Mar 31, 2023
1 Company Overview
The Company has integrated steel manufacturing facility starting from iron ore mining, coal mining to the finished steel in the form of wire rod and H.B. wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Two Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The company has also promoted hydropower projects through SPVs.
1.1 Significant Accounting Policies
Basis of preparation of financial statements
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (''Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
The financial statements have been prepared on the historical cost convention and on accrual basis except for the following:
0 certain financial assets and liabilities including derivative instruments measured at fair value
0 defined benefit plans - plan assets measured at fair value
The financial statements are presented in Indian rupees rounded off to nearest crore.
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
1.5 Summary of significant accounting policies1.5.1 Revenue recognition
⢠Revenue from the sale of products is recognized when the entity satisfies a performance obligation by transferring a promised good or service to a customer at an amount as specified in the contract.
⢠Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. (For the purpose of determining the transaction price, an entity shall assume that the goods or services will be transferred to the customer as promised in accordance with the existing contract) The transaction price of goods sold and services provided is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract; revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved
⢠Revenue from the sale of products is recognized when the control of the goods has been transferred to the customer as specified in the contract. Revenue is recognized for variable considerations such as discounts, rebates, refunds, credits, price concessions, incentives, GST, in a contract when they are highly probable to be provided which is when significant risks and rewards of ownership pass to the customer The amount of revenue excludes any amount collected on behalf of third parties
⢠Revenue from the sale of power is recognized when the services are transferred to the customer at the amount specified for transferring promised goods and are measured based on bilateral contractual agreements The Company doesn''t recognize revenue for the cost incurred in the past that will be recovered.
⢠Revenue from the sale of land and plots is recognized in the year in which the underlying sale deed is executed and there exists no uncertainty in the ultimate collection of collection from buyers.
⢠Export incentives and subsidies are recognized when there is reasonable assurance that the company will comply with the conditions and the incentive will be received. Export benefits available are accounted for in the year of export.
⢠Refund liability is recognized if the entity receives consideration from a customer and expects to refund some or all of that consideration to the customer. Refund liability is calculated as the sum of the consideration received (or payable) for which the entity does not anticipate being entitled (i.e., sums not included in the transaction price).
⢠A receivable is recognized when the goods are delivered and to the extent that it has an unconditional contractual right to receive cash or other financial assets.
⢠A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration from the customer. Contract liabilities are recognized as revenue when the Company performs under the contract including Advance received from the Customer.
⢠Government grants/ subsidies are recognized at fair value where there is reasonable certainty that the grant /subsidy will be received and all attached conditions will be complied with.
1.5.2 Other income Dividend income
Dividend income is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Operations and maintenance income
Income arising from billing of maintenance charges is recognized in the period in which the services are being rendered.
Revenue is recognized when the right to receive the credits is established and there is no significant uncertainty regarding the ultimate collection.
1.5.3 Property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation/ amortisation and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. These are included in profit or loss within other gains/ losses.
The residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively.
ii) Depreciation
Depreciation has been provided based on life assigned to each asset in accordance with Schedule II of the Companies Act, 2013. Leased assets are amortized on a straight-line basis over the useful life of the asset or the remaining period of lease, whichever is earlier. Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower.
Mining rights and expenditure incurred on development of mines are amortized over useful life of mines or lease period, whichever is earlier.
Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of any component recognized as a separated component is derecognized when replaced. All other repairs and maintenance are recognized in profit or loss as incurred.
iv) Mining Assets
The cost of Mining Assets capitalized includes costs of licenses and rights to explore, stamp duty, registration fees and other such associated costs.
Bid premium and royalties payable with respect to mining operations is contractual obligations. The said obligations are variable and linked to market prices. The Company has accounted for the same as expenditure on accrual basis as and when related liability arises as per respective agreements/ statue.
Exploration and evaluation expenditure incurred after obtaining the mining or the legal right to explore are capitalized as exploration and evaluation assets. (intangible assets) and stated at cost less impairment. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed recoverable amount.
The company measures its exploration and evaluation assets at cost and classifies as Property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that tangible asset is consumed in developing and intangible asset, the amount reflecting that consumption is capitalized as a part of the cost of the intangible asset.
3. Site restoration, rehabilitation and environmental costs
Provision is made for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mine. The cost are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the cost of restoration are capitalized. The provision for decommissioning assets is based on the current estimated of the cost for removing and decommissioning production facilities, the forecast timing of settlement of decommissioning liabilities and the appropriate discount rate. A corresponding provision is created on the liability side. The capitalized asset is charged to profit and loss over the life of the asset through amortization over the life of the operation and the provision. Management estimates are based on local legislation and/or other agreements are reviewed periodically.
v) Spare parts
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalized and depreciated on straight line method on prorata basis at the rates specified therein. Other spare parts are carried as inventory and recognized in the income statement on consumption.
Property that is held for capital appreciation or for earning rentals or both or whose future use is undetermined is classified as investment property. Items of investment properties are measured at cost less accumulated depreciation / amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use. Investment properties are depreciated on straight line method on prorata basis at the rates specified therein. Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Intangible assets comprising of computer software, mining rights are stated at cost of acquisition/ implementation/development less accumulated amortization.
Intangible Assets are amortized over technically useful life of the asset.
1.5.6 Capital work in progress
Capital work in progress is stated at cost.
Expenditure in relation to survey and investigation of the projects is carried as Capital Work in Progress. Such expenditure is either capitalized as cost of project on completion of the construction of the project or the same is expensed in the year in which it is decided to abandon such project.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
A lease is classified on the inception date as a finance or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or if lower the present value of the minimum lease payments. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Leases under which substantially all the risks and rewards of ownership are not transferred to the Company are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
Lease payments under operating leases are recognized as an income on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation. The respective leased assets are included in the balance sheet based on their nature.
i) Stores and Spares are carried at cost (net of GST credits availed) on moving average basis and net realizable value whichever is lower.
ii) Raw Materials are carried at cost (net of GST credits availed) on moving average basis and net realizable value whichever is lower. However, raw materials held for use in the production of inventories are not
written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
iii) Finished and semi finished products produced or purchased by the Company are carried at lower of cost and net realizable value. Cost includes direct material and labour cost and a proportion of manufacturing overheads. Cost of finished goods includes excise duty based on prevailing rate.
iv) By products are valued at net realizable value. 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.
v) Cost of land and plots under development includes cost of land under development, internal and external development cost and related overhead costs and valued at lower of cost or net realizable value.
1.5.9 A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity of another entity.
Financial asseti) Initial measurement
All financial assets are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Regular way purchase and sale of financial assets are recognized on trade date. Financial assets of the Company include investments in equity shares of subsidiaries, associates, joint ventures and other companies, trade and other receivables, loans and advances to employees and other parties, deposits etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets of the Company are classified in the following categories:
1) financial assets measured at amortized cost
2) financial assets measured at fair value through other comprehensive income
3) financial assets measured at fair value through profit and loss and
The classification of financial assets depends on the objective of the business model. Management determines the classification of its financial assets at initial recognition.
Financial instruments measured at amortized cost
A financial instrument is measured at amortized cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables, bank deposits, security deposits, cash and cash equivalents, employee and other advances.
Financial instruments measured at fair value through other comprehensive income
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
(a) the objective of the business model is achieved by both collecting contractual cash flows and selling financial assets
(b) the asset''s contractual cash flow represent SPPI
Financial instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recognized in other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain loss in statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from equity to profit and loss. Interest earned is recognized under the expected interest rate (EIR) model.
Financial instruments measured at fair value through profit and loss
Fair value through profit and loss is the residual category. Any financial instrument which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified at FVTPL.
Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recorded in statement of profit and loss.
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. Such election is made on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable..
iii) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized when:
⢠The rights to receive cash flows from the asset have been transferred, or
⢠The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liability
All financial liabilities are recognized initially at fair value net of directly attributable transaction costs. The Company''s financial liabilities include loans and borrowings, trade and other payables etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial liabilities of the Company are classified in the following categories:
1) financial liabilities measured at amortized cost
2) financial liabilities measured at fair value through profit and loss Financial liabilities at amortised cost:
Financial liabilities at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.
Offsetting of financial instrument
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
All equity investments in scope of Ind AS 109 are measured at fair value. Investments in subsidiaries, associates and joint ventures are measured at cost in accordance with Ind AS 27. Investments in mutual funds are measured at fair value through profit and loss (FVTPL). The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Trading instruments are recognized at FVTPL.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less provision for impairment using expected credit loss method.
Loans and borrowings are initially recognized at fair value net of transaction costs incurred. Subsequently, these are measured at amortized cost using the effective interest rate (''EIR'') method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
1.5.13 Trade and other payables
These amount represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the EIR model.
The Company uses derivative financial instruments such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
1.5.15 Impairmenta) Financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
a) Financial assets measured at amortized cost e.g. loans, deposits and trade receivables.
b) Financial assets measured at FVTOCI e.g. investments.
Expected credit losses are measured through a loss allowance at an amount equal to:
(i) The 12 months expected credit loss (expected credit losses that result from those defaults events on the financial instruments that are possible within 12 months after the reporting date) ;or
(ii) Full time expected credit loss (expected credit loss that results from all possible defaults events over the life time of the financial instruments)
Loss allowance for trade receivable are always measured at an amount equal to life time expected credit losses,
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss.
As a practical expedient, the Company uses a provision matrix to determine the impairment loss on its trade receivables. The provision matrix is based on historically observed default rates and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in forward looking estimates are analyzed.
The Company assesses at each reporting date whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in profit or loss. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
Income tax expense comprises current and deferred tax. Current tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred tax is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
The Company participates in various employee benefit plans. Post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company''s only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks fall on the employee. The expenditure for defined contribution plans is recognized as expense during the period when the employee provides service. Under a defined benefit plan, it is the Company''s obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company.
Contribution to Provident fund and Contributory pension fund are accounted for on accrual basis. Provident fund contributions are made to a fund administered through statutory fund.
Actuarial gains or losses on gratuity and leave encashment are recognized in other comprehensive income. Further, the profit or loss does not include an expected return on plan assets. Instead net interest
recognized in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognized as part of re-measurement of net defined liability or asset through other comprehensive income.
Remeasurements comprising actuarial gains or losses and return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are not reclassified to profit or loss in subsequent periods.
1.5.18 Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgement of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
1.5.19 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks are considered part of the Company''s cash management system.
1.5.20 Foreign currency transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company.
Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing exchange rate. Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company''s monetary items at the closing rate are recognized as income or expenses in the period in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalized as part of cost of such asset until such time that the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted
average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. All other borrowing costs are recognized as an expense in the year in which they are incurred.
The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over period in which the options are vested. The increase in equity recognized in connection with a share based payment transaction is presented as a separate component of equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest.
The Company distributes stripping (waste removal) costs incurred during the production phase of its mining operations on equitable basis over estimated minable reserves. This calculation requires the use of judgements and estimates relating to the expected tons of waste to be removed over the life of the mining area and the expected economically recoverable reserves to be extracted as a result. This information is reviewed periodically to calculate the average life of mine strip ratio (expected waste to expected mineral reserves ratio). Changes in a mine''s life and design will usually result in changes to the average life of mine strip ratio. These changes are accounted for prospectively.
i) 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.
ii) Segment Accounting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
iii) Inter-Segment Transfers
The Company generally accounts for intersegment transfers at an agreed transaction value.
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer note 33 for details on segment information presented.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating/exiting the contract and the expected net cost of fulfilling the contract.
