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Accounting Policies of Orissa Minerals Development Company Ltd. Company

Mar 31, 2015

1.0 BASIS OF ACCOUNTING AND USE OF ESTIMATES

1.1 Financial Statements are prepared on an accrual basis under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India and to comply with the Accounting Standards notified under the Companies (Accounts) Rules,2014 and relevant provisions of the CompaniesAct,2013.

1.2 The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP), requires that Management makes estimates and reports for revenues & expenses during the reported period accordingly. The Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between the actual results and the estimates are recognized in the periods in which the results are known/ materialize.

2.0 FIXEDASSETS

2.1 Fixed Assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment, if any. The cost of acquisition comprises purchase price inclusive of duties (net of Cenvat), taxes, incidental expenses, erection/commissioning/trial run expenses and interest etc, up to the date the assets are ready for intended use.

2.2 Prospecting and development expenses incurred to prepare the mines ready for commercial exploration (i.e. in the nature of preliminary and preoperative expenses) are capitalized.

2.3 Expenditure incurred for obtaining required clearance to operate the mines subsequent to the allotment of their lease is capitalized as intangible assets.

2.4 Expenditure incurred for renewal of mining lease is capitalized under Mining Lease.

2.5 Machinery spare-parts which can be used only in connection with an item of fixed assets and whose use, as per technical assessment, is expected to be irregular are capitalized and depreciated over the residual life of the respective assets.

2.6 Assets awaiting disposal are valued at the lower of written down value and net realizable value and disclosed separately.

2.7 Capital work-in-progress includes machinery or other fixed assets to be installed and unfinished construction & erection materials.

3. DEPRECIATION AND AMORTISATION

3.1 Depreciation is provided on straight line method (SLM) on full value of the cost of the assets over the specified period in accordance with the provision of Schedule II of the Companies Act,2013.

3.2 The classification of Plant & Machinery into continuous and non-continuous process is done as per the technical evaluation and depreciation thereon is provided accordingly.

3.3 Depreciation on fixed Assets added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal.

3.4 Intangible Assets such as; Premium for Mining lease are amortized over the period of lease.

3.5 Leasehold land is amortized over the period of lease.

3.6 Intangible asset is amortized over the period of their useful life.

3.7 Where the remaining useful life of any asset is NIL as on 1st April,2014, the carrying value of the assets net off the residual value has been adjusted against opening reserves amounting toRs. 678.26 lacs in accordance with transitional provision of Schedule-II.

4. IMPAIRMENT OF FIXED ASSETS

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the net selling price of the assets and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the assets over their remaining useful life.

A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

5. INVESTMENTS

5.1 Long term Investments are carried at cost unless there is diminution in the value other than temporary.

5.2 Current investments are carried at lower of cost quoted/fair value.

6. INVENTORIES

6.1 Stock-in trade of finished goods is valued on FIFO basis at lower of cost and Net Realizable Value. Cost includes direct material, Labour Cost and a proportion of manufacturing overhead based on normal operating Capacity.

6.2 Stock of Stores and spare parts, loose tools are valued at Weighted Average cost.

6.3 Provision is made for Old/Obsolete/Surplus/Non-moving inventories as well as other anticipated losses considered wherever necessary.

6.4 Quantities of Closing Stock including stock of stores & spare parts have been taken as per the physical verification done.

6.5 Where physical stock is more than book stock, book stock is considered for valuation of stock. However Surplus stock is valued at Rs. 1/- per LOT for the Surplus stock available as on date of closing.

6.6 The Excise Duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock.

7.Retirementand Other Employee Benefits- Defined Benefit Scheme:

7.1 Gratuity:

Gratuity is payable on separation @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more and the maximum payable amount is calculated as per Gratuity Act. The sum of Gratuity is being covered under "Group Gratuity cum Life Insurance Scheme" with LIC of India and the provision On account of gratuity is being made as per the actuarial valuation.

7.2 Leave Encashment:

(i) Earned Leave: Payable if encashment of leave is applied for during the tenure of service of employee as per Company Rule and on separation to eligible employees who have accumulated earned leave balance. Maximum accumulated leave for 300 days is en-cashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuationasperAS-15 (Revised,2005).

(ii) Half Pay Leave: Payable on separation to eligible employees who have accumulated half pay leave balance. Maximum accumulated leave for 180 days is en-cashable at the time of separation. Liability of Leave salary is provided onthe basis of actuarial valuation as perAS-15 (Revised,2005).

