Mar 31, 2023
1. Corporate Information
Electrosteel Castings Limited (''the Company'') is a public limited company in India having its corporate office in Kolkata in the State of West Bengal and registered office at Rajgangpur, District: Sundergarh in the State of Odisha and is engaged in the manufacture and supply of Ductile Iron (DI) Pipes, Ductile Iron Fittings (DIF) and Cast Iron (CI) Pipes as its core business. It also produces Pig Iron, Metallurgical Coke, Sponge Iron, Sinter, Cement, Ferro products, Paint and Power mainly for captive consumption. The manufacturing activities of the company are spread over five different locations situated at Khardah, Haldia, Bansberia, Srikalahasthi and Elavur. The company caters to the needs of Water Infrastructure Development.
Hon''ble National Company Law Tribunal, Cuttack Bench (NCLT) vide their order dated December 09, 2021 had sanctioned the scheme of amalgamation ("the scheme") between the Electrosteel Castings Limited ("Company" or "the transferee Companyâ) and Srikalahasthi Pipes Limited ("Transferor Company â or the "SPL") and their respective shareholders and creditors for the amalgamation of SPL with the Company with effect from the appointed date i.e. October 1,2020. The Company''s shares are listed on National Stock Exchange of India Limited and BSE Limited. The Board of Directors have approved the financial statements for the year ended March 31,2023 on May 17, 2023.
2. Recent Accounting Developments2.1 Application of new and revised standards:
Effective April 01,2022, the company has adopted the amendments vide Companies (Indian Accounting Standard) Amendment Rules, 2022 notifying amendment to existing Ind AS. These amendments to the extent relevant to the company''s operation were relating to Ind AS 16 "Property, Plant and Equipmentâ which clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment and Ind AS 37 "Provisions, Contingent Liabilities and Contingent Assetsâ which specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
There were other amendments in various standards including Ind AS 101 "First-time Adoption of Indian Accounting Standardsâ Ind AS 103 "Business Combinationsâ Ind AS 109 "Financial Instrumentsâ, and Ind AS 41 "Agricultureâ which have not been listed herein above since these are not relevant to the company.
Revision in these standards did not have any material impact on the profit/loss and earning per share for the year.
2.2 Recent accounting pronouncements:
On March 31,2023, Ministry of Corporate Affairs (MCA) has made certain amendments to existing Ind AS vide Companies (Indian Accounting Standard) Amendment Rules, 2023. These amendments to the extent relevant to the company''s operation include amendment to Ind AS 1 "Presentation of Financial Statementsâ which requires the entities to disclose their material accounting policies rather than their significant accounting policies, Ind AS 8 "Accounting Policies, Changes in Accounting Estimates and Errorsâ which has introduced a definition of ''accounting estimates'' and include amendments to help entities distinguish changes in accounting policies from changes in accounting estimates . Further consequential amendments with respect to the concept of material accounting policies have also been made in ", Ind AS 107 "Financial Instruments: Disclosuresâ and Ind AS 34 "Interim Financial Reportingâ.
There are other amendments in various standards including Ind AS 101 "First-time Adoption of Indian Accounting Standardsâ Ind AS 103 "Business Combinations, Ind AS 109 "Financial Instruments " Ind AS 115 "Revenue from Contracts with Customersâ, Ind AS 12 "Income Taxesâ which has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences and Ind AS 102 "Share-based Paymentâ which have not been listed herein above since these are not relevant to the company.
Even though the company will evaluate the impact of above, none of these amendments as such are vital in nature and are not likely to have material impact on the financial statements of the company.
3. Statement of compliance and Significant Accounting Policies3.1 Statement of Compliance
These financial statements, excepting as stated in note no. 48, have been prepared in accordance with Indian Accounting Standards (referred to as "Ind ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the
Companies Act, 2013 ("the Actâ). The Company has complied with Ind AS issued, notified and made effective till the date of authorisation of the financial statements.
Accounting Policies have been consistently applied except where a newly issued Indian Accounting Standard is initially adopted or a revision to an existing Indian Accounting Standard requires a change in the accounting policy hitherto in use.
The Financial Statements have been prepared under the historical cost convention on accrual basis except for -
a) certain financial instruments that are measured in terms of relevant Ind AS at fair value/ amortized cost at the end of each reporting period;
b) certain class of Property, Plant and Equipment which on the date of transition have been fair valued to be considered as deemed costs; and
c) Defined benefit plans - Plan Assets measured at fair value.
Historical cost convention is generally based on the fair value of the consideration given in exchange for goods and services.
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Ind AS-1 ''Presentation of Financial Statements'' and Schedule III to the Companies Act, 2013. Having regard to the nature of business being carried out by the Company, the Company has determined its operating cycle as twelve months for the purpose of current and noncurrent classification.
The functional currency of the Company is determined as the currency of the primary economic environment in which it operates. The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest two decimal lakhs except otherwise stated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed for such measurement:
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within level 1 that are observable, either directly or indirectly for the asset or liability. Level 3 : Inputs for the asset or liability which are not based on observable market data (unobservable inputs).
The company has an established control framework with respect to the measurement of fair value. This includes a finance team that has overall responsibility for overseeing all significant fair value measurements who regularly review significant unobservable inputs, valuation adjustments and fair value hierarchy under which the valuation should be classified.
3.2 Property Plant and Equipment (PPE)
Property, plant and equipment are stated at cost of acquisition, construction and subsequent improvements thereto less accumulated depreciation and impairment losses, if any. For this purpose cost include deemed cost on the date of transition i.e. PPE which have been fair valued on transition to be considered as deemed cost and comprises purchase price of assets or its construction cost including duties and taxes (net of input tax credit availed), inward freight and other expenses incidental to acquisition or installation, adjustment for exchange differences wherever applicable and any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended for its use. In addition interest on borrowing to finance the construction of qualifying assets is capitalised as a part of the assets cost until such time the asset is ready for it''s intended use. Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized.
Parts of an item of PPE having different useful lives and material value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the Statement of Profit and Loss when incurred. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
Capital Work-in-progress includes project development expenses, equipments to be installed, construction and erection materials etc. Such costs are added to the related items and are classified to the appropriate categories of PPE when completed and ready for intended use.
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 March 31,2009 (as amended on December 29, 2011), which will be continued in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at March 31,2016. Accordingly, exchange differences relating to long term monetary items, in so far as they relate to the acquisition of PPE, were adjusted in the carrying amount of such assets.
Depreciation on PPE except as stated below, is provided as per Schedule II of the Companies Act, 2013 on straight line method. In the following cases depreciation has been provided on written down value method using the rates arrived at based on the useful life as specified in Schedule II of the Companies Act 2013 :
- Entire PPE at Elavur unit and
- Entire PPE at Khardah, Haldia and Bansberia unit excluding plant and equipment and office equipments.
Certain plant and equipments have been considered Continuous Process Plant on the basis of technical assessment. Depreciation on upgradation of Property, Plant and Equipment is provided over the remaining useful life of the entire component/ PPE.
Assets costing rupees five thousand or less are being depreciated fully in the year of addition/acquisition.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
In case the cost of part of tangible asset is significant to the total cost of the assets and useful life of that part is different from the remaining useful life of the asset, depreciation has been provided on straight line method based on internal assessment and independent technical evaluation carried out by external valuers, which the management believes that the useful lives of the component best represent the period over which it expects to use those components.
Railway siding constructed on Government land is amortised over the period of 10 years in terms of agreement.
Depreciation on Property, Plant and Equipments commences when the assets are ready for their intended use. Based on above, the useful life as estimated for other assets considered for depreciation are as follows :
Category |
Useful life |
Buildings |
|
Non-Factory Building (RCC Frame Structure) |
60 Years |
Factory Building |
30 Years |
Roads |
|
Carpeted Roads-RCC |
10 Years |
Carpeted Roads-other than RCC |
5 Years |
Non-Carpeted Roads |
3 Years |
Plant and machinery |
|
Other than Continuous Process Plant |
15 Years |
Sinter Plant, Blast Furnace, Coke Oven |
20 Years |
Coke Oven Battery Relining |
5 Years |
Blast Furnace Relining |
2 to 6 Years |
Pipe Moulds (specified size) |
3 to 15 Years |
Power Plant |
40 Years |
Computer equipment |
|
Servers and networks |
6 Years |
Others |
3 Years |
Category |
Useful life |
Furniture and fixtures, Electrical Installation and Laboratory Equipment''s |
10 Years |
Office equipment |
5 Years |
Vehicles |
|
Motor cycles, scooters and other mopeds |
10 Years |
Others |
8 Years |
Right to use wagons acquired under "Wagon Investment Schemeâ, cost of computer software packages (ERP and others) and mining rights are allocated / amortized over a period of 10 years, 5 years and available period of mining lease respectively.
Depreciation/ Amortisation methods, useful life and residual values are reviewed and adjusted as appropriate, at each reporting date.
Intangible assets are stated at cost of acquisition/ deemed cost on transition date comprising of purchase price inclusive of duties and taxes (net of input tax credit) less accumulated amortization and impairment losses.
Expenditure incurred on research and development are not capitalized but are charged as expense in the statement of profit and loss in the period in which such expenditure is incurred.
(i) Company as a lessee
The Company''s lease asset classes primarily consist of leases for Land, Buildings and Plant and Equipment. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether :
1. the contract involves the use of an identified asset
2. the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
3. the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset ("ROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options considered for arriving at ROU and lease liabilities when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the company changes its assessment if whether it will exercise an extension or a termination option. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
(ii) Company as a lessora. Finance Lease
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.
b. Operating Lease
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease except where scheduled increase in rent compensates the Company with expected inflationary costs.