1.5.26 New and Amended Standards:
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022, to amend the existing Ind AS viz. Ind AS 37, 103, 16, 101, 109 & 41. There is no such impact of amendments which would have been applicable from 1st April, 2022.
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1st April, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general-purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company does not expect this amendment to have any significant impact in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expense associated with investing or financing cash flow. The cash flows from operating, investing and financing activities of the Company are segregated.
Mar 31, 2018
1. Company Overview
The Company has integrated steel manufacturing facility starting from iron ore mining to the finished steel in the form of wire rod and H.B. wire. The Company is also a leading manufacturer and exporter of Ferro Alloys enjoying Two Star Export House Status. The manufacturing facilities are backed by captive thermal power plant. The company has also promoted hydropower projects through SPVs.
1.1 Significant Accounting Policies
Basis of preparation of financial statements
1.2 Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (''Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
1.3 Basis of Measurement
The financial statements have been prepared on the historical cost convention and on accrual basis except for the following:
- certain financial assets and liabilities including derivative instruments measured at fair value
- defined benefit plans - plan assets measured at fair value
- Share based payments
The financial statements are presented in Indian rupees rounded off to nearest lakh.
1.4 Use of estimate
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
1.5 Summary of significant accounting policies
1.5.1 Revenue recognition
Revenue from sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of return, trade discounts and volume rebates. Revenue is recognized when the significant risk and rewards of ownerships have been transferred to the buyer, recovery of the consideration is probable, the associated cost and possible return can be estimated reliably and there is no continuing effective control or managerial involvement with, the goods, and the amount can be measured reliably.
1.5.2 Other income Interest income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability.
Dividend income
Dividend income is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Incentives
Revenue is recognized when the right to receive the credits is established and there is no significant uncertainty regarding the ultimate collection.
1.5.3 Property, Plant and Equipment
i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation/ amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. These are included in profit or loss within other gains/ losses.
The residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively.
ii) Depreciation
Depreciation has been provided based on life assigned to each asset in accordance with Schedule II of the Companies Act, 2013.Leased assets are amortized on a straight-line basis over the useful life of the asset or the remaining period of lease, whichever is earlier. Spares parts procured along with the Plant & Machinery or subsequently which are capitalized and added in the carrying amount of such item are depreciated over the residual useful life of the related plant and machinery or their useful life whichever is lower.
Mining rights and expenditure incurred on development of mines are amortized over useful life of mines or lease period, whichever is earlier.
iii) Subsequent costs
Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of any component recognized as a separated component is derecognized when replaced. All other repairs and maintenance are recognized in profit or loss as incurred.
iv) Spare parts
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalized and depreciated on straight line method on prorata basis at the rates specified therein. Other spare parts are carried as inventory and recognized in the income statement on consumption.
1.5.4 Investment properties
Property that is held for capital appreciation or for earning rentals or both or whose future use is undetermined is classified as investment property. Items of investment properties are measured at cost less accumulated depreciation / amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use. Investment properties are depreciated on straight line method on prorata basis at the rates specified therein. Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
1.5.5 Intangible assets
Intangible assets comprising of computer software, mining rights are stated at cost of acquisition/ implementation/ development less accumulated amortization.
Amortization
Intangible Assets are amortized over technically useful life of the asset.
1.5.6 Capital work in progress
Capital work in progress is stated at cost.
Expenditure in relation to survey and investigation of the projects is carried as Capital Work in Progress. Such expenditure is either capitalized as cost of project on completion of the construction of the project or the same is expensed in the year in which it is decided to abandon such project.
1.5.7 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
As a lessee
A lease is classified on the inception date as a finance or an operating lease. Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or if lower the present value of the minimum lease payments. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Leases under which substantially all the risks and rewards of ownership are not transferred to the Company are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
As a lessor
Lease payments under operating leases are recognized as an income on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation. The respective leased assets are included in the balance sheet based on their nature.
1.5.8 Inventory
i) Stores and Spares are carried at cost (net of CENVAT, VAT & GST credits availed) on moving average basis and net realizable value whichever is lower.
ii) Raw Materials are carried at cost (net of CENVAT, VAT & GST credits availed) on moving average basis and net realizable value whichever is lower. However, raw materials held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
iii) Finished and semi finished products produced or purchased by the Company are carried at lower of cost and net realizable value. Cost includes direct material and labor cost and a proportion of manufacturing overheads. Cost of finished goods includes excise duty based on prevailing rate.
iv) By products are valued at net realizable value. 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.
1.5.9 A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity of another entity.
Financial asset
i) Initial measurement
All financial assets are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Regular way purchase and sale of financial assets are recognized on trade date. Financial assets of the Company include investments in equity shares of subsidiaries, associates, joint ventures and other companies, trade and other receivables, loans and advances to employees and other parties, deposits etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets of the Company are classified in the following categories:
1) financial assets measured at amortized cost
2) financial assets measured at fair value through other comprehensive income
3) financial assets measured at fair value through profit and loss and
The classification of financial assets depends on the objective of the business model. Management determines the classification of its financial assets at initial recognition.
Financial instruments measured at amortized cost
A financial instrument is measured at amortized cost if both the following conditions are met:
(a)The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables, bank deposits, security deposits, cash and cash equivalents, employee and other advances.
Financial instruments measured at fair value through other comprehensive income
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
(a) the objective of the business model is achieved by both collecting contractual cash flows and selling financial assets
(b) the asset''s contractual cash flow represent SPPI
Financial instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recognized in other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain loss in statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from equity to profit and loss. Interest earned is recognized under the expected Interest rate (EIR) model.
Financial instruments measured at fair value through profit and loss
Fair value through profit and loss is the residual category. Any financial instrument which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified at FVTPL.
Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recorded in statement of profit and loss.
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. Such election is made on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
iii) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized when:
- The rights to receive cash flows from the asset have been transferred, or
- The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liability
i) Initial measurement
All financial liabilities are recognized initially at fair value net of directly attributable transaction costs. The Company''s financial liabilities include loans and borrowings, trade and other payables etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial liabilities of the Company are classified in the following categories:
1) financial liabilities measured at amortized cost
2) financial liabilities measured at fair value through profit and loss Financial liabilities at amortized cost:
Financial liabilities at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.
Offsetting of financial instrument
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.5.10 Investments
All equity investments in scope of Ind AS 109 are measured at fair value. Investments in subsidiaries, associates and joint ventures are measured at cost in accordance with Ind AS 27. Investments in mutual funds are measured at fair value through profit and loss (FVTPL). The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Trading instruments are recognized at FVTPL
1.5.11 Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method, less provision for impairment using expected credit loss method.
1.5.12 Loans and borrowings
Loans and borrowings are initially recognized at fair value net of transaction costs incurred. Subsequently, these are measured at amortized cost using the effective interest rate (''EIR'') method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
1.5.13 Trade and other payables
These amount represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the EIR model.
1.5.14 Derivatives
The Company uses derivative financial instruments such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
1.5.15 Impairment
a) Financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
a) Financial assets measured at amortized cost e.g. loans, deposits and trade receivables.
b) Financial assets measured at FVTOCI e.g. investments.
Expected credit losses are measured through a loss allowance at an amount equal to:
(i) The 12 months expected credit loss (expected credit losses that result from those defaults events on the financial instruments that are possible within 12 months after the reporting date) ;or
(ii) Full time expected credit loss (expected credit loss that results from all possible defaults events over the life time of the financial instruments)
Loss allowance for trade receivable are always measured at an amount equal to life time expected credit losses, ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss.
As a practical expedient, the Company uses a provision matrix to determine the impairment loss on its trade receivables. The provision matrix is based on historically observed default rates and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in forward looking estimates are analyzed.
b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in profit or loss. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
1.5.16 Taxes
Income tax expense comprises current and deferred tax. Current tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred tax is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the carrying amount of the MAT credit entitlement at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
1.5.17 Employee benefits
The Company participates in various employee benefit plans. Post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Company''s only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks fall on the employee. The expenditure for defined contribution plans is recognized as expense during the period when the employee provides service. Under a defined benefit plan, it is the Company''s obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company.
Contribution to Provident fund and Contributory pension fund are accounted for on accrual basis. Provident fund contributions are made to a fund administered through statutory fund.
Actuarial gains or losses on gratuity and leave encashment are recognized in other comprehensive income. Further, the profit or loss does not include an expected return on plan assets. Instead net interest recognized in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognized as part of re-measurement of net defined liability or asset through other comprehensive income.
1.5.18 Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
1.5.19 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks are considered part of the Company''s cash management system.
1.5.20 Foreign currency transactions
The Company''s financial statements are presented in INR which is also the functional currency of the Company.
Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing exchange rate. Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Company''s monetary items at the closing rate are recognized as income or expenses in the period in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
1.5.21 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalized as part of cost of such asset until such time that the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. All other borrowing costs are recognized as an expense in the year in which they are incurred.
1.5.22 Share Based Payments
The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over period in which the options are vested. The increase in equity recognized in connection with a share based payment transaction is presented as a separate component of equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest.
1.5.23 Advance Stripping Cost
The Company distributes stripping (waste removal) costs incurred during the production phase of its mining operations on equitable basis over estimated minable reserves. This calculation requires the use of judgments and estimates relating to the expected tons of waste to be removed over the life of the mining area and the expected economically recoverable reserves to be extracted as a result. This information is reviewed periodically to calculate the average life of mine strip ratio (expected waste to expected mineral reserves ratio). Changes in a mine''s life and design will usually result in changes to the average life of mine strip ratio. These changes are accounted for prospectively.
1.5.24 Mine Restoration Expense
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mining property and the Company is liable for environmental damage caused by mining activities.
These future costs generally include restoration and remediation of land and disturbed areas, mine closure costs, including the dismantling and demolition of infrastructure and the removal of residual materials, and mining damages costs.
Decommissioning of mine sites and land and disturbed areas restoration costs are a normal consequence of mining. The majority of mine closure and rehabilitation expenditure is incurred at the end of the life of the mine. Although the ultimate cost to be incurred is uncertain, the Company''s businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and techniques.
Restoration costs and clean-up of land used for mining activities are liabilities to restore the land to the condition it was in prior to the mining activities or as stated in the relevant licenses. These costs are incurred during the mining activity and can continue for many years depending on the nature of the disturbance and the remediation techniques. The mine closure costs include estimated costs of mine levels and pits closure, and capping of pits after removal of the surface construction.
Provisions for land restoration and mine closure costs are recognized for estimated outflow of economic resources to settle the obligation. Provisions are structured as land restoration and mine closure costs provision. The total estimate of restoration expenses is apportioned over the life of the mine.
1.5.25 Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of Equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.
Partly paid equity shares are treated as fraction of a equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.
1.5.26 Segment Reporting
i) 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.
ii) Segment Accounting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
iii) Inter-Segment Transfers
The Company generally accounts for intersegment transfers at an agreed transaction value.
iv) Unallocated Items
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer note 33 for details on segment information presented.
1.5.27 Onerous Contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating/exiting the contract and the expected net cost of fulfilling the contract.
1.5.28 Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expense associated with investing or financing cash flow. The cash flows from operating, investing and financing activities of the Company are segregated.
Mar 31, 2017
1.1.1 Revenue recognition
Revenue from sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of return, trade discounts and volume rebates. Revenue is recognized when the significant risk and rewards of ownerships have been transferred to the buyer, recovery of the consideration is probable, the associated cost and possible return can be estimated reliably and there is no continuing effective control or managerial involvement with the goods, and the amount can be measured reliably.