7.3 Superannuation Benefit:

The Company pays fixed contribution @13% on (Basic IDA) on a/c of Superannuation fund only for the executives. This amount is deposited with a separate trust maintained by "The Orissa Minerals Development Company Limited Super annuation Fund".

Company has no other liabilities apart from its contribution to the fund.

7.4 Provident Fund:

(i) For Head Office Employee: The Company pays fixed contribution of Provident Fund at predetermined rates, to a separate trust i.e. The Orissa Minerals Development Company Limited Provident Institution.

(ii) For Mines Employees: The Company pays fixed contribution of Provident Fund at the rateof12% on Salary (i.e. Basic IDA)to RPFC, Keonjhar.

8.TAXATION

Tax expenses comprise of Current, Deferred and Prior year tax expenses, if any.

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company re-assesses unrecognized deferred tax assets at each balance sheet date.

-.REVENUE RECOGNITION

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue canbe reliably measured.

1 Sale of Goods- Sale of goods is recognized on dispatch of goods to customers, which is incidental to transfer of significant risk and reward of ownership. Sales are net of Excise Duty, Sales Tax, Entry Tax, Returns, Claims, Discounts, etc.

2 Interest- Interest is recognized on a time proportion basis taking into account the amount outstanding at the rate applicable.

3 Dividend- Income from dividend is recognised when the shareholders'' right to receive payment is established by the balance sheet date. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but pertains to period on or before the date of balance sheet.

4 Consideration for use of Company''s facilities- Consideration received from the Authorities for use of a part of the available facilities of the Company is recognized as revenue in the year of receipt/ realization.

10.GOVERNMENT GRANTS AND SUBSIDIES

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on as ystematic basis to the costs, which it is intended to compensate.

Where the grant or subsidy relates to an asset , its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.

11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

11.1 A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of AS-29 are not discounted to its present value and are determined Based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

11.2 Contingent liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts.

11.3 Contingent Assets are neither recognized nor disclosed in the financial statements.

12.EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

13.SEGMENT REPORTING Identification of Segments:

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing as trategic business unit that offers different products to different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers:

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

Allocation of common costs:

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items :

Includes general corporate income and expense items which are not Allocated to any business segment.

14. Excise duty/Royalty

Excise duty is payable on dispatch of Sponge Iron from Sponge Iron Plant and royalty is payable on dispatch of Iron Ore & Manganese Ore from mines.

15. Cash and Cash equivalents

Cash and cash equivalents as indicated in the cash flow statement comprise cash in hand, cash at bank and short-term investments with an original maturity of three months or less.


Mar 31, 2014

1.0 BASIS OF ACCOUNTING AND USE OF ESTIMATES

1.1 Financial Statements are prepared on an accrual basis under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India and notified under Section 211(3C) and the relevant provisions of the Companies Act, 1956 including Accounting Standards.

1.2 The preparation of financial statements, in conformity with Generally Accepted Accounting Principles (GAAP), requires that management makes estimates and reports revenue & expenses during the reported period accordingly.

2.0 FIXED ASSETS

a) Fixed Assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment, if any. The cost of acquisition comprises purchase price inclusive of duties (net of Cenvat), taxes, incidental expenses, erection/commissioning/trial run expenses and interest etc, up to the date the assets are ready for intended use.

b) Prospecting and development expenses incurred to prepare the mines ready for commercial exploration (i.e. in the nature of preliminary and preoperative expenses) are capitalized.

c) Expenditure incurred for obtaining required clearance to operate the mines subsequent to the allotment of their lease is capitalized as intangible assets.

d) Expenditure incurred for renewable of mining lease are capitalized under Mining Lease.

e) Machinery spares which can be used only in connection with an item of fixed assets and whose use, as per technical assessment, is expected to be irregular are capitalized and depreciated over the residual life of the respective assets.

f) Assets awaiting disposal are valued at the lower of written down value and net realizable value and disclosed separately.

g) Capital work-in-progress includes machinery or other fixed assets to be installed, construction and erection materials .