3.5 Derecognition of Tangible and Intangible assets
An item of PPE/ ROU/ Intangible Asset is de-recognised upon disposal or when no future economic benefits are expected to arise from its use or disposal. Gain or loss arising on the disposal or retirement of an item of PPE/ Intangible Assets is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
3.6 Impairment of Tangible/ Intangible and ROU Assets
Tangible/ Intangible and ROU assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of assets is determined. An impairment loss is recognized in the statement of profit and loss, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the higher of assets'' fair value less cost of disposal and its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate.
Impairment losses recognized earlier may no longer exist or may have come down. Based on such assessment at each reporting period the impairment loss is reversed and recognized in the Statement of Profit and Loss. In such cases the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years that reflects current market assessments of the time value of money and the risk specific to the asset.
Financial assets and financial liabilities (financial instruments) are recognised when the company becomes a party to the contractual provisions of the instruments. The company determines the classification of its financial assets and financial liabilities at initial recognition based on its nature and characteristics.
The company categorizes financial assets and financial liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed for such measurement :
Level 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within level 1 that are observable, either directly or indirectly for the asset or liability. Level 3 : Inputs for the asset or liability which are not based on observable market data (unobservable inputs).
I. Initial Recognition and measurement
The financial assets include investments, trade receivable, loans and advances, cash and cash equivalents, bank balances other than cash and cash equivalents, derivative financial instruments and other financial assets.
Financial assets are initially measured at fair value. Transaction costs directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or are deducted from the fair value of the financial assets as appropriate in initial recognition. However, trade receivable that do not contain a significant financing component are measured at transaction price.
For the purpose of subsequent measurement, financial assets are classified in the following categories:
(i) at amortised cost,
(ii) at fair value through other comprehensive income (FVTOCI), and
(iii) at fair value through profit or loss (FVTPL).
Financial Assets at amortised cost
A ''financial Asset'' is measured at the amortised cost if the following two conditions are met:
(i) The asset is held within a business whose objective is to hold these assets in order to collect contractual cash flows and
(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Amortised Cost is determined using the Effective Interest Rate ("EIRâ) method. Discount or premium on acquisition and other fees or costs forms an integral part of the EIR.
Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held both for collection of contractual cash flows and for selling the financial assets, and contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest.
Financial Assets at Fair value through profit or loss (FVTPL)
Financial Assets which does not meet the criteria of amortised cost or fair value through other comprehensive income are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the Consolidated Statement of profit and loss.
Equity instruments in the Scope of Ind AS 109 are measured at FVTPL except for investments in Subsidiaries and Joint Ventures.
The company makes an election to present changes in fair value through other comprehensive income or through profit or loss on instrument-by instrument basis. The classification is made on initial recognition and is irrevocable.
In case the company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. In addition, profit or loss arising on sale is taken to other comprehensive income. The amount accumulated in this respect is transferred within the Equity on derecognition.
The company derecognizes a financial asset or a group of financial assets when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
B. Financial Liabilities
I. Initial Recognition and measurement
The financial liabilities include trade and other payables, loan and borrowings including book overdraft, derivative financial instruments and other financial liabilities.
Financial liabilities are initially measured at fair value. Transaction costs directly attributable to the acquisition or issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are added to or are deducted from the fair value of the financial liabilities as appropriate in initial recognition.
II. Subsequent measurement
For the purpose of subsequent measurement, financial liabilities are classified in the following categories:
(i) at amortised cost, and
(ii) at fair value through profit or loss (FVTPL).
Financial Liabilities at amortised cost
After initial recognition, financial liabilities are measured at amortized cost using Effective Interest Rate (EIR) method. When the financial liabilities are derecognised, gain or losses are recognised in profit or loss. Discount or premium on acquisition and other fees or costs forms an integral part of the EIR.
Financial Liabilities at Fair value through profit or loss (FVTPL)
Financial Liabilities which does not meet the criteria of amortised cost are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the Consolidated Statement of profit and loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
C. Derivative and Hedge Accounting
Initial Recognition and Subsequent measurement
The company enters into derivative financial instruments such as foreign exchange forward, swap and option contracts to mitigate the risk of changes in foreign exchange rates in respect of financial instruments and forecasted cash flows denominated in certain foreign currencies. The company uses hedging instruments which provide principles on the use of such financial derivatives consistent with the risk management strategy of the company. The hedge instruments are designated and documented as hedges and effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis.
Any derivative that is either not designated as a hedge, or is so designated but is ineffective as per Ind AS 109 "Financial Instrumentsâ, is categorized as a financial asset/ financial liability, at fair value through profit or loss. Transaction costs attributable are also recognized in Statement of profit and loss. Changes in the fair value of the derivative hedging instrument designated as a fair value hedge are recognized in the Consolidated Statement of profit and loss.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and presented within equity as cash flow hedging reserve to the extent that the hedge is effective.
Hedging instrument which no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity remains therein till that time and thereafter to the extent hedge accounting being discontinued is recognised in Statement of profit and loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the Consolidated Statement of profit and loss.
D. Financial Guarantee Contracts
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of Ind AS 109 and the amount recognized less cumulative amortization.
E. Offsetting financial instruments
Financial assets and liabilities including derivative financial instruments are offset and the net amount is reported in the balance sheet where 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 in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
F. Impairment of financial assets
A financial asset is assessed for impairment at each balance sheet date. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. The company recognises loss allowances using the Expected Credit Loss ("ECLâ) model for financial assets measured at amortised cost.
The company recognises lifetime expected credit losses for trade receivables. Loss allowance equal to the lifetime expected credit losses are recognised if the credit risk on that financial asset has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on ''weighted average'' basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be sold at or above cost.
Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods and process stock represents direct and indirect cost for bringing the inventory to present situation and condition including cost of material plus costs of conversion, comprising of labour costs and an attributable proportion of manufacturing overheads based on normal levels of activity.
Cost in respect of work-in-progress represents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company.
By Products are valued at net realizable value.
Net Realizable Value is the estimated selling price in the ordinary course of business less estimated cost of completion and the estimated cost necessary to make the sale.
3.9 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency at the exchanges rate prevailing on the dates of the transactions. Foreign currency monetary assets and liabilities at the reporting date are translated at the reporting date exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are generally recognized in profit or loss in the year in which they arise except for exchange differences on foreign currency borrowings relating to qualifying assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is presented in the Statement of Profit and Loss within finance costs.
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 March 31,2009 (as amended on December 29, 2011), which will be continued in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at March 31,2016. Accordingly, exchange differences relating to long term monetary items, were in so far as they relate to the acquisition of fixed assets, were adjusted in the carrying amount of such assets.
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Par value of the equity shares is recorded as share capital and the amount received in excess of par value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
3.11 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities are not recognized and are disclosed by way of notes to the financial statements when there is a possible obligation arising from past events, 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 when there is a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle the same or a reliable estimate of the amount in this respect cannot be made.
When there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made.
Contingent assets are not recognised but disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
Employee benefits are accrued in the year in which services are rendered by the employee.
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period.
Other Long Term Employee Benefits
The cost of providing long term employee benefits consisting of leave encashment that are not expected to be settled wholly within twelve months are measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.
Post Employment Benefits
The Company operates the following post employment schemes:
The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Premeasurements of the net defined benefit obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
Defined contribution plans such as provident fund etc. are charged to the statement of profit and loss as and when incurred. Contribution to Superannuation fund and National Pension Scheme, a defined contribution plan is made in accordance with the company''s policy and is recognised in the Statement of profit and loss.
3.13 Operating and Other Incomei. Revenue from Sale of Products
Revenue from contracts with customers is accounted for only when it has commercial substance, and all the following criteria are met: (i) parties to the contract have approved the contract and are committed to perform their respective obligations;
(ii) each party''s rights regarding the goods or services to be transferred and payment terms there against can be identified;
(iii) consideration in exchange for the goods or service to be transferred is collectible and determinable.
Revenue from contract with customers is recognized on satisfaction of performance obligation, when control over the goods or services has been transferred and/or goods/ services are delivered/ provided to the customer. Delivery occurs when the goods have been shipped or delivered to a specific location, and the customer has either accepted the goods under the contract or the company has sufficient evidence that all the criteria for acceptance have been satisfied.
Revenue is measured at the amount of transaction price (consideration specified with the customers) allocated to that performance obligation. The transaction price of goods sold is net of variable consideration on account of rebates, claims and discounts, returns and value added tax. Goods and Service Tax (GST) and such other taxes collected on behalf of third party not being economic benefits flowing to the company are excluded from revenue. Accumulated experience is used to estimate and provide for the discounts/ right of return, using the expected value method.
A refund liability is recognized for expected returns in relation to sales made corresponding assets are recognized for the products expected to be returned.
The company recognises as an asset, the incremental costs of obtaining a contract with a customer, if the company expects to recover those costs. The said asset is amortised on a systematic basis consistent with the transfer of goods or services to the customer.
ii. Interest, Dividend and Claims
Dividend income is recognized when the right to receive payment is established. Interest has been accounted using effective interest rate method. Insurance claims/ other claims are accounted as and when admitted / settled.
iii. Export Benefits
Export incentives are accounted for in the year of export if the entitlements and realis ability thereof can be estimated with reasonable accuracy and conditions precedent to such benefit is fulfilled.
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs general or specific are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
3.15 Non-current assets (or disposal groups) held for sale
Non-current assets held for sale are presented separately in the balance sheet when the following criteria are met:
- the Company is committed to selling the asset;
- the assets are available for sale immediately;
- an active plan of sale has commenced; and
- Sale is expected to be completed within 12 months.
Assets held for sale and disposal groups are measured at the lower of their carrying amount and fair value less cost to sell. Assets held for sale are no longer amortised or depreciated.
