Accounting Policies of Steel Authority of India (SAIL) Ltd. Company
Mar 31, 2023
1. Corporate and General Information
Steel Authority of India Limited (hereinafter referred to as "the Company"), a Public Sector Undertaking, is domiciled and incorporated in India. The Company, conferred with Maharatna status by Government of India, is one of the largest steel producers in the country. The registered office of the Company is situated at Ispat Bhawan, Lodhi Road, New Delhi-110 003. The securities of the Company are listed on the National Stock Exchange of India Limited, BSE Limited and London Stock Exchange plc.
These standalone financial statements (the ''financial statements'') for the year ended 31st March, 2023 were approved by the Board of Directors and authorised for issue in their meeting held on 25th May, 2023. The Company has also prepared consolidated financial statements for the year ended 31st March 2023 in accordance with Ind AS 110 and the same were also authorised for issue by the Board of Directors on 25th May 2023.
2. Basis of Preparation
2.1 Statement of Compliance
The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other accounting principles generally accepted in India. The company has uniformly applied the accounting policies during the periods presented.
2.2 Basis of Measurement
The financial statements are prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value in accordance with the requirements of the relevant Ind AS:
⢠certain financial assets and liabilities which are classified at fair value through profit and loss or fair value through other comprehensive income;
⢠assets held for sale, at the lower of the carrying amounts and fair value less cost to sell;
⢠defined benefit plans and plan assets.
2.3 Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (?), which is the Company''s functional currency. All financial information presented in ? have been rounded off to the nearest two decimals of Crore unless otherwise stated.
2.4 Use of estimates, assumptions and judgements
In preparing the financial statements in conformity with Ind AS and company''s accounting policies, management is required to make estimates, assumptions and judgements that affect reported
amounts of revenues, expenses, assets and liabilities and the accompanying disclosures as at the date of the financial statements. The judgements, estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Actual results could differ from those estimates.
2.5 Current versus Non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
⢠Expected to be realised or intended to be sold or consumed in the Company''s normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
⢠It is expected to be settled in the Company''s normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current only.
3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements is given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1 Property, Plant and Equipment
3.1.1 Recognition and Measurement
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment. Property, plant and equipment held for use in the production or/and supply of goods or services, or for administrative purposes, are stated at cost, less accumulated depreciation and impairment losses, if any, except freehold land which are carried at historical cost. The initial cost at cash price equivalence of property, plant and equipment acquired comprises its purchase price, including import duties, non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any obligatory decommissioning costs for its intended use.
In case of constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs and trial run expenses (net of revenue).
Spares having useful life of more than one year and having value of Rs. 10 lakh or more in each case, are capitalised under the respective heads as and when available for use. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Capital work-in-progress comprises of assets in the course of construction for production and/ or supply of goods or services or administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss. At the point when an asset is operating as intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
3.1.2 Subsequent Cost
Subsequent expenditure is recognised as an increase in the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits derived from the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced item(s) is derecognised.
Any repair of '' 50 lakh or more of property, plant and equipment is recognised in the carrying amount of the respective item if it is probable that the future economic benefits of the costs incurred will flow to the Company. The carrying amount of the replaced item(s) is derecognised.
3.2 Investment Properties
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses. Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the Statement of Profit and Loss.
3.3 Depreciation
Depreciation on property, plant and equipment and investment property is provided on straight line method, considering residual value of 5% of the cost of the asset, over the useful lives of the asset, as specified in Schedule II of the Companies Act, 2013 except in case of following category of assets, where useful life is determined by technical experts. The useful life estimated by the technical experts is as under:
|
Asset category |
Estimated useful life (in years) |
|
Factory Buildings |
35 to 40 |
|
Plant and Machinery |
10 to 40 |
|
Water Supply & Sewerage |
25 to 40 |
|
Railway Lines & Sidings |
35 to 40 |
For these classes of assets, based on technical evaluation carried out by external technical experts, the Company believes that the useful lives as given above best represent the period over which Company expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
Freehold land is not depreciated.
The estimated useful lives and residual values of depreciable/ amortisable assets are reviewed at each year end, with the effect of any changes in estimates accounted for on a prospective basis.
Where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Depreciation on addition/ deletion during the year is provided on prorata basis with reference to the month of addition/ deletion. Assets costing up to Rs. 5000/- are fully depreciated in the year in which they are put to use.
Depreciation on capital spares is provided over the useful life of the spare or remaining useful life of the mother asset, as reassessed, whichever is lower.
3.4 Intangible assets Mining Rights
Mining rights are treated as Intangible Assets and all related costs thereof are amortised using the unit of production basis over the commercially recoverable reserves. In case the mining rights are not renewed, the balance related cost paid is charged to revenue in the year of decision of non-renewal.
Acquisition Cost i.e. cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances, as and when incurred, are treated as addition to the Mining Rights.
Other Intangible Assets
Other intangible assets are amortised on straightline method over the expected duration of benefits. Software, which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
Research and development
Development expenditure is capitalised only if it can be measured reliably and the related asset and process are identifiable and controlled by the Company Research and other development expenditure is recognised as revenue expenditure as and when incurred.
3.4.1 Subsequent Cost
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Profit and Loss.
3.4.2 De-recognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised.
3.5 Stripping Cost
The stripping cost incurred during the production phase of a surface mine is recognised as a component of the mining asset if such cost provides a benefit in terms of improved access to ore in future periods and following criteria are met:
⢠It is probable that the future economic benefits (improved access to an ore body) associated with the stripping activity will flow to the entity,
⢠The entity can identify the component of an ore body for which access has been improved, and
⢠The costs relating to the improved access to that component can be measured reliably.
The expenditure, which cannot be specifically identified to be incurred to access ore is charged to revenue, based on stripping ratio as per five-year mining plan for mines, except collieries which is based on project report.
3.6 Impairment of Non-Financial Assets
The Company reviews the carrying amount of its assets on each Balance Sheet date for the purpose
of ascertaining impairment indicators if any, by considering assets of entire one Plant as Cash Generating Unit (CGU). If any such indication exists, the assets'' recoverable amount is estimated, as higher of the Net Selling Price and the Value in Use. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
An assessment is made at each balance sheet date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised.
3.7 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, which takes substantial period of time, are capitalised as a part of the cost of that asset, during the period of time that is necessary to complete and prepare the asset for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
The Company considers a period of twelve months or more as a substantial period of time.
Transaction costs in respect of long-term borrowings are amortised over the tenor of respective loans using effective interest method and included within borrowing costs. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which these are incurred.
3.8 Inventories
Raw materials, Stores & Spares and Finished/Semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the items of the respective Plants/Units. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Immaterial By-products, Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & Spares - Moving weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products Cost of purchase, cost of conversion and other appropriate share of costs including manufacturing overheads incurred in bringing them to their respective present location and condition.
3.9 Government Grants
Government grants are recognised when there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in Statement of Profit & Loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognised as deferred income, and amortised over the expected useful life of the asset. Other grants are recognised in the statement of Profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.
Where the Company receives non-monetary grants, the asset and the grant are recorded gross at fair amounts and released to the income statement over the expected useful life and pattern of consumption of the benefit of the underlying asset.
3.10 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of reporting period.
Non-monetary items are not retranslated at period-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
The Company opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 relating to Accounting Standard-11 (Revised) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011), which will continue in accordance with Ind-AS 101 for all preexisting long term foreign currency monetary items as at 31st March, 2016. Accordingly, for foreign currency loans taken before 31st March, 2016, for adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalised. For foreign currency loans taken after 31st March 2016, exchange differences arising on settlement or translation of long term monetary items are recognised in statement of profit or loss.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the Statement of profit and loss for the period.
3.11 Employee Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions to a separate entity. Payment to defined contribution benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Contributions towards Provident Funds and Pension Funds are charged to the Statement of Profit and Loss of the period when the contributions to the Funds are due.
Defined Benefit Plan
Defined benefit plans are the amount of the benefit that an employee will receive on completion of services by reference to length of service, last drawn salary or direct costs related to such benefits. The legal and/ or constructive obligation for such benefits remains with the Company.
The liability recognised for Defined Benefit Plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The management estimates the present value of the DBO annually through valuations by an independent actuary using the projected unit credit method. Actuarial gains and losses are included in Statement of Profit and Loss or Other Comprehensive Income of the year.
Remeasurement, comprising of actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the Statement of Profit and Loss.
Short Term Employee Benefits
Short term employee benefits comprise of employee costs such as salaries, bonus, ex-gratia, annual leave and sick leave which are accrued in the year in which the associated services are rendered by employees of the Company.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.
Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit and Loss immediately.
3.12 Revenue Recognition
The Company manufactures and sells a range of steel and other products.
Sale of Goods
Sales are net of Goods and Services Tax (GST), rebates and price concessions. Sales are recognised when it satisfy performance obligation by transferring promised goods or services (i.e. assets) to the customers and the customers obtain control of those goods or services. Where the contract prices are not finalised with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realisation of material value without shipment is provided in the letter of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognised as income when the right to receive arises and the realisation of the same is not considered uncertain.
Interest and dividend income
Interest income is accrued on a time proportion basis, by reference to the principal amount outstanding and the effective interest rate applicable.
Dividend income is recognised when the right to receive dividend is established.
3.13 Adjustment pertaining to Earlier Years
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening of assets, liabilities and equity for the earliest period presented, are restated.
3.14 Claims for Liquidated Damages and Price Escalation
Claims for liquidated damages are accounted for as and when these are considered recoverable by the Company. These are adjusted to the capital cost or recognised in Statement of Profit and Loss, as the case may be.
Suppliers'' and Contractors'' claims for price escalation are accounted for to the extent such claims are accepted by the Company.
3.15 Leases
At the inception of a contract, the Company assesses whether a contract is, or contains a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for short-term leases of twelve months or less and leases for which the underlying asset is of low
value, which are expensed in the statement of Profit & Loss on a straight-line basis over the lease term.The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Certain lease arrangements include the options to extend the lease term. Right-of use assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reviewed for indicators of impairment and reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted based on the interest rate implicit in the lease or if that rate cannot be readily determined, the Company''s incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is re measured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Company as a Lessor Finance leases
Leases which effectively transfer to the lessee substantially all the risks and rewards incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognised as revenue in the period in which they are earned.
Operating leases
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.16 Non-current assets held for sale
Company classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction. This condition is regarded as met only when the asset is available for immediate sale in its present condition and its sale is highly probable.
Non-current assets including discontinued operations, classified as held for sale are measured at the lower of the carrying amounts and fair value less costs to sell and presented separately in the financial statements. Once classified as held for sale, the assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or remeasurement of discontinued operations is presented as part of a single line item in Statement of Profit and Loss.
3.17 Mine Closure
Mine Closure Provision includes the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines. This provision is based on all regulatory requirements and related estimated cost based on best available information. Mine closure costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure.
3.18 Provisions, Contingent Liabilities and Contingent Assets
Provisions and Contingent Liabilities
A Provision is recognised when the Company has present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
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 recognised as a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made.
In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognised or disclosure is made.
Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognised and are disclosed only where an inflow of economic benefits is probable.
3.19 Income Taxes
Tax expense recognised in Statement of Profit and Loss comprises the sum of deferred tax and current tax except to the extent that the tax relates to the items that are recognised directly in Other Comprehensive Income (OCI) or in equity in which case the related tax is recognised either directly in OCI or equity accordingly.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. The Company offsets current tax assets and current tax liabilities when the legally enforceable right to offset exists and they are intended to be settled net or realised simultaneously.
Deferred income taxes are calculated using the balance sheet liability method/approach. Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
The Company offsets deferred income tax assets and liabilities when the legally enforceable right to offset current tax assets and liabilities exists and they are intended to be settled or realised simultaneously.
3.20 Cash and Cash Equivalents
Cash and cash equivalents comprise cash and cheques on hand and demand deposits, together with other short-term highly liquid investments with
original maturities of three months or less that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in value.
3.21 Financial Instruments
Recognition, initial measurement and de-recognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and are measured at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, except for those which are classified at Fair Value through Profit & Loss (FVTPL) at inception, are adjusted with the fair value on initial recognition.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expires, or has been transferred, and the Company has transferred all substantial risks and rewards of ownership. A financial liability (or a part of financial liability) is derecognised when the obligation specified in the contract is extinguished or discharged or cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
⢠amortised cost
⢠financial assets at fair value through profit or loss (FVTPL)
⢠financial assets at fair value through other comprehensive income (FVOCI)
All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.
Amortised cost
A financial asset is measured at amortised cost using effective interest rates if the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company''s cash and cash equivalents, trade receivables and most of other receivables fall into this category of financial instruments.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that either do not meet the criteria for amortised cost classification or that are equity instruments held for trading or that meet certain conditions and
are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognised in Statement of Profit and Loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at FVOCI
FVTOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are irrevocable designated to this category.
FVTOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in Statement of Profit and Loss.
Classification and subsequent measurement of financial liabilities
Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in Statement of Profit and Loss. All derivative financial instruments are accounted for at FVTPL.
Embedded Derivatives
Some hybrid financial liability contracts contain both derivative and a non-derivative component. In such cases, the derivative component is termed as embedded derivative, with a non-derivative component representing the host financial liability contract. If the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract and the contract itself is not measured at FVTPL, the embedded derivative is bifurcated and reported at fair value, with gains and losses recognised in net gains (losses) on financial assets/liabilities at fair value through profit or loss (FVTPL). The host financial liability is accounted for in accordance with the appropriate Ind AS.
Fair value measurement
The Company classifies the fair value of its financial instruments in the following hierarchy, based on the inputs used in their valuation:
i) Level 1: The fair value of financial instruments quoted in active markets is based on their quoted closing price at the Balance Sheet date.
ii) Level 2: The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques using observable market data. Such valuation techniques include discounted cash flows, standard valuation models based on market parameters for interest
rates, yield curves or foreign exchange rates, dealer quotes for similar instruments and use of comparable arm''s length transactions.
iii) Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs).
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets measured at amortised cost or at fair value through other comprehensive income.
ECL is the weighted average difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive.
Trade Receivables
Trade receivables are recognised initially at fair value based on amounts exchanged and subsequently at amortised cost less any impairment as per Ind AS 109.
Offsetting of financial instruments
Financial assets and liabilities are offset, with net amount reported in the balance sheet, only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.22 Investments in subsidiaries, joint ventures, associates and equity Instruments
Investment in subsidiaries, associate and joint ventures are carried at cost less accumulated impairment, if any in the Company''s standalone financial statements in accordance with Ind AS- 27, ''Separate Financial Statements''.
Investments in equity instruments, where the Company has opted to classify such instruments at fair value through other comprehensive income (FVTOCI) are measured at fair value through other comprehensive income. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment
3.23 Segment reporting
Segments are identified based on the manner in which the Chief Operating Decision Maker (''CODM'') decides about resource allocation and reviews performance. Segment results that are reported to the CODM include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the period to acquire property and equipment and intangible assets.
The Company has eight operating segments: five integrated steel plants and three alloy steel plants, being separate manufacturing units, have been considered reportable operating segments. In identifying these operating segments, management generally considers the Company''s separately identifiable manufacturing operations representing its main operations.
Each of these operating segments is managed separately as each has different requirements in terms of technology, raw material and other resources. All inter-segment transfers are carried out at arm''s length prices based on prices charged to unrelated customers in standalone sales of identical goods or services.
In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Company''s administrative head office and mining operations.
There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.
3.24 Earnings per share
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid-up shares are included as fully paid equivalents according to the fraction paid-up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive
3.25 Significant Judgements, Assumptions and Estimations in applying Accounting Policies
3.25.1 Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
3.25.2 Close-down and Restoration Obligations
Close-down and restoration costs are normal consequence of mining or production, and majority of close-down and restoration expenditure are incurred in the years following the closure of mine. Although the ultimate cost to be incurred is uncertain, the Company estimate their costs based on current interpretation of scientific and legal data and existing technology, in addition to assumptions about probability and future costs.
3.25.3 Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
3.25.4 Inventories
The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. Significant technical and commercial judgements are required to determine the Company''s quality and quantity of inventories. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.
3.25.5 Defined Benefit Obligation (DBO)
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
3.25.6 Fair Value Measurements
The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company''s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
3.25.7 Provisions and Contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
3.25.8 Mine Closure and Restoration Obligations
Environmental liabilities and Asset Retirement Obligation (ARO): Estimation of environmental liabilities and ARO require interpretation of scientific
and legal data, in addition to assumptions about probability and future costs.
3.25.9 Useful lives of depreciable/ amortisable assets (tangible and intangible)
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
3.26 Recent Accounting Pronouncements
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 March 31,2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
3.26.1 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.
3.26.2 Ind AS 12 - Income Taxes
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 is evaluating the impact, if any, in its financial statements.
3.26.3 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.
Mar 31, 2022
1. Corporate and General information
Steel Authority of India Limited (hereinafter referred to as "the Company"), a Public Sector Undertaking, is domiciled and incorporated in India. The Company, conferred with Maharatna status by Government of India, is one of the largest steel producers in the country. The registered office of the Company is situated at Ispat Bhawan, Lodhi Road, New Delhi-110 003. The securities of the Company are listed on the National Stock Exchange of India Limited, BSE Limited and London Stock Exchange plc.
These financial statements have been approved by the Board of Directors of the Company and authorised for issue in their meeting held on 23rd May, 2022.
2. Basis of Preparation2.1 Statement of Compliance
The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other accounting principles generally accepted in India. The company has uniformly applied the accounting policies during the periods presented.
The financial statements are prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value in accordance with the requirements of the relevant Ind AS:
⢠certain financial assets and liabilities which are classified at fair value through profit and loss or fair value through other comprehensive income;
⢠assets held for sale, at the lower of the carrying amounts and fair value less cost to sell;
⢠defined benefit plans and plan assets.
2.3 Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (?), which is the Company''s functional currency. All financial information presented in ? have been rounded off to the nearest two decimals of Crore unless otherwise stated.
2.4 use of estimates, assumptions and judgements
In preparing the financial statements in conformity with Ind AS and company''s accounting policies, management is required to make estimates, assumptions and judgements that affect reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures as at the date of the financial statements. The judgements, estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised prospectively. Actual results could differ from those estimates.
2.5 Current versus Non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
⢠Expected to be realised or intended to be sold or consumed in the Company''s normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
⢠It is expected to be settled in the Company''s normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current only.
3. SiGNiFiCANT ACCounTinG PoLiCiES
A summary of the significant accounting policies applied in the preparation of the financial statements is given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1 Property, Plant and Equipment3.1.1 Recognition and Measurement
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment. Property, plant and equipment held for use in the production or/and supply of goods or services, or for administrative purposes, are stated at cost, less accumulated depreciation and
impairment losses, if any, except freehold land which are carried at historical cost. The initial cost at cash price equivalence of property, plant and equipment acquired comprises its purchase price, including import duties, non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any obligatory decommissioning costs for its intended use.
in case of constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs and trial run expenses (net of revenue).
Spares having useful life of more than one year and having value of '' 10 lakh or more in each case, are capitalised under the respective heads as and when available for use. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
capital work-in-progress comprises of assets in the course of construction for production and/ or supply of goods or services or administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss. At the point when an asset is operating as intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment. costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of profit and Loss.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits derived from the cost incurred will flow to the company and the cost of the item can be measured reliably. The carrying amount of replaced item(s) is derecognised. .
any repair of ''50 lakh or more of property, plant and equipment is recognised in the carrying amount of the respective item if it is probable that the future economic benefits of the costs incurred will flow to the company. the carrying amount of the replaced item(s) is derecognised.
investment properties are properties held to earn rentals and/or for capital appreciation. investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses. any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the Statement of profit and Loss.
Depreciation on property, plant and equipment and investment property is provided on straight line method, considering residual value of 5% of the cost of the asset, over the useful lives of the asset, as specified in Schedule ii of the companies act, 2013 except in case of following category of assets, where useful life is determined by technical experts. the useful life estimated by the technical experts is as under:
|
Asset category |
Estimated useful life (in years) |
|
factory Buildings |
35 to 40 |
|
plant and Machinery |
10 to 40 |
|
Water Supply & Sewerage |
25 to 40 |
|
Railway Lines & Sidings |
35 to 40 |
For these classes of assets, based on technical evaluation carried out by external technical experts, the company believes that the useful lives as given above best represent the period over which company expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under part c of Schedule ii of the companies act 2013.
Freehold land is not depreciated. the estimated useful lives and residual values of depreciable/ amortisable assets are reviewed at each year end, with the effect of any changes in estimates accounted for on a prospective basis.
Where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. depreciation on addition/ deletion during the year is provided on prorata basis with reference to the month of addition/ deletion. assets costing up to '' 5000/- are fully depreciated in the year in which they are put to use.
depreciation on capital spares is provided over the useful life of the spare or remaining useful life of the mother asset, as reassessed, whichever is lower.
3.4 intangible assets Mining Rights
Mining rights are treated as intangible assets and all related costs thereof are amortised using the unit of production basis over the commercially recoverable reserves. In case the mining rights are not renewed, the balance related cost paid is charged to revenue in the year of decision of non-renewal.
Acquisition cost i.e. cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances, as and when incurred, are treated as addition to the Mining Rights.
other intangible assets are amortised on straightline method over the expected duration of benefits. Software, which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
Development expenditure is capitalised only if it can be measured reliably and the related asset and process are identifiable and controlled by the company Research and other development expenditure is recognised as revenue expenditure as and when incurred.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of profit and Loss.
3.4.2 De-recognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised.
The stripping cost incurred during the production phase of a surface mine is recognised as a component of the mining asset if such cost provides a benefit in terms of improved access to ore in future periods and following criteria are met:
⢠It is probable that the future economic benefits (improved access to an ore body) associated with the stripping activity will flow to the entity,
⢠The entity can identify the component of an ore body for which access has been improved, and
⢠The costs relating to the improved access to that component can be measured reliably.
the expenditure, which cannot be specifically identified to be incurred to access ore is charged to revenue, based on stripping ratio as per five-year
mining plan for mines, except collieries which is based on project report.