3. DEPRECIATION AND AMMORTISATION

3.1 Depreciation is provided on straight line method (SLM),on full value of the cost of the assets over the specified period in accordance with the provision of Schedule XIV of the Companies Act, 1956, except in respect of certain assets where management decided to charge Depreciation at higher rates on Straight Line Method:

Photo Copiers & Fax Machines, Telecom Equipment (5 Years),Audio & Visual Equipment (10 Years), Other Office Equipment, Earth Moving Equipment, Air Conditioners, Refrigerators, Water Coolers, Air Coolers, Freezers (7 Years), Car (6 Years), Safety Equipment, Others light vehicles (8 Years) and Computer (including Software system) (4 Years).

3.2 The classification of Plant & Machinery into continuous and non-continuous process is done as per the technical evaluation and depreciation thereon is provided accordingly.

3.3 Depreciation on fixed Assets added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal.

3.4 Intangible Assets such as; Premium for Mining lease are amortized over the period of lease.

3.5 Leasehold land is amortized over the period of lease.

3.6 Intangible asset is amortized over the period of their useful life.

4. Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the net selling price of the assets and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the assets over their remaining useful life.

A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

5. INVESTMENTS

5.1 Long term Investments are carried at cost unless there is diminution in the value other than temporary.

5.2 Current investments are carried at lower of cost quoted/fair value.

6 INVENTORIES

6.1 Stock-in trade of finished goods is valued at lower of cost and Net Realizable Value. Cost includes direct material, Labour Cost and a proportion of manufacturing overhead based on normal operating Capacity.

6.2 Stock of Stores and spare parts, loose tools are valued at Weighted Average cost

6.3 Provision is made for old/Obsolete/Surplus/Non-moving inventories as well as other anticipated losses considered wherever necessary.

6.4 Quantities of Closing Stock including stock of stores & spare parts have been taken as per the physical verification done.

6.5 Where physical stock is more than book stock, book stock is considered for valuation of stock. However Surplus stock is valued at Rs. 1/- per LOT for the Surplus stock available as on date of closing.

6.6 The Excise Duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock.

7. Retirement and Other Employee Benefits: Defined Benefit Scheme:

a) Gratuity: Payable on separation @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more and maximum payable amount is calculated as per Gratuity Act. The gratuity is being covered under "Group Gratuity cum Life Insurance Scheme" with LIC of India and the provision on account of gratuity is being made as per the actuarial valuation.

b) Leave Encashment: (i) Earned Leave: Payable if encashment of leave is applied for during the tenure of service of employee as per Company Rule and on separation to eligible employees who have accumulated earned leave. Maximum accumulated leave 300 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS-15 (Revised,2005).

(ii) Half Pay Leave: Payable on separation to eligible employees who have accumulated Half pay leave balance. Maximum accumulated leave 180 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS-15 (Revised,2005).

(c) Superannuation Benefit: The Company pays fixed contribution @13% on (Basic IDA) on a/ c of Superannuation fund only for the executives. This amount is deposited with a separate trust maintained by "The Orissa Minerals Development Company Limited Superannuation Fund".

The company has no other liabilities apart from its contribution to the fund.

(d) Provident Fund : Head Office Employee

Company pays fixed contribution to Provident Fund, at predetermined rates, to a separate trust i.e. The Orissa Minerals Development Company Limited Provident Institution.

Mines Employee

Company pay fixed contribution of Provident Fund at the rate of 12% on (Basic IDA) to RPFC.

8. Taxation

Tax expenses comprise of Current, Deferred and Prior year tax expenses, if any.

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The Company re-assesses unrecognized deferred tax assets at each balance sheet date.

9. REVENUE RECOGNITION

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

9.1 Sale of Goods

Sale of goods is recognized on despatch of goods to customers, which is incidental to transfer of significant risk and reward of ownership. Sales are net of Excise Duty, Sales Tax, Entry Tax, Returns, Claims, Discounts, etc.

9.2 Interest

Interest is recognized on a time proportion basis taking into account the amount outstanding at the rate applicable.

9.3 Dividend

Income from dividend is recognised when the shareholders'' right to receive payment is established by the balance sheet date. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but pertains to period on or before the date of balance sheet.

9.4 Consideration for use of Company''s facilities

Consideration received from the Authorities for use of a part of the available facilities of the Company is recognized as revenue in the year of receipt / realization.

10. Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.

Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.

11. Provisions, Contingent Liabilities and Contingent Assets

11.1 A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

11.2 Contingent liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed by way of notes to the accounts.

11.3 Contingent Assets are neither recognized nor disclosed in the financial statements.

12. Earnings per Share

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

13. Segment Reporting

Identification of segments ;

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers ;

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

Allocation of common costs :

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items ;

Includes general corporate income and expense items which are not allocated to any business segment.