Non-current asset classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a Noncurrent asset classified as held for sale are presented separately from other liabilities in the balance sheet.
Government grants are recognized on systematic basis when there is reasonable certainty of realization of the same. Revenue grants including subsidy/rebates are credited to Statement of Profit and Loss Account under "Other Operating Incomeâ or deducted from the related expenses for the period to which these are related. Grants which are meant for purchase, construction or otherwise acquire non current assets are recognized as Deferred Income and disclosed under Non Current Liabilities and transferred to Statement of Profit and Loss on a systematic basis over the useful life of the respective asset. Grants relating to non-depreciable assets is transferred to Statement of Profit and Loss over the periods that bear the cost of meeting the obligations related to such grants.
Income tax expense representing the sum of current tax expenses and the net charge of the deferred taxes is recognized in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.
Current income tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and adjusted to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Basic earnings per share are computed by dividing the net profit/(loss) attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
Operating segments are identified and reported taking into account the in the different risk and return, organisation structure and in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments, financial results, forecasts or plan for the segment and accordingly is identified as the chief operating decision maker.
The Company has identified one reportable segment "Pipes and all other activities revolve around the main businessâ based on the information reviewed by the CODM.
Common control business combination where the Company is transferee, is accounted using the pooling of interest method. Assets and liabilities of the combining entities are reflected at their carrying amounts and no new asset or liability is recognised other than those adjustments that are made are to harmonise accounting policies. Identity of reserves of the transferor company is preserved by reflecting them in the same form in the Company''s financial statements in which they appeared in the financial statement of the transferor company. The excess between the amounts of consideration paid over the share capital of the transferor company is recognised and disclosed as capital reserve on business combination.
The financial information in the financial statements in respect of prior periods is restated from the beginning of the preceding period in the financial statements if the business combination date is prior to that date. However, if business combination date is after that date, the financial information in the financial statements is restated from the date of business combination.
4. Critical accounting judgments, assumptions and key sources of estimation and uncertainty
The preparation of the financial statements in conformity with the measurement principle of Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts
of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized and, if material, their effects are disclosed in the notes to the financial statements.
Application of accounting policies that require significant areas of estimation, uncertainty and critical judgments and the use of assumptions in the financial statements have been disclosed below. The notes provide an overview of the areas that involved a high degree of judgement or complexity and of items which are likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant note together with information about basis of calculation of each affected line item in the financial statements. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below:
4.1 Depreciation / amortization and impairment on Property, Plant and Equipment / intangible assets/ ROU
Property, plant and equipment/ intangible assets and ROU are depreciated/ amortized on straight-line /written down value basis over the estimated useful lives (or lease term if shorter) in accordance with Schedule II of the Companies Act, 2013, taking into account the estimated residual value, wherever applicable.
The company reviews its carrying value of its tangible/ intangible and ROU Assets whenever there is objective evidence that the assets are impaired. In such situation Assets'' recoverable amount is estimated which is higher an asset''s or cash generating units (CGU) fair value less cost of disposal and its value in use. In assessing value in use the estimated future cash flows are discounted using pre-tax discount rate which reflect the current assessment of time value of money. In determining fair value less cost of disposal, recent market realisations are considered or otherwise in absence of such transactions appropriate valuations are adopted. The Company reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation / amortization and amount of impairment expense to be recorded during any reporting period. This reassessment may result in variation in the amount of depreciation and amortisation in future period.
4.2 Impairment on Investments in Subsidiaries and Joint Ventures
The company reviews its carrying value of investments in Subsidiaries and Joint Venture carried at cost/ deemed cost (net of impairment if any) annually or more frequently when there is an indication for impairment. If the recoverable amount is less than its carrying amount the impairment loss is accounted for in the standalone statement of profit and loss.
4.3 Right-of-use assets and lease liability
Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the company''s operations taking into account among other thing, the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Claims including insurance claims / arbitration claim are accounted for on determination of certainty of realisation thereof. Compensation receivable against coal mine (refer note no. 48) pending final acceptance or settlement thereof even though has not been given effect to, as amount expected to be realised in this respect has been considered to be covering the carrying amount of the relevant assets and other recoverables.
4.5 Impairment allowances for on trade receivables
The Company evaluates whether there is any objective evidence that trade receivables are impaired and determines the amount of impairment allowance as a result of the inability of the customers to make required payments. The Company bases the estimates on the ageing of the trade receivables balance, credit-worthiness of the trade receivables and historical write-off experience. In case of
variation in financial condition the amount of impairment as recognised may vary having a significant impact on the financial statement.
Significant judgment is required in determination of taxability of certain income and deductibility of certain expenses during the estimation of the provision for income taxes. Also there are many transactions and assumptions during the ordinary course of business for which the ultimate tax determination is uncertain. Further judgement is involved in determining the deferred tax position on the balance sheet date.
4.7 Defined benefit obligation (DBO)
The present value of the defined benefit obligations and long term employee benefits depends on a number of factors that are determined on an actuarial basis using a number of assumptions. An actuarial valuation critical estimate of the DBO involves a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate, anticipation of future salary increases etc. as estimated by Independent Actuary appointed for this purpose by the Management. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
4.8 Provisions and Contingencies
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement
Mar 31, 2018
1. Significant Accounting Policies
1.1 Basis of Preparation
The Financial Statements have been prepared under the historical cost convention on accrual basis excepting certain financial instruments which are measured in terms of relevant Ind AS at fair value/ amortized costs at the end of each reporting period and certain class of Property, Plant and Equipment i.e. freehold land and building and Investment in Associates which as on the date of transition have been fair valued to be considered as deemed cost.
Historical cost convention is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course, the same has been assumed to have duration of 12 months. All Assets and Liabilities have been classified as current or non-current as per the operating cycle and other criteria set out in Ind AS 1 âPresentation of Financial Statementsâ and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest two decimal lakhs except otherwise stated.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed for such measurement:
Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within level 1 that are observable either directly or indirectly for the asset or liability.
Level 3 : Inputs for the asset or liability which are not based on observable market data (unobservable inputs).
The company has an established control framework with respect to the measurement of fair values. This includes a finance team that has overall responsibility for overseeing all significant fair value measurements who regularly review significant unobservable inputs, valuation adjustments and fair value hierarchy under which the valuation should be classified.
1.2 Property Plant and Equipment (PPE)
Property, plant and equipment are stated at cost of acquisition, construction and subsequent improvements thereto less accumulated depreciation and impairment losses, if any. For this purpose cost include deemed cost on the date of transition and comprises purchase price of assets or its construction cost including duties and taxes (net of recoverable taxes), inward freight and other expenses incidental to acquisition or installation and adjustment for exchange differences wherever applicable and any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended for its use. For major projects, interest and other costs incurred on / related to borrowings to finance such projects or fixed assets during construction period and related pre-operative expenses are capitalized. Expenditure on Blast Furnace / Coke Oven Battery Relining is capitalized.
Parts of an item of PPE having different useful lives and material value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the Statement of Profit and Loss when incurred.
Capital Work-in-progress includes preoperative and development expenses, equipments to be installed, construction and erection materials, advances etc. Such items are classified to the appropriate categories of PPE when completed and ready for intended use.
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), which will be continued 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.
Depreciation and Amortization
Depreciation on PPE except as stated below, is provided as per Schedule II of the Companies Act, 2013 on straight line method in respect of Plant and Equipments and Office Equipments at all location of the Company except Elavur Plant of the Company and on written down value method on all other assets including Plant and Equipments and Office Equipments at Elavur Plant. Certain Plant and Equipmentâs have been considered Continuous Process Plant on the basis of technical assessment. Depreciation on upgradation of Property, Plant and Equipment is provided over the remaining useful life of the mother plant / fixed assets.
Leasehold Land held under finance lease including leasehold land are depreciated over their expected lease terms. No depreciation is charged on Freehold land. Assets costing rupees five thousand or less are being depreciated fully in the year of addition / acquisition.
In case the cost of part of tangible asset is significant to the total cost of the assets and useful life of that part is different from the remaining useful life of the asset, depreciation has been provided on straight line method based on internal assessment and independent technical evaluation carried out by external valuers, which the management believes that the useful lives of the component best represent the period over which it expects to use those components. Pipe Moulds of specified sizes are depreciated over a period of 3 years.
Railway siding constructed on Government land is amortised over the period of 10 years in terms of agreement.
Depreciation on Property, Plant and Equipments commences when the assets are ready for their intended use. Based on above, the useful lives as estimated for other assets considered for depreciation are as follows:
Depreciation methods, useful lives, residual values are reviewed and adjusted as appropriate, at each reporting date.
1.3 Intangible Assets
Intangible assets are stated at cost comprising of purchase price inclusive of duties and taxes (net of recoverable taxes) less accumulated amount of amortization and impairment losses. Such assets, are amortised over the useful life using straight line method and assessed for impairment whenever there is an indication of the same.
Accordingly, right to use wagons acquired under âWagon Investment Schemeâ, cost of computer software packages (ERP and others) and mining rights are allocated / amortized over a period of 10 years, 5 years and available period of mining lease respectively.
Research cost are not capitalized and the related expenditure is recognized in the statement of profit and loss in the period in which the expenditure is incurred.
Depreciation methods, useful lives and residual values and are reviewed, and adjusted as appropriate, at each reporting date.
1.4 Derecognition of Tangible and Intangible assets
An item of PPE is de-recognised upon disposal or when no future economic benefits are expected to arise from its use or disposal gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
1.5 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases.
Finance leases are capitalized at the inception of the lease at lower of its fair value and the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Any initial direct costs of the lessee are added to the amount recognised as an asset. Each lease payments are apportioned between finance charge and reduction of the lease liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the outstanding amount of the liabilities.