3.6 impairment of Non-Financial assets
the company reviews the carrying amount of its assets on each Balance Sheet date for the purpose of ascertaining impairment indicators if any, by considering assets of entire one plant as cash generating unit (cgu). if any such indication exists, the assets'' recoverable amount is estimated, as higher of the Net Selling price and the Value in use. an impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
an assessment is made at each balance sheet date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. if such indication exists, the company estimates the asset''s or cGu''s recoverable amount. a previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised.
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, which takes substantial period of time, are capitalised as a part of the cost of that asset, during the period of time that is necessary to complete and prepare the asset for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
the company considers a period of twelve months or more as a substantial period of time.
transaction costs in respect of long-term borrowings are amortised over the tenor of respective loans using effective interest method and included within borrowing costs. An other borrowing costs are recognised in the Statement of profit and Loss in the period in which these are incurred.
raw materials, Stores & Spares and Finished/Semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the items of the respective plants/units. in case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. the net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
immaterial By-products, residue products and other scrap are valued at estimated net realisable value.
the basis of determining cost is:
raw materials - periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & Spares - Moving weighted average cost Materials in-transit - at cost
Finished/Semi-frnished products Cost of purchase, cost of conversion and other appropriate share of costs including manufacturing overheads incurred in bringing them to their respective present location and condition.
Government grants are recognised when there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in Statement of profit & Loss on a systematic basis over the periods in which the company recognises as expenses the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognised as deferred income, and amortised over the expected useful life of the asset. other grants are recognised in the statement of profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.
Where the company receives non-monetary grants, the asset and the grant are recorded gross at fair amounts and released to the income statement over the expected useful life and pattern of consumption of the benefit of the underlying asset.
3.10 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency of the company using the exchange rates prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of reporting period.
Non-monetary items are not retranslated at period-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
The company opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with companies (accounting Standards) amendment Rules, 2009 relating to accounting Standard-11 (revised) notified by government of india on 31st March, 2009 (as amended on 29th December, 2011), which will continue in accordance with ind-AS 101 for all preexisting long term foreign currency monetary items as at 31st March, 2016. accordingly, for foreign currency loans taken before 31st March, 2016, for adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalised. for foreign currency loans
taken after 31st March 2016, exchange differences arising on settlement or translation of long term monetary items are recognised in statement of profit or loss.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the Statement of profit and loss for the period.
3.11 Employee Benefits Defined Contribution Plan
a defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions to a separate entity. payment to defined contribution benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. contributions towards provident funds and pension funds are charged to the Statement of profit and Loss of the period when the contributions to the funds are due.
Defined benefit plans are the amount of the benefit that an employee will receive on completion of services by reference to length of service, last drawn salary or direct costs related to such benefits. The legal and/ or constructive obligation for such benefits remains with the company.
the liability recognised for defined Benefit plans is the present value of the defined Benefit obligation (DBo) at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. the management estimates the present value of the DBo annually through valuations by an independent actuary using the projected unit credit method. actuarial gains and losses are included in Statement of profit and Loss or other comprehensive income of the year.
remeasurement, comprising of actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the Statement of profit and Loss.
Short Term Employee Benefits
Short term employee benefits comprise of employee costs such as salaries, bonus, ex-gratia, annual leave and sick leave which are accrued in the year in which the associated services are rendered by employees of the group.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.
Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit and Loss immediately.
The company manufactures and sells a range of steel and other products.
Sales are net of Goods and Services tax (GST), rebates and price concessions. Sales are recognised when it satisfy performance obligation by transferring promised goods or services (i.e. assets) to the customers and the customers obtain control of those goods or services. Where the contract prices are not finalised with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realisation of material value without shipment is provided in the letter of credit of respective contracts, whichever is earlier.
export incentives under various schemes are recognised as income when the right to receive arises and the realisation of the same is not considered uncertain.
interest income is accrued on a time proportion basis, by reference to the principal amount outstanding and the effective interest rate applicable.
Dividend income is recognised when the right to receive dividend is established.
3.13 Adjustment pertaining to Earlier Years
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. if the error occurred before the earliest period presented, the opening of assets, liabilities and equity for the earliest period presented, are restated.
3.14 Claims for Liquidated Damages and Price Escalation
claims for liquidated damages are accounted for as and when these are considered recoverable by the company. these are adjusted to the capital cost or recognised in Statement of profit and Loss, as the case may be.
Suppliers'' and contractors'' claims for price escalation are accounted for to the extent such claims are accepted by the company.
At the inception of a contract, the company assesses whether a contract is, or contains a lease based on whether the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
the company recognises a right-of-use asset and a lease liability at the lease commencement date except for short-term leases of twelve months or less and leases for which the underlying asset is of low value, which are expensed in the statement of profit & Loss on a straight-line basis over the lease termThe right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
the right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. certain lease arrangements include the options to extend the lease term. right-of use assets and lease liabilities include these options when it is reasonably certain that they will be exercised. the estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. in addition, the right-of-use asset is periodically reviewed for indicators of impairment and reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
the lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted based on the interest rate implicit in the lease or if that rate cannot be readily determined, the company''s incremental borrowing rate
the lease liability is measured at amortised cost using the effective interest method. it is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the company''s estimate of the amount expected to be payable under a residual value guarantee, or if the company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is re measured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Company as a Lessor Finance leases
Leases which effectively transfer to the lessee substantially all the risks and rewards incidental to ownership of the leased item are classified and
accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. contingent rents are recognised as revenue in the period in which they are earned.
Leases in which the company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the company with expected inflationary costs.
3.16 Non-current assets held for sale
company classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction. this condition is regarded as met only when the asset is available for immediate sale in its present condition and its sale is highly probable.
Non-current assets including discontinued operations, classified as held for sale are measured at the lower of the carrying amounts and fair value less costs to sell and presented separately in the financial statements. once classified as held for sale, the assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or remeasurement of discontinued operations is presented as part of a single line item in Statement of profit and Loss.
Mine closure provision includes the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines. this provision is based on all regulatory requirements and related estimated cost based on best available information. Mine closure costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure.
3.18 Provisions, Contingent Liabilities and Contingent Assets
Provisions and Contingent liabilities
a provision is recognised when the company has present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. provisions are discounted to their present value, where the time value of money is material. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
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 recognised as a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made.
In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no provision is recognised or disclosure is made.
contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. contingent Assets are not recognised and are disclosed only where an inflow of economic benefits is probable.
tax expense recognised in Statement of profit and Loss comprises the sum of deferred tax and current tax except to the extent that the tax relates to the items that are recognised directly in other comprehensive income (oci) or in equity in which case the related tax is recognised either directly in oci or equity accordingly.
current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the indian income-tax Act. the company offsets current tax assets and current tax liabilities when the legally enforceable right to offset exists and they are intended to be settled net or realised simultaneously.
Deferred income taxes are calculated using the balance sheet liability method/approach. deferred tax liabilities are generally recognised in full for all taxable temporary differences. deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax creditsor deductible temporary difference will be utilised against future taxable income. the carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
The company offsets deferred income tax assets and liabilities when the legally enforceable right to offset current tax assets and liabilities exists and they are intended to be settled or realised simultaneously.
3.20 Cash and Cash Equivalents
cash and cash equivalents comprise cash and cheques on hand and demand deposits, together with other short-term highly liquid investments with original maturities of three months or less that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in value.
Recognition, initial measurement and de-recognition
Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the instrument and are measured at fair value on initial recognition. transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, except for those which are classified at fair Value through profit & Loss (FVTpL) at inception, are adjusted with the fair value on initial recognition.
financial assets are derecognised when the contractual rights to the cash flows from the financial asset expires, or has been transferred, and the company has transferred all substantial risks and rewards of ownership. A financial liability (or a part of financial liability) is derecognised when the obligation specified in the contract is extinguished or discharged or cancelled or expires.
Classification and subsequent measurement of financial assets
for the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
⢠amortised cost
⢠financial assets at fair value through profit or loss (fVTpL)
⢠financial assets at fair value through other comprehensive income (FVoG)
All financial assets except for those at fVTpL are subject to review for impairment at least at each reporting date.
a financial asset is measured at amortised cost using effective interest rates if the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
the company''s cash and cash equivalents, trade receivables and most of other receivables fall into this category of financial instruments.
financial assets at FVTpL include financial assets that either do not meet the criteria for amortised cost classification or that are equity instruments held for trading or that meet certain conditions and are designated at FVTpL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognised in Statement of profit and Loss. the fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
FVToG financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are irrevocable designated to this category.
FVToG financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in Statement of profit and Loss.
Classification and subsequent measurement of financial liabilities
financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTpL, that are carried subsequently at fair value with gains or losses recognized in Statement of profit and Loss. All derivative financial instruments are accounted for at FVTpL.
Some hybrid financial liability contracts contain both derivative and a non-derivative component. In such cases, the derivative component is termed as embedded derivative, with a non-derivative component representing the host financial liability contract. If the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract and the contract itself is not measured at FVTpL, the embedded derivative is bifurcated and reported at fair value, with gains and losses recognised in net gains (losses) on financial assets/liabilities at fair value through profit or loss (FVTpL). The host financial liability is accounted for in accordance with the appropriate ind AS.
impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected credit Loss (EcL) model for measurement and recognition of impairment loss for financial assets measured at amortised cost or at fair value through other comprehensive income.
EcL is the difference between all contractual cash flows that are due to the company in accordance with the contract and all the cash flows that the company expects to receive.
Trade receivables are recognised initially at fair value based on amounts exchanged and subsequently at amortised cost less any impairment as per ind As 109.
Offsetting of financial instruments
Financial assets and liabilities are offset, with net amount reported in the balance sheet, only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. the legally enforceable right must not be contingent on future events and must be enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.22 investments in subsidiaries, joint ventures, associates and equity instruments
investment in subsidiaries, associate and joint ventures are carried at cost less accumulated impairment, if any in the company''s standalone financial statements in accordance with ind As- 27, ''Separate financial Statements''.
investments in equity instruments, where the company has opted to classify such instruments at fair value through other comprehensive income (FVTOci) are measured at fair value through other comprehensive income. There is no recycling of the amounts from oci to P&L, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
The company has eight operating segments: five integrated steel plants and three alloy steel plants, being separate manufacturing units, have been considered reportable operating segments. in identifying these operating segments, management generally considers the company''s separately identifiable manufacturing operations representing its main operations.
Each of these operating segments is managed separately as each has different requirements in terms of technology, raw material and other resources. All inter-segment transfers are carried out at arm''s length
prices based on prices charged to unrelated customers in standalone sales of identical goods or services.
in addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the company''s administrative head office and mining operations.
There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.
3.24 Significant Judgements, assumptions and Estimations in applying accounting Policies3.24.1 Leases
The company evaluates if an arrangement qualifies to be a lease as per the requirements of ind AS 116. identification of a lease requires significant judgment. The company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
3.24.2 Close-down and Restoration obligations
close-down and restoration costs are normal consequence of mining or production, and majority of close-down and restoration expenditure are incurred in the years following the closure of mine. Although the ultimate cost to be incurred is uncertain, the company estimate their costs based on current interpretation of scientific and legal data and existing technology, in addition to assumptions about probability and future costs.
3.24.3 recognition of Deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the company''s future taxable income against which the deferred tax assets can be utilized. in addition, significant judgement is required in assessing the impact of any legal or economic limits.
The company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. Significant technical and commercial judgements are required to determine the company''s quality and quantity of inventories. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.
3.24.5 defined Benefit obligation (DBo)
Employee benefit obligations are measured on the basis of actuarial assumptions which include
mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
3.24.6 Fair Value Measurements
the company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. this involves developing estimates and assumptions consistent with the market participants to price the instrument. the company''s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
3.24.7 Provisions and Contingencies
the assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind As) 37, ''provisions, contingent Liabilities and contingent Assets'' the evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
3.24.8 Mine Closure and Restoration obligations Environmental liabilities and Asset retirement obligation (ARo): Estimation of environmental liabilities and ARO require interpretation of scientific and legal data, in addition to assumptions about probability and future costs.
3.24.9 useful lives of depreciable/ amortisable assets (tangible and intangible)
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
Mar 31, 2021
1. Corporate and General Information
Steel Authority of India Limited (hereinafter referred to as âthe Companyâ), a Public Sector Undertaking, is domiciled and incorporated in India. The Company, conferred with Maharatna status by Government of India, is one of the largest steel producers in the country. The registered office of the Company is situated at Ispat Bhawan, Lodhi Road, New Delhi-110 003. The securities of the Company are listed on the National Stock Exchange of India Limited, BSE Limited and London Stock Exchange plc. These financial statements have been approved by the Board of Directors of the Company and authorised for issue in their meeting held on 10 th June, 2021.
2. Basis of Preparation2.1 Statement of Compliance
The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other accounting principles generally accepted in India. The company has uniformly applied the accounting policies during the periods presented.
The financial statements are prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value in accordance with the requirements of the relevant Ind AS:
⢠certain financial assets and liabilities which are classified at fair value through profit and loss or fair value through other comprehensive income;
⢠assets held for sale, at the lower of the carrying amounts and fair value less cost to sell;
⢠defined benefit plans and plan assets.
2.3 Functional and Presentation Currency
The financial statements have been presented in Indian Rupees (''), which is the Company''s functional currency. All financial information presented in '' have been rounded off to the nearest two decimals of Crore unless otherwise stated.
2.4 Use of estimates, assumptions and judgements
In preparing the financial statements in conformity with Ind AS and company''saccounting policies, management is required to make estimates, assumptions and judgements that affect reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures as at the date of the financial statements. The judgements, estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised prospectively. Actual results could differ from those estimates.
2.5 Current versus Non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non- current classification. An asset is classified as current when it is:
⢠Expected to be realised or intended to be sold or consumed in the Company''s normal operating cycle;
⢠Held primarily for the purpose of trading;
⢠Expected to be realised within twelve months after the reporting period; or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
⢠It is expected to be settled in the Company''s normal operating cycle;
⢠It is held primarily for the purpose of trading;
⢠It is due to be settled within twelve months after the reporting period; or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current only.
3. SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements is given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1 Property, Plant and Equipment3.1.1 Recognition and Measurement
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment. Property, plant and equipment held for use in the production or/and supply of goods or services, or for administrative purposes, are stated at cost, less accumulated depreciation and impairment losses, if any, except freehold land which are carried at historical cost. The initial cost at cash price equivalence of property, plant and equipment acquired comprises its purchase price, including import duties, non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any obligatory decommissioning costs for its intended use.
In case of constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs and trial run expenses (net of revenue). Spares having useful life of more than one year and having value of ''10 lakh or more in each case, are capitalised under the respective heads as and when available for use. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Capital work-in-progress comprises of assets in the course of construction for production and/ or supply of goods or services or administrative purposes or for purposes not yet determined are carried at cost less any recognised impairment loss. At the point when an asset is operating as intended by the management, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits derived from the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced item(s) is derecognised.
Any repair of ''50 lakh or more of property, plant and equipment is recognised in the carrying amount of the respective item if it is probable that the future economic benefits of the costs incurred will flow to the Company. The carrying amount of the replaced item(s) is derecognised.
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses. Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognised in the Statement of Profit and Loss.
Depreciation on property, plant and equipment and investment property is provided on straight line method, considering residual value of 5% of the cost of the asset, over the useful lives of the asset, as specified in Schedule II of the Companies Act, 2013 except in case of following category of assets, where useful life is determined by technical experts. The useful life estimated by the technical experts is as under:
|
Asset category |
Estimated useful life (in years) |
|
Factory Buildings |
35 to 40 |
|
Plant and Machinery |
10 to 40 |
|
Water Supply & Sewerage |
25 to 40 |
|
Railway Lines & Sidings |
35 to 40 |
For these classes of assets, based on technical evaluation carried out by external technical experts, the Company believes that the useful lives as given above best represent the period over which Company expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
Freehold land is not depreciated.
The estimated useful lives and residual values of depreciable/ amortisable assets are reviewed at each year end, with the effect of any changes in estimates accounted for on a prospective basis.
Where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Depreciation on addition/ deletion during the year is provided on pro-rata basis with reference to the month of addition/ deletion. Assets costing up to '' 5000/- are fully depreciated in the year in which they are put to use. Depreciation on capital spares is provided over the useful life of the spare or remaining useful life of the mother asset, as reassessed, whichever is lower.
3.4 Intangible assets Mining Rights
Mining rights are treated as Intangible Assets and all related costs thereof are amortised using the unit of production basis over the commercially recoverable reserves. In case the mining rights are not renewed, the balance related cost paid is charged to revenue in the year of decision of non-renewal.
Acquisition Cost i.e. cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances, as and when incurred, are treated as addition to the Mining Rights.
Other Intangible Assets
Other intangible assets are amortised on straight-line method over the expected duration of benefits. Software, which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
Development expenditure is capitalised only if it can be measured reliably and the related asset and process are identifiable and controlled by the Company Research and other development expenditure is recognised as revenue expenditure as and when incurred.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Profit and Loss.
3.4.2 De-recognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised.
The stripping cost incurred during the production phase of a surface mine is recognised as a component of the mining asset if such cost provides a benefit in terms of improved access to ore in future periods and following criteria are met:
⢠It is probable that the future economic benefits (improved access to an ore body) associated with the stripping activity will flow to the entity,
⢠The entity can identify the component of an ore body for which access has been improved, and
⢠The costs relating to the improved access to that component can be measured reliably.
The expenditure, which cannot be specifically identified to be incurred to access ore is charged to revenue, based on stripping ratio as per five-year mining plan for mines, except collieries which is based on project report.
3.6 Impairment of Non-Financial Assets
The Company reviews the carrying amount of its assets on each Balance Sheet date for the purpose of ascertaining impairment indicators if any, by considering assets of entire one Plant as Cash Generating Unit (CGU). If any such indication exists, the assets'' recoverable amount is estimated, as higher of the Net Selling Price and the Value in Use. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
An assessment is made at each balance sheet date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised.
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, which takes substantial period of time, are capitalised as a part of the cost of that asset, during the period of time that is necessary to complete and prepare the asset for its intended use.Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
The Company considers a period of twelve months or more as a substantial period of time.
Transaction costs in respect of long-term borrowings are amortised over the tenor of respective loans using effective interest method and included within borrowing costs. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which these are incurred.
Raw materials, Stores & Spares and Finished/Semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the items of the respective Plants/Units. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Immaterial By-products, Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost Minor raw materials - Moving weighted average cost Stores & Spares - Moving weighted average cost Materials in-transit - at cost
Finished/Semi-finished products Cost of purchase, cost of conversion and other appropriate share of costs including manufacturing overheads incurred in bringing them to their respective present location and condition.
Government grants are recognised when there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in Statement of Profit & Loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognised as deferred income, and amortised over the expected useful life of the asset. Other grants are recognised in the statement of Profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.
Where the Company receives non-monetary grants, the asset and the grant are recorded gross at fair amounts and released to the income statement over the expected useful life and pattern of consumption of the benefit of the underlying asset.
3.10 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the date of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of reporting period.
Non-monetary items are not retranslated at period-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
The Company opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules, 2009 relating to Accounting Standard-11 (Revised) notified by Government of India on 31st March, 2009 (as amended on 29th December, 2011), which will continue in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at 31st March, 2016. Accordingly, for foreign currency loans taken before 31st March, 2016, for adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalised. For foreign currency loans taken after 31st March 2016, exchange differences arising on settlement or translation of long term monetary items are recognised in statement of profit or loss.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the Statement of profit and loss for the period.
3.11 Employee Benefits Defined Contribution Plan
A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions to a separate entity. Payment to defined contribution benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. Contributions towards Provident Funds and Pension Funds are charged to the Statement of Profit and Loss of the period when the contributions to the Funds are due.
Defined Benefit Plan
Defined benefit plans are the amount of the benefit that an employee will receive on completion of services by reference to length of service, last drawn salary or direct costs related to such benefits. The legal and/ or constructive obligation for such benefits remains with the Company.
The liability recognised for Defined Benefit Plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. The management estimates the present value of the DBO annually through valuations by an independent actuary using the projected unit credit method. Actuarial gains and losses are included in Statement of Profit and Loss or Other Comprehensive Income of the year.
Remeasurement, comprising of actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the Statement of Profit and Loss.
Short Term Employee Benefits
Short term employee benefits comprise of employee costs such as salaries, bonus, ex-gratia, annual leave and sick leave which are accrued in the year in which the associated services are rendered by employees of the Company.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.
Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit and Loss immediately.
The Company manufactures and sells a range of steel and other products.
Sale of Goods
Sales are net of Goods and Services Tax (GST), rebates and price concessions. Sales are recognised when it satisfy performance obligation by transferring promised goods or services (i.e. assets) to the customers and the customers obtain control of those goods or services. Where the contract prices are not finalised with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realisation of material value without shipment is provided in the letter of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognised as income when the right to receive arises and the realisation of the same is not considered uncertain.
Interest and dividend income
Interest income is accrued on a time proportion basis, by reference to the principal amount outstanding and the effective interest rate applicable.
Dividend income is recognised when the right to receive dividend is established.
3.13 Adjustment pertaining to Earlier Years
Material prior period errors are corrected retrospectively by restating the comparative amounts for the prior periods presented in which the error occurred. If the error occurred before the earliest period presented, the opening of assets, liabilities and equity for the earliest period presented, are restated.
3.14 Claims for Liquidated Damages and Price Escalation
Claims for liquidated damages are accounted for as and when these are considered recoverable by the Company. These are adjusted to the capital cost or recognised in Statement of Profit and Loss, as the case may be.
Suppliers'' and Contractors'' claims for price escalation are accounted for to the extent such claims are accepted by the Company.