14. Excise duty/Royalty

Excise duty is payable on dispatch of Sponge Iron from Sponge Iron Plant and royalty is payable on dispatch of Iron Ore & Manganese Ore from mines.

15. Cash and Cash equivalents

Cash and cash equivalents as indicated in the cash flow statement comprise cash on hand, cash at bank and short-term investments with an original maturity of three months or less.


Mar 31, 2013

1.0 BASIS OF ACCOUNTING AND USE OF ESTIMATES

1.1 Financial Statements are prepared on an accrual basis under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India and notified under Section 211(3C) and the relevant provisions of the Companies Act, 1956 including Accounting Standards.

1.2 The preparation of Financial Statements, in conformity with Generally Accepted Accounting Principles (GAAP) requires that management makes estimates and the reported amounts of Revenue and Expenses during the reported period.

2.0 FIXED ASSETS

a) Fixed Assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment, if any. The cost of acquisition comprises purchase price inclusive of duties (net of Cenvat), Taxes, Incidental Expenses, Erection/Commissioning/Trial run expenses and interest etc, up to the date on which the assets are ready for intended use.

b) Prospecting and development expenses incurred to prepare the mine ready for commercial exploration (i.e. in the nature of Preliminary and Preoperative Expenses) are capitalized.

c) Expenditure incurred for obtaining required clearance to operate the mines subsequent to the allotment of their lease is capitalised as Intangible Assets.

d) Expenditure incurred for renewable of Mining Lease are capitalised under Mining Lease.

e) Machinery spares which can be used only in connection with an item of Fixed Assets and whose use, as per technical assessment, is expected to be irregular are capitalised and depreciated over the residual life of the respective Assets.

f) Assets awaiting disposal are valued at the lower of written down value and net realizable value and disclosed separately.

g) Capital Work-in-Progress includes Machinery or other Fixed Assets to be installed, construction and erection materials.

3. DEPRECIATION AND AMORTISATION

3.1 Depreciation is provided on Straight Line Method (SLM),on full value of the cost of the assets over the specified period in accordance with the provision of Schedule XIV of the Companies Act, 1956, except in respect of certain assets where management decided to charge Depreciation at higher rates on Straight Line Method:

Photo Copiers & Fax Machines, Telecom Equipment (5 Years),Audio & Visual Equipment (10 Years), Other Office Equipment, Earth Moving Equipment, Air Conditioners, Refrigerators, Water Coolers, Air Coolers, Freezers (7 Years), Car (6 Years), Safety Equipment, Others Light Vehicles (8 Years) and Computer (including Software system) (4 Years).

3.2 The classification of Plant & Machinery into continuous and non-continuous process is done as per the technical evaluation and depreciation thereon is provided accordingly.

3.3 Depreciation on Fixed Assets added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal.

3.4 Intangible Assets such as premium for Mining Lease are amortized over the period of lease.

3.5 Leasehold Land is amortized over the period of lease.

3.6 Intangible Asset is amortised over the period of their useful life.

4. Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each Balance Sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an Asset exceeds its recoverable amount which is the greater of the net selling price of the assets and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the assets over their remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual Depreciation if there was no impairment.

5. INVESTMENTS

5.1 Long Term Investments are carried at cost unless there is diminution in the value other than temporary.

5.2 Current Investments are carried at lower of Cost Quoted/Fair Value.

6. INVENTORIES

6.1 Stock-in Trade of Finished Goods is valued at lower of Cost and Net Realisable Value. Cost includes direct material, Labour Cost and a proportion of manufacturing overhead based on Normal Operating Capacity.

6.2 Stock of Stores and Spare Parts, Loose Tools are valued at Weighted Average cost.

6.3 Provision is made for Old/Obsolete/Surplus/Non-moving Inventories as well as other anticipated losses considered wherever necessary.

6.4 Where Physical Stock is more than Book Stock, Book Stock is considered for valuation of stock. However Surplus Stock is valued at Rs. 1/- per LOT for the Surplus Stock available as on date of closing.

6.5 The Excise Duty payable on Closing Stock of Finished Goods at the time of sale is not considered in valuation of Closing Stock.