Payments made under operating leases are recognised as expenses on a straight-line basis over the term of the lease unless the lease arrangements are structured to increase in line with expected general inflation or another systematic basis which is more representative of the time pattern of the benefits availed Contingent rentals, if any, arising under operating leases are recognised as an expense in the period in which they are incurred.
1.6 Impairment of Tangible and Intangible Assets
Tangible and Intangible assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of assets is determined. An impairment loss is recognized in the statement of profit and loss, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the higher of assetsâ fair value less cost of disposal and its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate.
Impairment losses recognized earlier may no longer exist or may have come down. Based on such assessment at each reporting period the impairment loss is reversed and recognized in the Statement of Profit and Loss. In such cases the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
1.7 Financial Assets and Financial Liabilities
Financial assets and financial liabilities (financial instruments) are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
The financial assets and financial liabilities are classified as current if they are expected to be realised or settled within operating cycle of the company or otherwise these are classified as non-current.
The classification of financial instruments whether to be measured at Amortized Cost, at Fair Value through Profit and Loss (FVTPL) or at Fair Value through Other Comprehensive Income (FVTOCI) depends on the objective and contractual terms to which they relate. Classification of financial instruments are determined on initial recognition.
(i) Cash and cash equivalents
All highly liquid financial instruments, which are readily convertible into determinable amounts of cash and which are subject to an insignificant risk of change in value and are having original maturities of three months or less from the date of purchase, are considered as cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets and Financial Liabilities measured at amortised cost
Financial Assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and 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 are measured at amortized cost.
The above Financial Assets and Financial Liabilities subsequent to initial recognition are measured at amortized cost using Effective Interest Rate (EIR) method.
The effective interest rate is the rate that discounts estimated future cash payments or receipts (including all fees and points paid or received, transaction costs and other premiums or discounts) through the expected life of the Financial Asset or Financial Liability to the gross carrying amount of the financial asset or to the amortised cost of financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and 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. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised directly in other comprehensive income.
(iv) For the purpose of para (ii) and (iii) above, principal is the fair value of the financial asset at initial recognition and interest consists of consideration for the time value of money and associated credit risk.
(v) Financial Assets or Liabilities at Fair value through profit or loss
Financial Instruments which does not meet the criteria of amortised cost or fair value through other comprehensive income are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the statement of profit and loss.
(vi) Equity Instruments measured at FVTOCI and FVTPL
Equity instruments which are, held for trading are classified as at FVTPL are measured at Fair Value as per Ind AS 109. For all other equity instruments, the company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable. In case the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Profit and Loss, even on sale of investment.
(vii) Investment in Subsidiaries, Associates and Joint Ventures
Investments in subsidiaries, associates and joint ventures are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries or the loss of significant influence over associates, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.
(viii) Derivative and Hedge Accounting
The company enters into derivative financial instruments such as foreign exchange forward, swap and option contracts to mitigate the risk of changes in foreign exchange rates in respect of financial instruments and forecasted cash flows denominated in certain foreign currencies. The Company uses hedging instruments which provide principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The hedge instruments are designated and documented as hedges and effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis.
Any derivative that is either not designated as a hedge, or is so designated but is ineffective as per Ind AS 109 âFinancial Instrumentsâ is categorized as a financial asset, at fair value through profit or loss. Transaction costs attributable are also recognized in Statement of profit and loss. Changes in the fair value of the derivative hedging instrument designated as a fair value hedge are recognized in the Statement of profit and loss.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and presented within equity as cash flow hedging reserve to the extent that the hedge is effective.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and thereafter to the extent hedge accounting being discontinued is recognised in Statement of profit and loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the Statement of profit and loss.
(ix) Impairment of financial assets
A financial asset is assessed for impairment at each balance sheet date. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
The company measures the loss allowance for a financial asset at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
However, for trade receivables or contract assets that result in relation to revenue from contracts with customers, the company measures the loss allowance at an amount equal to lifetime expected credit losses.
(x) Derecognition of financial instruments
The Company derecognizes a financial asset or a group of financial assets when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the assetâs carrying amount and the sum of the consideration received and receivable are recognized in statement of profit and loss.
On derecognition of assets measured at FVTOCI the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
Financial liabilities are derecognized if the Companyâs obligations specified in the contract expire or are discharged or cancelled. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
(xi) Financial Guarantee Contracts
Financial guarantee contracts issued by the company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of Ind AS 109 and the amount recognized less cumulative amortization.
1.8 Inventories
Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on âweighted averageâ basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be sold at or above cost.
Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods represents prime cost, and includes appropriate portion of overheads.
Cost in respect of process stock represents, cost incurred up to the stage of completion.
Cost in respect of work-in-progress represents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company.
Net Realizable Value is the estimated selling price in the ordinary course of business less estimated cost of completion and the estimated cost necessary to make the sale.
1.9 Foreign Currency Transactions
Foreign currency transactions are translated into the functional currency using the spot rates of exchanges at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchanges at the reporting date.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities are generally recognized in profit or loss in the year in which they arise except for exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those qualifying assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings, the balance is presented in the Statement of Profit and Loss within finance costs.
Non monetary items which are carried in terms of historical cost denominated in foreign currency, are reported using the exchange rate as at the date of transaction.
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), which will be continued 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.
1.10 Equity Share Capital
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Par value of the equity shares is recorded as share capital and the amount received in excess of par value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
1.11 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities are not recognized and are disclosed by way of notes to the financial statements when there is a possible obligation arising from past events, 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 when there is a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the same or a reliable estimate of the amount in this respect cannot be made.
Contingent assets are not recognised but disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
1.12 Employee Benefits Short Term Benefits
Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related services are provided. Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services up to the end of the reporting period.
Other Long Term Employee Benefits
The liabilities for leave encashment that are not expected to be settled wholly within twelve months are measured as the present value of the expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation. Remeasurements as the result of experience adjustment and changes in actuarial assumptions are recognized in statement of profit and loss.
Post Employment Benefits
The Company operates the following post employment schemes:
â Defined Benefit Plans
The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. The defined benefit obligation is calculated annually by Actuaries using the projected unit credit method.
The liability recognized for defined benefit plans is the present value of the defined benefit obligation at the reporting date less the fair value of plan assets, together with adjustments for unrecognized actuarial gains or losses and past service costs. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. The benefits are discounted using the government securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of related obligation.
Remeasurements of the net defined benefit obligation, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, are recognized in other comprehensive income. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss.
â Defined Contribution Plan
Defined contribution plans such as provident fund etc are charged to the statement of profit and loss as and when incurred. Contribution to Superannuation fund, a defined contribution plan is made in accordance with the companyâs policy and is recognised in the Statement of profit and loss.
1.13 Revenue
Sale of goods :
Revenue is recognized at the fair value of consideration received or receivable when the significant risk and rewards of goods ownership of goods have been transferred and the amount thereof can be measured reliably. This represents the net invoice value of goods supplied after deducting discounts, rebates and taxes and duties collected on behalf of third parties.
Revenue from Turnkey Contracts :
Revenue against Turnkey Contracts undertaken by the Company is recognized progressively on the basis of percentage of completion method. Stage of completion of contracts in progress is determined by reference to the physical proportion of the contract work completed. Estimated loss on project to be undertaken in future years is provided for.
Interest, Dividend and Claims :
Dividend income is recognized when the right to receive payment is established. Interest has been accounted using effective interest rate method. Insurance claims/ other claims are accounted as and when admitted / settled.
Other Operating Revenue :
Export incentive and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions and the incentive will be received.
1.14 Borrowing Costs
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
1.15 Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of the carrying amount and the fair value less cost to sell.
An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Non-current assets (or disposal group) classified as held for sale are presented separately in the balance sheet. 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.
1.16 Government Grants
Government grants are recognized on systematic basis when there is reasonable certainty of realization of the same. Revenue grants including subsidy/rebates are credited to Statement of Profit and Loss Account under âOther Incomeâ or deducted from the related expenses for the period to which these are related. Grants which are meant for purchase, construction or otherwise acquire non current assets are recognized as Deferred Income and disclosed under Non Current Liabilities and transferred to Statement of Profit and Loss on a systematic basis over the useful life of the respective asset. Grants relating to non-depreciable assets is transferred to Statement of Profit and Loss over the periods that bear the cost of meeting the obligations related to such grants.
1.17 Taxes on Income
Income tax expense representing the sum of current tax expenses and the net charge of the deferred taxes is recognized in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.
Current income tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets include Minimum Alternative Tax (MAT) measured in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability and such benefit can be measured reliably and it is probable that the future economic benefit associated with same will be realized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
1.18 Earnings Per Share
Basic earnings per share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
1.19 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker of the Company is responsible for allocating resources and assessing performance of the operating segments and accordingly is identified as the chief operating decision maker.
The Company has identified one reportable segment âPipes and all other activities revolve aound the main businessâ based on the information reviewed by the CODM.
Mar 31, 2017
1. Significant Accounting Policies
1.1 Basis of Preparation
The Financial Statements have been prepared under the historical cost convention on accrual basis excepting certain financial instruments which are measured in terms of relevant Ind AS at fair value/ amortized costs at the end of each reporting period and certain class of Property, Plant and Equipment i.e. freehold land and building and Investment in Associates which as on the date of transition have been fair valued to be considered as deemed cost.
Historical cost convention is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course, the same has been assumed to have duration of 12 months. All Assets and Liabilities have been classified as current or non-current as per the operating cycle and other criteria set out in Ind AS 1 âPresentation of Financial Statementsâ and Schedule III to the Companies Act, 2013.