At the inception of a contract, the Company assesses whether a contract is, or contains a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date except for short-term leases of twelve months or less and leases for which the underlying asset is of low value, which are expensed in the statement of Profit & Loss on a straight-line basis over the lease term. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straightline method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Certain lease arrangements include the options to extend the lease term. Right-of use assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reviewed for indicators of impairment and reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted based on the interest rate implicit in the lease or if that rate cannot be readily determined, the Company''s incremental borrowing rate The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is re measured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
Company as a Lessor Finance leases
Leases which effectively transfer to the lessee substantially all the risks and rewards incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognised as revenue in the period in which they are earned.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.16 Non-current assets held for sale
Company classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction. This condition is regarded as met only when the asset is available for immediate sale in its present condition and its sale is highly probable. Non-current assets including discontinued operations, classified as held for sale are measured at the lower of the carrying amounts and fair value less costs to sell and presented separately in the financial statements. Once classified as held for sale, the assets are not subject to depreciation or amortisation.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item in Statement of Profit and Loss.
Mine Closure Provision includes the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines. This provision is based on all regulatory requirements and related estimated cost based on best available information. Mine closure costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure.
3.18 Provisions, Contingent Liabilities and Contingent Assets Provisions and Contingent Liabilities
A Provision is recognised when the Company has present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material.All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
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 recognised as a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made.
In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognised or disclosure is made.
Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognised and are disclosed only where an inflow of economic benefits is probable.
Tax expense recognised in Statement of Profit and Loss comprises the sum of deferred tax and current tax except to the extent that the tax relates to the items that are recognised directly in Other Comprehensive
Income (OCI) or in equity in which case the related tax is recognised either directly in OCI or equity accordingly.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. The Company offsets current tax assets and current tax liabilities when the legally enforceable right to offset exists and they are intended to be settled net or realised simultaneously.
Deferred income taxes are calculated using the balance sheet liability method/approach. Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax creditsor deductible temporary difference will be utilised against future taxable income. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at thetax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
The Company offsets deferred income tax assets and liabilities when the legally enforceable right to offset current tax assets and liabilities exists and they are intended to be settled or realised simultaneously.
3.20 Cash and Cash Equivalents
Cash and cash equivalents comprise cash and cheques on hand and demand deposits, together with other short-term highly liquid investments with original maturities of three months or less that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in value.
Recognition, initial measurement and de-recognition Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and are measured at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, except for those which are classified at Fair Value through Profit & Loss (FVTPL) at inception, are adjusted with the fair value on initial recognition.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expires, or has been transferred, and the Company has transferred all substantial risks and rewards of ownership. A financial liability (or a part of financial liability) is derecognised when the obligation specified in the contract is extinguished or discharged or cancelled or expires.
Classification and subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
⢠amortised cost
⢠financial assets at fair value through profit or loss (FVTPL)
⢠financial assets at fair value through other comprehensive income (FVOCI)
All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.
Amortised cost
A financial asset is measured at amortised cost using effective interest rates if the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company''s cash and cash equivalents, trade receivables and most of other receivables fall into this category of financial instruments.
Financial assets at FVTPL include financial assets that either do not meet the criteria for amortised cost classification or that are equity instruments held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognised in Statement of Profit and Loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at FVOCI
FVTOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are irrevocable designated to this category.
FVTOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in Statement of Profit and Loss.
Classification and subsequent measurement of financial liabilities
Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in Statement of Profit and Loss. All derivative financial instruments are accounted for at FVTPL.
Embedded Derivatives
Some hybrid financial liability contracts contain both derivative and a non-derivative component. In such cases, the derivative component is termed as embedded derivative, with a non-derivative component representing the host financial liability contract. If the economic characteristics and risks of embedded derivatives are not closely related to those of the host contract and the contract itself is not measured at FVTPL, the embedded derivative is bifurcated and reported at fair value, with gains and losses recognised in net gains (losses) on financial assets/liabilities at fair value through profit or loss (FVTPL). The host financial liability is accounted for in accordance with the appropriate IndAS.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets measured at amortised cost or at fair value through other comprehensive income.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive.
Trade receivables are recognised initially at fair value based on amounts exchanged and subsequently at amortised cost less any impairment as per Ind AS 109.
Offsetting of financial instruments
Financial assets and liabilities are offset,with net amountreported in the balance sheet, only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.22 Investments in subsidiaries, joint ventures,associates and equity Instruments
Investment in subsidiaries, associate and joint ventures are carried at cost less accumulated impairment, if any in the Company''s standalone financial statements in accordance with Ind AS- 27, âSeparate Financial Statements''.
Investments in equity instruments, where the Company has opted to classify such instruments at fair value through other comprehensive income (FVTOCI) are measured at fair value through other comprehensive income. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
The Company has eight operating segments: five integrated steel plants and three alloy steel plants, being separate manufacturing units, have been considered reportable operating segments. In identifying these operating segments, management generally considers the Company''s separately identifiable manufacturing operations representing its main operations.
Each of these operating segments is managed separately as each hasdifferent requirements in terms of technology, raw material and other resources. All inter-segment transfers are carried out at arm''s length prices based on prices charged to unrelated customers in standalone sales of identical goods or services.
In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Company''s administrative head office and mining operations.
There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.
3.24 Significant Judgements, Assumptions and Estimations in applying Accounting Policies3.24.1 Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
3.24.2 Close-down and Restoration Obligations
Close-down and restoration costs are normal consequence of mining or production, and majority of close-down and restoration expenditure are incurred in the years following the closure of mine. Although the ultimate cost to be incurred is uncertain, the Company estimate their costs based on current interpretation of scientific and legal data and existing technology, in addition to assumptions about probability and future costs.
3.24.3 Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.
The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. Significant technical and commercial judgements are required to determine the Company''s quality and quantity of inventories. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.
3.24.5 Defined Benefit Obligation (DBO)
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates,
medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
3.24.6 Fair Value Measurements
The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company''s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
3.24.7 Provisions and Contingencies
The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, âProvisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.
3.24.8 Mine Closure and Restoration Obligations
Environmental liabilities and Asset Retirement Obligation (ARO): Estimation of environmental liabilities and ARO require interpretation of scientific and legal data, in addition to assumptions about probability and future costs.
3.24.9 Useful lives of depreciable/ amortisable assets (tangible and intangible)
Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
Mar 31, 2018
1. Corporate and General Information
Steel Authority of India Limited (referred to as "the Company") is domiciled and incorporated in India. The Company, a Public Sector Undertaking conferred with Maharatna status by Government of India, is one of the largest steel producers in the Country. The registered office of the Company is situated at Ispat Bhawan, Lodhi Road, New Delhi-110 003. The securities of the Company are listed on the National, Bombay and London Stock Exchanges.
These financial statements have been approved by the Board of Directors of the Company in their meeting held on 30th May, 2018.
2. Basis of Preparation
2.1 Statement of Compliance
The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (Ind AS) as prescribed under Section 133 of Companies Act, 2013, as notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended), and other accounting principles generally accepted in India. The Company has uniformly applied the accounting policies during the periods presented.
2.2 Basis of Measurement
The financial statements are prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value:
- certain financial assets and liabilities which are classified as fair value through profit and loss or fair value through other comprehensive income;
- assets held for sale, at the lower of the carrying amounts and fair value less cost to sell;
- defined benefit plans and plan assets.
2.3 Functional and Presentation Currency
The Financial Statements have been presented in Indian Rupees (?), which is the Company''s functional currency. All financial information presented in '' have been rounded off to the nearest two decimals of crore unless otherwise stated.
2.4 Use of Estimates and Management Judgment
In preparing the financial statements in conformity with Company''s Accounting Policies, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements, the amounts of revenue and expenses during the reported period and notes to the Financial Statements. Actual results could differ from those estimates. Any revision to such estimates is recognized in the period in which the same is determined.
2.5 Current versus Non-current classification
The Group presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is classified as current when it is:
- Expected to be realized or intended to sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current.
A liability is classified as current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
3 SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements is given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1 Property, Plant and Equipment
3.1.1 Recognition and Measurement Tangible Assets
Property, Plant and Equipment held for use in the production or/and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and impairment losses. The initial cost at cash price equivalence of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any obligatory decommissioning costs for its intended use. Plant and Machinery also include assets held under finance lease.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs including trial run expenses (net of revenue)
Spares having useful life of more than one year and having value of Rs, 10 lakhs or more in each case, are capitalized under the respective heads as and when available for use.
Profit or loss arising on the disposal of property, plant and equipment is recognized in the Statement of Profit and Loss.
3.1.2 Subsequent Cost
Subsequent expenditure is recognized as an increase in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits derived from the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced item(s) is derecognized. .
Any repair of '' 50 lakhs or more of property, plant and equipment are recognized in the carrying amount of the item if it is probable that the future economic benefits of the costs incurred will flow to the Company. The carrying amount of the replaced item(s) is derecognized.
For these classes of assets, based on technical evaluation carried out by external technical experts, the Company believes that the useful lives as given above best represent the period over which Company expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
The estimated useful lives and residual values of depreciable/ amortizable assets are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortized depreciable amount is provided over the residual useful life of the asset. Depreciation on addition/ deletion during the year is provided on pro-rata basis with reference to the month of addition/ deletion. Assets costing up to Rs, 5000/- are fully depreciated in the year in which they are put to use.
Depreciation on capital spares is provided over the useful life of the spare or remaining useful life of the mother asset, as reassessed, whichever is lower.
3.2 Intangible assets
3.2.1 Recognition and measurement Mining Rights
Mining Rights are treated as Intangible Assets and all related costs thereof are amortized on the basis of annual production to the total estimated mineable reserves. In case the mining rights are not renewed, the balance related cost will be charged to revenue in the year of decision of non-renewal.
Acquisition Cost i.e. cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances, as and when incurred, are treated as addition to the Mining Rights. Other Intangible Assets
Software which is not an integral part of related hardware, is treated as intangible asset and amortized over a period of five years or its licence period, whichever is less.
Research and development
Development expenditure is capitalized only if it can be measured reliably and the related asset and process are identifiable and controlled by the Company.
Research and other development expenditure is recognized as revenue expenditure as and when incurred.
3.2.2 Subsequent Cost
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in the Statement of Profit and Loss.
3.3 Impairment of Non-Financial Assets
The Company reviews the carrying amount of its assets on each Balance Sheet date for the purpose of ascertaining impairment indicators, if any, by considering assets of entire one Plant as Cash Generating Unit (CGU). If any such indication exists, the assets'' recoverable amount is estimated, as higher of the Net Selling Price and the Value in Use. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.
3.4 Stripping Cost
The stripping cost incurred during the production phase of a surface mine is recognized as an asset if such cost provides a benefit in terms of improved access to ore in future periods and following criteria are met:
- It is probable that the future economic benefits (improved access to an ore body) associated with the stripping activity will flow to the entity,
- The entity can identify the component of an ore body for which access has been improved, and
- The costs relating to the improved access to that component can be measured reliably.
The expenditure, which cannot be specifically identified to have been incurred to access ore is charged to revenue, based on stripping ratio as per 5 year mining plan for mines, except collieries which is based on project report.
3.5 Borrowing costs
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, which takes substantial period of time, are capitalized as a part of the cost of that asset, during the period of time that is necessary to complete and prepare the asset for its intended use.
The Company considers a period of twelve months or more as a substantial period of time.
Transaction costs in respect of long-term borrowings are amortized over the tenor of respective loans using effective interest method. Other borrowing costs are recognized in the Statement of Profit & Loss in the period in which these are incurred.
3.6 Inventories
Raw materials, Stores & Spares and Finished/Semi-finished products (including process scrap) are valued at lower of cost and net realizable value of the items of the respective Plants/Units. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realizable value of semi-finished special products, which have realizable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realizable value. The basis of determining cost is:
Raw materials - Periodical weighted average cost Minor raw materials - Moving weighted average cost Stores & Spares - Moving weighted average cost Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
3.7 Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in Statement of Profit and Loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognized as deferred income, and amortized over the expected useful life of the asset. Other grants are recognized in the statement of Profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.
Where the Company receives non-monetary grants, the asset and the grant are recorded gross at fair amounts and released to the income statement over the expected useful life and pattern of consumption of the benefit of the underlying asset.
3.8 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement and remeasurement of monetary items denominated in foreign currency are recognized in the Statement of Profit and Loss at period-end exchange rates.
The Company opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard-11 notified by Government of India on 31st March, 2009 (as amended on 29th December 2011), which will continue in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at 31st March 2016. Accordingly, exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
Non-monetary items are not retranslated at period-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
3.9 Employee Benefits Defined Contribution Plan
A defined contribution plan is a plan under which the Company pays fixed contributions into a separate entity. Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. Contributions towards Provident Funds are charged to the Statement of Profit and Loss of the period when the contributions to the Funds are due.
Defined Benefit Plan
Defined benefit plans are the amount of the benefit that an employee will receive on completion of services by reference to length of service, last drawn salary or direct costs related to such benefits. The legal obligation for any benefits remains with the Company.
The liability recognized for Defined Benefit Plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Management estimates the present value of the DBO annually through valuations by an independent actuary using the projected unit credit method. Actuarial gains and losses are included in Statement of Profit and Loss or Other Comprehensive Income of the year.
Remeasurement, comprising of actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
Short Term Employee Benefits
Short term employee benefits comprise of employee costs such as salaries, bonus, ex-gratia, annual leave and sick leave which are accrued in the year in which the associated services are rendered by employees of the Company. Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.
Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit and Loss immediately.
3.10 Revenue Recognition
Revenue is measured at the fair value of consideration received or receivable. Sale of goods
Sales include excise duty (up to 30th June, 2017) and are net of Goods and Services Tax (GST) (from 1st July, 2017), rebates and price concessions. Sales are recognized at the time of transfer of risks and rewards of ownership of the goods to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Where the contract prices are not finalized with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognized on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realization of material value without shipment is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on certainty of realization.
The iron ore fines not readily useable/saleable are included in inventory and revenue is recognized on disposal.
Interest and dividend income
Interest income is reported on an accrual basis using the effective interest method. Dividends are recognized at the time the right to receive is established.
3.11 Adjustment pertaining to Earlier Years
Income/Expenditure relating to prior period, which do not exceed 0.5% of Turnover in each case, is treated as income/expenditure of current year.
3.12 Claims for Liquidated Damages and Price Escalation
Claims for liquidated damages are accounted for as and when these are considered recoverable by the Company, on final settlement. These are adjusted to the capital cost or recognized in Statement of Profit and Loss, as the case may be on final settlement of Liquidated damages.
Suppliers'' and Contractors'' claims for price escalation are accounted for to the extent such claims are accepted by the Company.
3.13 Leases
Company as a Lessee Finance leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments under such leases are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the ownership by the end of lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the less or are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensate the lesser for expected inflationary costs.
Company as a Less or Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognized as revenue in the period in which they are earned. Operating leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.14 Investment Properties
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses. Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognized in the Statement of Profit and Loss.
3.15 Non-current assets held for sale
Company classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction. This condition is regarded as met only when the asset is available for immediate sale in its present condition and its sale is highly probable.
Non-current assets including discontinued operations, classified as held for sale are measured at the lower of the carrying amounts and fair value less costs to sell and presented separately in the financial statements. Once classified as held for sale, the assets are not subject to depreciation or amortization.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item in statement of profit and loss.
3.16 Mine Closure
Mine Closure Provision includes the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines. This provision is based on all regulatory requirements and related estimated cost based on best available information. Mine closure costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure.
The initial close-down and restoration provision is capitalized within "Property, Plant and Equipment". Subsequent movements in the close-down and restoration provisions for on-going operations, including those resulting from new disturbance related to expansions or other activities qualifying for capitalization, updated cost estimates, changes to the estimated lives of operations, changes to the timing of closure activities and revisions to discount rates are also capitalized within "Property, Plant and Equipment". These costs are depreciated over the lives of the assets to which they relate. Any changes in closure provisions relating to closed operations are charged /credited to the Statement of Profit and Loss. The amortization or "unwinding" of the discount applied in establishing the provisions is charged as Finance Cost.
3.17 Provisions, Contingent Liabilities and Contingent Assets Provisions and Contingent Liabilities
A Provision is recognized when the Company has present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material. 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 a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognized because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.
In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognized or disclosure is made.
Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable.
3.18 Income Taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Current income tax relating to items recognized outside statement of profit and loss is recognized either in OCI or in equity.
Deferred income taxes are calculated using the liability method. Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits (MAT Credit entitlement) or deductible temporary difference will be utilized against future taxable income. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside statement of profit and loss is recognized either in OCI or in equity.
3.19 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in value.
3.20 Equity and Reserves
Share Capital represents the nominal value of shares that have been issued. Securities premium includes any premium received on issue of Share Capital. Components of other equity include the following:
- Re-measurement of defined benefit liability comprises the actuarial gain or loss from changes in demographic and financial assumptions and return on plan assets.
- Bond Redemption Reserve.
- Other transactions recorded directly in Other Comprehensive Income.
- Retained earnings include all current and prior period retained profits
3.21 Financial Instruments
Recognition, initial measurement and de-recognition Financial assets and financial liabilities are recognized and are measured initially at fair value adjusted by transactions costs, except for those financial assets which are classified at Fair Value through Profit & Loss (FVTPL) at inception. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
- amortized cost
- financial assets at fair value through profit or loss (FVTPL)
- financial assets at fair value through other comprehensive income (FVOCI) All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.
Amortized cost
A financial asset is measured at amortized cost using effective interest rates if both of the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company''s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that are either do not meet the criteria for amortized cost classification or that are equity instruments held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at FVOCI
FVOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are irrevocable designated to this category at inception.
FVOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in statement of profit or loss.
Classification and subsequent measurement of financial liabilities Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in profit or loss. All derivative financial instruments are accounted for at FVTPL.
Embedded Derivatives
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive.
Trade Receivables
The Company applies approach as specified in Indian Accounting Standards (Ind AS) 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables.
Other Financial Assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.22 Investments in subsidiaries, joint ventures and associates
The Company has accounted for its subsidiaries and associates, joint ventures at cost in its standalone financial statements in accordance with Ind AS- 27, Separate Financial Statements.
3.23 Segment reporting
The Company has 8 operating/reportable segments: the five integrated steel plants and three alloy steel plants, being separate manufacturing units, have been considered reportable segments. In identifying these operating segments, management generally considers the Company''s separately identifiable manufacturing operations representing its main operations.
Each of these operating segments is managed separately as each requires different technologies, raw materials and other resources. All inter-segment transfers are carried out at arm''s length prices based on prices charged to unrelated customers in standalone sales of identical goods or services.
In addition, corporate assets which are not directly attributable to the business activities of any operating segment are not allocated to a segment. This primarily applies to the Company''s administrative head office and mining operations. There have been no changes from prior periods in the measurement methods used to determine reported segment profit or loss.
3.24 Significant Judgments, Assumptions, and Estimations in applying Accounting Policies
3.24.1 Classification of Leases
The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
3.24.2 Close-down and Restoration Obligations
Close-down and restoration costs are normal consequence of mining or production, and majority of close-down and restoration expenditure are incurred in the years following the closure of mine, although the ultimate cost to be incurred is uncertain, the Company estimate their costs using current restoration techniques.
3.24.3 Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits.
3.24.4 Inventories
The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.
3.24.5 Defined Benefit Obligation (DBO)
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
3.24.6 Fair Value Measurements
The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company''s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
3.24.7 Provisions and Contingencies
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgment by management regarding the probability of exposure to potential loss.
3.24.8 Mine Closure and Restoration Obligations
Environmental liabilities and Asset Retirement Obligation (ARO): Estimation of environmental liabilities and ARO require interpretation of scientific and legal data, in addition to assumptions about probability and future costs.
3.24.9 Useful lives of depreciable/ amortizable assets (tangible and intangible) Management reviews its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
(i) Contractual obligations
Refer note 48.1 for disclosure of contractual commitments for the acquisition of property, plant and equipment.
(ii) Land:
(a) Includes 68,019.40 acres (67,718.76 acres as on 31st March, 2017) owned / possessed / taken on lease by the Company, in respect of which title/lease deeds are pending for registration.
(b) Includes 34,576.05 acres (34,061.08 acres as on 31st March, 2017) in respect of which title is under dispute.
(c) 9,367.80 acres (9007.46 acres as on 31st March, 2017) transferred/agreed to be transferred or made available for settlement to various Joint Ventures / Central / State / Semi Government authorities, in respect of which conveyance deeds remain to be executed/registered.
(d) 6,187.95 acres (6384.17 acres as on 31st March, 2017) given on lease to various agencies/employees/ex-employees.
(e) Includes 4070.09 acres (4,436.70 acres as on 31st March, 2017) under unauthorized occupation.
(f) 1,762.92 acres (1,762.92 acres as on 31st March, 2017) of Land which is not in the actual possession, shown as deemed possession.
(g) '' 63.13 crore is lying under deposits (in respect of land already acquired) with the District & Sessions Judge, Bokaro during the year 2007 towards compensation payable to land losers.
(h) Vide Notification of Acquisition in the Gazette of India (Extraordinary) bearing No S.O. 1309(E) dated 08.06.2012 and No. S.O. 2484E dated 13.10.2012, National Highway Authority of India Ltd.(NHAI) has acquired 12.19 acres.
(i) Includes 21.13 acres freehold land notified for acquisition by Government of Jharkhand vide Gazette notification no. 42 & 43 dated 26th August, 2009, determining compensation of Rs, 13.91 crore only for 15.62 acres. Management proposes to contest the same with appropriate authorities. Pending further action in the matter, no effect of above has been given in the accounts.
(iii) Other Assets:
(a) Buildings include net block of Rs, 21.23 crore as on 31st March, 2018 (Rs, 21.18 crore as on 31st March, 2017) for which conveyance deed is yet to be registered in the name of the Company.
(b) Includes 7107 (7038 as on 31st March, 2017), residential quarters/houses under unauthorized occupation.
The Company is having accumulated business losses (Including Investment Allowance) of Rs,28,575.26 crore (Previous year- Rs,24,744.77 crore) [including accumulated unabsorbed depreciation of Rs,18,823.78 crore (Previous Year - Rs,15,057.93 crore)] and MAT credit of Rs,1,051.83 crore as on 31st March, 2018 as per the provisions of the Income Tax Act, 1961. The unabsorbed business losses amounting to Rs,9,751.48 crore (Previous Year - Rs,9,686.84 crore) are available for offset for maximum period of eight years from the incurrence of loss and unused tax (MAT) credit will be available for offset within maximum period of fifteen years.