1.1.2 Other income
i) Interest income
For all debt instruments measured either at amortized cost or at fair value through other comprehensive income, interest income is recorded using the Effective Interest Rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability.
ii) Dividend income
Dividend income is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Incentives
Revenue is recognized when the right to receive the credits is established and there is no significant uncertainty regarding the ultimate collection.
1.1.3 Property, plant and equipment
i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation/ amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. These are included in profit or loss within other gains/ losses.
The residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively.
ii) Depreciation
Depreciation has been provided based on life assigned to each asset in accordance with Schedule II of the Companies Act, 2013. Leased assets are amortized on a straight-line basis over the useful life of the asset or the remaining period of lease, whichever is earlier. Spares parts procured along with the plant and machinery of subsequently which are capitalized and added in the carrying amount of the item are depreciated over the residual useful life of the related plant and machinery or their useful life which ever is lower.
Mining rights and expenditure incurred on development of mines are amortized over useful life of mines or lease period, whichever is earlier
iii) Subsequent costs
Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of any component recognised as a seperated component is derecognized when replaced. All other repairs and maintenance are recognized in profit or loss as incurred.
iv) Spare parts
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment are capitalized and depreciated on straight line method on prorata basis at the rates specified therein. Other spare parts are carried as inventory and recognized in the income statement on consumption.
1.1.4 Investment properties
Property that is held for capital appreciation or for earning rentals or both or whose future use is undetermined is classified as investment property. Items of investment properties are measured at cost less accumulated depreciation / amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for its intended use. Investment properties are depreciated on straight line method on prorata basis at the rates specified therein. Subsequent expenditure including cost of major overhaul and inspection is recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
1.1.5 Intangible assets
Intangible assets comprising of computer software, mining rights are stated at cost of acquisition/ implementation/ development less accumulated amortization.
Amortization
Intangible Assets are amortized over technically useful life of the asset.
1.1.6 Capital work in progress
Capital work in progress is stated at cost.
Expenditure in relation to survey and investigation of the projects is carried as Capital Work in Progress. Such expenditure is either capitalized as cost of project on completion of the construction of the project or the same is expensed in the year in which it is decided to abandon such project.
1.1.7 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
As a lessee
A lease is classified on the inception date as a finance or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or if lower, the present value of the minimum lease payments. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Leases under which substantially all the risks and rewards of ownership are not transferred to the Company are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation.
As a lessor
Lease payments under operating leases are recognised as an income on a straight line basis in the statement of profit and loss over the lease term except where the lease payments are structured to increase in line with expected general inflation. The respective leased assets are included in the balance sheet based on their nature.
1.1.8 Inventory
i) Stores and Spares are carried at cost (net of CENVAT & VAT credits availed) on moving average basis and net realizable value, whichever is lower.
ii) Raw Materials are carried at cost (net of CENVAT & VAT credits availed) on moving average basis and net realizable value whichever is lower. However, raw materials held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
iii) Finished and semi finished products produced or purchased by the Company are carried at lower of cost and net realizable value. Cost includes direct material and labor cost and a proportion of manufacturing overheads. Cost of finished goods includes excise duty based on prevailing rate.
iv) By products are valued at net realizable value. 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.
1.1.9 A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity of another entity.
Financial asset
i) Initial measurement
All financial assets are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Regular way purchase and sale of financial assets are recognized on trade date. Financial assets of the Company include investments in equity shares of subsidiaries, associates, joint ventures and other companies, trade and other receivables, loans and advances to employees and other parties, deposits etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets of the Company are classified in the following categories:
1) financial assets measured at amortized cost
2) financial assets measured at fair value through other comprehensive income and
3) financial assets measured at fair value through profit and loss
The classification of financial assets depends on the objective of the business model. Management determines the classification of its financial assets at initial recognition.
Financial instruments measured at amortized cost:
A financial instrument is measured at amortized cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables, bank deposits, security deposits, cash and cash equivalents, employee and other advances.
Financial instruments measured at fair value through other comprehensive income (FVTOCI)
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
(a) the objective of the business model is achieved by both collecting contractual cash flows and selling financial assets
(b) the assetâs contractual cash flow represent SPPI
Financial instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recognized in Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain loss in statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from equity to profit and loss. Interest earned is recognized under the Expected Interest Rate (EIR) model.
Financial instruments measured at fair value through profit and loss (FVTPL)
Fair value through profit and loss is the residual category. Any financial instrument which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified at FVTPL.
Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recorded in statement of profit and loss.
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVTOCI or FVTPL. Such election is made on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
iii) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial asset) is primarily derecognized when:
- The rights to receive cash flows from the asset have been transferred, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liability
i) Initial measurement
All financial liabilities are recognized initially at fair value net of directly attributable transaction costs. The Companyâs financial liabilities include loans and borrowings, trade and other payables, etc.
ii) Classification and subsequent measurement
For the purpose of subsequent measurement, financial liabilities of the Company are classified in the following categories:
1) financial liabilities measured at amortized cost
2) financial liabilities measured at fair value through profit and loss Financial liabilities at amortized cost:
Financial liabilities at amortized cost are initially recognized at fair value, and subsequently carried at amortized cost using the Effective Interest Rate method.
Offset Wing of financial instrument
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.1.10 Investments
All equity investments in scope of Ind AS 109 are measured at fair value. Investments in subsidiaries, associates and joint ventures are measured at cost in accordance with Ind AS 27. Investments in mutual funds are measured at fair value through profit and loss (FVTPL). The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Trading instruments are trading at FVTPL
1.1.11 Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the Effective Interest Rate method, less provision for impairment using expected credit loss method.
1.1.12 Loans and borrowings
Loans and borrowings are initially recognized at fair value net of transaction costs incurred. Subsequently, these are measured at amortized cost using the Effective Interest Rate (âEIRâ) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
1.1.13 Trade and other payables
These amount represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the EIR model.
1.1.14 Derivatives
The Company uses derivative financial instruments such as forward currency contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
1.1.15 Impairment
a) Financial assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:
a) Financial assets measured at amortized cost e.g. loans, deposits and trade receivables.
b) Financial assets measured at FVTOCI e.g. investments.
Expected credit losses are measured through a loss allowance at an amount equal to:
(i) The 12 months expected credit loss (expected credit losses that result from those defaults events on the financial instruments that are possible within 12 months after the reporting date); or
(ii) Full time expected credit loss (expected credit loss that results from all possible defaults events over the life time of the financial instruments)
Loss allowance for trade receivable are always measured at an amount equal to life time expected credit losses,
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/expense in the statement of profit and loss.
As a practical expedient, the Company uses a provision matrix to determine the impairment loss on its trade receivables. The provision matrix is based on historically observed default rates and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in forward looking estimates are analysed.
b) Non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non financial asset or a group of non financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount. Losses are recognized in profit or loss. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
1.1.16 Taxes
Income tax expense comprises current and deferred tax. Current tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred tax is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the carrying amount of the MAT credit entitlement at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.
1.1.17 Employee benefits
The Company participates in various employee benefit plans. Post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Companyâs only obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks fall on the employee. The expenditure for defined contribution plans is recognized as expense during the period when the employee provides service. Under a defined benefit plan, it is the Companyâs obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company.
Contribution to Provident fund and Contributory pension fund are accounted for on accrual basis. Provident fund contributions are made to a fund administered through statutory fund.
Actuarial gains or losses on gratuity and leave encashment are recognized in other comprehensive income. Further, the profit or loss does not include an expected return on plan assets. Instead net interest recognized in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognized as part of re-measurement of net defined liability or asset through other comprehensive income.
1.1.18 Provisions and contingent liabilities
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
1.1.19 Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks are considered part of the Companyâs cash management system.
1.1.20 Foreign currency transactions
The Companyâs financial statements are presented in INR which is also the functional currency of the Company.
Foreign currency transactions are recorded on initial recognition in the functional currency using the exchange rate at the date of the transaction. At each balance sheet date, foreign currency monetary items are reported using the closing exchange rate. Exchange differences that arise on settlement of monetary items or on reporting at each balance sheet date of the Companyâs monetary items at the closing rate are recognized as income or expenses in the period in which they arise.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
1.1.21 Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or erection of qualifying assets are capitalized as part of cost of such asset until such time that the assets are substantially ready for their intended use. Qualifying assets are assets which take a substantial period of time to get ready for their intended use or sale.
When the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the borrowing costs incurred are capitalized. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for the acquisition of the qualifying asset.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.
All other borrowing costs are recognized as an expense in the year in which they are incurred.
1.1.22 Share Based Payments
The fair value of options granted to employees is recognized as an employee expense, with a corresponding increase in equity, over period in which the options are vested. The increase in equity recognized in connection with a share based payment transaction is presented as a separate component of equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest.
1.1.23 Advance stripping cost
The Company distributes stripping (waste removal) costs incurred during the production phase of its mining operations on equitable basis over estimated minable reserves. This calculation requires the use of judgments and estimates relating to the expected tons of waste to be removed over the life of the mining area and the expected economically recoverable reserves to be extracted as a result. This information is reviewed periodically to calculate the average life of Mine Strip Ratio (expected waste to expected mineral reserves ratio). Changes in a mineâs life and design will usually result in changes to the average life of Mine Strip Ratio. These changes are accounted for prospectively.
1.1.24 Mine restoration expense
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mining property and the Company is liable for environmental damage caused by mining activities.
These future costs generally include restoration and remediation of land and disturbed areas, mine closure costs, including the dismantling and demolition of infrastructure and the removal of residual materials, and mining damages costs.
Decommissioning of mine sites and land and disturbed areas restoration costs are a normal consequence of mining. The majority of mine closure and rehabilitation expenditure is incurred at the end of the life of the mine. Although the ultimate cost to be incurred is uncertain, the Companyâs businesses estimate their respective costs based on feasibility and engineering studies using current restoration standards and techniques.
Restoration costs and clean-up of land used for mining activities are liabilities to restore the land to the condition it was in prior to the mining activities or as stated in the relevant licenses. These costs are incurred during the mining activity and can continue for many years depending on the nature of the disturbance and the remediation techniques. The mine closure costs include estimated costs of mine levels and pits closure, and capping of pits after removal of the surface construction.
Provisions for land restoration and mine closure costs are recognized for estimated outflow of economic resources to settle the obligation. Provisions are structured as land restoration and mine closure costs provision. The total estimate of restoration expenses is apportioned over the life of the mine.
1.1.25 Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted average number of equity shares outstanding during the year.
Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.
Partly paid equity shares are treated as fraction of a equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.
1.1.26 Segment Reporting
i) Identification of Segments
The Companyâs 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.
ii) Segment Accounting Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
iii) Inter-Segment Transfers
The Company generally accounts for inter-segment transfers at an agreed transaction value.
iv) Unallocated Items
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer note 33 for details on segment information presented.
1.1.27 Onerous Contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating/exiting the contract and the expected net cost of fulfilling the contract.
1.1.28 Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expense associated with investing or financing cash flow. The cash flows from operating, investing and financing activities of the Company are segregated.