7. Retirement and Other Employee Benefits: Defined Benefit Scheme:

a) Gratuity: Payable on separation @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more. Maximum amount in the case of separation is Rs. 10 lacs for each Employees. The gratuity is being covered under "Group Gratuity cum Life Insurance Scheme" with LIC of India and the provision on account of gratuity is being made as per the Actuarial Valuation.

b) Leave Encashment: (i) Earned Leave: Payable if Encashment of Leave is applied for during the tenure of service of employee and on separation to eligible employees who have accumulated earned leave. Maximum accumulated leave 300 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of Actuarial Valuation as per AS-15 (Revised,2005).

(ii) Half Pay Leave: Payable if encashment of leave is applied for during the tenure of service of employee and on separation to eligible employees who have accumulated Half pay leave. Maximum accumulated leave 180 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of Actuarial Valuation as per AS-15 (Revised,2005).

(c) Superannuation Benefit: The Company pays fixed contribution @13% on

(Basic IDA) on account of Superannuation Fund only for the executives. This is deposited with a separate Trust maintained by The Orissa Minerals Development Company Limited Superannuation Fund which invests the fund in permitted securities.

The superannuation benefit at the rate of two-third of the total accumulated contribution is payable to the executives on separation from the Company. The balance one-third of the benefit is payable to such executive in annuity form. The company has no other liabilities apart from its contribution to the fund.

(d) Provident Fund: Head Office Employees Company pays fixed contribution to Provident Fund, at predetermined rates, to a separate Trust i.e. The Orissa Minerals Development Company Limited Provident Institution.

Mines Employees Company pay fixed contribution of Provident Fund at the rate of 12% on (Basic IDA) to RPFC. The Company has been taking necessary steps with the RPFC authority to merge the fund of H.O. employees to the RPFC. However due to some regulatory restriction the same could not be maintained as yet.

8. Taxation

Tax Expense comprise of Current, Deferred and Prior Year Tax Expenses, if any. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred Income Taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred Tax Assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The Company re-assesses unrecognised Deferred Tax Assets at each Balance Sheet date.

9. REVENUE RECOGNITION

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

9.1 Sale of Goods

Sale of goods is recognised on despatch of goods to customers, which is incidental to transfer of significant risk and reward of ownership. Sales are net of Excise Duty, Sales Tax, Entry Tax, Returns, Claims, Discounts, etc.

9.2 Interest

Interest is recognised on a time proportion basis taking into account the amount outstanding at the rate applicable.

9.3 Dividend

Income from dividend is recognised when the shareholders'' right to receive payment is established by the Balance Sheet date. Dividend from subsidiaries is recognised even if same are declared after the Balance Sheet date but pertains to period on or before the date of balance sheet.

9.4 Consideration for use of Company''s facilities

Consideration received from the Authorities for use of a part of the available facilities of the Company is recognised as revenue in the year of receipt / realisation.

10. Government grants and subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognised as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensated.

Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.

11. Provisions, Contingent Liabilities and Contingent Assets

11.1 A provision is recognised when the Company has a present obligation as a result of past

event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

11.2 Contingent liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of Notes to the Accounts.

11.3 Contingent Assets are neither recognised nor disclosed in the Financial Statements.

12. Earnings per Share

Basic earning per share is calculated by dividing the Net Profit or Loss for the year attributable to Equity Shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted Earnings per Share, the Net Profit or Loss for the year attributable to Equity Shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential Equity Shares.

13. Segment Reporting

Identification of segments:

The Company''s operating businesses are organised and managed separately according to the nature of Products and Services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers:

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

Allocation of common costs :

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items:

Includes general corporate income and expense items which are not allocated to any business segment.

14. Excise duty/Royalty

Excise duty is payable on dispatch of Sponge Iron from Sponge Iron Plant and Royalty is payable on despatch of Iron Ore and Manganese Ore from Mines.

15. Cash and Cash equivalents

Cash and Cash Equivalents as indicated in the Cash Flow Statement comprise Cash in hand, Cash at bank and Short-term Investments with an original maturity of three months or less.