In view of the various measures being implemented by the Government for upliftment of the Steel Industry and to boost the demand coupled with steps being taken by the Company to reduce the cost, improvement in the efficiency/productivity, the Company is certain that it will be able to improve its physical and financial performance in future. Consequently, the Company will be able to earn sufficient future taxable profits to adjust the accumulated business losses/unabsorbed depreciation and unused MAT credit.
Accordingly, deferred tax asset of Rs,3,407.55 crores on accumulated business losses (including Rs,55.13 crores during the year ended 31st March, 2018) and MAT credit of Rs,1,051.83 crores, has been recognized as on 31st March, 2018.
Total Non Current Loans 29777.16 19087.48
No loans have been guaranteed by the directors and others.
There is no default as on the balance sheet date in repayment of borrowings and interest thereon.
All bonds are repayable on the maturity date unless otherwise stated.
Bonds are secured, in respect of respective facilities by way of :
a) Secured by charges ranking pari-passu inter-se, on all the present and future immovable property at Mouje-Wadej of City taluka, District Ahmedabad, Gujarat and Company''s Plant & Machinery, including the land on which it stands, pertaining to IISCO Steel Plant (ISP).
b) Secured by charges ranking pari-passu inter-se, on all the present and future immovable property at Mouje-Wadej of City taluka, District Ahmedabad, Gujarat and Company''s Plant & Machinery, including the land on which it stands, pertaining to Durgapur Steel Plant. (DSP).
c) Redeemable in 12 equal yearly installments of Rs, 14 crore each starting w.e.f 26th October, 2014. Installment payable on 26th Oct, 2018 has been shown in Other Current Liabilities.
d) Redeemable in 3 equal instilments of Rs, 50 crore each on 15th September of 2014, 2019 and 2024.
e) The soft basis of the loan was drawn in 3 tranches stated as 1(a), 1(b) and 1( c) at an interest rate of 8.75% p.a. The Interest on 1(a) is 0.75% p.a and balance 8% is towards meeting Exchange fluctuation (4%) and Pollution control schemes (4%). In case of 1 (b) the Interest is 0.75% p.a and balance 8.0% p.a is towards periphery development. The Interest on 1(c) is 3.66% p.a and the balance 5.09% p.a is towards meeting periphery development. The principal and interest is repayable half yearly. The loan is guaranteed by Government of India.
f) The loan is repayable in 3 equal yearly installments on 16th November starting from 2015 at an interest rate of 6 month LIBOR 1.06%. Interest is paid half yearly.
g) The loan is repayable by 2030. The principal and interest is paid half yearly, guaranteed by Government of India.
h) The loan is repayable in 3 equal yearly installments on 21st December starting from 2016 at an interest rate of 6 month LIBOR 1.75%. Interest is paid half yearly.
i) Terms of repayment is to be decided by SDF management Committee.
j) Secured by charges ranking pari-pasu on the present and future movable plant and machinery of BSL & BSP to the extent of loan. SBIECB loan is repayable in 4 equal installments at the end of 4th, 5th, 6th and 7th from the first draw-down i.e. 25th Sept 2017.
k) Redeemable in 5 equal yearly installments starting w.e.f 25th May, 2018. Installment payable on 25th May, 2018 has been shown in current liabilities.
(iv) Valuation process and technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
(a) Fair value of interest swap is determined based on dealer or counterparty quotes for similar instruments
(b) Fair value of forward foreign exchange contract and principal swap is determined using forward rate at balance sheet date.
(c) The carrying value of borrowings bearing variable interest rate are considered to be representative of their fair value.
(d) The carrying value of financial assets and liabilities with maturities less than 12 months are considered to be representative of their fair value.
(e) Fair value of fixed interest rate financial assets and liabilities carried at amortized cost (including finance lease obligations) is determined by discounting the cash flows using a discount rate equevalent to market interest rate applicable to similar assets and liabilities as at the balance sheet date.
(v) Unquoted investments:
Fair value estimates of unquoted equity investments are included in level-3 and are based on information relating to value of investee company''s net assets. For investments in cooperative societies, the Company has determined that cost is appropriate estimate of fair value, therefore, there have been no changes on account of fair values.
* Investment in equity of joint ventures and associates have been carried at cost as per Ind AS 27 "Separate financial statements" and hence are not presented here.
ii) Risk Management
The Company is exposed to various risk in relation to financial instruments. The Company''s financial asset and liabilities are by category are summarized in note 43(i). The main types of risks are market risk, credit risk and liquidity risk. The Company''s risk management is co-ordinate at its headquarters, in close cooperation with the board of directors, and focuses on actively securing the Company''s short to medium-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns. The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Company is exposed are described below.
A) Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits, etc. The Company''s maximum exposure to credit risk is limited to the carrying amount of following types financial assets.
-Cash and cash equivalents -Derivative financial instruments -Trade receivables
-Other financial assets measured at amortized cost
The Company continuously monitors defaults of customers and other counterparties, identified either individually or by the Company, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Company''s policy is to deal only with creditworthy counterparties.
a) Credit risk management Cash and cash equivalent
Credit risk related to cash and cash equivalents is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks across the country.
Derivative financial instruments
Credit risk related to derivative financial instruments is also managed by only entering into such arrangement with highly rated banks or financial institutions as counterparties. The company diversifies its holdings with multiple counterparties.
Trade receivables
Credit risk related to trade receivables are mitigated by taking bank guarantees from customers where credit risk is high. The Company closely monitors the credit-worthiness of the debtors and only sells goods to credit-worthy parties. The Company''s internal systems are configured to define credit limits of customers, thereby limiting the credit risk to pre-calculated amounts.
Other financial assets measured at amortized cost
Other financial assets measured at amortized cost includes loans and advances to employees and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
b) Expected credit losses
Company provides expected credit losses based on the following Trade receivables
The Company recognizes lifetime expected credit losses on trade receivables using a simplified approach and uses historical information to arrive at loss percentage relevant to each category of trade receivables:
Other financial assets measured at amortized cost
Company provides for expected credit losses on "loans advances and other than trade receivables" by assessing individual financial instruments for expectation of any credit losses. Since this category includes loans and receivables of varied natures and purpose, there is no trend that the company can draws to apply consistently to entire population For such financial assets, the Company''s policy is to provides for 12 month expected credit losses upon initial recognition and provides for lifetime expected credit losses upon significant increase in credit risk. The Company does not have any expected loss based impairment recognized on such assets considering their low credit risk nature, though incurred loss provisions are disclosed under each sub-category of such financial assets.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
Maturities of financial liabilities
The tables below analyse the company''s financial liabilities into relevant maturity companying based on their contractual maturities for all non-derivative financial liabilities and the amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
* borrowings excludes finance lease obligations, refer note 49.11(b) for disclosure of maturity profile of finance lease obligations.
C) Market Risk
a) Foreign currency risk
Most of the Company''s transactions are carried out in INR. Exposures to currency exchange rates arise from the Company''s overseas borrowing arrangements, which are primarily denominated in US dollars (USD).
To mitigate the Company''s exposure to foreign currency risk, non-INR cash flows are monitored and forward exchange contracts are entered into in accordance with the Company''s risk management policies. Generally, the Company''s risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows (due after 6 months). Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward exchange contracts are mainly entered into for significant long-term foreign currency exposures that are not expected to be offset by other same-currency transactions.
Sensitivity
The following table illustrates the sensitivity of profit and equity in regards to the Company''s financial assets and financial liabilities and the USD/INR exchange rate and EUR/INR exchange rate âall other things being equal''. It assumes a /- 4.24% change of the INR/USD exchange rate for the year ended at 31 March, 2018 (2017:4.09%). A /- 6.90% change is considered for the INR/EUR exchange rate (2017: 7.86%). Both of these percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Company''s foreign currency financial instruments held at each reporting date and also takes into account forward exchange contracts that offset effects from changes in currency exchange rates.
b) Interest rate risk
The Company''s policy is to minimize interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. At 31 March, 2018, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates. The Company''s investments in bonds all pay fixed interest rates. The exposure to interest rates for the Company''s money market funds is considered immaterial. The following table illustrates the sensitivity of profit and equity to a reasonably possible change in interest rates of /- 1% (2017: /- 1%). These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.
i) Liabilities
The company''s policy is to minimize interest rate cash flow risk exposures on long-term financing. At 31st March, 2018, the company is exposed to changes in market interest rates through bank borrowings at variable interest rates.
ii) Assets
The company''s fixed deposits are carried at amortized cost and are fixed rate deposits. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest.
c) Price risk Exposure
The Company is exposed to other price risk in respect of its investment shares of other companies (see Note 8). The Company does not consider changes in value of its investments in shares as insignificant, therefore is not exposed to price risks on exposures outstanding on the balance sheet date.
Mar 31, 2017
Notes to Standalone Financial Statements for the Year ended 31st March, 2017
1. Corporate and General Information
Steel Authority of India Limited (referred to as "the Company") is domiciled and incorporated in India. The Company, a Public Sector Undertaking conferred with Maharatna status by Government of India, is one of the largest steel producers in the Country. The registered office of the Company is situated at Ispat Bhawan, Lodhi Road, New Delhi-110 003. The securities of the Company are listed on the National, Bombay and London Stock Exchanges.
These financial statements have been approved by the Board of Directors of the Company in their meeting held on 30th May, 2017.
2. Basis of Preparation
2.1 Statement of Compliance
The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (Ind AS) as prescribed under Section 133 of Companies Act, 2013, as notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended), and other accounting principles generally accepted in India. The Company has uniformly applied the accounting policies during the periods presented. These are the Company''s first Ind AS financial statements and Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied.
For all the periods up to and including 31st March 2016, the Company had prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India, which includes, Accounting Standards prescribed under Section 133 of the Companies Act 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies Act, 2013 (collectively referred to as ''Indian GAAP''). The Company followed the provisions of IndAS 101 in preparing its opening Ind AS Balance Sheet as of the date of transition, viz., 1st April, 2015. Certain of the Company''s Ind AS Accounting Policies used in the opening Balance Sheet differed from its Indian GAAP Accounting Policies applied as at 31st March, 2015 and accordingly the adjustments were made to restate the opening balances as per Ind AS. The resulting adjustments, arising from events and transactions before the date of transition to Ind AS, were recognized directly through retained earnings as at 1st April, 2015 as required by Ind AS 101.
2.2 Basis of Measurement
The financial statements are prepared on a historical cost basis except for the following assets and liabilities which have been measured at fair value:
- certain financial assets and liabilities which are classified as fair value through profit and loss or fair value through other comprehensive income;
- assets held for sale, at the lower of the carrying amounts and fair value less cost to sell;
- defined benefit plans and plan assets.
2.3 Functional and Presentation Currency
The Financial Statements have been presented in Indian Rupees (?), which is the Company''s functional currency. All financial information presented in '' have been rounded off to the nearest two decimals of Crore unless otherwise stated.
2.4 Use of Estimates and Management Judgments
In preparing the financial statements in conformity with Company''s Accounting Policies, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements, the amounts of revenue and expenses during the reported period and notes to the Financial Statements. Actual results could differ from those estimates. Any revision to such estimates is recognized in the period in which the same is determined.
3. Significant Accounting Policies
A summary of the significant accounting policies applied in the preparation of the financial statements is given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
3.1 Property, Plant and Equipment
3.1.1 Recognition and Measurement Tangible Assets
Property, plant and equipment held for use in the production or/and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and impairment losses. The initial cost at cash price equivalence of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any obligatory decommissioning costs for its intended use. Plant and Machinery also include assets held under finance lease.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs including trial run expenses (net of revenue) Spares having useful life of more than one year and having value of Rs, 10 lakhs or more in each case, are capitalized under the respective heads as and when available for use.
Profit or loss arising on the disposal of property, plant and equipment is recognized in the Statement of Profit and Loss.
3.1.2 Subsequent Cost
Subsequent expenditure is recognized as an increase in the carrying amount of the asset or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits derived from the cost incurred will flow to the Company and the cost of the item can be measured reliably. The carrying amount of replaced item (s) is derecognized. .
Any repairs of Rs, 50 lakhs or more of property, plant and equipment are recognized in the carrying amount of the item if it is probable that the future economic benefits of the costs incurred will flow to the Company. The carrying amount of the replaced item(s) is derecognized.
3.1.3 Depreciation
Depreciation on tangible assets and investment property is provided on straight line method, considering residual value of 5% of the cost of the asset, over the useful lives of the assets, as specified in Schedule II of the Companies Act, 2013 except in case of Factory Buildings, Plant and Machinery, Water Supply & Sewerage and Railway Lines & Sidings and components thereof, where useful life is determined by technical experts. The useful life assumed by the technical experts is as under:
For these classes of assets, based on technical evaluation carried out by external technical experts, the Company believes that the useful lives as given above best represent the period over which Company expects to use these assets. Hence, the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
The estimated useful lives and residual values of depreciable/ amortisable assets are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.
Where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Depreciation on addition/ deletion during the year is provided on pro-rata basis with reference to the month of addition/ deletion. Assets costing up to Rs, 5000/- are fully depreciated in the year in which they are put to use.
Depreciation on capital spares is provided over the useful life of the spare or remaining useful life of the mother asset, as reassessed, whichever is lower.
3.2 Intangible Assets
3.2.1 Recognition and Measurement
Mining Rights
Mining Rights are treated as Intangible Assets and all related costs thereof are amortised on the basis of annual production to the total estimated mineable reserves. In case the mining rights are not renewed, the balance related cost will be charged to revenue in the year of decision of non- renewal.
Acquisition Cost i.e. cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances, as and when incurred, are treated as addition to the Mining Rights. Other Intangible Assets
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
Research and Development
Development expenditure is capitalised only if it can be measured reliably and the related asset and process are identifiable and controlled by the Company. Research and other development expenditure is recognized as revenue expenditure as and when incurred.
3.2.2 Subsequent Cost
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in the Statement of Profit and Loss.
3.3 Impairment of Non-Financial Assets
The Company reviews the carrying amount of its assets on each Balance Sheet date for the purpose of ascertaining impairment indicators if any, by considering assets of entire one Plant as Cash Generating Unit (CGU). If any such indication exists, the assets'' recoverable amount is estimated, as higher of the Net Selling Price and the Value in Use. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Statement of Profit and Loss.
3.4 Stripping Cost
The stripping cost incurred during the production phase of a surface mine is recognized as an asset if such cost provides a benefit in terms of improved access to ore in future periods and following criteria are met:
- It is probable that the future economic benefits (improved access to an ore body) associated with the stripping activity will flow to the entity,
- The entity can identify the component of an ore body for which access has been improved, and
- The costs relating to the improved access to that component can be measured reliably.
The expenditure, which cannot be specifically identified to have been incurred to access ore is charged to revenue, based on stripping ratio as per 5 year mining plan for mines, except collieries which is based on project report.
3.5 Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of a qualifying asset, which takes substantial period of time, are capitalized as a part of the cost of that asset, during the period of time that is necessary to complete and prepare the asset for its intended use.
The Company considers a period of twelve months or more as a substantial period of time.
Transaction costs in respect of long-term borrowings are amortized over the tenure of respective loans using effective interest method. Other borrowing costs are recognized in the Statement of Profit & Loss in the period in which these are incurred.
3.6 Inventories
Raw materials, Stores & Spares and Finished/Semi-finished products (including process scrap) are valued at lower of cost and net realizable value of the items of the respective Plants/Units. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realizable value of semi-finished special products, which have realizable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realizable value. The basis of determining cost is:
Raw materials - Periodical weighted average cost Minor raw materials - Moving weighted average cost Stores & Spares - Moving weighted average cost Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
3.7 Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in Statement of Profit and Loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognized as deferred income, and amortized over the expected useful life of the asset. Other grants are recognized in the statement of Profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.
Where the Company receives non-monetary grants, the asset and the grant are recorded gross at fair amounts and released to the income statement over the expected useful life and pattern of consumption of the benefit of the underlying asset.
3.8 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency of the Company using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement and remeasurement of monetary items denominated in foreign currency are recognized in the Statement of Profit and Loss at period-end exchange rates.
The Company opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard-11 notified by Government of India on 31st March, 2009 (as amended on 29th December 2011), which will continue in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at 31st March 2016. Accordingly, exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
Non-monetary items are not retranslated at period-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.
3.9 Employee Benefits Defined Contribution Plan
A defined contribution plan is a plan under which the Company pays fixed contributions into a separate entity. Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. Contributions towards Provident Funds are charged to the Statement of Profit and Loss of the period when the contributions to the Funds are due.
Defined Benefit Plan
Defined benefit plans are the amount of the benefit that an employee will receive on completion of services by reference to length of service, last drawn salary or direct costs related to such benefits. The legal obligation for any benefits remains with the Company.
The liability recognized for Defined Benefit Plans is the present value of the Defined Benefit Obligation (DBO) at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. Management estimates the present value of the DBO annually through valuations by an independent actuary using the projected unit credit method. Actuarial gains and losses are included in Statement of Profit and Loss or Other Comprehensive Income of the year.
Remeasurement, comprising of actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
Short Term Employee Benefits
Short term employee benefits comprise of employee costs such as salaries, bonus, ex-gratia, annual leave and sick leave which are accrued in the year in which the associated services are rendered by employees of the Company.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.
Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit and Loss immediately.
3.10 Revenue Recognition
Revenue is measured at the fair value of consideration received or receivable. Sale of goods
Sales include excise duty and are net of sales taxes, rebates and price concessions. Sales are recognized at the time of dispatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Where the contract prices are not finalized with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognized on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realization of material value without shipment is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on certainty of realization.
The iron ore fines not readily useable/saleable are included in inventory and revenue is recognized on disposal.
Interest and dividend income
Interest income is reported on an accrual basis using the effective interest method. Dividends are recognized at the time the right to receive is established.
3.11 Adjustment pertaining to Earlier Years
Income/Expenditure relating to a prior period, which do not exceed 0.5% of Turnover in each case, are treated as income/expenditure of current year.
3.12 Claims for Liquidated Damages and Price Escalation
Claims for liquidated damages are accounted for as and when these are considered recoverable by the Company, on final settlement. These are adjusted to the capital cost or recognized in Statement of Profit and Loss, as the case may be on final settlement of Liquidated damages.
Suppliers'' and Contractors'' claims for price escalation are accounted for to the extent such claims are accepted by the Company.
3.13 Leases
Company as a Lessee Finance leases
Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments under such leases are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.
If there is no reasonable certainty that the Company will obtain the ownership by the end of lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Operating leases
Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight-line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
Company as a Less or Finance leases
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognized as revenue in the period in which they are earned. Operating leases
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. The respective leased assets are included in the balance sheet based on their nature. Rental income is recognized on straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.14 Investment Properties
Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and impairment losses. Any gain or loss on disposal of investment property is determined as the difference between net disposal proceeds and the carrying amount of the property and is recognized in the Statement of Profit and Loss.
3.15 Non-current assets held for sale
Company classifies a non-current asset as held for sale if its carrying amount will be recovered principally through a sale transaction. This condition is regarded as met only when the asset is available for immediate sale in its present condition and its sale is highly probable.
Non-current assets including discontinued operations, classified as held for sale are measured at the lower of the carrying amounts and fair value less costs to sell and presented separately in the financial statements. Once classified as held for sale, the assets are not subject to depreciation or amortization.
Any profit or loss arising from the sale or re-measurement of discontinued operations is presented as part of a single line item in statement of profit and loss.
3.16 Mine Closure
Mine Closure Provision include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas for mines. This provision is based on all regulatory requirements and related estimated cost based on best available information. Mine closure costs are provided for in the accounting period when the obligation arises based on the net present value of the estimated future costs of restoration to be incurred during the life of the operation and post closure.
The initial close-down and restoration provision is capitalized within "Property, Plant and Equipment". Subsequent movements in the close-down and restoration provisions for on-going operations, including those resulting from new disturbance related to expansions or other activities qualifying for capitalization, updated cost estimates, changes to the estimated lives of operations, changes to the timing of closure activities and revisions to discount rates are also capitalized within "Property, Plant and Equipment". These costs are depreciated over the lives of the assets to which they relate. Any changes in closure provisions relating to closed operations are charged /credited to the Statement of Profit and Loss. The amortization or "unwinding" of the discount applied in establishing the provisions is charged as Finance Cost.
3.17 Provisions, Contingent Liabilities and Contingent Assets Provisions and Contingent Liabilities
A Provision is recognized when the Company has present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material. 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 a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liability is a possible obligation arising from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events but is not recognized because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.
In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognized or disclosure is made.
Contingent Assets
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable.
3.18 Income Taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Current income tax relating to items recognized outside statement of profit and loss is recognized either in OCI or in equity.
Deferred income taxes are calculated using the liability method. Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits (MAT Credit entitlement) or deductible temporary difference will be utilized against future taxable income. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside statement of profit and loss is recognized either in OCI or in equity.
3.19 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments (original maturity less than 3 months) that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in value.
3.20 Equity and Reserves
Share Capital represents the nominal value of shares that have been issued. Securities premium includes any premium received on issue of Share Capital. Other components of equity include the following:
- Re-measurement of defined benefit liability comprises the actuarial gain or loss from changes in demographic and financial assumptions and return on plan assets.
- Bond Redemption Reserve.
- Other transactions recorded directly in Other Comprehensive Income.
- Retained earnings include all current and prior period retained profits
3.21 Financial Instruments
Recognition, initial measurement and de-recognition
Financial assets and financial liabilities are recognized and are measured initially at fair value adjusted by transactions costs, except for those financial assets which are classified at Fair Value through Profit & Loss (FVTPL) at inception. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:
- amortized cost
- financial assets at fair value through profit or loss (FVTPL)
- financial assets at fair value through other comprehensive income (FVOCI) All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.
Amortized cost
A financial asset is measured at amortized cost using effective interest rates if both of the following conditions are met:
a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company''s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.
Financial assets at FVTPL
Financial assets at FVTPL include financial assets that are either do not meet the criteria for amortized cost classification or that are equity instruments held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Financial assets at FVOCI
FVOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are irrevocable designated to this category at inception.
FVOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in statement of profit or loss.
Classification and subsequent measurement of financial liabilities Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in profit or loss. All derivative financial instruments are accounted for at FVTPL.
Embedded Derivatives
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the contracts are not measured at FVTPL.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive.
Trade Receivables
The Company applies approach as specified in Indian Accounting Standards (Ind AS) 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables.
Other Financial Assets
For recognition of impairment loss on other financial assets and risk exposure,the Company determines whether there has been a significant increase in the credit risk since initial recognition.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.
3.22 Investments in subsidiaries, joint ventures and associates
The Company has accounted for its subsidiaries and associates, joint ventures at cost in its standalone financial statements in accordance with Ind AS- 27, Separate Financial Statements.
3.23 Significant Judgments, Assumptions and Estimations in applying Accounting Policies
3.23.1 Classification of Leases
The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee''s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset''s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
3.23.2 Close-down and Restoration Obligations
Close-down and restoration costs are normal consequence of mining or production, and majority of close-down and restoration expenditure are incurred in the years following the closure of mine, although the ultimate cost to be incurred is uncertain, the Company estimate their costs using current restoration techniques.
3.23.3 Recognition of Deferred Tax Assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits.
3.23.4 Inventories
The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.
3.23.5 Defined Benefit Obligation (DBO)
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
3.23.6 Fair Value Measurements
The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company''s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date.
3.23.7 Provisions and Contingencies
The assessments undertaken in recognizing provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgment by management regarding the probability of exposure to potential loss.
3.23.8 Mines Closure and Restoration Obligations
Environmental liabilities and Asset Retirement Obligation (ARO): Estimation of environmental liabilities and ARO require interpretation of scientific and legal data, in addition to assumptions about probability and future costs.
3.23.9 Useful lives of depreciable/ amortizable assets (tangible and intangible) Management reviews its estimate of the useful lives of depreciable/ amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to actual normal wear and tear that may change the utility of plant and equipment.
(i) Contractual obligations
Refer note 40.1 for disclosure of contractual commitments for the acquisition of property, plant and equipment.
(ii) Land:
a) Includes 67,718.76 acres ( 67,681.64 acres as on 31st March, 2016, 67,354.96 acres as on 1st April, 2015) owned / possessed / taken on lease by the Company, in respect of which title/lease deeds are pending for registration.
(b) Includes 34,061.08 acres (34,061.08 acres as on 31st March, 2016, 35,334.08 acres as on 1st April, 2015) in respect of which title is under dispute.
(c) 9,007.46 acres (8,856.73 acres as on 31st March, 2016, 8,851.69 acres as on 1st April, 2015) transferred/agreed to be transferred or made available for settlement to various Joint Ventures / Central / State / Semi-Government authorities, in respect of which conveyance deeds remain to be executed/registered.
(d) 6,384.17 acres (7,181.43 acres as on 31st March, 2016, 6,345.43 acres as on 1st April, 2015) given on lease to various agencies/employees/ex-employees.
(e) Includes 4,436.70 acres (4,440.70 acres as on 31st March, 2016, 4,211.42 acres as on 1st April, 2015) under unauthorized occupation.
(f) 1,762.92 acres (1,762.92 acres as on 31st March, 2016, 1,762.92 acres as on 1st April, 2015) of Land which is not in the actual possession, shown as deemed possession.
(g) Rs, 68.71 crore is lying under deposits (in respect of land already acquired) with the District & Sessions Judge, Bokaro during the year 2007 towards compensation payable to land losers.
(h) Vide Notification of Acquisition in the Gazette of India (Extraordinary) bearing No S.O. 1309(E) dated 08.06.2012 and No. S.O. 2484E dated 13.10.2012, National Highway Authority of India Ltd.(NHAI) had notified its intention to acquire 9.553 acres
(i) Includes 21.13 acres freehold land notified for acquisition by Government of Jharkhand vide Gazette notification no. 42 & 43 dated 26th August, 2009, determining compensation of Rs, 13.91 crore only for 15.62 acres. Management proposes to contest the same with appropriate authorities. Pending further action in the matter, no effect of above has been given in the accounts.
(iii) Other Assets:
(a) Buildings include net block of Rs, 21.18 crore (Rs, 21.73 crore as on 31st March, 2016, Rs, 22.15 crore as on 1st April, 2015) for which conveyance deed is yet to be registered in the name of the Company.
(b) Includes 6,035 residential quarters/houses under unauthorised occupation.
Mar 31, 2016
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention on accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, and the provisions
of the Companies Act, 2013, including accounting standards notified
thereunder.
B. Use of Estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in India, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the amounts of revenue and expenses
during the reported period. Actual results could differ from those
estimates. Any revision to such estimates is recognised in the period
in which the same is determined.
C. Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation,
except land gifted by the State Governments, which is stated at
notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is
capitalised as part of cost of land. Cost of Lease hold land is
amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run
expenses, net of revenue.
Mining Rights are treated as Intangible Assets and all related costs
thereof are amortised on the basis of annual production to the total
estimated mineable reserves. In case the mining rights are not renewed,
the balance related cost will be charged to revenue in the year of
decision of non- renewal.
Software which is not an integral part of related hardware, is treated
as intangible asset and amortised over a period of five years or its
license period, whichever is less.
D. Borrowing Costs
Borrowing costs directly attributable to the acquisition or
construction of a qualifying asset are capitalised as part of the cost
of that asset. Other borrowing costs are recognised as expense in the
period in which these are incurred.
E. Depreciation
Depreciation is provided on straight line method, considering residual
value of 5% of the cost of the asset, over the useful lives of the
assets, as specified in Schedule II of the Companies Act, 2013 except
in case of Factory Buildings, Plant and Machinery, Water Supply &
Sewerage and Railway Lines & Sidings and components thereof where
useful life is determined by technical experts. The life assumed by the
technical experts is as under :
For these class of assets, based on technical evaluation carried out by
external technical experts, the company believes that the useful lives
as given above best represent the period over which Company expects to
use these assets. Hence, the useful lives for these assets are
different from the useful lives as prescribed under Part C of Schedule
II of the Companies Act 2013.
Where the historical cost of a depreciable asset undergoes a change,
the depreciation on the revised unamortised depreciable amount is
provided over the residual useful life of the asset. Depreciation on
addition/deletion during the year is provided on pro-rata basis with
reference to the month of addition/deletion. Assets costing up to
Rs.5000/- are fully depreciated in the year in which they are put to
use.
F. Investments
Long-term investments (including investments in subsidiary companies
and joint ventures) are carried at cost, after providing for diminution
(other than temporary) in value. Current investments are carried at
lower of cost and market value.
G. Inventories
Raw materials, stores & spares and finished/semi-finished products
(including process scrap) are valued at lower of cost and net
realisable value of the respective plants/units. In case of identified
obsolete/ surplus/ non-moving items, necessary provision is made and
charged to revenue. The net realisable value of semi-finished special
products, which have realisable value at finished stage only, is
estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable
value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & spares - Moving weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share
of labour, related overheads and duties.
H. Grants
Grants relating to the acquisition of a specific asset are adjusted
against the cost of the concerned asset. Grants relating to the revenue
expenditure are adjusted against the related expenses.
I. Foreign Currency Transactions
Monetary assets and liabilities denominated in foreign currency
remaining unsettled at the end of the year are translated at Year- end
rates.
The exchange differences in translation of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions other than those relating to fixed assets, are recognised
in the Statement of Profit and Loss. In respect of transactions covered
by forward exchange contracts entered into to hedge foreign currency
risks, the difference between the contract rate and spot rate on the
date of the transaction is recognised in the Statement of Profit and
Loss over the period of the contract.
The Company had opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard -11 notified by Government of India on 31st March,
2009 (as amended on 29th December 2011). Accordingly, exchange
differences (including arising out of forward exchange contracts)
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of fixed assets, are adjusted in
the carrying amount of such assets.
J. Employees'' Benefits
Contributions towards Provident Funds are charged to the Statement of
Profit and Loss of the period when the contributions to the Funds are
due. The provisions/liabilities towards gratuity, accrued leave, long
term service awards, post-retirement medical and settlement benefits,
future payments to the disabled employees/legal heirs of deceased
employees under the Employees'' Family Benefit Scheme, are made based on
the actuarial valuation as at the end of the year and charged to the
Statement of Profit and Loss after considering along with actuarial
gains/losses.
K. Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses,
which do not exceed Rs.10 lakhs in each case, are treated as
income/expenditure of current year.
L. Revenue Recognition
Sales include excise duty and are net of rebates and price concessions.
Sales are recognised at the time of dispatch of materials to the buyers
including the cases where delivery documents are endorsed in favour of
the buyers. Where the contract prices are not finalised with government
agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases
where realisation of material value without shipment is provided in the
letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on
certainty of realisation.
The iron ore fines not readily useable/saleable included in inventory,
are recognised on disposal.
M. Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are
deducted and/or considered recoverable by the Company. These are
adjusted to the capital cost or recognised in Statement of Profit and
Loss, as the case may be, on final settlement.
Suppliers''/Contractors'' claims for price escalation are accounted for,
to the extent such claims are accepted by the Company.
N. Deferred Tax
The deferred tax on timing differences between book profit and taxable
profit for the year is accounted for applying the tax rates and laws
that have been enacted or substantively enacted as on the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is a reasonable certainty that the
assets can be realised in future.
O. Overburden Removal
The expenditure on removal of backlog of over burden is charged to
revenue, based on stripping ratio as per 5 year mining plan for mines
except collieries which is based on project report.
P. Contingent Liabilities
Contingent liability is a possible obligation arising from past events
and the existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company or a present obligation that arises from
past events but is not recognised because it is not possible that an
outflow of resources embodying economic benefit will be required to
settle the obligations or reliable estimate of the amount of the
obligations cannot be made. The Company discloses the existence of
Contingent Liabilities in Financial Statements.
Mar 31, 2015
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention on accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, and the provisions
of the Companies Act, 2013, including accounting standards notified
thereunder.
B. Use of estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in India, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the amounts of revenue and expenses
during the reported period. Actual results could differ from those
estimates. Any revision to such estimates is recognised in the period
in which the same is determined.
C. Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation,
except land gifted by the State Governments, which is stated at
notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is
capitalised as part of cost of land. Cost of Lease hold land is
amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run
expenses, net of revenue.
Mining Rights are treated as Intangible Assets and all related costs
thereof are amortised on the basis of annual production to the total
estimated mineable reserves. In case the mining rights are not renewed,
the balance related cost will be charged to revenue in the year of
decision of non- renewal.
Software which is not an integral part of related hardware, is treated
as intangible asset and amortised over a period of five years or its
licence period, whichever is less.
D. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a
qualifying asset are capitalised as part of the cost of that asset.
Other borrowing costs are recognised as expense in the period in which
these are incurred.
E. Depreciation
Depreciation is provided on straight line method, considering residual
value of 5% of the cost of the asset, over the useful lives of the
assets, as specified in Schedule II to the Companies Act, 2013.
However, where the historical cost of a depreciable asset undergoes a
change, the depreciation on the revised unamortised depreciable amount
is provided over the residual useful life of the asset. Depreciation on
addition/deletion during the year is provided on pro-rata basis with
reference to the month of addition/deletion. Assets costing up to
Rs.5000/- are fully depreciated in the year in which they are put to
use.
F. Investments
Long-term investments (including investments in subsidiary companies
and joint ventures) are carried at cost, after providing for diminution
(other than temporary) in value. Current investments are carried at
lower of cost and market value.
G. Inventories
Raw materials, stores & spares and finished/semi-finished products
(including process scrap) are valued at lower of cost and net
realisable value of the respective plants/units. In case of identified
obsolete/ surplus/ non-moving items, necessary provision is made and
charged to revenue. The net realisable value of semi-finished special
products, which have realisable value at finished stage only, is
estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable
value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials  Moving weighted average cost
Stores & spares  Moving weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products  material cost plus appropriate share
of labour, related overheads and duties.
H. Grants
Grants relating to the acquisition of a specific asset are adjusted
against the cost of the concerned asset. Grants relating to the revenue
expenditure are adjusted against the related expenses.
I. Foreign Currency Transactions
Monetary assets and liabilities denominated in foreign currency
remaining unsettled at the end of the year are translated at year-end
rates.
The exchange differences in translation of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions other than those relating to fixed assets, are recognised
in the Statement of Profit and Loss. In respect of transactions covered
by forward exchange contracts entered into to hedge foreign currency
risks, the difference between the contract rate and spot rate on the
date of the transaction is recognised in the Statement of Profit and
Loss over the period of the contract.
The Company had opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard-11 notified by Government of India on 31st March,
2009 (as amended on 29th December 2011). Accordingly, exchange
differences (including arising out of forward exchange contracts)
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of fixed assets, are adjusted in
the carrying amount of such assets.
J. Employees'' Benefits
Contributions towards Provident Funds are charged to the Statement of
Profit and Loss of the period when the contributions to the Funds are
due. The provisions/ liabilities towards gratuity, accrued leave, long
term service awards, post-retirement medical and settlement benefits,
future payments to the disabled employees/legal heirs of deceased
employees under the Employees'' Family Benefit Scheme, are made based on
the actuarial valuation as at the end of the year and charged to the
Statement of Profit and Loss after considering along with actuarial
gains/losses.
K. Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses,
which do not exceed Rs.10 lakhs in each case, are treated as
income/expenditure of current year.
L. Revenue recognition
Sales include excise duty and are net of rebates and price concessions.
Sales are recognised at the time of dispatch of materials to the buyers
including the cases where delivery documents are endorsed in favour of
the buyers. Where the contract prices are not finalised with
government agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of lay can period, in cases
where realisation of material value without shipment is provided in the
letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on
certainty of realisation.
The iron ore fines not readily useable/saleable included in inventory,
are recognised on disposal.
M. Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are
deducted and/or considered recoverable by the Company. These are
adjusted to the capital cost or recognised in Statement of Profit and
Loss, as the case may be, on final settlement.
Suppliers''/Contractors'' claims for price escalation are accounted for,
to the extent such claims are accepted by the Company.
N. Deferred Tax
The deferred tax on timing differences between book profit and taxable
profit for the year is accounted for applying the tax rates and laws
that have been enacted or substantively enacted as on the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is a reasonable certainty that the
assets can be realised in future.
O. Overburden Removal
The expenditure on removal of backlog of over burden is charged to
revenue, based on stripping ratio as per 5 year mining plan for mines
except collieries which is based on project report.
P. Contingent Liabilities
Contingent liability is a possible obligation arising from past events
and the existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company or a present obligation that arises from
past events but is not recognised because it is not possible that an
outflow of resources embodying economic benefit will be required to
settle the obligations or reliable estimate of the amount of the
obligations cannot be made. The Company discloses the existence of
Contingent Liabilities in Financial Statements.
Mar 31, 2014
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention on accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, and the relevant
provisions of the Companies Act, 2013 (to the extent notified) and
provisions of the Companies Act, 1956 (to the extent applicable)
including accounting standards notified there under.
B. Use of Estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in India, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the amounts of revenue and expenses
during the reported period. Actual results could differ from those
estimates. Any revision to such estimates is recognised in the period
in which the same is determined.
C. Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation,
except land gifted by the State Governments, which is stated at
notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is
capitalised as part of cost of land. Cost of Lease hold land is
amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run
expenses, net of revenue.
Mining Rights are treated as Intangible Assets and all related costs
thereof are amortised on the basis of annual production to the total
estimated mineable reserves. In case the mining rights are not renewed,
the balance related cost will be charged to revenue in the year of
decision of non- renewal.
Software which is not an integral part of related hardware, is treated
as intangible asset and amortised over a period of five years or its
licence period, whichever is less.
D. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a
qualifying asset are capitalised as part of the cost of that asset.
Other borrowing costs are recognised as expense in the period in which
these are incurred.
E. Depreciation
Depreciation is provided on straight-line method at the rates specified
in Schedule XIV to the Companies Act, 1956. However, where the
historical cost of a depreciable asset undergoes a change, the
depreciation on the revised unamortised depreciable amount is provided
over the residual useful life of the asset. Classification of plant and
machinery into continuous and non-continuous is made on the basis of
technical opinion and depreciation provided accordingly. Depreciation
on addition/deletion during the year is provided on pro-rata basis with
reference to the month of addition/deletion.
F. Investments
Long-term investments (including investments in subsidiary companies
and joint ventures) are carried at cost, after providing for diminution
(other than temporary) in value.
Current investments are carried at lower of cost and market value.
G. Inventories
Raw materials, stores & spares and finished/semi-finished products
(including process scrap) are valued at lower of cost and net
realisable value of the respective plants/units. In case of identified
obsolete/ surplus/ non-moving items, necessary provision is made and
charged to revenue. The net realisable value of semi-finished special
products, which have realisable value at finished stage only, is
estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable
value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials  Moving weighted average cost
Stores & Spares  Moving weighted average cost
Materials in-transit - At cost
Finished/Semi-finished products  Material cost plus appropriate share
of labour, related overheads and duties.
H. Grants
Grants relating to the acquisition of a specific asset are adjusted
against the cost of the concerned asset. Grants relating to the revenue
expenditure are adjusted against the related expenses.
I. Foreign Currency Transactions
Monetary assets and liabilities denominated in foreign currency
remaining unsettled at the end of the year are translated at year-end
rates.
The exchange differences in translation of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions other than those relating to fixed assets, are recognised
in the Statement of Profit and Loss. In respect of transactions covered
by forward exchange contracts entered into to hedge foreign currency
risks, the difference between the contract rate and spot rate on the
date of the transaction is recognised in the Statement of Profit and
Loss over the period of the contract.
The Company had opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules, 2009 relating to
Accounting, Standard -11 notified by Government of India on 31st March,
2009 (as amended on 29th December 2011). Accordingly, exchange
differences (including arising out of forward exchange contracts)
relating to long-term monetary items, arising during the year, in so
far as they relate to the acquisition of fixed assets, are adjusted in
the carrying amount of such assets.
J. Employees'' Benefits
Contributions towards Provident Funds are charged to the Statement of
Profit and Loss of the period when the contributions to the Funds are
due. The provisions/liabilities towards gratuity, accrued leave, long
term service awards, post-retirement medical and settlement benefits,
future payments to the disabled employees/legal heirs of deceased
employees under the Employees'' Family Benefit Scheme, are made based on
the actuarial valuation as at the end of the year and charged to the
Statement of Profit and Loss after considering along with actuarial
gains/losses.
K. Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses,
which do not exceed Rs.10 lakhs in each case, are treated as
income/expenditure of current year.
L. Revenue Recognition
Sales include excise duty and are net of rebates and price concessions.
Sales are recognised at the time of dispatch of materials to the buyers
including the cases where delivery documents are endorsed in favour of
the buyers. Where the contract prices are not finalised with government
agencies, sales are accounted for on provisional basis. Marine export
sales are recognised on: i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period , in cases
where ''realisation of material value without shipment'' is provided in
the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on
certainty of realisation.
The iron ore fines not readily useable/saleable included in inventory,
are recognised on disposal.
M. Claims for Liquidated Damages/Price Escalation Claims for
liquidated damages are accounted for as and when these are deducted
and/or considered recoverable by the Company. These are adjusted to the
capital cost or recognised in Statement of Profit and Loss, as the case
may be, on final settlement.
Suppliers''/Contractors'' claims for price escalation are accounted for,
to the extent such claims are accepted by the Company.
N. Deferred Tax
The deferred tax on timing differences between book profit and taxable
profit for the year is accounted for applying the tax rates and laws
that have been enacted or substantively enacted as on the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is a reasonable certainty that the
assets can be realised in future.
O. Overburden Removal
The expenditure on removal of backlog of over burden is charged to
revenue, based on stripping ratio as per 5 year mining plan for mines
except collieries which is based on project report.
P. Contingent Liabilities
Contingent liability is a possible obligation arising from past events
and the existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company or a present obligation that arises from
past events but is not recognised because it is not possible that an
outflow of resources embodying economic benefit will be required to
settle the obligations or reliable estimate of the amount of the
obligations cannot be made. The Company discloses the existence of
Contingent Liabilities in Financial Statements.
Mar 31, 2013
A. Basis of Accounting
The financial statements are prepared under the historical cost
convention on accrual basis of accounting, in accordance with the
generally accepted accounting principles in India, and the relevant
provisions of the Companies Act, l956 including accounting standards
notified there under.
B. Use of estimates
In preparing the financial statements in conformity with accounting
principles generally accepted in India, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the amounts of revenue and expenses
during the reported period. Actual results could differ from those
estimates. Any revision to such estimates is recognised in the period
in which the same is determined.
C. Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation,
except land gifted by the State Governments, which is stated at
notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is
capitalised as part of cost of land. Cost of Lease hold land is
amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run
expenses, net of revenue.
Mining Rights are treated as Intangible Assets and all related costs
thereof are amortised on the basis of annual production to the total
estimated mineable reserves. In case the mining rights are not renewed,
the balance related cost will be charged to revenue in the year of
decision of non-renewal.
Software which is not an integral part of related hardware, is treated
as intangible asset and amortised over a period of five years or its
licence period, whichever is less.
D. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a
qualifying asset are capitalised as part of the cost of that asset.
Other borrowing costs are recognised as expense in the period in which
these are incurred.
E. Depreciation
Depreciation is provided on straight-line method at the rates specified
in Schedule XIV to the Companies Act, l956. However, where the
historical cost of a depreciable asset undergoes a change, the
depreciation on the revised unamortised depreciable amount is provided
over the residual useful life of the asset. Classification of plant and
machinery into continuous and non-continuous is made on the basis of
technical opinion and depreciation provided accordingly. Depreciation
on addition/deletion during the year is provided on pro-rata basis with
reference to the month of addition/ deletion.
F. Investments
Long-term investments (including investments in subsidiary companies
and joint ventures) are carried at cost, after providing for diminution
(other than temporary) in value. Current investments are carried at
lower of cost and market value.