The Standalone Financial Statements are presented in Indian Rupees and all values are rounded off to the nearest two decimal lakhs except otherwise stated.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed for such measurement :
Level 1 : Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 : Inputs other than quoted prices included within level 1 that are observable either directly or indirectly for the asset or liability. Level 3 : Inputs for the asset or liability which are not based on observable market data (unobservable inputs).
The company has an established control framework with respect to the measurement of fair values. This includes a finance team that has overall responsibility for overseing all significant fair value measurements who regularly review significant unobservable inputs, valuation adjustments and fair value hierarchy under which the valuation should be classified.
1.2 Property Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost of acquisition, construction and subsequent improvements thereto less accumulated depreciation and impairment losses, if any. For this purpose cost include deemed cost on the date of transition and comprises purchase price of assets or its construction cost including duties and taxes, inward freight and other expenses incidental to acquisition or installation and adjustment for exchange differences wherever applicable and any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended for its use. For major projects, interest and other costs incurred on / related to borrowings to finance such projects or fixed assets during construction period and related pre-operative expenses are capitalized. Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized.
Parts of an item of PPE having different useful lives and material value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement when incurred.
Capital Work-in-progress includes preoperative and development expenses, equipments to be installed, construction and erection materials, advances etc. Such items are classified to the appropriate categories of PPE when completed and ready for intended use.
Development Expenses including overburden removal expenses net of revenue of the Projects / Mines under development are debited to Development Account and included under Capital Work in progress till the projects/ mines are brought to Revenue Account. Except otherwise specifically stated in the Project Report, upon the commercial readiness of the project to yield production on a sustainable basis and completion of required development activity during the period of construction, projects and mines under development are brought to revenue: (a) From beginning of the financial year immediately after the year in which the project achieves physical output of 50% of rated capacity as per approved project report, or (b) One year of touching of coal, or (c) From the beginning of the financial year in which the value of production is more than total expenses.
Depreciation and Amortization
Depreciation on PPE except as stated below, is provided as per Schedule II of the Companies Act, 2013 on straight line method in respect of Plant and Equipments and Office Equipments at all location of the Company except Elavur Plant of the Company and on written down value method on all other assets including Plant and Equipments and Office Equipments at Elavur Plant. Certain Plant and Equipmentâs have been considered Continuous Process Plant on the basis of technical assessment. Depreciation on upgradation of Property, Plant and Equipment is provided over the remaining useful life of the mother plant / fixed assets.
Leasehold Land held under finance lease including leasehold land are depreciated over their expected lease terms. No depreciation is charged on Freehold land. Assets costing rupees five thousand or less are being depreciated fully in the year of addition/acquisition.
Pipe Moulds of specified sizes are charged to consumption in the year of issue. Others are depreciated over a period of three years.
Depreciation on Property, Plant and Equipments commences when the assets are ready for their intended use. Based on above, the useful lives as estimated for other assets considered for depreciation are as follows :
Depreciation methods, useful lives, residual values are reviewed and adjusted as appropriate, at each reporting date.
1.3 Intangible Assets
Intangible assets are stated at cost comprising of purchase price inclusive of duties and taxes less accumulated amount of amortization and impairment losses. Such assets, are amortised over the useful life using straight line method and assessed for impairment whenever there is an indication of the same.
Accordingly, right to use wagons acquired under âWagon Investment Schemeâ, cost of computer software packages (ERP and others) and mining rights are allocated / amortized over a period of 10 years, 5 years and available period of mining lease respectively.
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.
1.4 Derecognition of Tangible and Intangible assets
An item of PPE is derecognised upon disposal or when no future economic benefits are expected to arise from its use or disposal. Gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
1.5 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases.
Finance leases are capitalized at the inception of the lease at lower of its fair value and the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Any initial direct costs of the lessee are added to the amount recognised as an asset. Each lease payments are apportioned between finance charge and reduction of the lease liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the outstanding amount of the liabilities.
Payments made under operating leases are recognised as expenses on a straight-line basis over the term of the lease unless the lease arrangements are structured to increase in line with expected general inflation or another systematic basis which is more representative of the time pattern of the benefits availed. Contingent rentals, if any, arising under operating leases are recognised as an expense in the period in which they are incurred.
1.6 Impairment of Tangible and Intangible Assets
Tangible and Intangible assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of assets is determined. An impairment loss is recognized in the statement of profit and loss, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the higher of assetsâ fair value less cost of disposal and its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their present value at appropriate rate.
Impairment losses recognized earlier may no longer exist or may have come down. Based on such assessment at each reporting period the impairment loss is reversed and recognized in the Statement of Profit and Loss. In such cases the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.
1.7 Financial Assets and Financial Liabilities
Financial Assets and Financial Liabilities (financial instruments) are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial Assets and Financial Liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the Statement of Profit and Loss.
The Financial Assets and Financial Liabilities are classified as current if they are expected to be realised or settled within operating cycle of the company or otherwise these are classified as non-current.
The classification of financial instruments whether to be measured at Amortized Cost, at Fair Value Through Profit and Loss (FVTPL) or at Fair Value Through Other Comprehensive Income (FVTOCI) depends on the objective and contractual terms to which they relate. Classification of financial instruments are determined on initial recognition.
(i) Cash and cash equivalents
All highly liquid financial instruments, which are readily convertible into determinable amounts of cash and which are subject to an insignificant risk of change in value and are having original maturities of three months or less from the date of purchase, are considered as cash equivalents. Cash and cash equivalents includes balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets and Financial Liabilities measured at amortised cost
Financial Assets held within a business whose objective is to hold these assets in order to collect contractual cash flows and 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 are measured at amortized cost.
The above Financial Assets and Financial Liabilities subsequent to initial recognition are measured at amortized cost using Effective Interest Rate (EIR) method.
The effective interest rate is the rate that discounts estimated future cash payments or receipts (including all fees and points paid or received, transaction costs and other premiums or discounts) through the expected life of the Financial Asset or Financial Liability to the gross carrying amount of the financial asset or to the amortised cost of financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Asset at Fair Value through Other Comprehensive Income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and 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. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised directly in other comprehensive income.
(iv) For the purpose of para (ii) and (iii) above, principal is the fair value of the financial asset at initial recognition and interest consists of consideration for the time value of money and associated credit risk.
(v) Financial Assets or Liabilities at Fair value through profit or loss.
Financial Instruments which does not meet the criteria of amortised cost or fair value through other comprehensive income are classified as Fair Value through Profit or loss. These are recognised at fair value and changes therein are recognized in the statement of profit and loss.
(vi) Investment in Subsidiaries, Joint Ventures and Associates are being carried at deemed cost/at cost.
(vii) Derivative and Hedge Accounting
The company enters into derivative financial instruments such as foreign exchange forward, swap and option contracts to mitigate the risk of changes in foreign exchange rates in respect of financial instruments and forecasted cash flows denominated in certain foreign currencies. The Company uses hedging instruments which provide principles on the use of such financial derivatives consistent with the risk management strategy of the Company. The hedge instruments are designated and documented as hedges and effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at inception and on an ongoing basis.
Any derivative that is either not designated as a hedge, or is so designated but is ineffective as per Ind AS 109 âFinancial Instrumentsâ is categorized as a financial asset, at fair value through profit or loss. Transaction costs attributable are also recognized in Statement of profit and loss. Changes in the fair value of the derivative hedging instrument designated as a fair value hedge are recognized in the Statement of profit and loss.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and presented within equity as cash flow hedging reserve to the extent that the hedge is effective.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity till that time remains and thereafter to the extent hedge accounting being discontinued is recognised in Statement of profit and loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss accumulated in equity is transferred to the Statement of profit and loss.
(viii) Impairment of financial assets
A financial asset is assessed for impairment at each balance sheet date. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
The company measures the loss allowance for a financial asset at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.
However, for trade receivables or contract assets that result in relation to revenue from contracts with customers, the company measures the loss allowance at an amount equal to lifetime expected credit losses.
(ix) Derecognition of financial instruments
The Company derecognizes a financial asset or a group of financial assets when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
On derecognition of a financial asset (except for equity instruments designated as FVTOCI), the difference between the assetâs carrying amount and the sum of the consideration received and receivable are recognized in statement of profit and loss.
On derecognition of assets measured at FVTOCI the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
Financial liabilities are derecognized if the Companyâs obligations specified in the contract expire or are discharged or cancelled. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
1.8 Inventories
Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on âweighted averageâ basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be sold at or above cost.
Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods represents prime cost, and includes appropriate portion of overheads and excise duty.
Cost in respect of process stock represents, cost incurred up to the stage of completion.
Cost in respect of work-in-progress represents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company.
Insurable Spares whose use are expected to be irregular, are amortised over a period of three years and such amount is included under stores and spares consumed.
1.9 Foreign Currency Transactions and Derivatives
Transactions in foreign currencies are translated into the functional currency at the exchange rates prevailing on the date of the transactions. Foreign currency monetary assets and liabilities at the year-end are translated at the year-end exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate as at the date of transaction. The loss or gain thereon and also on the exchange differences on settlement of the foreign currency transactions during the year are recognized as income or expense in the statement of profit and loss except in respect of non-current liabilities existing as on April 1, 2015 (as stated in Note no. 59) related to Property, Plant and Equipment/ Capital work in progress, in which case these are adjusted to the cost of respective PPE/ Capital work in progress. Foreign exchange gain/loss to the extent considered as an adjustment to Interest Cost are considered as part of borrowing cost.
1.10 Equity Share Capital
An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Par value of the equity shares is recorded as share capital and the amount received in excess of par value is classified as Securities Premium.
Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
1.11 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a legal or constructive obligation as a result of past events and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for future operating losses. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.