Mar 31, 2015
A) Accounting convention
These financial statements have been prepared under historical cost
convention from books of accounts maintained on an accrual basis
(unless otherwise stated hereinafter) in conformity with accounting
principles generally accepted in India and comply with the Accounting
Standards issued by the Institute of Chartered Accountants of India and
referred to Sec 129 & 133 of the Companies Act, 2013, of India. The
accounting policies applied by the Company are consistent with those
used in previous year.
b) 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 amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
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.
c) Current and Non-current classification
An asset or a liability is classified as current when it satisfies any
of the following criteria:
i. it is expected to be realized / settled, or is intended for sale or
consumption, in the Company's normal operating cycle;
ii. it is held primarily for the purpose of being traded;
iii. it is expected to be realized / due to be settled within twelve
months after the reporting date;
iv. the Company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting date.
All other assets and liabilities are classified as non-current.
2.1 Summary of significant accounting policies
a) Fixed assets Tangible
Tangible assets are stated at cost, net of recoverable taxes less
accumulated depreciation / amortization and impairment losses if any.
Cost comprises purchase price and any attributable costs of bringing
the asset to its working condition for its intended use.
All costs, including administrative, financing and general overhead
expenses, as are specifically attributable to construction of a project
or to the acquisition of a fixed asset or bringing it to its working
condition, is included as part of the cost of construction of project
or as a part of the cost of fixed asset, till commencement of
commercial production. Adjustments arising from exchange rate
variations attributable to the fixed assets are capitalized as
aforementioned.
Subsequent expenditure related to an item of tangible assets is added
to its book value only, if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
The Ministry of Corporate Affairs (MCA) has issued Companies
(Accounting Standards) Amendment Rules 2011 dated 29th December 2011
for amendment in the Accounting Standard 11 "The Effects of Changes in
Foreign Exchange Rates", to allow companies deferral/ capitalization of
exchange differences arising on long-term foreign currency monetary
items. The Company has opted to avail the option provided in the said
Rules. Consequently, the exchange differences arising on long term
foreign currency monetary items, related to acquisition of a fixed
asset, are capitalized and depreciated / amortized over the remaining
useful life of the respective assets.
Intangible
Intangible assets are carried at its cost, less accumulated
amortization and impairment losses, if any. All costs, including
financing costs relating to development of intangible assets which
takes substantial period of time to get ready for its intended use are
also included to the extent they are incurred, till commencement of
commercial production.
Expenditure on exploration, prospecting and evaluation of minerals /
other projects is recognized as intangible assets under development.
The application of the Company's accounting policy for exploration and
evaluation expenditure requires judgment in determining whether future
economic benefits are likely from future exploitation. The deferral
policy requires management to make certain estimates and assumptions
about future events or circumstances, in particular, whether an
economically viable extraction operation can be established. Estimates
and assumptions made may change if new information becomes available.
If, after expenditure is capitalized, information becomes available
suggesting that the recovery of expenditure is unlikely, the amount
capitalized is written off in Statement of profit and loss in the
period when the new information becomes available.
Capital work in progress
Projects / fixed assets under installation including other capital work
in progress are carried at cost, comprising direct cost, related
incidental expenses and attributable cost. Advances for capital work in
progress are shown under Non Current Assets.
Expenditure in relation to survey and investigation of the projects is
carried as Capital Work in Progress. Such expenditure is either
capitalized as cost of project on completion of the construction of the
project or the same is expensed in the year in which it is decided to
abandon such project.
b) Lease
The Company has entered into various operating lease agreements for
premises (residential, office and godown).These lease agreements are
cancellable in nature and range between 11 months to 3 years and are
usually renewable by mutual consent on mutually agreed terms. The
aggregate rentals on accrual basis under such agreement have been
charged to Statement of Profit and Loss under the head rent, rates and
taxes in Other Expenses.
c) Impairment of fixed assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists
based on internal or external factors, or when annual impairment
testing for an asset is required, the Company estimates the asset's
recoverable amount. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. The recoverable amount is the greater
of the net selling price and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value
based on an appropriate discount factor. After impairment, depreciation
is provided on the revised carrying amount of the assets over its
remaining useful life.
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognized for the asset in prior years.
d) Depreciation / Amortization
Depreciation has been provided based on life assigned to each asset in
accordance with Schedule II of the Companies Act, 2013.
Mining Rights and expenditure incurred on development of mines are
amortized over useful life of the mines or lease period whichever is
shorter.
Leased assets are amortized on a straight-line basis over the useful
life of the asset or the remaining period of lease, whichever is
earlier.
Intangible Assets are amortized over technically useful life of the
asset.
e) Investments
Trade Investments are investments made to enhance the Company's
business interests. Investments are classified either as current or
long-term based on Management's intention at the time of purchase.
Other Investments, which are readily realizable and intended to be held
for not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried at the lower of cost and fair value
determined by category of investment. Long-term investments are carried
at cost less provisions recorded to recognize any decline, other than
temporary, in the carrying value of each investment.
f) Valuation of inventories
i) Stores and Spares are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis.
ii) Raw Materials are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis and net realizable value, whichever is
lower. However, raw materials held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost.
iii) Finished and semi finished products produced or purchased by the
Company are carried at lower of cost and net realizable value. Cost
includes direct material and labor cost and a proportion of
manufacturing overheads. Cost of finished goods includes excise duty
based on prevailing rate.
iv) By products are valued at net realizable value.
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.
g) Advance stripping costs
The Company distributes stripping (waste removal) costs incurred during
the production phase of its mining operations on equitable basis over
estimated minable reserves. This calculation requires the use of
judgments and estimates relating to the expected tons of waste to be
removed over the life of the mining area and the expected economically
recoverable reserves to be extracted as a result. This information is
reviewed periodically to calculate the average life of mine strip ratio
(expected waste to expected mineral reserves ratio). Changes in a
mine's life and design will usually result in changes to the average
life of mine strip ratio. These changes are accounted for
prospectively.
h) Mines restoration expenses
An obligation to incur restoration, rehabilitation and environmental
costs arises when environmental disturbance is caused by the
development or ongoing production of a mining property and the Company
is liable for environmental damage caused by mining activities.
These future costs generally include restoration and remediation of
land and disturbed areas, mine closure costs, including the dismantling
and demolition of infrastructure and the removal of residual materials,
and mining damages costs.
Decommissioning of mine sites and land and disturbed areas restoration
costs are a normal consequence of mining. The majority of mine closure
and rehabilitation expenditure is incurred at the end of the life of
the mine. Although the ultimate cost to be incurred is uncertain, the
Company's businesses estimate their respective costs based on
feasibility and engineering studies using current restoration standards
and techniques.
Restoration costs and clean-up of land used for mining activities are
liabilities to restore the land to the condition it was in prior to the
mining activities or as stated in the relevant licenses. These costs
are incurred during the mining activity and can continue for many years
depending on the nature of the disturbance and the remediation
techniques. The mine closure costs include estimated costs of mine
levels and pits closure, and capping of pits after removal of the
surface construction.
Provisions for land restoration and mine closure costs are recognized
for estimated outflow of economic resources to settle the obligation.
Provisions are structured as land restoration and mine closure costs
provision. The total estimate of restoration expenses is apportioned
over the life of the mine.
i) Borrowing cost
Borrowing cost includes interest, commitment charges on bank
borrowings, amortization of ancillary costs incurred in connection with
the arrangement of borrowings.
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of that asset. The amount of borrowing costs eligible for
capitalization is determined in accordance with Accounting Standard 16
"Borrowing Costs". Other borrowing costs are recognized as an expense
in the period in which they are incurred.
In accordance with Accounting Standard 16, exchange differences arising
from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs are recognized as borrowing costs,
and are capitalized as part of the cost of fixed assets if they are
directly attributable to their acquisition or charged to Statement of
Profit and Loss.
j) Employee benefits
i) Retirement benefits in the form of Provident Fund contribution to
the Statutory Provident Fund and superannuation fund are defined
contribution schemes and the payments are charged to the Statement of
Profit and Loss of the year when the payments to the respective funds
are due.
ii) Retirement benefits in the form of Gratuity is a defined benefit
obligation and is covered under group gratuity scheme. The Company
contributes the ascertained gratuity liability to the approved Gratuity
Trust which is charged to revenue on accrual basis. Gratuity Liability
at each balance sheet date is ascertained on Actuarial Valuation basis
using projected unit credit method. Actuarial gains/losses are
immediately taken to Statement of Profit and Loss and are not deferred.
iii) The liability for encashable leaves /compensated absences
outstanding as on reporting date is provided based on the salary
prevailing on reporting date.
iv) Employee Stock Option Scheme(ESOS)
Stock options granted to the employees under the stock options schemes
are accounted at intrinsic value as per the accounting treatment
prescribed by the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 ('Guidelines') and guidance note on Employee share based payments
issued by the Institute of Chartered Accountants of India. Accordingly,
the excess of market price, of underlying equity shares as on the date
of the grant (market value), over the exercise price of the options is
recognised as deferred stock compensation expense and is charged to
statement of profit and loss on a straight line basis over the vesting
period of the options. The amortised portion of the cost is shown under
shareholders' funds.
k) 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.
Sale of Goods
Revenue is recognized, when all the significant risks and rewards of
ownership of the goods is passed to the buyer, which is generally on
dispatch of goods to customers except in case of consignment sales.
Sales include excise duty and exclude VAT and are net of discounts and
incentives to the customers. Excise Duty to the extent included in the
gross turnover is deducted to arrive at the net turnover.
Dividends
Revenue is recognized when the Company's right to receive the payment
is established by the reporting date.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Incentives
Revenue is recognized when the right to receive the credits is
established and there is no significant uncertainty regarding the
ultimate collection.
l) Foreign currency transaction and balances Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
a) Monetary Items
Year end balances of foreign currency monetary items are retranslated
using the exchange rate prevailing at the reporting date.
b) Non monetary items
Non Monetary items such as investments are carried at historical cost
using the exchange rate on the date of transaction.
Exchange differences
Exchange differences arising on long term foreign currency monetary
items, related to acquisition of a fixed asset are deferred/capitalized
and depreciated over the remaining useful life of respective assets as
per the Companies (Accounting Standards) Amendment Rules, 2011 dated 29
December, 2011 for amendment to Accounting Standard 11 "The Effects of
Changes in Foreign Exchange Rates'; issued by The Ministry of Corporate
Affairs (MCA).
In order to exercise the option, an asset or liability is treated as a
long term foreign currency monetary item, if the asset or liability is
expressed in a currency and has a term of twelve months or more at the
date of the origination of the asset or liability.
All other exchange differences including mark to market losses/gains
are dealt with in the Statement of Profit and Loss as income or as
expenses in the period in which they arise except to the extent that
they are regarded as an adjustment to the interest costs and
capitalized to fixed assets or charged to Statement of Profit and Loss
as per Accounting Standard 16 "Borrowing Costs".
Foreign exchange forward contracts are marked to market at Closing Rate
as on the reporting date. The premium or discount arising at the
inception of forward exchange contract is amortized and recognized as
an expense/income over the life of the contract. Any profit or loss
arising on cancellation or renewal of such forward exchange contract is
also recognized as income or as expense for the period.
m) Taxes on income
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act. Deferred income taxes reflects the
impact of current period timing differences between taxable income and
accounting income for the period 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. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits. At each Balance Sheet date the Company
re-assesses unrecognized deferred tax assets. It recognizes
unrecognized 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 realized.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of Profit and Loss and
shown as MAT Credit Entitlement. The Company reviews the same at each
Balance Sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
n) 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.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
Inter-segment transfers
The Company generally accounts for intersegment transfers at an agreed
transaction value.
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
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
o) Earnings per share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss attributable to the
equity shareholders for the year by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss attributable to the equity shareholders
for the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
p) Provisions
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability.
Where there is a possible obligation or a present obligation in respect
of which the likelihood of outflow of resources is remote, no provision
or disclosure is made.