G. Inventories
Raw materials, stores & spares and finished/semi-finished products
(including process scrap) are valued at lower of cost and net
realisable value of the respective plants/units. In case of identified
obsolete/surplus/non-moving items, necessary provision is made and
charged to revenue. The net realisable value of semi-finished special
products, which have realisable value at finished stage only, is
estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable
value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & spares - Moving weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share
of labour related overheads and duties.
H. Grants
Grants relating to the acquisition of a specific asset are adjusted
against the cost of the concerned asset. Grants relating to the revenue
expenditure are adjusted against the related expenses.
I. Foreign Currency Transactions
Monetary assets and liabilities denominated in foreign currency
remaining unsettled at the end of the year are translated at year- end
rates.
The exchange differences in translation of monetary assets and
liabilities and realised gains and losses on foreign exchange
transactions other than those relating to fixed assets, are recognised
in the Statement of Profit and Loss. In respect of transactions covered
by forward exchange contracts entered into to hedge foreign currency
risks, the difference between the contract rate and spot rate on the
date of the transaction is recognised in the Statement of Profit and
Loss over the period of the contract.
The Company had opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard -ll notified by Government of India on 3l st March,
2009 (as amended on 29th December, 20ll). Accordingly, exchange
differences (including arising out of forward exchange contracts)
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of fixed assets, are adjusted in
the carrying amount of such assets.
J. Employees'' Benefits
Contributions towards Provident Funds are charged to the Statement of
Profit and Loss of the period when the contributions to the Funds are
due. The provisions/liabilities towards gratuity, accrued leave, long
term service awards, post-retirement medical and settlement benefits,
future payments to the disabled employees/legal heirs of deceased
employees under the Employees'' Family Benefit Scheme, are made based on
the actuarial valuation as at the end of the year and charged to the
Statement of Profit and Loss after considering along with actuarial
gains/losses.
K. Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses,
which do not exceed Rs.10 lakhs in each case, are treated as
income/expenditure of current year.
L. Revenue Recognition
Sales include excise duty and are net of rebates and price concessions.
Sales are recognised at the time of dispatch of materials to the buyers
including the cases where delivery documents are endorsed in favour of
the buyers. Where the contract prices are not finalised with government
agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases
where ''realisation of material value without shipment'' is provided in
the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on
certainty of realisation.
The iron ore fines not readily useable/saleable included in inventory,
are recognised on disposal.
M. Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are
deducted and/or considered recoverable by the Company. These are
adjusted to the capital cost or recognised in Statement of Profit and
Loss, as the case may be, on final settlement.
Suppliers''/Contractors'' claims for price escalation are accounted for,
to the extent such claims are accepted by the Company.
N. Deferred Tax
The deferred tax on timing differences between book profit and taxable
profit for the year is accounted for applying the tax rates and laws
that have been enacted or substantively enacted as on the balance sheet
date. Deferred tax assets arising from timing differences are
recognised to the extent there is a reasonable certainty that the
assets can be realised in future.
O. Overburden Removal
The expenditure on removal of backlog of over burden is charged to
revenue, based on stripping ratio as per 5 year mining plan for mines
except collieries which is based on project report.
Mar 31, 2012
A. Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.
B. Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
C. Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Cost of Lease hold land is amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the period (including deemed renewal) of the lease.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
D. Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
E. Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. lassification of plant and machinery into continuous and non- continuous is made on the basis of technical opinion and depreciation provided accordingly. Depreciation on addition/ deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
F. Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution, other than temporary, in value. Current investments are carried at lower of cost and market value.
G. Inventories
Raw materials, stores & spares and finished / semi - finished products (including process scrap) are valued at lower of cost and net realisable value of the respective plants/units. In case of identified obsolete / surplus / non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & spares - Moving weighted average cost
Materials in-transit - at cost
Finished / Semi - finished products - Material cost plus appropriate share of labour, related overheads and duties.
H. Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
I. Voluntary Retirement Compensation
Expenditure on voluntary retirement compensation, is charged off in the year, in which it is incurred.
J. Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets, are recognised in the Statements of Profit and Los. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the Statement of Profit and Loss over the period of the contract.
The Company had opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard-11 notified by Government of India on 31st March, 2009. Accordingly, exchange differences (including arising out of forward exchange contracts) relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
K. Employees' Benefits
Contributions towards Provident Funds are charged to the Statement of Profit and Loss of the period when the contributions to the Funds are due. The provisions/liabilities towards gratuity, accrued leave, long term service awards, post- retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the statement of Profit and Loss after considering along with actuarial gains/losses.
L. Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses, which do not exceed Rs.10 lakhs in each case, are treated as income/expenditure of current year.
M. Revenue recognition
Sales include excise duty and are net of rebates and price concessions. Sales are recognised at the time of dispatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Where the contract prices are not finalised with government agencies, sales are accounted for on provisional basis.
Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where 'realisation of material value without shipment' is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on certainty of realisation.
The iron ore fines not readily usable/saleable included in inventory, are recognised on disposal.
N. Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in Statement of Profit and Loss, as the case may be, on final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
O. Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
P. Overburden Removal
The expenditure on removal of backlog of overburden is charged to revenue, based on stripping ratio as per 5 year mining plan for mines except collieries which is based on project report.
Mar 31, 2011
1.1 Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, and the relevant provisions of the Companies Act, 1956 including accounting standards notified there under.
1.2 Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
1.3 Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Cost of Lease hold land is amortised over the period of lease.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the period (including deemed renewal) of the lease.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
1.4 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.5 Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Classification of plant and machinery into continuous and non- continuous is made on the basis of technical opinion and depreciation provided accordingly. Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
1.6 Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution, other than temporary, in value. Current investments are carried at lower of cost and market value.
1.7 Inventories
Raw materials, stores & spares and finished/semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the respective plants/units. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials - Periodical weighted average cost
Minor raw materials - Moving weighted average cost
Stores & spares - Moving weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
1.8 Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.9 Voluntary Retirement Compensation
Expenditure on voluntary retirement compensation, is charged off in the year, in which it is incurred.
1.10 Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets, are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.
The company had opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard -11 notified by Government of India on 31st March, 2009. Accordingly, exchange differences (including arising out of forward exchange contracts) relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
1.11 Employees' Benefits
Contributions towards Provident Funds are charged to the Profit and Loss Account of the period when the contributions to the Funds are due. The provisions/liabilities towards gratuity, accrued leave, long term service awards, post-retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the profit and loss account after considering along with actuarial gains/losses.
1.12 Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses, which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.13 Revenue Recognition
Sales include excise duty and are net of rebates and price concessions. Sales are recognised at the time of dispatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers Where the contract prices are not finalised with government agencies, sales are accounted for on provisional basis. Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period , in cases where Rs.realisation of material value without shipment' is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognized as income on certainty of realisation. The iron ore fines not readily useable/saleable included in inventory, are recognised on disposal.
1.14 Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.15 Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
1.16 Overburden Removal
The expenditure on removal of backlog of over burden is charged to revenue, based on stripping ratio as per 5 year mining plan for mines except collieries which is based on project report.
Mar 31, 2010
1.1 Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, and the relevant provisions of the Companies Act, 1956 including accounting standards notified thereunder.
1.2 Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
1.3 Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Cost of Lease hold land is amortised over the period of lease. Expenditure on construction/development of assets owned by Government / Semi-Government authorities is capitalised under appropriate asset accounts and amortised in five years.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the period (including deemed renewal) of the lease.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
1.4 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.5 Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Classification of plant and machinery into continuous and non- continuous is made on the basis of technical opinion and depreciation provided accordingly. Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
1.6 Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution, other than temporary, in value. Current investments are carried at lower of cost and market value.
1.7 Inventories
Raw materials, stores & spares and finished/semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the respective plants. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials and Stores & Spares - weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
1.8 Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.9 Voluntary Retirement Compensation
Expenditure on voluntary retirement compensation, is charged off in the year, in which it is incurred.
1.10 Foreign currency transactions
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets, are recognised in the Profit and Loss Account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.
The company had opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard -11 notified by Government of India on 31st March, 2009. Accordingly, exchange differences (including arising out of forward exchange contracts) relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
1.11 Employees Benefits
Contributions towards Provident Funds are charged to the Profit and Loss Account of the period when the contributions to the Funds are due. The provisions/liabilities towards gratuity, accrued leave, long term service awards, post-retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the Profit and Loss Account after considering along with actuarial gains/losses.
1.12 Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses, which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.13 Revenue recognition
Sales include excise duty and are net of rebates and price concessions. Sales are recognised at the time of dispatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Marine export sales are recognised on:
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period , in cases where `realisation of material value without shipment is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognised as income on certainty of realisation. The iron ore fines not readily usable/saleable included in inventory, are recognised on disposal.
1.14 Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers/Contractors claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.15 Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2009
1.1 Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles in India, and the relevant provisions of the Companies Act, 1956 including accounting standards notified thereunder.
1.2 Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
1.3 Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Cost of Lease hold land is amortised over the period of lease. Expenditure on construction/development of assets owned by Government / Semi- Government authorities is capitalised under appropriate asset accounts and amortised in five years.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the period (including deemed renewal) of the lease.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less,
1.4 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.5 Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset. Classification of plant and machinery into continuous and non- continuous is made on the basis of technical opinion and depreciation provided accordingly. Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
1.6 Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution, other than temporary, in value. Current investments are carried at lower of cost and market value.
1.7 Inventories
Raw materials, stores & spares and finished/semi-finished products (including process scrap) are valued at lower of cost and net realisable value of the respective plants. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and other scrap are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials and Stores & Spares - weighted average cost
Materials in-transit -at cost
Finished/Semi-finished products-material cost plus appropriate share of labour, related overheads and duties.
1.8 Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.9 Voluntary Retirement Compensation
Expenditure on voluntary retirement compensation, is charged off in the year, in which it is incurred.
1.10 Employees Benefits
The provisions/liabilities towards gratuity, accrued leave, long term service awards, post-retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the profit and loss account after considering along with actuarial gains/losses.
1.11 Adjustments pertaining to earlier years and prepaid expenses Income / expenditure relating to prior period and prepaid expenses, which do not exceed Rs. 5 lakhs in each case, are treated as income/expenditure of current year.
1.12 Revenue recognition
Sale; include excise duty and are net of rebates and price concessions. Sales are recognised at the time of dispatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Marine export sales are recognised on -
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where realisation of material value without shipment is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognised as income in the year of actual shipment at estimated realisable value/actual credit earned.
The iron ore fines not readily useable/saleable included in inventory, are recognised on disposal.
1.13 Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement
1.14 Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2008
1.1 Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
1.3 Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Expenditure on construction/development of assets on land owned by Government/Semi-Government authorities is capitalised under appropriate asset accounts.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the period (including deemed renewal) of the lease.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
1.4 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.5 Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.
However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset.
Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.
Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
1.6 Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.
1.7 Inventories
Raw materials, stores & spares and finished/semi-finished products are valued at lower of cost and net realisable value of the respective plants. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Iron ore fines not readily useable/saleable, are recognised on disposal.
Residue products and scrap of various nature are valued at estimated net realisable value.
The basis of determining cost is:
Raw materials and Stores & Spares - weighted average cost
Materials in-transit - at cost
Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
1.8 Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.9 Voluntary Retirement Compensation
Voluntary retirement compensation is treated as deferred revenue expenditure. Such expenditure incurred upto 31st March, 2006 is written-off in five years and the expenditure incurred thereafter is written-off in equal yearly instalments upto 31st March, 2010.
1.10 Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets acquired from outside India prior to 1st April, 2004, are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.
Exchange differences (including arising out of forward exchange contracts) in respect of liabilities relating to fixed assets, arising out of transactions entered prior to 1st April, 2004, are adjusted in the carrying amount of such assets.
1.11 Employees Benefits
The provisions/liabilities towards gratuity, accrued leave, leave travel concession facility, long term service awards, post-retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the profit and loss account alongwith actuarial gains/losses.
1.12 Adjustments pertaining to earlier years and prepaid expenses
Income / expenditure relating to prior period and prepaid expenses, which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.13 Revenue recognition
Sales include excise duty and are net of rebates and price concessions. Sales in the domestic market are recognised at the time of despatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Export sales are recognised on :
i) the issue of bill of lading, or
ii) negotiation of export bills upon expiry of laycan period, in cases where `realisation of material value without shipment is provided in the letters of credit of respective contracts, whichever is earlier.
Export incentives under various schemes are recognised as income in the year of actual shipment at estimated realisable value/actual credit earned.
1.14 Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers/Contractors claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.15 Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2007
1.1 Basis of Accounting
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any revision to such estimates is recognised in the period the same is determined.
1.3 Fixed Assets
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including leasehold land, is capitalised as part of cost of land. Expenditure on construction/ development of assets on land owned by Government/Semi-Government authorities is capitalised under appropriate asset accounts.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
Mining rights are treated as intangible assets and all the related costs thereof are amortised over the lease period.
Software which is not an integral part of related hardware, is treated as intangible asset and amortised over a period of five years or its licence period, whichever is less.
1.4 Borrowing Costs
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.5 Depreciation
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.
However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset.
Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.
Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
1.6 Investments
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.
1.7 Inventories
Raw materials, stores & spares and finished/semi-finished products are valued at lower of cost and net realisable value of the respective plants. In case of identified obsolete/ surplus/ non-moving items, necessary provision is made and charged to revenue. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Iron ore fines not readily useable/saleable, are recognised on disposal.
Residue products and scrap of various nature are valued at estimated net realisable value.
The basis of determining cost is: Raw materials and Stores & spares - weighted average cost Materials in-transit - at cost Finished/Semi-finished products - material cost plus appropriate share of labour, related overheads and duties.
1.8 Grants
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.9 Voluntary Retirement Compensation
Voluntary retirement compensation is treated as deferred revenue expenditure. Such expenditure incurred upto 31st March, 2006 is written-off in five years and the expenditure incurred thereafter is written-off in equal yearly instalments upto 31st March 2010.
1.10 Foreign Currency Transactions
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets acquired from outside India are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.
Exchange differences (including arising out of forward exchange contracts) in respect of liabilities incurred to acquire fixed assets from outside India are adjusted in the carrying amount of such assets.
1.11 Employees Benefits
The provisions towards gratuity, accrued leave, long term service awards, post-retirement medical and settlement benefits, future payments to the disabled employees/legal heirs of deceased employees under the Employees Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year and charged to the profit and loss account alongwith actuarial gains/losses.
1.12 Adjustments pertaining to earlier years and prepaid expenses
Income/expenditure relating to prior period and prepaid expenses, which do not exceed Rs.5 lakh in each case, are treated as income/expenditure of current year.
1.13 Revenue recognition
Sales include excise duty and are net of rebates and price concessions. Sales in the domestic market are recognised at the time of despatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Export sales are recognised on issue of bill of lading.
Export incentives under various schemes are recognised as income in the year of exports at estimated realisable value/actual credit earned.
1.14 Claims for Liquidated Damages/Price Escalation
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers/Contractors claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.15 Deferred Tax
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2006
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956.
1.2 FIXED ASSETS
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including lease hold land, is capitalised as part of cost of land. Expenditure on construction/development of assets on land owned by Government/Semi-Government authorities is capitalised under appropriate asset accounts.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.4 DEPRECIATION
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.
However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset.
Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.
Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion!
Cost pertaining to acquisition of mining rights is amortised over the lease period.
1.5 INVESTMENTS
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.
1.6 INVENTORIES
Stores and spares are valued at cost. In case of identified obsolete/surplus/non-moving items, necessary provision is made and charged to revenue.
Raw materials and finished/semi-finished products are valued at lower of cost and net realisable value of the respective plants. The net realisable value of semi-finished special products, which have realisable value at finished stage only, is estimated for the purpose of comparison with cost.
Residue products and scrap of various nature are valued at estimated net realisable value except iron ore fines not readily useable/saleable, which are recognised on disposal.
The basis of determining cost is:
Stores & spares and raw materials - Weighted average cost
Materials in-transit - At cost
Finished/Semi-finished products - Material cost plus appropriate share of labour, related overheads and duties.
1.7 GRANTS
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.8 DEFERRED REVENUE EXPENDITURE
Voluntary retirement compensation is treated as deferred revenue expenditure and written-off in five years.
1.9 FOREIGN CURRENCY TRANSACTIONS
Monetary assets and liabilities related to foreign currency transactions remaining unsettled are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets acquired from outside India are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate on the date of the transaction is recognised in the profit and loss account over the period of the contract.
Exchange differences (including arising out of forward exchange contracts) in respect of liabilities incurred to acquire fixed assets from outside India are adjusted in the carrying amount of such assets.
1.10 EMPLOYEES' BENEFITS
The provisions towards gratuity, accrued leave, post-retirement medical and settlement benefits to employees, future payments to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year.
1.11 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses, which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.12 REVENUE RECOGNITION
Sales include excise duty and are net of rebates and price concessions. Sales in the domestic market are recognised at the time of despatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Export sales are recognised on issue of bill of lading.
Export incentives under various schemes are recognised as income in the year of exports at estimated realisable value/actual credit earned.
1.13 CLAIMS FOR LIQUIDATED DAMAGES/PRICE ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.14 DEFERRED TAX
The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2005
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the generally accepted accounting principles, accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the relevant provisions of the Companies Act, 1956.
1.2 FIXED ASSETS
Fixed assets are stated at cost of acquisition less depreciation, except land gifted by the State Governments, which is stated at notional/nominal value with corresponding credit to capital reserve.
Expenditure on development of land, including lease hold land, is capitalised as part of cost of land. Expenditure on construction/development of assets on land owned by Government/Semi-Government authorities, is capitalised under appropriate asset accounts.
Cost includes all identifiable expenditure including trial-run expenses, net of revenue.
Assets retired from active use are shown separately under fixed assets at lower of net book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Other borrowing costs are recognised as expense in the period in which these are incurred.
1.4 DEPRECIATION
Depreciation is provided on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956.
However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided over the residual useful life of the asset.
Classification of plant and machinery into continuous and non-continuous is made on the basis of technical opinion and depreciation provided accordingly.
Depreciation on addition/deletion during the year is provided on pro-rata basis with reference to the month of addition/deletion.
Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Long-term investments (including investments in subsidiary companies and joint ventures) are carried at cost, after providing for diminution in value, if it is of a permanent nature. Current investments are carried at lower of cost and market value.
1.6 INVENTORIES
Stores and spares are valued at cost. In case of identified obsolete/surplus/non-moving items, necessary provision is made and charged to revenue.
Raw materials and finished/semi-finished products are valued at lower of cost and net realisable value of the respective plants. Semi-finished special products which have realisable value at finished stage only, the net realisable value is estimated for the purpose of comparison with cost.
Residue products and scrap of various nature are valued at estimated net realisable value.
The basis of determining cost is:
Stores & spares and raw materials - Weighted average cost
Materials in-transit - Actual cost
Finished/Semi-finished products - Material cost plus appropriate share of labour, related overheads and duties.
1.7 GRANTS
Grants relating to the acquisition of a specific asset are adjusted against the cost of the concerned asset. Grants relating to the revenue expenditure are adjusted against the related expenses.
1.8 DEFERRED REVENUE EXPENDITURE
Voluntary retirement compensation is treated as deferred revenue expenditure and writlen-off in five years.
In respect of deferred voluntary retirement schemes, compensation liability, as initially ascertained on actuarial valuation, is written-off in five years. Annual increase/decrease in the liability, actuarially ascertained, is charged to profit and loss account.
Other expenditure incurred upto 31st March 2003 and treated as deferred revenue expenditure, continues to be written-off in five years.
1.9 FOREIGN CURRENCY TRANSACTIONS
Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year-end rates.
The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions other than those relating to fixed assets are recognised in the profit and loss account. In respect of transactions covered by forward exchange contracts, the difference between the contract rate and spot rate' on the date of the transaction is recognised in the profit and loss account over the period of the contract, except in case of liabilities incurred for acquiring fixed assets.
Exchange differences (including arising out of forward exchange contracts) in respect of liabilities incurred to acquire fixed assets are adjusted in the carrying amount of such assets.
1.10 EMPLOYEES' BENEFITS
The provisions towards gratuity, accrued leave, post-retirement medical and settlement benefits to employees, future payments to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme, are made based on the actuarial valuation as at the end of the year.
1.11 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs. 5 lakhs in each case, are treated as income/expenditure of current year.
1.12 REVENUE RECOGNITION
Sales include excise duty and are net of rebates, price concessions and sales tax. Sales in the domestic market are recognised at the time of despatch of materials to the buyers including the cases where delivery documents are endorsed in favour of the buyers. Export sales are recognised on issue of bill of lading.
Export incentives under various schemes are recognised as income in the year of exports at estimated realisable value/actual credit earned.
1.13 CLAIMS FOR LIQUIDATED DAMAGES/PRICE ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are adjusted to the capital cost or recognised in profit and loss account, as the case may be, on final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.14 TAXATION
Provision for current tax is made on the taxable profits for the year at the rates in force. The deferred tax on timing differences between book profit and taxable profit for the year is accounted for applying the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets arising from timing differences are recognised to the extent there is a reasonable certainty that the assets can be realised in future.
Mar 31, 2004
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to `Capital Reserve'. The expenditure on development of land including leasehold land is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under `Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company's contribution/expenditure towards construction/development of assets on land owned by the Government/Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value. Grants-in-aid related to revenue items are netted against the related expenses.
Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value-till the acceptance of disposal proposals there against, and due provisions are made to take care of the shortfall, if any, in their respective realisable value. However, fixed assets that have been retired from active use and whose disposal proposals have been accepted, are de-capitalised and included under "Inventories" at lower of book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual useful life of the asset based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of addition/disposal thereof. Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for diminution in the value of such investments is made-to recognise a decline, other than temporary, on individual investment basis.
1.6 INVENTORIES
Semi/Finished products, are valued at lower of cost and net realisable value of the respective plants. Raw-materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a reasonable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in case of non-moving, obsolete/surplus stores and spares items, provision is made on book value and charged to revenue, as stated below:
i) Not moved for five years and more - 10% ii) Not moved for ten years and more - 50% iii) Not moved for fifteen years and more - 75% iv) Obsolete/surplus stores and spares - 75%
In respect of inter-unit transfers: The closing stock of (i) semi/finished products is valued at lower of cost or realisable value of the transferor plant. Materials out of inter-plant transfers, lying in stock after further processing, are valued at transfer price plus processing cost of the transferee plant or realisable value, whichever is lower. Such inter-plant transferred materials used for capitalisation have, however, been considered at cost (ii) Stores and spares are valued at cost of the transferor plant (iii) Raw materials at patents are valued at tower of cost and net realisable value-Cost is determined based on the average of purchase cost and transfer price.