Contingent liabilities are not recognized and are disclosed by way of notes to the financial statements when there is a possible obligation arising from past events, 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 when there is a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the same or a reliable estimate of the amount in this respect cannot be made.
Contingent assets are not recognised but disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
1.12 Employee Benefits
Employee benefits are accrued in the year in which services are rendered by the employees. Short term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the related service is rendered.
Contribution to defined contribution plans such as Provident Fund etc, is being made in accordance with statute and are recognised as and when incurred.
Contribution to defined benefit plans consisting of contribution to gratuity are determined at close of the year at present value of the amount payable using actuarial valuation techniques. Actuarial gain and losses arising from experience adjustments and changes in actuarial assumptions are recognized in other comprehensive income.
Other long term employee benefits consisting of Leave Encashment are determined at close of the year at present value of the amount payable using actuarial valuation techniques. The changes in the amount payable including actuarial gain/loss are recognised in the Statement of profit and loss.
Contribution to Superannuation fund, a defined contribution plan is made in accordance with the companyâs policy and is recognised in the Statement of profit and loss.
1.13 Revenue Sale of goods :
Revenue is recognized at the fair value of consideration received or receivable when the significant risk and rewards of goods ownership of goods have been transferred and the amount thereof can be measured reliably. This represents the net invoice value of goods supplied after deducting discounts, rebates and taxes and duties collected on behalf of third parties and is inclusive of excise and other duties which the company pays as principal.
Revenue from Turnkey Contracts :
Revenue against Turnkey Contracts undertaken by the Company is recognized progressively on the basis of percentage of completion method. Stage of completion of contracts in progress is determined by reference to the physical proportion of the contract work completed. Estimated loss on project to be undertaken in future years is provided for.
Interest, Dividend and Claims :
Dividend income is recognized when the right to receive payment is established. Interest has been accounted using effective interest rate method. Insurance claims/ other claims are accounted as and when admitted / settled.
Export Benefits :
Export benefits arising on account of entitlement for duty free imports are accounted for through import of materials. Other export benefits are accounted for as and when the ultimate realisability of such benefits are established.
1.14 Borrowing Costs
Borrowing cost comprises of interest and other costs incurred in connection with the borrowing of the funds. All borrowing costs are recognized in the Statement of Profit and Loss using the effective interest method except to the extent attributable to qualifying Property Plant Equipment (PPE) which are capitalized to the cost of the related assets. A qualifying PPE is an asset, that necessarily takes a substantial period of time to get ready for its intended use or sale. Borrowing cost also includes exchange differences to the extent considered as an adjustment to the borrowing costs.
1.15 Research and Development Expenditure
Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the Statement of profit and loss in the year in which they are incurred.
1.16 Government Grants
Government grants are recognized on systematic basis when there is reasonable certainty of realization of the same. Revenue grants including subsidy/rebates are credited to Statement of Profit and Loss Account under âOther Incomeâ or deducted from the related expenses for the period to which these are related. Grants which are meant for purchase, construction or otherwise acquire non current assets are recognized as Deferred Income and disclosed under Non Current Liabilities and transferred to Statement of Profit and Loss on a systematic basis over the useful life of the respective asset. Grants relating to non-depreciable assets is transferred to Statement of Profit and Loss over the periods that bear the cost of meeting the obligations related to such grants.
1.17 Taxes on Income
Income tax expense representing the sum of current tax expenses and the net charge of the deferred taxes is recognized in the income statement except to the extent that it relates to items recognized directly in equity or other comprehensive income.
Current income tax is provided on the taxable income and recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets include Minimum Alternative Tax (MAT) measured in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability and such benefit can be measured reliably and it is probable that the future economic benefit associated with same will be realized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
1.18 Earnings Per Share
Basic earnings per share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.
1.19 Segment Reporting
Operating segments are identified and reported taking into account the different risk and return, organisation structure and internal reporting system.
Mar 31, 2015
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention except in respect of certain fixed assets which are stated
at revalued amount in accordance with the provisions of the Companies
Act, 2013 and accounting standards as prescribed under section 133 of
the Companies Act, 2013, read with rule 7 of the Companies (Accounts)
Rules, 2014 and other recognized accounting practices. Accounting
policies unless specifically stated to be otherwise, are consistent and
are in consonance with generally accepted accounting principles.
1.2 USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of revenue and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
1.3 FIXED ASSETS, DEPRECIATION AND AMORTIZATION OF EXPENSES 1) Tangible
Assets
(i) Gross Block:
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto or at revalued amounts wherever such assets have
been revalued. Cost of acquisition includes taxes, duties (net of
cenvat availed), inward freight, preoperative expenses, installation
expenses and adjustment for exchange differences wherever applicable.
For major projects, interest and other costs incurred on / related to
the borrowings for financing projects / fixed assets during
construction period and pre-operative period, if appropriate, are
capitalized. Expenditure on Blast Furnace/Coke Oven Battery Relining is
capitalized.
(ii) Depreciation and Amortization of Expenses:
(a) Depreciation on tangible fixed assets, except otherwise stated has
been provided as per Schedule II of the Companies Act, 2013 on straight
line method in respect of Plant & Equipment and office equipment at all
location of the Company except Elavur Plant of the Company and on
written down value method on all other assets including plant and
equipment and office equipment at Elavur Plant. Certain Plant and
Equipments have been considered Continuous Process Plant on the basis
of technical assessment. Depreciation on upgradation of fixed assets
(tangible) is provided over the remaining useful life of the mother
plant / fixed assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method. Railway
siding constructed on government land is amortised over the period of
ten years.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of tangible Fixed Asset and whose use are expected to be irregular, are
amortised over the useful life of the respective tangible fixed assets
and the amount amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative and development
expenses, equipments to be installed, construction and erection
materials, etc.
(iv) Development Expenses including overburden removal expenses net of
revenue of the Projects / Mines under development are debited to
Development Account and included under Capital Work in progress till
the projects/ mines are brought to Revenue Account. Except otherwise
specifically stated in the Project Report, upon the commercial
readiness of the project to yield production on a sustainable basis and
completion of required development activity during the period of
construction, projects and mines under development are brought to
revenue: (a) From beginning of the financial year immediately after the
year in which the project achieves physical output of 50% of rated
capacity as per approved project report, or (b) One year of touching of
coal, or (c) From the beginning of the financial year in which the
value of production is more than total expenses.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised on straight line
method over a period of 5 years. Mining rights are amortised on
straight line method over the available period of mining lease
1.4 INVESTMENTS
Non current investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value, computed category wise.
1.5 INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on 'weighted average' basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the related finished
products are expected to be sold at or above cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
1.6 IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of the assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis.
1.7 FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as revenue or expense and are shown in the
statement of profit and loss except in respect of non current
liabilities related to fixed asset/capital work in progress in which
case, these are adjusted to the cost of respective fixed assets/capital
work in progress.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred. Branch monetary assets and
liabilities are restated at the year end rates.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forward rate and exchange rate at the date of transaction is
recognized as revenue / expense over the life of the contract.
In respect of derivative contracts (other than forward contracts dealt
as above) premium paid, gains /losses on settlement and losses on
restatement are recognized in statement of profit and loss except in
case they relate to acquisition or construction of fixed assets, in
which case they are adjusted to the cost of fixed assets/capital work
in progress.
1.8 REVENUE RECOGNITION
All expenses and revenue to the extent considered payable and
receivable respectively unless specifically stated to be otherwise are
accounted for on mercantile basis.
1.9 SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
1.10 EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees. Short term employee benefits are recognised as an expense in
the statement of profit and loss for the year in which the related
service is rendered.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
1.11 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or
construction of qualifying asset are capitalized as part of the cost of
such assets. 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 statement of Profit and Loss.
1.12 RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
1.13 EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when the ultimate realisibility of such
benefits are established.
1.14 GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Statement of
Profit and Loss under "other operating income" or deducted from the
related expenses. Grants relating to fixed assets are credited to
Capital Reserve Account or adjusted in the cost of such assets as the
case may be, as and when the ultimate realisability of such grants are
established.
1.15 INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable revenue using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
1.16 PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statements. Contingent liabilities are not provided for and are
disclosed by way of notes.
Mar 31, 2014
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention except in respect of certain fixed assets which are stated
at revalued amount in accordance with the provisions of the Companies
Act, 1956 and accounting standards notified vide Companies (Accounting
Standards) Rules, 2006. Accounting policies unless specifically stated
to be otherwise, are consistent and are in consonance with generally
accepted accounting principles.
1.2 USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of revenue and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
1.3 FIXED ASSETS, DEPRECIATION AND AMORTIZATION OF EXPENSES 1) Tangible
Assets
(i) Gross Block:
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto or at revalued amounts wherever such assets have
been revalued. Cost of acquisition includes taxes, duties (net of
cenvat availed), inward freight, installation expenses and adjustment
for exchange differences wherever applicable. For major projects,
interest and other costs incurred on / related to direct borrowings to
finance projects / fixed assets during construction period and
pre-operative expenses, if appropriate, are capitalized. Expenditure on
Blast Furnace/Coke Oven Battery Relining is capitalized.
(ii) Depreciation and Amortization of Expenses:
(a) Depreciation on Fixed Assets (Tangible), except otherwise stated,
is provided as per Schedule XIV of the Companies Act, 1956 on straight
line method in respect of Plant and Equipments of Ductile Iron Foundry
Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge
Iron Plant, Coke Oven Plant and Sinter Plant and on written down value
method on other assets. Certain Plant and Equipments have been
considered Continuous Process Plant on the basis of technical
assessment. Depreciation on upgradation of fixed assets (tangible) is
provided over the remaining useful life of the mother plant / fixed
assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method. Railway
siding constructed on government land is amortised over the period of
ten years.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of tangible Fixed Asset and whose use are expected to be irregular, are
amortised over the useful life of the respective tangible fixed assets
and the amount amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative and development
expenses, equipments to be installed, construction and erection
materials, advances etc.