Mar 31, 2011

I) Basis of preparation of Accounts

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention, except for certain fixed assets which are revalued. The accounting policies have been consistently applied by the Company.

ii) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

iii) Fixed Assets :

a) Fixed Assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment, if any. The cost of acquisition comprises purchase price inclusive of duties (net of Cenvat), taxes, incidental expenses, erection/ commissioning/trial run expenses and interest etc, up to the date the assets are ready for intended use.

b) Prospecting and development expenses incurred to prepare the mine ready for commercial exploration (i.e. in the nature of preliminary and preoperative expenses) are capitalized.

c) Expenditure incurred for obtaining required clearance to operate the mines subsequent to the allotment of their lease is capitalised as intangible assets.

d) Expenditure incurred for renewable of mining lease are capitalised under Mining Lease.

e) Machinery spares which can be used only in connection with an item of fixed assets and whose use, as per technical assessment, is expected to be irregular are capitalised and depreciated over the residual life of the respective assets.

f) Assets awaiting disposal are valued at the lower of written down value and net realisable value and disclosed separately.

g) Capital work-in-progress includes machinery or other fixed assets to be installed, construction and erection materials and capital advances.

h) The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on external/internal factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount which represents the greater of the net selling price and 'Value in use' of the assets. The estimated future cash flows considered for determining the value in use, are discounted to their present value at appropriate rate arrived at after considering the prevailing interest rates and weighted average cost of capital.

(iv) Depreciation / Amortisation

a) The classification of Plant & Machinery into continuous and non-continuous process is done as per the technical evaluation and depreciation thereon is provided accordingly.

b) Depreciation on fixed assets is provided on written down method at the rates and in the manner prescribed in schedule XIV of the Companies Act, 1956 or at rates determined based on useful lives of the respective assets, as estimated by the management, whichever is higher.

c) Depreciation on revalued assets is provided at the rates specified in Section 205(2) (b) of The Companies Act, 1956. However in case of fixed assets whose life is determined by the valuer to be less than their useful life under Section 205, depreciation is provided at the higher rate, to ensure the amortisation of these assets over their life determined by the valuer.

d) Leasehold land is amortised over the period of lease.

e) Mining lease is amortised over the lease period.

f) Prospecting and development expenditure is amortised at the rate of 10% using written down value method.

g) Intangible asset is amortised over the balance period of lease period of mine.

h) Depreciation on fixed Assets added/disposed off during the year is provided on prorate basis with reference to the date of addition/disposal.

i) In case of impairment, if any, depreciation is provided on the revised carrying amount of the assets over their remaining useful life.

(v) Impairment of Fixed Assets

The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the net selling price of the assets and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation is provided on the revised carrying amount of the assets over their remaining useful life.

A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(vi) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are valued at lower of cost and net realisable value on individual investment basis. Long term investments are valued at cost, unless there is an "other than temporary" decline in value thereof, in which case, adequate provision/write-off is made in the accounts.

(vii) Inventories

a) Raw materials and Stores & Spare Parts are valued at lower of cost and net realisable value. Cost is determined on a weighted average basis.

b) Stores-in-transit are stated at their invoice value.

c) Finished goods are valued at lower of cost and net realizable value. Cost includes direct materials, labour cost and a proportion of manufacturing overheads based on normal operating capacity.

d) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

(viii) Retirement and Other Employee Benefits : Defined Benefit Scheme:

a) Gratuity : Payable on separation @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more. Maximum amount in the case of separation is Rs. 10 lacs for each Employees. The gratuity is being covered under "Group Gratuity cum Life Insurance Scheme" with LIC of India and the provision on account of gratuity is being made as per the actuarial valuation.

b) Leave Encashment : (i) Earned Leave : Payable if encashment of leave is applied for during the tenure of service of employee and on separation to eligible employees who have accumulated earned leave. Maximum accumulated leave 300 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS- 15 (Revised, 2005).

(ii) Half Pay Leave: Payable if encashment of leave is applied for during the tenure of service of employee and on separation to eligible employees who have accumulated Half pay leave. Maximum accumulated leave 180 days is encashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS- 15 (Revised, 2005).

(ix) Taxation

Tax expense comprises of current, deferred and prior year tax expenses, if any.

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. If the company has carry forward unabsorbed depreciation and carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty backed by convincing evidence that such deferred tax assets can be realised against future taxable profits. Unrecognised deferred tax assets of earlier periods are re- assessed and recognised to the extent that it has become reasonably certain that future taxable income will be available against which such deferred tax assets can be realised.

At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(x) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of Goods

Revenue from sale of goods is recognised on despatch of goods to customers, which is incidental to transfer of significant risk and reward of ownership. Sales are net of returns, claims, discounts etc but include royalty.

Interest

Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend

Revenue is recognised when the shareholders' right to receive payment is established by the balance sheet date. Dividend from subsidiaries is recognised even if same are declared after the balance sheet date but pertains to period on or before the date of balance sheet as per the requirement of schedule VI of the Companies Act, 1956.