Cost is arrived on weighted average basis.
1.7 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
1.7.1. Voluntary retirement compensation is treated as deferred revenue expenditure and written off in five years.
In respect of deferred Voluntary Retirement Schemes, compensation liability is initially ascertained on actuarial valuation and written-off in five years. Annual increase/decrease to the above liability, actuarially ascertained, is charged to Profit and Loss Account, after adjustment of payments thereof during the year. Incremental amount due to wage revision is charged corresponding to the period for which such expenditure is amortised.
In case of Voluntary Retirement Schemes, which envisage monthly payments, the payments are charged off as per contractual terms.
1.7.2. The development/deferred revenue expenditure incurred upto 31st March, 2003 continues to be written-off in line with Accounting Standard-26, issued by the Institute of Chartered Accountants of India as follows:
- Expenditure incurred on development of new projects, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure and added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
- Expenditure on extraction at captive mines is distributed over the excavation of ore, normal waste (intercalated waste) and over burden.The expenditure on removal of normal waste (intercalated waste) is loaded on the cost of ore excavated. Expenditure on removal of over burden is written-off in five years.
- Expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements is written-off in five years.
The expenditure mentioned above, incurred after 31st March 2003, is charged to revenue.
1.8 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities, other than those covered by forward contracts, as on the Balance Sheet date are converted at the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rates prevailing on the date of transactions.
In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit and Loss Account, as the case may be, proportionately over the contract period.
1.9 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are treated as income on completion of the projects/final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.11 RETIREMENT BENEFITS
The provisions towards gratuity, leave encashment, post-retirement medical and settlement benefits to employees are made based on the actuarial valuation as at the end of the year.
1.12 EMPLOYEES' FAMILY BENEFIT SCHEME
The provision towards payments to be made in future to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme is based on the actuarial valuation as at the end of the year.
1.13 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs-5 lakhs in each case, are treated as income/expenditure of current year.
1.14 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers Including the cases where delivery documents are in the company's name, pending collection of payments, since the significant risks and rewards in such cases are passed on to the buyers on despatch of materials. Export sales are treated as sales on issue of Bills of lading.
1.15 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
1.16 LEASES
(a) Where the Company is lessor
Assets given under finance lease are recognised as receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the basis of internal rate of return. The principal amount received is reduced from the net investment in the lease while interest recovery is recognised as revenue. In those cases where the entire lease premium/consideration is received up front, the difference between consideration money and net book value of the assets is recognised as income in the Profit & Loss Account.
Assets subject to operating lease are included in fixed assets and the lease income is recognised in the Profit & Loss Account on a straight line basis over the lease term. Expenses including depreciation in relation thereto, are recognised as an expense in the Profit & Loss Account.
(b) Where the Company is lessee
Finance leases which effectively transfer to the Company substantially all the risks and rewards incidental to the ownership of the leased items, are capitalised at the lower of the face value and present value of the minimum lease payments at the inception of the lease term. Leased payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining liability. Capitalised leased assets are depreciated over the lease term or estimated useful life of the relevant assets, whichever is shorter.
All leases except for those specified above, are classified as operating leases. Lease payments, in such cases, are recognised as an expense in the Profit & Loss Account on a straight line basis over the lease term.
1.17 TAXATION
Provision for income tax comprises of current tax and deferred tax charged or realised. Deferred tax is recognised, subject to consideration of prudence on timing differences, being the differences between taxable and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets will be realised.
1.18 SEGMENT REPORTING
(a) Identification of Segments
The Company has identified that its operating segments are primary segments. The Company's operating business are organised and managed separately for all the manufacturing units, with each business unit representing a strategic segment, Accordingly, each manufacturing unit has been identified as an operating segment for reporting purposes.
The analysis of geographical segments is based on the areas in which the customers of the Company are located.
(b) Allocation of Common costs
Common expenses are allocated to each segment on appropriate basis. Revenue and expenses not allocated to segments, have been included under the head "unallocated - common expenses".
The Accounting Policies adopted for segment reporting are in line with those of the Company.
Mar 31, 2003
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including leasehold land is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under `Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company's contribution/expenditure towards construction/development of assets on land owned by the Government/Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value. Grants-in-aid related to revenue items are netted against the related expenses.
Machinery spares which can be used only in connection with an item of fixed assets and V/hose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value till the acceptance of disposal proposals thereagainst, and due provisions are made to take care of the shortfall, if any, in their respective realisable value. However, fixed assets that have been retired from active use and whose disposal proposals have been accepted, are de-capitalised and included under "Inventories" at lower of book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying assets are capitalised until.the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual useful life of the asset based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of addition/disposal thereof. Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for diminution in the value of such investments is made to recognise a decline, other than temporary, on individual investment basis.
1.C INVENTORIES
Semi/Finished products, are valued at lower of cost and net realisable value of the respective plants. Raw-materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and also those which have not-moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant. Materials out of inter-plant transfers, lying in stock after further processing, are valued at transfer price plus processing cost of the transferee plant or realisable value, whichever is lower. Such inter-plant transferred materials used for capitalisation have, however, been considered at cost (ii) Stores and spares are valued at cost of the transferor plant (iii) Raw materials at plants are valued at lower of cost and net realisable value. Cost is determined based on the average of purchase cost and transfer price.
Cost is arrived on weighted average basis.
1.7 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure on extraction at captive mines is distributed over the excavation of ore, normal waste (intercalated waste) and over burden. The expenditure on removal of normal waste (intercalated waste) is loaded on the cost of ore excavated. Expenditure on removal of over burden is treated as deferred revenue expenditure and the same is written off in 5 years.
Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as deferred revenue expenditure and written-off in five years. Further, annual increase/decrease to the above liability actuarially ascertained, is taken to Profit and Loss Account, after adjustment of payments thereof during the year. Incremental payments against Voluntary Retirement Schemes due to wage revision is charged corresponding to the period for which deferred revenue expenditure relating to such Voluntary Retirement Scheme is amortised, with the first charge being made for the entire lapsed period in the year in which such wage agreement is finalised. In case of Voluntary Retirement Schemes' which envisage monthly payments, the payments are charged off as per contractual terms.
Other deferred revenue expenditure including expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements is written-off in five years.
1.8 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities, other than those covered by forward contracts, as on the Balance Sheet date are converted at the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rates prevailing on the date of transactions.
In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the contract period.
1.9 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are treated as income on completion of the projects/final settlement.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.11 RETIREMENT BENEFITS
The provisions towards gratuity, leave encashment, post-retirement medical and settlement benefits to employees are made based on the actuarial valuation as at the end of the year.
1.12 EMPLOYEES' FAMILY BENEFIT SCHEME
The provision towards payments to be made in future to the disabled employees/legal heirs of deceased employees under the Employees' Family Benefit Scheme is based on the actuarial valuation as at the end of the year.
1.13 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs. 5 lakhs in each case, are treated as income/expenditure of current year.
1.14 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the company's name, pending collection of payments, since the significant risks and rewards in such cases are passed on to the buyers on despatch of materials. Export sales are treated as sales on issue of Bills of lading.
1.15 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
1.16 LEASES
(a) Where the Company is lessor
Assets given under finance lease are recognised as receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the basis of internal rate of return. The principal amount received is reduced from the net investment in the lease while interest recovery is recognised as revenue. In those cases where the entire lease premium/consideration is received up front, the difference between consideration money and net book value of the assets is recognised as income in the Profit & Loss Account.
Assets subject to operating lease are included in fixed assets and the lease income is recognised in the Profit & Loss Account on a straight line basis over the lease term. Expenses including depreciation in relation thereto, are recognised as an expense in the Profit & Loss Account.
(b) Where the Company is lessee
Finance leases which effectively transfer to the Company substantially all the risks and rewards incidental to the ownership of the leased items, are capitalised at the lower of the face value and present value of the minimum lease payments at the inception of the lease term. Leased payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining liability. Capitalised leased assets are depreciated over the lease term or estimated useful life of the relevant assets, whichever is shorter.
All leases except for those specified above, are classified as operating leases. Lease payments, in such cases, are recognised as an expense in the Profit & Loss Account on a straight line basis over the lease term.
1.17 TAXATION
Provision for income tax comprises of current tax and deferred tax charged or realised. Deferred tax is recognised, subject to consideration of prudence on timing differences, being the differences between taxable and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets will be realised.
1.18 SEGMENT REPORTING
(a) Identification of Segments
The Company has identified that its operating segments are primary segments. The Company's operating business are organised and managed separately for all the manufacturing units, with each business unit representing a strategic segment. Accordingly, each manufacturing unit has been identified as an operating segment for reporting purposes.
The analysis of geographical segments is based on the areas in which the customers of the Company are located.
(b) Allocation of Common costs
Common expenses are allocated to each segment on appropriate basis. Revenue and expenses not allocated to segments, have been included under the head "unallocated - common expenses".
The Accounting Policies adopted for segment reporting are in line with those of the Company.
Mar 31, 2002
1. BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
2. FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to `Capital Reserve. The expenditure on development of land including lease-hold land, is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under `Capital work-in-progress at the beginning and close of the year under each scheme.
Fixed assets whose actual:costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Companys contribution/expenditure towards construction/development of assets on land owned by the Government/Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value. Grants-in-aid related to revenue items are netted against the related expenses.
Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value till the acceptance of disposal proposals there against, and due provisions are made to take care of the shortfall, if any, in their respective realisable value. However, fixed assets that have been retired from active use and whose disposal proposals have been accepted, are de-capitalised and included under "Inventories" at lower of book value and estimated realisable value.
3. BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to revenue.
4. DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual useful life of the asset based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of addition/disposal thereof.
Cost of acquiring mining rights is amortised over the lease period.
5. INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for diminution in the value of such investments is made to recognise a decline, other than temporary, on individual investment basis.
6. INVENTORIES
Semi/Finished products, are valued at lower of cost and net realisable value of the respective plants.
Raw-materials are valued at lower of cost and net realisable value.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous years realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished products realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and also those which have not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant. Materials out of inter-plant transfers, lying in stock after further processing, are valued at transfer price plus processing cost of the transferee plant or realisable value, whichever is lower. Such inter-plant transferred materials used for capitalisation have, however, been considered at cost (ii) Stores and spares are valued at cost of the transferor plant (iii) Raw materials at plants are valued at lower of cost and net realisable value. Cost is determined based on the average of purchase cost and transfer price. Cost is arrived on weighted average basis.
7. DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as deferred revenue expenditure and written-off in five years. Further, annual increase/decrease to the above liability actuarially ascertained, is taken to Profit &. Loss Account, after adjustment of payments thereof during the year. Incremental payments against Voluntary Retirement Schemes due to wage revision is charged corresponding to the period for which deferred revenue expenditure relating to such Voluntary Retirement Scheme is amortised, with the first charge being made for the entire lapsed period in the year in which such wage agreement is finalised. In case of Voluntary Retirement Schemes which envisage monthly payments, the payments are charged off as per contractual terms, while the future liability to the disabled employee/legal heirs of deceased employees under the Family Benefit Schemes is treated as deferred revenue expenditure and written-off over a period of 5 years.
Other deferred revenue expenditure including expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements is written-off in five years.
8. FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by forward contracts) as on the Balance Sheet date are converted at the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rates prevailing on the date of transactions
In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the contract period.
9. RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
10. CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company.
These are treated as income on completion of the projects/final settlement.
Suppliers/Contractors claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
11. RETIREMENT BENEFITS
The provisions for gratuity and leave encashment liabilities are made on the basis of year end actuarial valuation.
12. ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do nor exceed Rs. 5 lakhs in each case, are treated as income/expenditure of current year.
13. SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery 10 carriers including, the cases where delivery documents are in the companys name, pending collection of payments, since the significant risks and rewards in such cases arc passed on to the buyers on despatch of materials. Export sales arc treated as sales on issue of Rills of lading.
14. EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
15. LEASES
(a) Where the Company is lessor
Assets given under finance lease are recognised as receivable at an amount equal to the net investment in the lease. Lease rentals are apportioned between principal and interest on the basis of internal rate of return. The principal amount received is reduced from the net investment in the lease while interest recovery is recognised as revenue. In those cases where the entire lease premium/consideration is received up front, the difference between consideration money and net book value of the assets is recognised as income in the Profit & Loss Account.
Assets subject to operating lease are included in fixed assets and the lease income is recognised in the Profit & Loss Account on a straight line basis over the lease term. Expenses including depreciation in relation thereto, arc recognised as an expense in the Profit & Loss Account.
(b) Where the Company is lessee
Finance leases which effectively transfer to the Company substantially all the risks and rewards incidental to the ownership of the leased items, are capitalised at the lower of the face value and present value of the minimum lease payments at the inception of the lease term. Leased payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining liability. Capitalised leased assets are depreciated over the lease term or estimated useful life of the relevant assets, whichever is shorter.
All leases except for those Specified above, are classified as aperating leases. Lease payments, in such cases, are recognised as an expense in the Profit & Loss Account on a straight line basis over the lease term.
16. TAXATION
Provision for income tax comprises of current tax and deferred tax charged or realised. Deferred tax is recognised, subject to consideration of prudence on timing differences, being the differences between taxable and accounting income/expenditure that originate in one period and are capable of reversal in one or more subsequent period(s). Deferred tax assets are not recognised unless there is virtual certainty that sufficient future taxable income will be available, against which such deferred tax assets will be realised.
17. SEGMENT REPORTING
(a) Identification of Segments
The Company has identified that its operating segments are primary segments. The Companys operating business are organised and managed separately for all the manufacturing units, with each business unit representing a strategic segment. Accordingly, each manufacturing unit has been identified is an operating segment for reporting purposes.
The analysis of geographical segments is based on the areas in which the customers of the Company are located.
(b) Allocation of Common costs
Common expenses are allocated to each segment on appropriate basis. Revenue and expenses not allocated to segments, have been included under the head "unallocated - common expenses".
The Accounting Policies adopted for segment reporting arc in line with those of the Company.
Mar 31, 2001
1. ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under 'Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company's contribution/expenditure towards construction/development of assets on land owned by the Government/Semi- Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value. Grants-in-aid related to revenue items are netted against the related expenses.
Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value till the acceptance of disposal proposals thereagainst, and due provisions are made to take care of the shortfall, if any, in their respective realisable value. However, fixed assets that have been retired from active use and whose disposal proposals have been accepted, are de-capitalised and included under "Inventories" at lower of book value and estimated realisable value.
1.3 BORROWING COSTS
Borrowing costs relating to the acquisition/construction of qualifying assets are capitalised until the time all substantial activities necessary to prepare the qualifying assets for their intended use are complete.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.
1.4 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual useful life of the asset based on the rates specified in Schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of addition/disposal thereof. Cost of acquiring mining rights is amortised over the lease period.
1.5 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for diminution in the value of such investments is made to recognise a decline, otherthan temporary, on individual investment basis.
1.6 INVENTORIES
Semi/Finished products, are valued at lower of cost or net realisable value of the respective plants. Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and also those which have not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant (ii) Stores and spares are valued at cost of the transferor plant (iii) Raw materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Cost is arrived on weighted average basis.
1.7 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as deferred revenue expenditure and written-off in five years. Further, annual increase/decrease to the above liability actuarially ascertained, is taken to Profit and Loss Account, after adjustment of payments thereof during the year. However, in case of Voluntary Retirement Schemes which envisage monthly payments, the payments are charged off as per contractual terms.
Other deferred revenue expenditure including expenditure on consultancy/ technological assistance for strategic cost reduction and quality improvements is written-off in five years.
1.8 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by forward contracts) as on the Balance Sheet date are converted at the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rate prevailing on the date of transaction.
In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the contract period.
1.9 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.10 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are treated as income on completion of the projects/final settlement.
Suppliers'/Contractors' claims tor price escalation are accounted for, to the extent such claims are accepted by the Company.
1.11 RETIREMENT BENEFITS
The provisions for gratuity and leave encashment liabilities are made on the basis of year end actuarial valuation.
1.12 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the company's name, pending collection of payments. Export sales are treated as sales on issue of Bills of lading.
1.14 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
Mar 31, 2000
1. ACCOUNTING POLICIES
1.1. BASIS OF ACCOUNTING
The Company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued nationally/nominally and the corresponding amount is credited to `Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as a part of the cost of land.
Interest on Loans for additions, modifications and replacement scheme is capitalised, based on the mean of the balances under `Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed Assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company's contribution/expenditure towards construction/development of assets on land owned by the Government. Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value
Machinery spares which can be used only in connection with an item of fixed assets and whose use as per technical assessment is expected to be irregular, are capitalised and depreciated over the residual useful life of the respective assets.
Items of fixed assets that have been retired from active use are exhibited under fixed assets at their book value till the acceptance of disposal proposals thereagainst, and the provisions are made to take care of the shortfall, if any, in their respective realisable value. However, fixed assets that have ben retired from active use and their disposal proposals have been initiated, they are de-capitalised and included under "Inventories" at lower of book value and estimated realisable value.
1.3 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. However, where the historical cost of a depreciable asset undergoes a change, the depreciation on the revised unamortised depreciable amount is provided prospectively over the residual life of the asset computed on the basis of rates specified in schedule XIV as stated above.
Depreciation on assets installed/disposed off during the year is provided with respect to the month of additions/disposal thereof.
Cost of acquiring mining rights is amortised over the lease period.
1.4 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value of individual investment basis.
Investments in subsidiary Companies and other long-term and unquoted investments are valued at cost. However, provision for diminution in the value of such investments is made to recognise a decline, other than temporary, on individual investment basis.
1.5 INVENTORIES
Semi-Finished products, are valued at lower of cost or net realisable value of the respective plants.
Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants, are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
The stocks of wear scrap lying unconsumed at the plant and mixed coke and middlings/rejects, are valued at the estimated net realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and also those which have not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
In respect of inter-unit transfers: (i) the closing stock of semi-finished products is valued at lower of cost or realisable value of the transferor plant (ii) Stores and spares are valued at cost of the transferor plant (iii) The raw materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Cost is arrived on weighted average basis.
1.6 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such written off in five years.
Voluntary retirement compensation liability ascertained on actuarial valuation, is treated as deferred revenue expenditure and written-off in five years. Further, annual increase/decrease to the above liability actuarially ascertained, is taken to Profit and Loss Account, after adjustment of payments thereof during the year.
Other deferred revenue expenditure including expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements is written-off in five years.
1.7 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by forward contracts) as on the Balance Sheet date are converted at the year end exchange rate and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Accounts, as the case may be.
Transactions in foreign currencies other than those covered by forward contracts are recorded at the rate prevailing on the date of transaction.
In case of foreign currency transaction covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the contract period.
1.8 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.9 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deduced and/or considered recoverable by the Company. These are treated as income on completion of the projects/final settlement.
Supplies'/Constractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.10 GRATUITY
The provision for gratuity liability is made on basis of year end actuarial valuation.
1.11 LEAVE LIABILITY
Leave encashment liability for the employees during service period is recognised and provided for only when such encashment is allowed by the management. However, leave encashment liability for retiring employees is provided for at the time of retirement.
1.12 ADJUSTMENT PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid which do not exceed Rs. 5 lakhs in each case, are treated as income/expenditure of current year.
1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the company's name, pending collection of payments. Export sales are treated as sales on issue of Bills of lading.
1.14 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme (DEPB) and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
Mar 31, 1999
1.1 BASIS OF ACCOUNTING
The company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
1.2 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as a pant of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under 'Capital work- in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production. The Company's contribution/expenditure towards construction/development of assets on land owned by the Government/Semi-Government authorities, is capitalised under appropriate assets account. Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value.
1.3 DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. Depreciation on assets installed/disposed of during the year is provided with respect to the month of addition/disposal thereof. Cost of acquiring mining rights is amortised over the lease period.
1.4 INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis. Investments in subsidiary companies are carried in the financial statements at cost. In respect of other long-term and unquoted investments, which are valued at cost, provision for diminution is made to recognise a decline, other than temporary, on individual investment basis.
1.5 INVENTORIES
Semi/Finished products, other than Ingots and Slabs meant for rolling in the plants, are valued at lower of cost or realisable value of the respective plants. Ingots and Slabs meant for rolling in the plants are valued at cost. The cost of manufactured semi/finished products, which includes interest on working capital, is determined on the basis of annual average cost of production.
Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
Wear scrap lying unconsumed at plant is valued at realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
In respect of inter-unit transfers : (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant (ii) Stores and spares are valued at cost of the transferor plant (iii) The raw materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and stores and spares not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue. Stock of mixed coke and middlings/rejects is valued at net realisable value.
1.6 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Expenditure on voluntary retirement compensation (net of grants-in-aid) incurred through lumpsum payments is treated as deferred revenue expenditure. However, voluntary retirement compensation which envisages deferred payment on monthly basis, will be accounted for as and when payable.
Other deterred revenue expenditure including expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements is written-off in five years.
1.7 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities (other than those covered by forward contracts) as on the Balance Sheet date are converted at the year end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be. Depreciation on such adjustments to fixed assets is adjusted prospectively. In case of foreign currency transactions covered by forward contracts, the difference between contract rate and exchange rate prevailing on the date of transactions, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the contract period.
1.8 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.9 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by the Company. These are treated as income on completion of the projects.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by Company.
1.10 GRATUITY
The provision for gratuity liability is made on the basis of actuarial valuation.
1.11 LEAVE LIABILITY
Leave encashment liability for the employees during service period is recognised and provided for only when such encashment is allowed by the management. However, leave encashment liability for retiring employees is provided for at the time of retirement.
1.12 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of current year.
1.13 SALES
Sales include Excise Duty and are net of rebates/price concessions/sales tax.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the company's name, pending collection of payments. Export sales are treated as sales on issue of Bills of lading.