Clause 8.5 of the AS-4 "Contingencies and events occurring after the
Balance Sheet date" states that proposed dividend is sometimes
reflected in the financial statements because of statutory requirement.
As per requirement of Schedule III, the Company is disclosing proposed
dividend separately.
q) Onerous contracts
Provisions for onerous contracts are recognized when the expected
benefits to be derived by the Company from a contract are lower than
the unavoidable costs of meeting the future obligations under the
contract. The provision is measured at lower of the expected cost of
terminating/exiting the contract and the expected net cost of
fulfilling the contract.
r) Contingent liabilities
Possible obligation that arises from past events whose existence will
be confirmed by the occurrence or non-occurrence of one or more
uncertain future events beyond the control of the Company or a present
obligation that is not recognized because it is not probable that an
outflow of resources will be required to settle the obligation is
reported as contingent liability. In rare cases, when a liability
cannot be measured reliably, it is classified as contingent liability.
The Company does not recognize a contingent liability but discloses its
existence in the financial statements.
s) Cash flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
For the purpose of Cash Flow Statement, Cash and Cash Equivalents
comprise cash at bank and in hand and highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Mar 31, 2014
A) Accounting convention
The fnancial statements of the Company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The Company has prepared these fnancial statements to comply in all
material respects with the accounting standards notifed under the
Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956. The fnancial statements
have been prepared on an accrual basis and under the historical cost
convention as per Revised Schedule VI notifed under the Companies act,
1956.
b) Use of estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
fnancial 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.
c) Current and Non-current classification
An asset or a liability is classified as current when it satisfes any of
the following criteria: i. it is expected to be realized / settled, or
is intended for sale or consumption, in the Company''s normal operating
cycle; ii. it is held primarily for the purpose of being traded;
iii. it is expected to be realized / due to be settled within twelve
months after the reporting date; iv the company does not have an
unconditional right to defer settlement of the liability for at least
twelve months after
the reporting date.
All other assets and liabilities are classified as non-current.
2.1 Summary of significant accounting policies a) Fixed assets
Tangible
Tangible assets are stated at cost, net of recoverable taxes less
accumulated depreciation / amortization and impairment losses if any.
Cost comprises purchase price and any attributable costs of bringing
the asset to its working condition for its intended use.
All costs, including administrative, fnancing and general overhead
expenses, as are Specifically attributable to construction of a project
or to the acquisition of a fixed asset or bringing it to its working
condition, is included as part of the cost of construction of project
or as a part of the cost of fixed asset, till commencement of commercial
production. Adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized as aforementioned.
Subsequent expenditure related to an item of tangible assets is added
to its book value only, if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
the Ministry of Corporate affairs (MCa) has issued Companies
(accounting Standards) amendment Rules 2011 dated 29th December 2011
for amendment in the Accounting Standard 11 "The Effects of Changes in
Foreign Exchange Rates", to allow companies deferral/ capitalization of
exchange differences arising on long-term foreign currency monetary
items. the Company has opted to avail the option provided in the said
Rules. Consequently, the exchange differences arising on long term
foreign currency monetary items, related to acquisition of a fixed
asset, are capitalized and depreciated / amortized over the remaining
useful life of the respective assets.
Intangible
Intangible assets are carried at its cost, less accumulated
amortization and impairment losses, if any. All costs, including
fnancing costs relating to development of intangible assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they are incurred, till commencement of
commercial production.
Expenditure on exploration, prospecting and evaluation of minerals /
other projects is recognized as intangible assets under development.
the application of the Company''s accounting policy for exploration and
evaluation expenditure requires judgment in determining whether future
economic benefits are likely from future exploitation. the deferral
policy requires management to make certain estimates and assumptions
about future events or circumstances, in particular, whether an
economically viable extraction operation can be established. Estimates
and assumptions made may change if new information becomes available.
If, after expenditure is capitalized, information becomes available
suggesting that the recovery of expenditure is unlikely, the amount
capitalized is written off in Statement of profit and loss in the period
when the new information becomes available.
Capital work in progress
Projects / fixed assets under installation including other capital work
in progress are carried at cost, comprising direct cost, related
incidental expenses and attributable cost. Advances for Capital work in
progress are shown under Non Current assets.
Expenditure in relation to survey and investigation of the projects is
carried as Capital Work in Progress. Such expenditure is either
capitalized as cost of project on completion of the construction of the
project or the same is expensed in the year in which it is decided to
abandon such project.
b) Lease
The Company has entered into various operating lease agreements for
premises (residential, office and godown). These lease agreements are
cancellable in nature and range between 11 months to 3 years and are
usually renewable by mutual consent on mutually agreed terms. the
aggregate rentals on accrual basis under such agreement have been
charged to Statement of profit and Loss under the head rent, rates and
taxes in Other Expenses.
c) Impairment of fixed assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists
based on internal or external factors, or when annual impairment
testing for an asset is required, the Company estimates the asset''s
recoverable amount. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. the recoverable amount is the greater
of the net selling price and value in use. in assessing value in use,
the estimated future cash flows are discounted to their present value
based on an appropriate discount factor. After impairment, depreciation
is provided on the revised carrying amount of the assets over its
remaining useful life.
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognized for the asset in prior years.
d) Depreciation / Amortization
Depreciation on building and Plant & Machinery in respect of Steel
Division are provided on Straight Line Method and on all other assets
on Written Down Value method at the rates and in the manner prescribed
in Schedule XIV of the Companies act, 1956.
Mining Rights and expenditure incurred on development of mines are
amortized over useful life of the mines or lease period whichever is
shorter.
Leased assets are amortized on a straight-line basis over the useful
life of the asset or the remaining period of lease, whichever is
earlier.
Intangible Assets are amortized over technically useful life of the
asset.
e) Investments
Trade Investments are investments made to enhance the Company''s
business interests. Investments are classified either as current or
long-term based on Management''s intention at the time of purchase.
Other Investments, which are readily realizable and intended to be held
for not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried at the lower of cost and fair value
determined by category of investment. Long- term investments are
carried at cost less provisions recorded to recognize any decline,
other than temporary, in the carrying value of each investment.
f) Valuation of inventories
i) Stores and Spares are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis.
ii) Raw Materials are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis and net realizable value whichever is
lower. However, raw materials held for use in the production of
inventories are not written down below cost if the fnished products in
which they will be incorporated are expected to be sold at or above
cost.
iii) Finished and semi fnished products produced or purchased by the
Company are carried at lower of cost and net realizable value. Cost
includes direct material and labour cost and a proportion of
manufacturing overheads. Cost of fnished goods includes excise duty
based on prevailing rate.
iv) By products are valued at net realizable value.
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.
g) Advance stripping costs
The Company distributes stripping (waste removal) costs incurred during
the production phase of its mining operations on equitable basis over
estimated minable reserves. This calculation requires the use of
judgments and estimates relating to the expected tons of waste to be
removed over the life of the mining area and the expected economically
recoverable reserves to be extracted as a result. This information is
reviewed periodically to calculate the average life of mine strip ratio
(expected waste to expected mineral reserves ratio). Changes in a
mine''s life and design will usually result in changes to the average
life of mine strip ratio. these changes are accounted for
prospectively.
h) Mines restoration expenses
An obligation to incur restoration, rehabilitation and environmental
costs arises when environmental disturbance is caused by the
development or ongoing production of a mining property and the Company
is liable for environmental damage caused by mining activities.
These future costs generally include restoration and remediation of
land and disturbed areas, mine closure costs, including the dismantling
and demolition of infrastructure and the removal of residual materials,
and mining damages costs.
Decommissioning of mine sites and land and disturbed areas restoration
costs are a normal consequence of mining. The majority of mine closure
and rehabilitation expenditure is incurred at the end of the life of
the mine. although the ultimate cost to be incurred is uncertain, the
Company''s businesses estimate their respective costs based on
feasibility and engineering studies using current restoration standards
and techniques.
Restoration costs and clean-up of land used for mining activities are
liabilities to restore the land to the condition it was in prior to the
mining activities or as stated in the relevant licenses. These costs
are incurred during the mining activity and can continue for many years
depending on the nature of the disturbance and the remediation
techniques. the mine closure costs include estimated costs of mine
levels and pits closure, and capping of pits after removal of the
surface construction.
Provisions for land restoration and mine closure costs are recognized
for estimated outflow of economic resources to settle the obligation.
Provisions are structured as land restoration and mine closure costs
provision. the total estimate of restoration expenses is apportioned
over the life of the mine.
i) Borrowing cost
Borrowing cost includes interest, commitment charges on bank
borrowings, amortization of ancillary costs incurred in connection with
the arrangement of borrowings.
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of that asset. The amount of borrowing costs eligible for
capitalization is determined in accordance with Accounting Standard 16
"Borrowing Costs". Other borrowing costs are recognized as an expense
in the period in which they are incurred.
In accordance with Accounting Standard 16, exchange differences arising
from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs are recognized as borrowing costs,
and are capitalized as part of the cost of fixed assets if they are
directly attributable to their acquisition or charged to Statement of
profit and Loss.
j) Employee benefits
i) Retirement benefits in the form of Provident fund contribution to the
Statutory Provident Fund and superannuation fund are Defined
contribution schemes and the payments are charged to the Statement of
profit and Loss of the year when the payments to the respective funds
are due.
ii) Retirement benefits in the form of Gratuity is a Defined benefit
obligation and is covered under group gratuity scheme. The Company
contributes the ascertained gratuity liability to the approved Gratuity
Trust which is charged to revenue on accrual basis. Gratuity Liability
at each balance sheet date is ascertained on Actuarial Valuation basis
using projected unit credit method. Actuarial gains/losses are
immediately taken to Statement of profit and Loss and are not deferred.
iii) the liability for encashable leaves / compensated absences
outstanding as on reporting date is provided based on the salary
prevailing on reporting date.
iv) Employee stock option scheme(ESOS)
Stock options granted to the employees under the stock options schemes
are accounted at intrinsic value as per the accounting treatment
prescribed by the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 (''Guidelines'') and guidance note on Employee share based payments
issued by the institute of Chartered accountants of india. accordingly,
the excess of market price, of underlying equity shares as on the date
of the grant (market value), over the exercise price of the options is
recognised as deferred stock compensation expense and is charged to
statement of profit and loss on a straight line basis over the vesting
period of the options. The amortized portion of the cost is shown under
shareholders'' funds.
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured.
Sale of goods
Revenue is recognized, when all the significant risks and rewards of
ownership of the goods is passed to the buyer, which is generally on
dispatch of goods to customers except in case of consignment sales.
Sales include excise duty and exclude VAT and are net of discounts and
incentives to the customers. Excise duty to the extent included in the
gross turnover is deducted to arrive at the net turnover.
Dividends
Revenue is recognized when the company''s right to receive the payment
is established by the reporting date.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Incentives
Revenue is recognized when the right to receive the credits is
established and there is no significant uncertainty regarding the
ultimate collection.
l) Foreign currency transaction and balances
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
a) Monetary items
Year end balances of foreign currency monetary items are retranslated
using the exchange rate prevailing at the reporting date.
b) Non monetary items
Non monetary items such as investments are carried at historical cost
using the exchange rate on the date of transaction.