Consideration for use of Company's facilities

Consideration received from the Authorities for use of a part of the available facilities of the Company is recognised as revenue in the year of receipt / realisation.

(xi) Government grants and subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, it is recognised as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.

Where the grant or subsidy relates to an asset , its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.

(xii) Provision

A provision is recognised when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.

Provisions made in terms of Accounting Standard 29 are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

(xiii) Earnings per Share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(xiv) Segment Reporting

Identification of segments :

The Company's operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter segment Transfers :

The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.

Allocation of common costs :

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items :

Includes general corporate income and expense items which are not allocated to any business segment.

(xv) Excise duty/Royalty

Excise duty is payable on despatch of Sponge Iron from Sponge Iron plant and royalty is payable on despatch of Iron ore & Manganese ore from mines.

(xvi) Cash and Cash equivalents

Cash and cash equivalents as indicated in the cash flow statement comprise cash on hand, cash at bank and short-term investments with an original maturity of three months or less.

(xvii) Prior Period Items/Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/ materialise.

(xviii) Contingencies

Liabilities, which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed by way of notes to the accounts.












Mar 31, 2002

(a) Convention :

The financial statements have been prepared in accordance with the relevant presentational requirements of the Companies Act, 1956 and the acceptable Accounting Standards in India. A summary of significant accounting policies which have been applied consistently is set out below.

(b) Basis of Accounting :

The financial statements have been prepared in accordance with the historical cost convention.

(c) Fixed Assets and Depreciation :

i) Fixed assets are stated at cost of acquisition including appropriate incidental expenses except for certain items of fixed assets which were revalued on 30.06.1978 and 30.06.1982 and shown at replacement cost.

ii) The cost of replacements/modifications of plant and machinery, wherever the same, in the opinion of the management, would result in improvements in reliability of the assets concerned and useful economic life thereof, are capitalised.

iii) Prospecting and Development expenses excepting those in the nature of preliminary and preoperative and included under fixed assets are charged off in the year in which they are incurred.

iv) Capital work in progress includes advances paid for capital jobs.

v) Depreciation on assets other than Leasehold Properties and Prospecting and Development are provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956. Depreciation on leasehold properties being expenditure incurred for renewal of mining leases as per terms stipulated by the appropriate authority, is provided in equal instalments spread over the life of the lease, whereas addition on account of Prospecting and Development is amortised at the rate of 10% on W.D.V. method. Differential amount of depreciation arising out of revaluation of fixed assets is not adjusted to the concerned reserve.

(d) Investments: (Long-term)

Investments are shown at cost, less permanent fall in value of investment, if any,

(e) Inventories:

Stock in trade is stated at cost or market value whichever is lower. Cost comprises expenditure incurred in the normal course of business in bringing such stocks to their location and includes appropriate overhead. Stock of stores and spare parts is valued at weighted average cost or under and stores-in- transit are stated at their invoice value.

(f) Revenue Recognition:

Mercantile system of accounting is followed with recognition of income and expenditure on accrual basis except those with significant uncertainties.

(g) Sales:

Sales represents invoiced value of goods supplied less sales tax and discount but include royalty.

(h) Retirement Benefits:

i) The Company contributes to Provident Funds which are administered by duly constituted and approved independent Trust/Government.

ii) The scheme of payment of Gratuity to the employees is operated through a separate fund under the management of Trustees. Administration of the fund however is in the hand of Life Insurance Corporation of India (LLC.) in terms of LLCs Group Gratuity Scheme. Yearly contribution payable by the company as determined by the L.I.C.I. is provided in the Accounts.

iii) The company is contributing to Superannuation Fund for certain employees at the rate of 13% of the employees current salary. The fund is independent of the companys finance and administered by trustees.

iv) Year-end liability towards Leave Encashment of employees are provided as per actuarial valuation.

(i) Consideration for use of Companys facilities :

Consideration received for the authority given for use of a part of the available facilities of the company is recognised as revenue.

(j) Government Grants:

Grant in Aids / Subsidies received from Government and,

i) related to revenue are deducted in reporting to related expense.

ii) related to specific fixed assets are deducted from the cost of such assets.

(k) Prior Period Items :

Income/Expenses relating to earlier year(s) are either accounted under the respective heads with proper indication or disclosed separately as Prior Period Items.

 
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