(iv) Development Expenses including overburden removal expenses net of
revenue of the Projects / Mines under development are debited to
Development Account and included under Capital Work in progress till
the projects/ mines are brought to Revenue Account. Except otherwise
specifically stated in the Project Report to determine the commercial
readiness of the project to yield production on a sustainable basis and
completion of required development activity during the period of
construction, projects and mines under development are brought to
revenue: (a) From beginning of the financial year immediately after the
year in which the project achieves physical output of 50% of rated
capacity as per approved project report, or (b) One year of touching of
coal, or (c) From the beginning of the financial year in which the
value of production is more than total expenses.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised over a period of
5 years. Amortsation is done on straight line basis. Mining rights are
amortised on straight line method over the available period of mining
lease
1.4 INVESTMENTS
Non current investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value, computed category wise.
1.5 INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on ''weighted average1 basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the related finished
products are expected to be sold at or above cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
1.6 IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of the assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis.
1.7 FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as revenue or expense and are shown in the
statement of profit and loss except in respect of non current
liabilities related to fixed asset/capital work in progress in which
case, these are adjusted to the cost of respective fixed assets/capital
work in progress.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred. Branch monetary assets and
liabilities are restated at the year end rates.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as revenue / expense over the life of the contract.
In respect of derivative contracts (other than forward contracts dealt
as above) premium paid, gains /losses on settlement and losses on
restatement are recognized in statement of profit and loss except in
case they relate to acquisition or construction of fixed assets, in
which case they are adjusted to the cost of fixed assets/capital work
in progress.
1.8 REVENUE RECOGNITION
All expenses and revenue to the extent considered payable and
receivable respectively unless specifically stated to be otherwise are
accounted for on mercantile basis.
1.9 SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
1.10 EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees. Short term employee benefits are recognised as an expense in
the statement of profit and loss for the year in which the related
service is rendered.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
1.11 BORROWING COSTS
Borrowing cost that are attributable to the acquisition or construction
of qualifying asset are capitalized as part of the cost of such assets.
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 statement of Profit and Loss.
1.12 RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
1.13 EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when the ultimate realisibility of such
benefits are established.
1.14 GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Statement of
Profit and Loss under "other operating income" or deducted from the
related expenses. Grants relating to fixed assets are credited to
Capital Reserve Account or adjusted in the cost of such assets as the
case may be, as and when the ultimate realisability of such grants are
established.
1.15 INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable revenue using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
1.16 PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statements. Contingent liabilities are not provided for and are
disclosed by way of notes.
Mar 31, 2013
1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention except in respect of certain fixed assets which are stated
at revalued amount in accordance with the provisions of the Companies
Act, 1956 and accounting standards notified vide Companies (Accounting
Standards) Rules, 2006. Accounting policies unless specifically stated
to be otherwise, are consistent and are in consonance with generally
accepted accounting principles.
1.2 USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of revenue and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
1.3 FIXED ASSETS, DEPRECIATION AND AMORTIZATION
1) Tangible Assets
(i) Gross Block :
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto or at revalued amounts wherever such assets have
been revalued. Cost of acquisition includes taxes, duties (net of
cenvat availed), inward freight, installation expenses and adjustment
for exchange differences wherever applicable. For major projects,
interest and other costs incurred on / related to direct borrowings to
finance projects / fixed assets during construction period and
pre-operative expenses, if appropriate, are capitalized. Expenditure on
Blast Furnace/Coke Oven Battery Relining is capitalized.
(ii) Depreciation and Amortization :
(a) Depreciation on Fixed Assets (Tangible), except otherwise stated,
is provided as per Schedule XIV of the Companies Act, 1956 on straight
line method in respect of Plant and Equipments of Ductile Iron Foundry
Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge
Iron Plant, Coke Oven Plant and Sinter Plant and on written down value
method on other assets. Certain Plant and Equipments have been
considered Continuous Process Plant on the basis of technical
assessment. Depreciation on upgradation of fixed assets (tangible) is
provided over the remaining useful life of the mother plant / fixed
assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method. Railway
siding constructed on government land is amortised over the period of
ten years.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of tangible Fixed Asset and whose use are expected to be irregular, are
amortised over the useful life of the respective tangible fixed assets
and the amount amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative expenses,
equipments to be installed, construction and erection materials,
advances etc.
(iv) Development Expenses including overburden removal expenses net of
revenue of the Projects / Mines under development are debited to
Development Account and grouped under Capital Work in progress till the
projects/ mines are brought to Revenue Account. Except otherwise
specifically stated in the Project Report to determine the commercial
readiness of the project to yield production on a sustainable basis and
completion of required development activity during the period of
construction, projects and mines under development are brought to
revenue: (a) From beginning of the financial year immediately after the
year in which the project achieves physical output of 50% of rated
capacity as per approved project report, or (b) One year of touching of
coal, or (c) From the beginning of the financial year in which the
value of production is more than total expenses.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised over a period of
5 years. Amortization is done on straight line basis. Mining rights are
amortised on straight line method over the available period of mining
lease
1.4 INVESTMENTS
Non current investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value, computed category wise.
1.5 INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on ''weighted average1 basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the related finished
products are expected to be sold at or above cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
1.6 IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of the assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis.
1.7 FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as revenue or expense and are shown in the
statement of profit and loss except in respect of non current
liabilities related to fixed asset/capital work in progress in which
case, these are adjusted to the cost of respective fixed assets/capital
work in progress.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred. Branch monetary assets and
liabilities are restated at the year end rates.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as revenue / expense over the life of the contract.
In respect of derivative contracts (other than forward contracts dealt
as above) premium paid, gains /losses on settlement and losses on
restatement are recognized in statement of profit and loss except in
case they relate to acquisition or construction of fixed assets, in
which case they are adjusted to the cost of fixed assets/capital work
in progress.
1.8 REVENUE RECOGNITION
All expenses and revenue to the extent considered payable and
receivable respectively unless specifically stated to be otherwise are
accounted for on mercantile basis.
1.9 SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
1.10 EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees. Short term employee benefits are recognised as an expense in
the statement of profit and loss for the year in which the related
service is rendered.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
1.11 BORROWING COSTS
Borrowing cost that are attributable to the acquisition or construction
of qualifying asset are capitalized as part of the cost of such assets.
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 Statement of Profit and Loss.
1.12 RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
1.13 EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when the ultimate realisibility of such
benefits are established.
1.14 GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Statement of
Profit and Loss under "other operating income" or deducted from the
related expenses. Grants relating to fixed assets are credited to
Capital Reserve Account or adjusted in the cost of such assets as the
case may be, as and when the ultimate realisability of such grants are
established.
1.15 INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable revenue using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
1.16 PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statements. Contingent liabilities are not provided for and are
disclosed by way of notes.
Mar 31, 2012
1. 1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention in accordance with the provisions of the Companies Act, 1956
and accounting standards notified vide Companies (Accounting Standards)
Rules, 2006. Accounting policies unless specifically stated to be
otherwise, are consistent and are in consonance with generally accepted
accounting principles.
1.2 USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of revenue and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
1.3 FIXED ASSETS, DEPRECIATION AND AMORTIZATION
1) Tangible Assets
(i) Gross Block :
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto. Cost of acquisition includes taxes, duties (net
of cenvat availed), inward freight, installation expenses and
adjustment for exchange differences wherever applicable. For major
projects, interest and other costs incurred on / related to direct
borrowings to finance projects / fixed assets during construction
period and pre-operative expenses, if appropriate, are capitalized.
Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized.
(ii) Depreciation & Amortization :
(a) Depreciation on Fixed Assets (Tangible), except where otherwise
stated, is provided as per Schedule XIV of the Companies Act, 1956 on
straight line method in respect of Plant and Equipments of Ductile Iron
Foundry Works, Coal Mine, Mini Blast Furnace Plant, Captive Power
Plant, Sponge Iron Plant, Coke Oven Plant and Sinter Plant and on
written down value method on other assets. Certain Plant and Equipments
have been considered Continuous Process Plant on the basis of technical
assessment. Depreciation on upgradation of fixed assets (tangible) is
provided over the remaining useful life of the mother plant / fixed
assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method. Railway
siding constructed on government land is amortised over the period of
ten years.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of tangible Fixed Asset and whose use is expected to be irregular are
amortised over the useful life of the respective tangible fixed assets
and the amount amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative expenses,
equipments to be installed, construction and erection materials etc.
(iv) Development Expenses net of revenue of the Projects / Mines under
development are booked to Development Account and grouped under Capital
Work in progress till the projects/ mines are brought to Revenue
Account, except otherwise specifically stated in the Project Report to
determine the commercial readiness of the project to yield production
on a sustainable basis and completion of required development activity
during the period of construction, projects and mines under development
are brought to revenue: (a) From beginning of the financial year
immediately after the year in which the project achieves physical
output of 50% of rated capacity as per approved project report, or (b)
One year of touching of coal, or (c) From the beginning of the
financial year in which the value of production is more than total
expenses, whichever event occurs first.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised over a period of
5 years. Amortsation is done on straight line basis. Mining rights are
amortised on straight line method over the available period of mining
lease
1.4 INVESTMENTS
Non current investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value, computed category wise.
1.5 INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on 'weighted average' basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
1.6 IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of the assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis. Subsequent to recognition
of impairment loss/reversal thereof, depreciation is provided on the
revised carrying amount of the asset, on a systematic basis, over its
remaining useful life.