Exchange differences
Exchange differences arising on long term foreign currency monetary
items, related to acquisition of a fixed asset are deferred/capitalized
and depreciated over the remaining useful life of respective assets as
per the Companies (accounting Standards) amendment Rules 2011 dated
29th December 2011 for amendment to accounting Standard 11 "The Effects
of Changes in Foreign Exchange Rates", issued by the Ministry of
Corporate Affairs (MCA)
in order to exercise the option, an asset or liability is treated as a
long term foreign currency monetary item, if the asset or liability is
expressed in a currency and has a term of twelve months or more at the
date of the origination of the asset or liability.
All other exchange differences including mark to market losses/gains
are dealt with in the Statement of profit and Loss as income or as
expenses in the period in which they arise except to the extent that
they are regarded as an adjustment to the interest costs and
capitalized to fixed assets or charged to Statement of profit and Loss as
per Accounting Standard 16 "Borrowing Costs".
Foreign exchange forward contracts are marked to market at closing rate
as on the reporting date. The premium or discount arising at the
inception of forward exchange contract is amortized and recognized as
an expense/income over the life of the contract. Any profit or loss
arising on cancellation or renewal of such forward exchange contract is
also recognized as income or as expense for the period.
m) Taxes on income
tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act. Deferred income taxes refects the
impact of current period timing differences between taxable income and
accounting income for the period 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 suffcient future taxable income will be available
against which such deferred tax assets can be realized. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits. At each balance sheet date the company
re-assesses unrecognized deferred tax assets. It recognizes
unrecognized deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be that
suffcient future taxable income will be available against which such
deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suffcient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
suffcient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of profit and Loss and shown
as MAT credit entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT credit
entitlement to the extent there is no longer convincing evidence to the
effect that company will pay normal Income Tax during the specified
period.
n) Segment reporting
Identifcation 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.
Segment accounting policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the fnancial
statements of the company as a whole.
Inter-segment transfers
the company generally accounts for intersegment transfers at an agreed
transaction value.
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
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
o) Earnings per share
The company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss attributable to the
equity shareholders for the year by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss attributable to the equity shareholders
for the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
p) Provisions
A provision is recognized if, as a result of a past event, the company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation at
the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability.
Where there is a possible obligation or a present obligation in respect
of which the likelihood of outflow of resources is remote, no provision
or disclosure is made.
Clause 8.5 of the AS-4 "Contingencies and events occurring after the
Balance Sheet date" states that proposed dividend is sometimes refected
in the fnancial statements because of statutory requirement. As per
requirement of revised Schedule VI, now the company is not providing
but disclosing proposed dividend separately.
q) Onerous contracts
Provisions for onerous contracts are recognized when the expected
benefits to be derived by the company from a contract are lower than the
unavoidable costs of meeting the future obligations under the contract.
The provision is measured at lower of the expected cost of
terminating/exiting the contract and the expected net cost of fulfilling
the contract.
r) Contingent liabilities
Possible obligation that arises from past events whose existence will
be confirmed by the occurrence or non- occurrence of one or more
uncertain future events beyond the control of the company or a present
obligation that is not recognized because it is not probable that an
outflow of resources will be required to settle the obligation is
reported as contingent liability. In rare cases, when a liability
cannot be measured reliably, it is classified as contingent liability.
The company does not recognize a contingent liability but discloses its
existence in the fnancial statements.
s) Cash fow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or fnancing cash flows. The cash flows from operating,
investing and fnancing activities of the company are segregated.
For the purpose of Cash Flow Statement, cash and cash equivalents
comprise cash at bank and in hand and highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
b Terms/rights attached to equity shares
The company has only one class of shares - equity shares - having a par
value ofRs. 10/- per share. Each holder of equity shares is entitled to
one vote per share.
The Board of Directors of the Company subject to the approval of the
members in the ensuing general meeting, has proposed a dividend of Rs.3/-
per share (P.Y. Rs. 3/-) for the fnancial year ended 31st March, 2014.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Terms of repayment
a) the Non-Convertible Debentures are redeemable in three equal annual
installments commencing from July 2015. The Company has an option to
redeem these debentures earlier; however, no redemption will take place
before the end of 3rd year from the date of allotment.
b) External Commercial Borrowings availed in foreign currencies are
payable in 5 Annual Installments (First three installments are 1/6th of
the loan amount and remaining 2 installments are 1/4th of the loan
amount). Four installments have already been paid.
c) Rupee term loan from a fnancial institution is payable in 12 equal
quarterly installments commencing from September 2013. three
installments have already been paid.
d) Rupee term loan of Rs 4,500 lac from bank is payable in 11 quarterly
installments starting from September 2013 quarter. During the fnancial
year 2013-14, 3 installments comprising 10% of the loan amount repaid,
in the year 2014-15, 4 installments involving 20% and in the year
2015-16, 4 installments involving 70% of the loan amount will be
repaid.
e) Rupee term loan ofRs. 5,000 lac from bank is payable in 10 equal half
yearly installments starting from august 2014.
f) Hire purchase loan of Rs.22.05 lac from bank is payable in 34 equal
installments of Rs.1.94 lac starting from June 2012.
g) Deferred sales tax loan is interest free and payable at the end of
ffth year from the end of the fnancial year of accrual.
Security
The non-convertible debentures are secured by a registered mortgage of
an immovable property of the company situated at ahmedabad.
Term loans from bank, fnancial institution, external commercial
borrowing and debentures are secured by first pari-passu charge by way
of hypothecation of entire movable assets of the company situated at
Industrial Growth Centre, Siltara, Raipur subject to prior charge on
current assets in favour of working capital bankers and by way of joint
equitable mortgage of immovable properties of the company situated at
Industrial Growth Centre, Siltara.
Besides this, the term loan from bank and non convertible debentures
are also secured by unconditional and irrevocable personal guarantees
of Mr K. K. Sarda & Mr Manish Sarda.
Hire purchase loan from bank is secured by hypothecation of related
vehicles.
Terms of repayment
Short term loan of Rs 4,500 lac is payable in March 2015.
Security
Working capital loans from banks are secured by first pari-passu charge
on stocks & book debts and second pari- passu charge on all present and
future movable plant & machinery and second charge by way of joint
equitable mortgage of immovable properties located at Industrial Growth
Centre, Siltara, Raipur. These facilities are also secured by
irrevocable personal guarantees of Mr. K.K.Sarda and Mr. Manish Sarda.
Mar 31, 2012
A) Accounting Convention
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policies as discussed below.
b) 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 amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
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.
c) Current and Non-current classification
An asset or a liability is classified as current when it satisfies any
of the following criteria:
i. it is expected to be realized / settled, or is intended for sale or
consumption, in the Company's normal operating cycle;
ii. it is held primarily for the purpose of being traded;
iii. it is expected to be realized / due to be settled within twelve
months after the reporting date;
iv. the Company does not have an unconditional right to defer
settlement of the liability for at least twelve months after the
reporting date.
All other assets and liabilities are classified as non-current.
2.1 Summary of significant accounting policies
a) Changes in accounting policies
i. Presentation and disclosure of financial statements
These financial statements have been prepared as per Revised Schedule
VI notified under the Companies Act, 1956. Except accounting for
dividend on investments in subsidiary companies, the adoption of
Revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
ii. Dividend on investment in subsidiary companies
Until last financial year, as per requirement of Pre-Revised Schedule
VI, the Company had a policy to recognize in its books, dividend
declared by subsidiaries even after reporting date, if such dividend
pertained to the period ending on or before the reporting date.
Accounting Standard 9 "Revenue Recognition", which now supersedes
Schedule VI, requires recognition of dividend as income only when the
right to receive the same is established by the reporting date.
Accordingly, to comply with the Accounting Standard, the Company has
changed its accounting policy for recognition of dividend income from
subsidiary companies when the right to receive the same is established
by the reporting date.
This change in the policy will however not affect the financials of the
Company since none of the subsidiaries have declared dividend in
previous year as well as in current year after the reporting date.
iii. Deferral/capitalization of exchange differences
The Ministry of Corporate Affairs (MCA) has issued Companies
(Accounting Standards) Amendment Rules, 2011 dated 29th December 2011
for amendment in the Accounting Standard 11 "The Effects of Changes in
Foreign Exchange Rates", to allow companies deferral/ capitalization of
exchange differences arising on long-term foreign currency monetary
items. The Company has opted to avail the option provided in the said
Rules. Consequently, the exchange differences arising on long term
foreign currency monetary items, related to acquisition of a fixed
asset, which were until now being recognized in the Statement of Profit
and Loss are now capitalized and depreciated / amortized over the
remaining useful life of the respective assets.
Accordingly, the Company has capitalized exchange losses, arising on
long-term foreign currency loan, amounting to Rs. 1,706.12 Lacs to the
cost of related fixed assets. Had the Company continued to follow the
earlier accounting policy, the net foreign exchange differences
recognized in the Statement of Profit and Loss would have been higher
by Rs. 1,706.12 Lacs, depreciation / amortization expenses would have
been lower by Rs. 113.85 Lacs. The surplus and Fixed Assets / Capital
Work in Progress would have been lower by Rs. 1,819.97 Lacs.
iv. Proposed Dividend
Clause 8.5 of the AS-4 "Contingencies and events occurring after the
Balance Sheet date" states that proposed dividend is sometimes
reflected in the financial statements because of statutory requirement.
Until last year, the Company was providing for proposed dividend in the
financial statements as per statutory requirement of the pre- revised
Schedule VI to the Companies Act, 1956. As per requirement of revised
Schedule VI, now the Company is not providing but disclosing proposed
dividend separately.
Had the Company continued to follow the earlier accounting policy, the
surplus would have been lower and short term provision would have been
higher by the amount of proposed dividend plus tax thereon.
b) Fixed Assets Tangible
Tangible assets are stated at cost, net of recoverable taxes less
accumulated depreciation / amortization and impairment losses, if any.
Cost comprises purchase price and any attributable costs of bringing
the asset to its working condition for its intended use.
All costs, including administrative, financing and general overhead
expenses, as are specifically attributable to construction of a project
or to the acquisition of a fixed asset or bringing it to its working
condition, is included as part of the cost of construction of project
or as a part of the cost of fixed asset, till commencement of
commercial production. Adjustments arising from exchange rate
variations attributable to the fixed assets are capitalized as
aforementioned.
Subsequent expenditure related to an item of tangible assets is added
to its book value only, if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
Intangible
Intangible assets are carried at its cost, less accumulated
amortization and impairment losses, if any. All costs, including
financing costs relating to development of intangible assets which
takes substantial period of time to get ready for its intended use are
also included to the extent they are incurred, till commencement of
commercial production.
Expenditure on exploration, prospecting and evaluation of minerals /
other projects is recognized as intangible assets under development.
The application of the Company's accounting policy for exploration and
evaluation expenditure requires judgment in determining whether future
economic benefits are likely from future exploitation. The deferral
policy requires management to make certain estimates and assumptions
about future events or circumstances, in particular, whether an
economically viable extraction operation can be established. Estimates
and assumptions made may change if new information becomes available.
If, after expenditure is capitalized, information becomes available
suggesting that the recovery of expenditure is unlikely, the amount
capitalized is written off in Statement of profit and loss in the
period when the new information becomes available.
Capital Work in Progress
Projects / fixed assets under installation including other capital work
in progress are carried at cost, comprising direct cost, related
incidental expenses and attributable cost. Advances for Capital work in
progress are shown under Non Current Assets.
c) Lease
The Company has entered into various operating lease agreements for
premises (residential, office and godown). These lease agreements are
cancellable in nature and range between 11 months to 3 years and are
usually renewable by mutual consent on mutually agreed terms. The
aggregate rentals on accrual basis under such agreement have been
charged to Statement of Profit and Loss under the head rent, rates and
taxes in Other Expenses.
d) Impairment of fixed Assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists
based on internal or external factors, or when annual impairment
testing for an asset is required, the Company estimates the asset's
recoverable amount. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written
down to its recoverable amount. The recoverable amount is the greater
of the net selling price and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value
based on an appropriate discount factor. After impairment, depreciation
is provided on the revised carrying amount of the assets over its
remaining useful life.
