltd and its above subsidiaries have not been drawn up for the period ended 31-MARCH-2010 also, as per the practice followed in earlier years.

3.0 Discontinuing Operations (AS-24) :

It has been decided to lease / sell the plant and machinery of Silica Sand Project, Lalapur and action has been initiated accordingly. Pending the above and as the transactions of the unit are not material, no further disclosure under the standard is considered necessary.

4.0 Intangible Assets (AS-26) : R&D

The Research & Development expenditure, charged to Profit & Loss account is Rs. 13.25 crore (previous year Rs.17.36 crore), including expenditure of Rs. 2.21 crore (previous year Rs.10.38 crore) on feasibility studies.

5. Impairment of Assets (AS - 28) : *

During the year, the Honble Supreme Court has revoked the suspension of the activities of Panna Diamond Project, subject to certain conditions. After complying with the conditions, the unit has restarted its regular operations with effect from 19 June 2009 and accordingly, the impairment loss provided during earlier years has been reversed.

There is no change during the year in the status of impaired UPFO plant, which is under care & maintenance.

6. Provisions, Contingent Liabilities and Contingent Assets (AS-29) : Necessary details in regard to provisions have been disclosed in Schedule 12-Provisions.

7. Others :

7.1 Govt, of India, Ministry of Corporate Affairs through letter dated 18th Jan 2010 has approved the merger of Ml s Sponge Iron India Ltd (SIIL) with NMDC Ltd. Legal formalities for merger of M/s SIIL with the Company are under progress. Pending merger of M/s SIIL with the Company, no accounting adjustments have been made.

7.2 The undistributed golden jubilee gifts pertaining to the eligible employees are kept in the custody of the Company.

7.3 A liability of Rs 0.31 crore has been made during the current year, towards Rehabilitation Cess u/s 441A of the Companies Act, 1956 at the minimum rate of 0.005% on the turnover (cumulative provision Rs 1.55 crore (Previous year Rs. 1.24 crore)) and the same is not remitted to Central Govt., in the absence of any notification issued by the Central Govt, in this regard.

7.4 The rate of royalty on iron ore has been revised from fixed rate per tonne to Advalorem basis @ 10% on the sale price with effect from 13th August 2009. Consequently, the increased charge of royalty to the P&L account for the year is Rs 313.51 cr.

7.5 During the year, the Government has disinvested its holding to the tune of 8.38% of Companys equity share capital resulting in reduction in Governments holding to 90% from 98.38% as on 31/03/2009.

7.6 Replies to some of the letters seeking confirmation of balances with regard to Sundry Debtors, Advances and Deposits are awaited.

7.7 Figures for the previous period have been regrouped wherever considered necessary so as to conform to the classification of the current period.

 
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