1.14 EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme (DEPB) and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
Mar 31, 1998
1. BASIS OF ACCOUNTING
The company prepares its accounts on accrual basis under historical cost convention as per the generally accepted accounting principles.
2. FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued nationally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under 'Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
Expenditure incurred during the trial run period are capitalised till the concerned assets are ready for commercial production.
The Company's contribution / expenditure towards construction / development of assets on land owned by Government / Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value.
3. DEPRECIATION
Depreciation is provided on straight line method at the rates specified in Schedule-XIV to the Companies Act, 1956. Depreciation on assets installed/disposed of during the year is provided with respect to the month of addition/disposal thereof. Cost of acquiring mining rights is amortised over the lease period.
4. INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies are carried in the financial statements at cost. In respect of other long-term and unquoted investments, which are valued at cost, provision for diminution is made to recognise a decline, other than temporary, on individual investment basis.
5. INVENTORIES
Semi/Finished products, other than Ingots and Slabs meant for rolling in the plants, are valued at lower of cost or realisable value of the respective plants. Ingots and Slabs meant for rolling in the plants are valued at cost. The cost of manufactured semi/finished products, which includes interest on working capital, is determined on the basis of annual average cost of production.
Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
Wear scrap lying unconsumed at plant is valued at realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant (ii) Stores and spares are valued at cost of the transferor plant (iii) the raw materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and stores and spares not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
Stock of mixed coke and middlings/rejects Is valued at net realisable value.
6. DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Expenditure on Voluntary Retirement Compensation incurred through lump-sum payment is treated as deferred revenue expenditure. However, Voluntary Retirement Compensation which envisages deferred payments on monthly basis will be accounted for as and when payable.
Other deferred revenue expenditure including expenditure on consultancy/technological assistance for strategic cost reduction and quality improvements are written-off in five years.
7. FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities as on the Balance Sheet date, are converted at the year-end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of assets or charged to Profit & Loss Account, as the case may be. Depreciation on such adjustments to fixed assets is adjusted prospectively.
8. RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
9. CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are accounted for as and when these are deducted and/or considered recoverable by Company. These are treated as income on completion of the projects.
Suppliers`/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by Company.
10. GRATUITY
The provision for gratuity liability is made on the basis of actuarial valuation.
11. LEAVE LIABILITY
Leave encashment liability for the employees during service period is recognised and provided for only when such encashment is allowed by the management. However, leave encashment liability for retiring employees is provided for at the time of retirement.
12. ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as income/ expenditure of current year.
13. SALES
Sales include Excise Duty and are net of rebates/price concessions.
Materials sold in domestic market are treated as sales on delivery to carriers including the cases where delivery documents are in the company's name, pending collection of payments. Export sales are treated as sales on issue of Bills of lading.
14. EXPORT INCENTIVES
Export incentives in the form of Special/Advance Licences, credit earned under Duty Entitlement Pass Book Scheme (DEPB) and duty drawback, are treated as income in the year of export, at estimated realisable value/actual credit earned on exports made during the year.
Mar 31, 1997
1.1 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued nationally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as part of the cost of land.
Interest on Loans for additions, modifications and replacement schemes is capitalised, based on the mean of the balances under 'Capital work-in-progress' at the beginning and close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation. if any, are made retrospectively on ascertainment of actual costs.
The Company's contribution/expenditure towards constructional development of assets on land owned by Government/Semi-Government authorities, is capitalised under appropriate assets account.
Grants-in-aid related to specific fixed assets are shown as deduction from the gross value of the assets concerned in arriving at their book value.
1.2 DEPRECIATION Depreciation is provided on Straight Line Method with respect to the month of addition/disposal of the respective assets. Depreciation on following assets is based on the management's estimate of the useful life of the assets, at the rates (which are higher than Schedule XIV rates) shown against each item below:
Earth-moving Equipments 15% Miscellaneous Equipments 10% Motor Cars 20% Motor Buses, Trucks 15% Furniture & Fittings 10% Library Books 20% Aircrafts 16%
Depreciation on other assets is provided as per the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.
Depreciation on buildings, roads, bridges and culverts capitalised upto 31.3.87 has been charged at the rates derived from those specified in the Income Tax Rules, as applicable in the year of their addition. Depreciation on such assets, capitalised since 1.4.87, has been provided at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 on Straight Line Method.
Depreciation is charged on roads, bridge and culverts from 1.4.83.
Cost of acquiring mining rights is amortised over the lease period.
1.3 INVESTMENTS Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in subsidiary Companies are carried in the financial statements at cost. In respect of other long-term and unquoted investments, which are valued at cost, provision for diminution is made to recognise a decline, other than temporary, on individual investment basis.
1.4 INVENTORIES Semi/Finished products, other than Ingots and Slabs meant for rolling in the plants, are valued at lower of cost or realisable value of the respective plants. Ingots and Slabs meant for rolling in the plants are valued at cost. The cost of manufactured semi/finished products, is determined on the basis of annual average cost of production.
Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
Wear scrap lying unconsumed at plant is valued at realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto the stage of process.
In respect of inter-unit transfers: (i) The closing stock of semi/finished products is valued at lower of cost or realisable value of the transfer or plant (ii) Stores and spares are valued at cost of the transfer or plant (iii)The raw-materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and stores and spares not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
Stock of mixed coke and middlings/rejects is valued at net realisable value.
1.5 DEVELOPMENT!DEFERRED REVENUE EXPENDITURE Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how / documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical knowhow/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Expenditure on Voluntary Retirement Compensation is treated as deferred revenue expenditure and is written off in five years irrespective of the remaining service period of an employee.
Deferred Revenue Expenditure relating to capital schemes are written-off in five years from the date of commercial production. Other deferred revenue expenditure are written off in five years.
1.6 FOREIGN CURRENCY TRANSACTIONS Foreign currency assets and liabilities as on the Balance Sheet date, are converted at the year-end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of assets or charged to Profit & Loss Account, as the case may be.
Depreciation on such adjustments to fixed assets is adjusted prospectively.
1.7 RESEARCH & DEVELOPMENT EXPENDITURE Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.8 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION Claims for liquidated damages are taken as income when these are deducted and/or considered recoverable by the Company. Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.9 RETIREMENT BENEFITS 1.9.1 The provision for gratuity liability is made on the basis of actuarial valuation.
1.9.2 Leave encashment liability towards employees is provided on actuarial valuation. Such liability upto 31st March, 1995, has been deferred, to be charged over the expected remaining working lives of the employees.
1.10 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of the current year.
1.11 SALES Materials sold in domestic market are treated as sales on delivery to carriers. Export sales are treated as sales on issue of Bills of lading.
1.12 EXPORT INCENTIVES The benefit of Special/Advance Licences against exports is availed of by the Company either through import of materials at nil/ concessional import duty or through sale of such licences, as and when sold.
Mar 31, 1996
FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued nationally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land, is capitalised as a part of the cost of land.
Interest on loans for Additions, Modifications and Replacement Schemes is capitalised, based on the mean of the balances under 'Capital work-in-progress' at the beginning and the close of the year under each scheme.
Fixed assets whose actual costs cannot be accurately ascertained, are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made retrospectively on ascertainment of actual costs.
The Company's contribution/expenditure towards construction/development of assets on land owned by Government/Semi-Government authorities, is capitalised under suitable assets account.
Grants-in-aid received against cost of fixed assets are credited to 'Capital Reserve' and proportionate depreciation thereon, is transferred to Profit & Loss Account from capital reserve over the life of the assets.
DEPRECIATION
Depreciation is provided on straight line method with respect to the month of addition/disposal of the respective assets.
Depreciation on following assets is based on the management's estimate of the useful life of the assets, at the rates (which are higher than Schedule XIV rates) shown against each item below:
Earth moving equipments 15% Miscellaneous equipments 10% Motor Cars 20% Motor Buses, Trucks 15% Furniture & Fittings 10% Library Books 20% Aircrafts 16%
Depreciation on other assets is provided as per the rates and in the manner specified in Schedule XIV to the Companies, Act, 1956.
Depreciation on buildings, roads, bridges and culverts capitalised upto 31.3.87 has been charged at the rates derived from those specified in the Income Tax Rules, as applicable in the year of their addition. Depreciation on such assets, capitalised since 1.4.87, has been provided at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 on straight line method.
Depreciation is charged on roads, bridges and culverts from 1.4.83.
Cost of acquiring mining rights is amortised over the lease period.
INVESTMENTS
Investments held/intended to be held for a period exceeding one year are classified as long term investments, while other investments are classified as current investments.
Current quoted investments are valued at lower of cost or market value on individual investment basis.
Investments in Subsidiary Companies are carried in the financial statements at cost. In respect of other long-term and unquoted investments, which are valued at cost, provision for diminution is made to recognise a decline, other than temporary, on individual investment basis.
INVENTORIES
Semi/Finished products, other than ingots and Slabs (Rollable), are valued at lower of cost or realisable value of the respective plants. Ingots and Slabs(Rollable) are valued at cost. The cost of manufactured semi/finished products, is determined on the basis of annual average cost of production.
Raw-materials are valued at cost.
Iron scrap and steel/skull scrap at the integrated plants are valued at 75% and 90% respectively of the previous year's realisable value of pig iron.
Wear scrap lying unconsumed at plant is valued at realisable value.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of process materials is arrived at by applying the ratio of finished products realisable value and its cost, to the cost upto the stage of process.
In respect of inter-unit transfers: (i) the closing stock of semi/finished products is valued at lower of cost or realisable value of the transferor plant (ii) Stores and spares are valued at cost of the transferor plant (iii) The raw-materials at plants are valued at average of purchase cost and transfer price. In respect of Bhilai Steel Plant, which has mines attached to it, the average of purchase cost and production cost is adopted.
Stores and spares are valued at cost. However, in the case of stores and spares declared obsolete/surplus and stores and spares not moved for five years or more, provision is made at 75% and 10% respectively of the book value and charged to revenue.
Stock of mixed coke is valued at net realisable value. Stock of middlings/rejects is valued at Government notified "G" grade coal price.
1.5 DEVELOPMENT/DEFERRED REVENUE EXPENDITURE
Expenditure incurred on development of new projects, removal of over-burden at mines, cost of feasibility studies for new projects and payments for technical know-how/ documentation is treated as development expenditure.
Expenditure incurred on removal of over-burden in mines is written off in five years. Expenditure on feasibility studies, technical know-how/documentation and other development expenditure is added to the capital cost of the project, if implemented. In case the project is abandoned, such expenses are written off in five years.
Expenditure on Voluntary Retirement Compensation is treated as deferred revenue expenditure and is written off in five years irrespective of the remaining service period of an employee.
Other deferred revenue expenditure are written off in five years.
1.6 FOREIGN CURRENCY TRANSACTIONS
Foreign currency assets and liabilities as on the Balance Sheet date, are converted at the year-end exchange rates and loss or gain arising thereon, is adjusted in the carrying amount of fixed assets or charged to Profit & Loss Account, as the case may be. Depreciation on such adjustments to fixed assets is adjusted prospectively.
1.7 RESEARCH & DEVELOPMENT EXPENDITURE
Research and Development Expenditure is charged to Profit and Loss Account in the year of incurrence. However, expenditure on fixed assets relating to research and development, is treated in the same way as other fixed assets.
1.8 CLAIMS FOR LIQUIDATED DAMAGES/ESCALATION
Claims for liquidated damages are taken as income when these are deducted and/or considered recoverable by the company.
Suppliers'/Contractors' claims for price escalation are accounted for, to the extent such claims are accepted by the Company.
1.9 RETIREMENT BENEFITS
1.9.1 The provision for gratuity liability is made on the basis of actuarial valuation.
1.9.2 Leave encashment liability towards employees is provided on actuarial valuation. Such liability upto 31st March, 1995, has been deferred, to be charged over the expected remaining working lives of the employees.
1.10 ADJUSTMENTS PERTAINING TO EARLIER YEARS AND PREPAID EXPENSES
Income/expenditure relating to prior period and prepaid expenses which do not exceed Rs.5 lakhs in each case, are treated as income/expenditure of the current year.
1.11 SALES
Materials sold in domestic market are treated as sales on delivery to carriers. Export sales are treated as sales on issue of Bills of lading.
1.12 EXPORT INCENTIVES
The benefit of Special/Advance Licences against exports is availed of by the Company either through import of materials at nil/ concessional import duty or through sale of such licences, as and when sold.
Mar 31, 1995
1.1 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued notionally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land is capitalised as part of the cost of land.
Interest on loans for Additions, Modifications and Replacement Schemes is capitalised based on the mean of the balances under 'Capital work-in-progress' at the beginning and the close of the year under each scheme.
Capitalisation out of inter-unit transfers is made at transfer prices and the related difference between transfer prices and cost is not quantified and adjusted in the accounts.
Where the actual cost of fixed assets cannot be accurately ascertained, such assets are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made on ascertainment of actual costs, retrospectively.
The Company's contribution/expenditure towards construction/development of assets on land owned by others and lease-hold land is capitalised under suitable assets account.
Grants-in-aid received against capital cost of fixed assets are credited to 'capital reserve' and proportionate depreciation thereon to the extent identified is transferred to Profit & Loss Account from capital reserve over the life of the assets.
1.2 DEPRECIATION
Depreciation is provided on straight line method.
Depreciation on following assets is based on the management's estimate of the useful life of the assets at the rates (which are higher than Schedule XIV rates) shown against each:
Earth moving equipments 15% Miscellaneous equipment 10% Motor Cars 20% Motor Buses, Trucks 15% Furniture & Fittings 10% Library Books 20% Aircrafts 16%
Depreciation on other assets is provided as per the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.
Depreciation on building, roads, bridges and culverts capitalised upto 31.3.87 have been charged at the rates derived from those specified in the Income Tax Rules, as applicable in the year of their addition and depreciation on such assets, capitalised since 1.4.87, has been provided in accordance with the rates and manner specified in Schedule XIV of the Companies Act, 1956 on straight line method.
Depreciation is charged on roads, bridges and culverts from 1.4.83.
Cost of acquiring mining rights is amortised over the lease period.
1.6 FOREIGN CURRENCY TRANSACTIONS
Loan balances and deposits in foreign currency are converted at the year-end market exchange rate. Loss or gain on conversion of foreign currency liabilities incurred for acquisition of fixed assets is added to or deducted from the cost of respective assets and depreciation is adjusted prospectively.
Mar 31, 1994
1.1 FIXED ASSETS
All fixed assets are stated at historical cost less depreciation.
Land gifted by the State Governments is valued nationally/nominally and the corresponding amount is credited to 'Capital Reserve'. The expenditure on development of land including lease-hold land is capitalised as part of the cost of land.
Interest on loans for Additions, Modifications and Replacement Schemes is capitalised based on the mean of the balances under 'Capital Work-in- progress' at the beginning and the close of the year under each scheme.
Capitalisation out of inter-unit transfers is made at transfer prices and the related difference between transfer prices and cost is not quantified and adjusted in the accounts.
Where the actual cost of fixed assets cannot be accurately ascertained, such assets are initially capitalised on the basis of estimated costs and final adjustments for costs and depreciation, if any, are made on ascertainment of actual costs, retrospectively.
The Company's contribution/expenditure towards construction/development of assets on land owned by others and lease-hold land is capitalised under suitable assets account.
Grants-in-aid received against capital cost of fixed assets are credited to 'capital reserve' and proportionate depreciation thereon to the extent identified is transferred to Profit & Loss Account from capital reserve over the life of the assets.
1.2 DEPRECIATION
Depreciation is provided on straight line method,
The following assets are, depreciated based on the management's estimate of the useful life of the assets at the rates shown against each
Earthmoving Equipment 15% Miscellaneous Equipment 10% Motor Cars 20% Motor Buses, Trucks 15% Furniture & Fittings 10% Library Books 20% Aircrafts 16%
Consequent upon revision of depreciation rates vide circular no. 14/93 of Department of Company Affairs, depreciation on Plant & Machinery items capitalised upto 31.3,93 (other than those depreciated upto 95%) has been calculated by recomputing the life of Plant & Machinery based on the revised rate and allocating the un-amortized value over the remaining part of the recomputed life.
Assets costing upto Rs. 5,000/- are depreciated in full, in the year of purchase installation/capitalisation.
Depreciation on all assets other than stated above capitalised upto 31.3.87 had been charged at the rates derived from those specified in the Income Tax Rules, as applicable in the year of their addition. On assets capitalised since 1.4.87, depreciation had been provided in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956, on straight line method. Depreciation is charged on roads, bridges and culverts only from 1.4.83.
Cost of acquiring mining rights is amortised over the lease period.
1.3 INVESTMENTS
Investments are valued at cost. No provision is made for (i) the shortfall in the value of investments, if any, in the companies having accumulated losses and for (ii) losses being incurred by subsidiary companies.
1.4 INVENTORIES
Semi/Finished products, other than Ingots and Slabs (Rollable) lying at plant, are valued at lower cost or realisable value of the respective plants. Ingots and Slabs (Rollable) are.valued at cost. The cost of manufactured semi/finished products, including Ingots, is determined on the basis of annual average cost of production. Iron scrap and Steel/Skull scrap at the integrated plants are valued at 75% and 90% respectively of the previous year's realisable value of Pig Iron. Wear scrap lying unconsumed at plant is valued at realisable value. Raw materials at Mines are valued at cost.
In the case of special products, which have a realisable value at the finished stage only, the realisable value of the in-process materials is arrived at by applying the ratio of finished product's realisable value and its cost, to the cost upto f he stage of process.
In respect of inter-unit transfers, the closing stock of semi/finished products are valued at lower of the previous year's cost or realisable value of the transferor plant and stores and spares are- valued by the transferee plant at cost to the extent practicable. The raw-materials at plants are valued at an average of purchase cost and transfer price except at Bhilai Steel Plant, where average of purchase cost and cost of production is adopted.
Stores and spares are valued at cost. However, in the case of stores a nd spares declared surplus and stores and spares not moved for five years or more, provision is made at 759%o and 100%o of book value respectively and charged to revenue,
Stock of mixed coke and middlings, rejects, etc. is valued at net realisable value. However, stock of middlings and rejects out of arisings upto 31.3.90 is valued at Government notified "G" grade coal price.
1.6 FOREIGN CURRENCY TRANSACTIONS
Loan balances and deposits in foreign currency are converted at the year-end at market exchange rate.
Loss or gain on conversion of foreign currency liabilities incurred for acquisition of fixed assets are added to or deducted from the cost of respective assets and depreciation is adjusted prospectively.
The stock of scrap at the plants has been physically verified. In case of some plants it has been considered in the accounts on the basis of visual survey/estimate,
Mar 31, 1993
Depreciation :
Depreciation is provided on straight line method.
Depreciation on assets capitalised up to 31.3.87 has been charged
at the rates derived from those provided in the Income Tax Rules,
as applicable in the year of addition. Depreciation on assets
capitalised subsequent to 31.3.87 is being charged at the rates
provided in the Schedule-XIV to the Companies Act, 1956. Depreciation
is charged on roads, bridges and culverts only from 1.4.83.
The following assets are depreciated based on the management's
estimate of the useful life of the assets at the rates shown against
each :
Earth moving equipment - 15%
Miscellaneous equipment 10%
Motor Cars 20%
Motor Buses, Trucks 15%
Furniture & Fittings 10%
Library Boosk 20%
Aircrafts 16%
Plant & machinery costing Rs. 5000/- and less are depreciated in full and miscellaneous items costing Rs. 1000/- and less are charged off to revenue in the year of acquisition.
Extra shift depreciation is provided considering a particular plant/mill as one unit. Foreign Currency Transactions Loan balances and deposits in foreign currency are converted at the year-end market exchange rate.
Loss or gain on conversion of foreign currency liabilities incurred for acquisition of fixed assets are added to or deducted from the cost of respective assets.
Sales The materials sold on FOR destination basis are treated as sales when goods are delivered to the Railways.
Mar 31, 1992
Depreciation is provided on straight line method.
Depreciation on assets capitalised up to 31.3.87 has been charged
at the rates derived from those provided in the Income Tax Rules,
as applicable in the year of addition. Depreciation on assets
capitalised subsequent to 31.3.87 is being charged at the rates
provided in the Schedule-XIV to the Companies Act, 1956. Depreciation
is charged on roads, bridges and culverts only from 1.4.83.
The following assets are depreciated based on the management's
estimate of the useful life of the assets at the rates shown against
each :
Earth moving equipment - 15%
Miscellaneous equipment 10%
Motor Cars 20%
Motor Buses, Trucks 15%
Furniture & Fittings 10%
Library Boosk 20%
Aircrafts 16%
Plant & machinery costing Rs. 5000/- and less are depreciated in full and miscellaneous items costing Rs. 1000/- and less are charged off to revenue in the year of acquisition.
Extra shift depreciation is provided considering a particular plant/mill as one unit. Foreign Currency Transactions Loan balances and deposits in foreign currency are converted at the year-end market exchange rate.
Sales The materials sold on FOR destination basis are treated as sales when goods are delivered to the Railways.
Mar 31, 1991
DEPRECIATION
Assets acquired before 2.4.1987
Depreciation is continued to be provided on straight line method at the rates specified below which are higher of the rates approved by the Board on technical assessment of useful life of assets or the rates prescribed under the provision of the Income Tax Act, 1961.
TYPE OF ASSETS Rate of Depreciation Building R.C.C.Structure 2.5% to 5% Others 8% to 10% Roads & Culverts 10% Compound Walls 20% Drainage, Effluent and Pollution Control System Drainage 5% Effluent System 12% Pollution Control System 24% Water Supply System 5% Chemicals & Utility plants 11% R &D Plants 11% Electrical Installation etc 5% to 15% Furniture and other equipments 5% to 15% Railways Sidings 6% Vehicles 8% to 12% Library Books 10% Energy Saving Devices 95%
Five percent of the value of assets is retained in the books as residual value in case of assets sold or disposed off, depreciation is charged upto the end of the month in which the same are sold/disposed off.
ASSETS ACQUIRED ON OR AFTER 2.4.1987 Depreciation is provided on straight line method in accordance with Schedule XIV to the Companies Act, 1956, except in the case of energy saving devices, where depreciation has been provided @ 95%. per annum.
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