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognized for the asset in prior years.
e) Depreciation / Amortization
Depreciation on Building and Plant & Machinery in respect of Steel
Division are provided on Straight Line Method and on all other assets
on Written Down Value method at the rates and in the manner prescribed
in Schedule XIV of the Companies Act, 1956.
Mining Rights and expenditure incurred on development of mines are
amortized over useful life of the mines or lease period whichever is
shorter.
Leased assets are amortized on a straight-line basis over the useful
life of the asset or the remaining period of lease, whichever is
earlier.
Intangible Assets are amortized over technically useful life of the
asset.
f) Investments
Trade Investments are investments made to enhance the Company's
business interests. Investments are classified either as current or
long-term based on Management's intention at the time of purchase.
Other Investments, which are readily realizable and intended to be held
for not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried at the lower of cost and fair value
determined by category of investment. Long- term investments are
carried at cost less provisions recorded to recognize any decline,
other than temporary, in the carrying value of each investment.
g) Valuation of Inventories
i) Stores and Spares are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis.
ii) Raw Materials are carried at cost (net of CENVAT & VAT credits
availed) on moving average basis and net realizable value, whichever is
lower. However, raw materials held for use in the production of
inventories are not written down below cost, if the finished products
in which they will be incorporated are expected to be sold at or above
cost.
iii) Finished and semi finished products produced or purchased by the
Company are carried at lower of cost and net realizable value. Cost
includes direct material and labour cost and a proportion of
manufacturing overheads. Cost of finished goods includes excise duty
based on prevailing rate.
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.
h) Advance Stripping Costs
The Company distributes stripping (waste removal) costs incurred during
the production phase of its mining operations on equitable basis over
estimated minable reserves. This calculation requires the use of
judgments and estimates relating to the expected tonnes of waste to be
removed over the life of the mining area and the expected economically
recoverable reserves to be extracted as a result. This information is
reviewed periodically to calculate the average life of mine strip ratio
(expected waste to expected mineral reserves ratio). Changes in a
mine's life and design will usually result in changes to the average
life of mine strip ratio. These changes are accounted for
prospectively.
i) Borrowing Cost
Borrowing cost includes interest, commitment charges on bank
borrowings, amortization of ancillary costs incurred in connection with
the arrangement of borrowings.
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of that asset. The amount of borrowing costs eligible for
capitalization is determined in accordance with Accounting Standard 16
"Borrowing Costs". Other borrowing costs are recognized as an expense
in the period in which they are incurred.
In accordance with Accounting Standard 16, exchange differences arising
from foreign currency borrowings to the extent that they are regarded
as an adjustment to interest costs are recognized as borrowing costs,
and are capitalized as part of the cost of fixed assets if they are
directly attributable to their acquisition or charged to Statement of
Profit and Loss
j) Employee Benefits
i) Retirement benefits in the form of Provident Fund contribution to
the Statutory Provident Fund and Superannuation Fund are defined
contribution schemes and the payments are charged to the Statement of
Profit and Loss of the year when the payments to the respective funds
are due.
ii) Retirement benefits in the form of Gratuity is a defined benefit
obligation and is covered under group gratuity scheme. The Company
contributes the ascertained gratuity liability to the approved Gratuity
Trust which is charged to revenue on accrual basis. Gratuity Liability
at each balance sheet date is ascertained on Actuarial Valuation basis
using projected unit credit method. Actuarial gains/losses are
immediately taken to Statement of Profit and Loss and are not deferred.
iii) The liability for encashable leaves / compensated absences
outstanding as on reporting date is provided based on the salary
prevailing on reporting date.
k) 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.
Sale of Goods
Revenue is recognized, when all the significant risks and rewards of
ownership of the goods is passed to the buyer, which is generally on
dispatch of goods to customers except in case of consignment sales.
Sales include excise duty and exclude VAT and are net of discounts and
incentives to the customers. Excise Duty to the extent included in the
gross turnover is deducted to arrive at the net turnover.
Dividends
Revenue is recognized when the Company's right to receive the payment
is established by the reporting date. Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the Statement of Profit and
Loss.
Incentives
Revenue is recognized when the right to receive the credits is
established and there is no significant uncertainty regarding the
ultimate collection.
l) Foreign Currency Transaction and Balances Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
a) Monetary Items
Year end balances of foreign currency monetary items are retranslated
using the exchange rate prevailing at the reporting date.
b) Non Monetary Items
Non Monetary items such as investments are carried at historical cost
using the exchange rate on the date of transaction.
Exchange differences
Exchange differences arising on long term foreign currency monetary
items, related to acquisition of a fixed asset are deferred/capitalized
and depreciated over the remaining useful life of respective assets as
per the Companies (Accounting Standards) Amendment Rules, 2011 dated
29th December 2011 for amendment to Accounting Standard
11 "The Effects of Changes in Foreign Exchange Rates", issued by The
Ministry of Corporate Affairs (MCA).
In order to exercise the option, an asset or liability is treated as a
long term foreign currency monetary item, if the asset or liability is
expressed in a currency and has a term of twelve months or more at the
date of the origination of the asset or liability.
All other exchange differences including mark to market losses/gains
are dealt with in the Statement of Profit and Loss as income or as
expenses in the period in which they arise except to the extent that
they are regarded as an adjustment to the interest costs and
capitalized to fixed assets or charged to Statement of Profit and Loss
as per Accounting Standard 16 "Borrowing Costs".
Foreign exchange forward contracts are marked to market at Closing Rate
as on the reporting date. The premium or discount arising at the
inception of forward exchange contract is amortized and recognized as
an expense/ income over the life of the contract. Any profit or loss
arising on cancellation or renewal of such forward exchange contract is
also recognized as income or as expense for the period.
m) Taxes on Income
Tax expense comprises current and deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act. Deferred income taxes reflects the
impact of current period timing differences between taxable income and
accounting income for the period 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. In situations
where the Company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits. At each Balance Sheet date the Company
re-assesses unrecognized deferred tax assets. It recognizes
unrecognized 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 realized.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of Profit and Loss and
shown as MAT Credit Entitlement. The Company reviews the same at each
Balance Sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
n) 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.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
Inter-segment transfers
The Company generally accounts for intersegment transfers at an agreed
transaction value.
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
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
o) Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss attributable to the
equity shareholders for the year by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss attributable to the equity shareholders
for the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period. The
weighted average number of equity shares outstanding during the period
is adjusted for events such as bonus issue, bonus element in a rights
issue, share split and reverse share split (consolidation of shares)
that have changed the number of equity shares outstanding, without a
corresponding change in resources.
p) Provisions
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability.
Where there is a possible obligation or a present obligation in respect
of which the likelihood of outflow of resources is remote, no provision
or disclosure is made.
q) Onerous Contracts
Provisions for onerous contracts are recognized when the expected
benefits to be derived by the Company from a contract are lower than
the una voidable costs of meeting the future obligations under the
contract. The provision is measured at lower of the expected cost of
terminating/exiting the contract and the expected net cost of
fulfilling the contract.
r) Contingent liabilities
Possible obligation that arises from past events whose existence will
be confirmed by the occurrence or non- occurrence of one or more
uncertain future events beyond the control of the Company or a present
obligation that is not recognized because it is not probable that an
outflow of resources will be required to settle the obligation is
reported as contingent liability. In rare cases, when a liability
cannot be measured reliably, it is classified as contingent liability.
The Company does not recognize a contingent liability but discloses its
existence in the financial statements.
s) Cash Flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
For the purpose of cash flow statement, Cash and cash equivalents
comprise cash at bank and in hand and highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to an insignificant risk of changes in value.
Mar 31, 2011
1. Accounting Convention
The financial statements of the Company are prepared under the
historical cost convention using the accrual method of accounting in
accordance with the generally accepted accounting principles in India,
mandatory accounting standards as specified in the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
2. 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 amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
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.
3. Fixed Assets
Tangible Assets are stated at cost less accumulated depreciation /
amortization and impairment losses if any. Cost comprises the purchase
price and any attributable costs of bringing the asset to its working
condition for its intended use. Borrowing costs relating to
acquisition/ construction of fixed assets which takes substantial
period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready for
commercial use.
Intangibles
Intangible assets are carried at its cost less accumulated amortization
and impairment losses if any.
4. Leases
The Company has entered into various operating lease agreements for
premises (residential, office and godown). These lease agreements are
cancellable in nature and range between 11 month to 3 years and are
usually renewable by mutual consent on mutually agreed terms. The
aggregate rentals on accrual basis under such agreement have been
charged to Profit and Loss account under the head rent, rates and taxes
in schedule "P" Manufacturing and Other Expenses.
5. Impairment of Fixed Assets
The carrying amount of the Company's fixed assets is reviewed at each
Balance Sheet date and If any indication of impairment exists based on
internal /external factors, impairment loss is recognised whenever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on an appropriate discount
factor. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Reversal of impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognised for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognised to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognised for the asset in prior years.
6. Depreciation / Amortization
Depreciation on Building and Plant & Machinery in respect of Steel and
Ferro Alloys are provided on Straight Line Method and on all other
assets including vehicles & office equipments on Written Down Value
method at the rates and in the manner prescribed in Schedule XIV of the
Companies Act, 1956.
Mining Rights and expenditure incurred on development of mines are
amortised over useful life of the mines or lease period whichever is
shorter.
Leasehold lands are amortised over the period of lease.
Intangible Assets are amortized over technically useful life of the
asset.
7. Investments
Trade Investments are the investments made to enhance the Company's
business interests. Investments are either classified as current or
long-term based on Management's intention at the time of purchase
Current investments are carried at the lower of cost and fair value
determined by category of investment. Provision for diminution in
value of current investments is made and charged to Profit and Loss
account on the basis of market price of such investments as on the
Balance Sheet date.
Long-term investments are carried at cost less provisions recorded to
recognize any decline, other than temporary, in the carrying value of
each investment.
8. Valuation of Inventories
i) Stores and Spares are carried at cost (net of CENVAT & State VAT
Credit availed) on moving average basis.
ii) Raw Materials are carried at cost (net of CENVAT & State VAT credit
availed) on moving average basis and net realizable value whichever is
lower.
iii) Finished and semi finished products produced and purchased by the
Company are carried at lower of cost and net realizable value.
9. Overburden (OB) Removal Expenses :-
In case of Coal Mines the Company books the coal stripping costs in
accordance with estimated stripping ratio over the life of the mine.
This calculation requires use of judgments and estimates such as
estimates of tonnes of waste to be removed and coal to be extracted
over the life of the mine. Expenses on Advance Stripping i.e. stripping
of waste in excess of estimated stripping ratio saving from under
stripping of waste i.e. stripping of waste lesser than the estimated
stripping ratio is recognised as current Asset/Current Liability.
The estimated stripping ratio over residual life of the mine is
reviewed periodically and any change in the ratio will usually result
into change in corresponding amount of the advance/ under stripping
expenses recognised in the Balance Sheet.
10. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of that asset. The amount of borrowing costs eligible for
capitalization are determined in accordance with Accounting Standard 16
on "Borrowing Costs". Other borrowing costs are recognized as an
expense in the period in which they are incurred. Interest earned is
reduced from interest and finance charges.
11. Employee Benefits
i) Retirement benefits in the form of Provident Fund contribution to
the Statutory Provident Fund is a defined contribution scheme and the
payments are charged to the Profit and Loss account of the year when
the payments to the respective funds are due. There are no obligations
other than contribution payable to Provident Fund Authorities.
ii) Certain employees of the Company are also participants in the
superannuation plan which is a defined contribution plan. The Company
makes contribution under the plan to the SEML Employees' Superannuation
Trust. The Company has no further obligation to the plan beyond its
periodic contributions. Payments to the Trust are charged to the Profit
and Loss account of the year when the payments to the respective funds
are due.
iii) Retirement benefits in the form of Gratuity is a defined benefit
obligation and is covered under group gratuity scheme. The Company
contributes the ascertained gratuity liability to the approved Gratuity
Trust which is charged to revenue on accrual basis. Gratuity Liability
at each Balance Sheet date is ascertained on Actuarial Valuation basis
using projected unit credit method. Actuarial gains/losses are
immediately taken to Profit and Loss account and are not deferred.
iv) The liability for encashable leaves / compensated absences
outstanding as on reporting date is provided based on the salary
prevailing on reporting date.
12. 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.
Sale of Goods
Revenue is recognized, when the significant risks and rewards of
ownership of the goods is passed to the buyer, which is generally on
dispatch of goods to customers except in case of consignment sales.
Sales include excise duty and exclude VAT and is net of discounts and
incentives to the customers. Excise Duty to the extent included in the
gross turnover is deducted to arrive at the net turnover. Excise duty
incurred on finished goods as at Balance Sheet date is disclosed
separately and adjusted with changes in stock of finished goods in the
Profit & Loss account.
Dividends
Revenue is recognized when the shareholder's right to receive the
payment is established by the Balance Sheet date. Dividend from
subsidiaries is recognized even if the same are recognized after the
Balance Sheet date but pertains to the period on or before the date of
Balance Sheet as per the requirement of Schedule VI to the Companies
Act,1956.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Incentives
Revenue is recognized when the right to receive the credits is
established and there is no significant uncertainty regarding the
ultimate collection.
13. Foreign Currency Transactions
a) Monetary Items
Year end balance of foreign currency monetary items is translated at
the closing rates as on Balance Sheet date.
Foreign exchange forward contracts are marked to market at Closing Rate
as on Balance Sheet date and the premium/discount earned or expended is
amortized over the life of the forward contract.
All exchange differences including mark to market losses/gains are
dealt with in the Profit and Loss account and disclosed under the head
"Forex Fluctuation Gain/Loss Account", except to the extent that they
are regarded as an adjustment to the interest costs and capitalized to
fixed assets as per AS 16.
b) Non Monetary Items
Non Monetary items such as investments are carried at historical cost
using the exchange rate on the date of transaction.
14. Taxes on Income
Current Tax (Considering MAT) payable in respect of taxable income is
calculated as per the provisions of the Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between the taxable income and accounting income
that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets arising on account of
unabsorbed depreciation or carry forward of tax losses are recognized
only to the extent there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax can be realized.
15. Capital Work in Progress / Project Expenses
Projects under commissioning including other capital work in progress
are carried at cost, comprising direct cost, related incidental
expenses, attributable cost and advances for capital goods. Expenses
incurred on exploration of new projects are capitalized in the relevant
project on materialization. If project does not materialize,
expenditure incurred till date is charged to Profit & Loss Account.
16. Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 "Earnings per Share". Basic EPS
is computed by dividing the net profit or loss attributable to the
equity shareholders for the year by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss attributable to the equity shareholders
for the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.
17. Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank
and in hand and short term investments with an original maturity of
three months or less.
18. Cash Flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash fows from operating,
investing and financing activities of the Company are segregated.
19. Provisions and contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.
20. Onerous Contracts
Provisions for onerous contracts are recognized when the expected
benefits to be derived by the Company from a contract are lower than
the unavoidable costs of meeting the future obligations under the
contract. The provision is measured at lower of the expected cost of
terminating/exiting the contract and the expected net cost of
fulfilling the contract.
Mar 31, 2010
1. Accounting Convention
The accounts of the Company are prepared under the historical cost
convention using the accrual method of accounting in accordance with
the generally accepted accounting principles in India, accounting
standards as specified in the Companies (Accounting Standards) Rules,
2006 and the relevant provisions of the Companies Act, 1956.
2. 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 amount of assets and
liabilities and disclosures of contingent liabilities as at the date of
financial statements and the results of operations during the reporting
period. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
3. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation /
amortization and impairment losses if any. Cost comprises the purchase
price and any attributable costs of bringing the asset to its working
condition for its intended use. Borrowing costs relating to acquisition
/ construction of fixed assets which takes substantial period of time
to get ready for its intended use are also included to the extent they
relate to the period till such assets are ready for commercial use.
Intangibles
Intangible assets are carried at its cost less accumulated amortization
and impairment losses if any.
4. Impairment of Fixed Assets
The carrying amount of the Companys fixed assets is reviewed at each
balance sheet date and if any indication of impairment exists based on
internal / external factor, Impairment loss is recognized whenever the
carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on an appropriate discount
factor. After impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
Reversal of Impairment losses recognized in prior years is recorded
when there is an indication that the impairment losses recognized for
the asset no longer exist or have decreased. However, the increase in
carrying amount of an asset due to reversal of an impairment loss is
recognized to the extent it does not exceed the carrying amount that
would have been determined (net of depreciation) had no impairment loss
been recognized for the asset in prior years.
5. Depreciation / Amortization
Depreciation on Building and Plant & Machinery in respect of Steel and
Oxygen Gas Division are provided on Straight Line Method and on all
other assets including vehicles & office equipments on Written Down
Value method at the rates and in the manner prescribed in Schedule XIV
of the Companies Act, 1956.
Mining Rights and expenditure incurred on development of mines are
amortized over useful life of the mines or lease period whichever is
shorter.
Leasehold lands are amortized over the period of lease.
Intangible Assets are amortized over technically useful life of the
asset.
6. Investments
Trade Investments are the investments made to enhance the Companys
business interests. Investments are either classified as current or
long-term based on Managements intention at the time of purchase.
Current investments are carried at the lower of cost and fair value
determined by category of investment. Cost for overseas investments
comprises the Indian Rupee value of the consideration paid for the
investment translated at the exchange rate prevalent at the date of
investment. Long-term investments are carried at cost less provisions
recorded to recognize any decline, other than temporary, in the
carrying value of each investment.
7. Valuation of Inventories
i) Stores and Spares are carried at cost (net of CENVAT & VAT Credit
availed) on moving average basis.
ii) Raw Materials are carried at cost (net of CENVAT & VAT credit
availed) on moving average basis and net realizable value whichever is
lower.
iii) Finished and semi finished products produced and purchased by the
company are carried at lower of cost and net realizable value.
8. Borrowing Cost
Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalized as part of the cost
of that asset. The amount of borrowing costs eligible for
capitalization is determined in accordance with Accounting Standard 16
(AS 16) on ÃBorrowing CostsÃ. Other borrowing costs are recognized as
an expense in the period in which they are incurred. Interest earned is
reduced from interest and finance charges.
9. Employee Benefits
i) Retirement benefit in the form of Provident fund contribution to the
Statutory Provident Fund is a defined contribution scheme and the
payments are charged to the Profit and Loss Account of the
period when the payments to the fund is due.
ii) Certain employees of the Company are also participants in the
superannuation plan which is a defined contribution plan. The Company
makes contribution under the plan to the SEML Employees Superannuation
Trust. The Company has no further obligation to the plan beyond its
periodic contributions.
iii) Retirement benefit in the form of Gratuity is a defined benefit
obligation and is covered under group gratuity scheme. The company
contributes the ascertained gratuity liability to the approved Gratuity
Trust which is charged to revenue on accrual basis. Gratuity Liability
at each balance sheet date is ascertained on Actuarial Valuation basis
using projected unit credit method. Actuarial gains / losses are
immediately taken to Proft and Loss Account and are not deferred.
iv) The liability for encashable leaves / compensated absences
outstanding as on reporting date is provided based on the salary
prevailing on reporting date.
10. 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.
Sale of Goods
Sale is recognized, when the significant risks and rewards of ownership
of the goods is passed to the buyer, which is generally on dispatch of
goods to customers. Sales include excise duty and exclude VAT and is
net of discounts and incentives to the customers. Excise Duty to the
extent included in the gross turnover is deducted to arrive at the net
turnover. Excise duty incurred on finished goods as at balance sheet
date is disclosed separately and adjusted with changes in stock of
finished goods in the profit & loss account.
Dividends
Revenue is recognized when the shareholders right to receive the
payment is established by the balance sheet date. Dividend from
subsidiaries is recognized even if the same are recognized after the
balance sheet date but pertains to the period on or before the date of
balance sheet as per the requirement of Schedule VI to the Companies
Act, 1956.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Tax Incentives
Revenue is recognized when the right to receive the credits is
established and there is no significant uncertainty regarding the
ultimate collection of export proceeds.
11. Foreign Currency Transactions
I. Monetary Items
Year end balance of foreign currency monetary items are translated at
the closing rates as on Balance Sheet date.
Foreign exchange forward contracts are marked to market at Closing Rate
as on Balance Sheet date. The premium / discount earned or expended is
amortized over the life of the forward contract.
All exchange differences including mark to market losses / gains are
dealt with in the profit and loss account and disclosed under the head
ÃForex Fluctuation Gain / Loss Accountà , except to the extent that
they are regarded as an adjustment to the interest costs and
capitalized to fixed assets as per AS 16.
II. Non Monetary Items
Non Monetary items such as investments are carried at historical cost
using the exchange rate on the date of transaction.
12. Taxes on Income
Current Tax (Considering MAT) payable in respect of taxable income is
calculated as per the provisions of the Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between the taxable income and accounting income
that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets arising on account of
unabsorbed depreciation or carry forward of tax losses are recognized
only to the extent there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax can be realized.
13. Capital Work in Progress / Project Expenses
Projects under commissioning including other capital work in progress
are carried at cost, comprising direct cost, related incidental
expenses, attributable cost and advances for capital goods. Expenses
incurred on exploration of new projects are capitalized in the relevant
project on materialization. If project does not materialize,
expenditure incurred till date is charged to Profit & Loss Account.
14. Earnings per Share
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 ÃEarnings per ShareÃ. Basic EPS
is computed by dividing the net profit or loss attributable to the
equity shareholders for the year by the weighted average number of
equity shares outstanding during the year. Diluted EPS is computed by
dividing the net profit or loss attributable to the equity shareholders
for the year by the weighted average number of equity shares
outstanding during the year as adjusted for the effects of all
potential equity shares, except where the results are anti-dilutive.
15. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short term investments with an original maturity of
three months or less.
16. Cash Flow statement
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash fows. The cash fows from operating,
investing and financing activities of the Company are segregated.
17. Provisions and contingent liabilities
A provision is recognized if, as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure is made as contingent liability. A disclosure for a
contingent liability is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where there is a possible obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.
18. Onerous Contracts
Provisions for onerous contracts are recognized when the expected
benefits to be derived by the company from a contract are lower than
the unavoidable costs of meeting the future obligations under the
contract. The provision is measured at lower of the expected cost of
terminating / exiting the contract and the expected net cost of
fulfilling the contract.
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