1.7 FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as revenue or expense and are shown in the
statement of profit and loss except in respect of non current
liabilities related to fixed asset/capital work in progress in which
case, these are adjusted to the cost of respective fixed assets/capital
work in progress.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred. Branch monetary assets and
liabilities are restated at the year end rates.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as revenue / expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29,2008 regarding accounting for derivatives, mark
to market losses on all other derivatives contracts (other than forward
contracts dealt as above) outstanding as at the year end , are
recognized in the financial statements.
1.8 REVENUE RECOGNITION
All expenses and revenue to the extent considered payable and
receivable respectively unless specifically stated to be otherwise are
accounted for on mercantile basis.
1.9 SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
1.10 EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
1.11 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or
construction of qualifying asset are capitalized as part of the cost of
such assets. 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 statement of Profit and Loss.
1.12 RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
1.13 EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when the ultimate realisibility of such
benefits are established.
1.14 GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Statement of
Profit and Loss under "other operating income" or deducted from the
related expenses. Grants relating to fixed assets are credited to
Capital Reserve Account or adjusted in the cost of such assets as the
case may be, as and when the ultimate realisability of such grants are
established.
1.15 INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable revenue using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
1.16 PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statements. Contingent liabilities are not provided for and are
disclosed by way of notes.
Mar 31, 2011
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accounts have been prepared under the historical cost convention in
accordance with the provisions of the Companies Act, 1956 and
accounting standards notified vide Companies (Accounting Standards)
Rules, 2006. Accounting policies unless specifically stated to be
otherwise, are consistent and are in consonance with generally accepted
accounting principles.
B. USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of income and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
C. FIXED ASSETS AND DEPRECIATION
1) Tangible Assets
(i) Gross Block:
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto. Cost of acquisition includes taxes, duties (net
of cenvat availed), inward freight, installation expenses and
adjustment for exchange differences wherever applicable. For major
projects, interest and other costs incurred on / related to direct
borrowings to finance projects / fixed assets during construction
period and pre-operative expenses, if appropriate, are capitalized.
Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized.
(ii) Depreciation:
(a) Depreciation on Fixed Assets, except where otherwise stated, is
provided as per Schedule XIV of the Companies Act, 1956 on straight
line method in respect of Plant and Machinery of Ductile Iron Foundry
Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge
Iron Plant, Coke Oven Plant and Sinter Plant and on written down value
method on other assets. Certain Plant and Machinery have been
considered Continuous Process Plant on the basis of technical
assessment. Depreciation on upgradation of fixed assets is provided
over the remaining useful life of the mother plant / fixed assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of Fixed Asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative expenses,
machinery to be installed, construction and erection materials,
advances etc.
(iv) Development Expenses net of Income of the Projects / Mines under
development are booked to Development Account and grouped under Capital
Work in progress till the projects/ mines are brought to Revenue
Account, except otherwise specifically stated in the Project Report to
determine the commercial readiness of the project to yield production
on a sustainable basis and completion of required development activity
during the period of construction, projects and mines under development
are brought to revenue: (a) From beginning of the financial year
immediately after the year in which the project achieves physical
output of 50% of rated capacity as per approved project report, or (b)
One year of touching of coal, or (c) From the beginning of the
financial year in which the value of production is more than total
expenses, whichever event occurs first.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised over a period of
5 years. Amortsation is done on straight line basis. Mining rights are
amortised on straight line method over the available period of mining
lease
D. INVESTMENTS
Long-term investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value, computed category wise.
E. INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on weighted average1 basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
F. IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of The assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis. Subsequent to recognition
of impairment loss/reversal thereof, depreciation is provided on the
revised carrying amount of the asset, on a systematic basis, over its
remaining useful life.
G. FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as income or expense and are adjusted to the
profit and loss account under respective heads of account except where
such liabilities and/or transactions relate to fixed assets / projects
and were entered into before 1-4-2004, in which case, these are
adjusted to the cost of respective fixed assets.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income / expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29, 2008 regarding accounting for derivatives,
mark to market losses on all other derivatives contracts (other than
forward contracts dealt as above) outstanding as at the year end , are
recognized in the accounts.
H. REVENUE RECOGNITION
All expenses and income to the extent considered payable and receivable
respectively unless specifically stated to be otherwise are accounted
for on mercantile basis.
I. SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
J. EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
K. RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
L. EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when the ultimate realisibility of such
benefits are established.
M. GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Profit and
Loss Account under "Other Income" or deducted from the related
expenses. Grants relating to fixed assets are credited to Capital
Reserve Account or adjusted in the cost of such assets as the case may
be, as and when the ultimate realisability of such grants are
established.
N. INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable income using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
O. PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statement. Contingent liabilities are not provided for and are
disclosed by way of notes.
Mar 31, 2010
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The accounts have been prepared under the historical cost convention in
accordance with the provisions of the Companies Act, 1956 and
accounting standards notified vide Companies (Accounting Standards)
Rules, 2006 . Accounting policies unless specifically stated to be
otherwise, are consistent and are in consonance with generally accepted
accounting principles.
B. USE OF ESTIMATES
The preparation of financial statements require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures relating to contingent liabilities as at
the Balance Sheet date and the reported amounts of income and expenses
during the year.
Contingencies are recorded when it is probable that a liability will be
incurred and the amounts can reasonably be estimated. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
C. FIXED ASSETS AND DEPRECIATION
1) Tangible Assets
(i) Gross Block:
Fixed Assets are stated at cost of acquisition and subsequent
improvements thereto. Cost of acquisition includes taxes, duties (net
of cenvat availed) , inward freight, installation expenses and
adjustment for exchange differences wherever applicable. For major
projects, interest and other costs incurred on / related to direct
borrowings to finance projects / fixed assets during construction
period and pre-operative expenses, if appropriate, are capitalized.
Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized.
(ii) Depreciation:
(a) Depreciation on Fixed Assets, except where otherwise stated, is
provided as per Schedule XIV of the Companies Act, 1956 on straight
line method in respect of Plant and Machinery of Ductile Iron Foundry
Works, Coal Mine, Mini Blast Furnace Plant, Captive Power Plant, Sponge
Iron Plant, Coke Oven Plant and Sinter Plant and on written down value
method on other assets. Certain Plant and Machinery have been
considered Continuous Process Plant on the basis of technical
assessment. Depreciation on upgradation of fixed assets is provided
over the remaining useful life of the mother plant / fixed assets.
(b) Assets costing Rs. five thousand or less are being depreciated
fully in the year of addition/acquisition.
(c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are
depreciated over a period of 3 years. Pipe Moulds upto 350 mm are
charged to consumption in the year of issue.
(d) Blast Furnace and Coke Oven Battery relining are depreciated on
straight line method over a period of 2 and 5 years respectively
(average expected life) as per technical assessment. Wagons acquired
under "Wagon Investment Scheme" are depreciated over a period of 10
years and Heavy Earth Moving Machinery used for coal mines are
depreciated over a period of 5 years on straight line method.
(e) Leasehold land is amortised on straight line method over the period
of the lease.
(f) Machinery Spares which can be used only in connection with an item
of Fixed Asset and whose use is expected to be irregular are amortised
over the useful life of the respective fixed assets and the amount
amortised is included under stores and spares consumed.
(iii) Capital Work-in-progress includes preoperative expenses,
machinery to be installed, construction and erection materials,
advances etc.
2) Intangible Assets
Intangible assets are stated at cost of acquisition less accumulated
amortization. Computer software packages are amortised over a period of
5 years. Amortsation is done on straight line basis.
D. INVESTMENTS
Long-term investments are stated at cost less provision, if any, for
diminution in value other than temporary. Current investments are
carried at lower of cost or fair value.
E. INVENTORIES
(i) Inventories are valued at lower of cost or net realisable value.
Cost of inventories is ascertained on weighted average basis.
Materials and other supplies held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost.
(ii) Cost in respect of raw materials and stores and spares includes
expenses incidental to procurement of the same. Cost in respect of
finished goods represents prime cost, and includes appropriate portion
of overheads and excise duty.
(iii) Cost in respect of process stock represents, cost incurred upto
the stage of completion.
(iv) Cost in respect of work-in-progress represents cost of materials
remaining uncertified / incomplete under the Turnkey Contracts
undertaken by the Company.
F. IMPAIRMENT
Fixed assets are reviewed at each balance sheet date for impairment. In
case events and circumstances indicate any impairment, recoverable
amount of fixed assets is determined. An impairment loss is recognized,
whenever the carrying amount of assets either belonging to Cash
Generating Unit (CGU) or otherwise exceeds recoverable amount. The
recoverable amount is the greater of assets net selling price or its
value in use. In assessing value in use, the estimated future cash
flows from the use of the assets are discounted to their present value
at appropriate rate. An impairment loss is reversed if there has been a
change in the recoverable amount and such loss either no longer exists
or has decreased. Impairment loss/reversal thereof is adjusted to the
carrying value of the respective assets, which in case of CGU, are
allocated to its assets on a prorata basis. Subsequent to recognition
of impairment loss/reversal thereof, depreciation is provided on the
revised carrying amount of the asset, on a systematic basis, over its
remaining useful life.
G. FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES
Transactions in foreign currencies are accounted for at the exchange
rate prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities at the year end are translated at the
year end exchange rates. Non-monetary items other than fixed assets,
which are carried in terms of historical cost denominated in a foreign
currency, are reported using the exchange rate at the date of
transaction. The loss or gain thereon and also on the exchange
differences on settlement of the foreign currency transactions during
the year are recognized as income or expense and are adjusted to the
profit and loss account under respective heads of account except where
such liabilities and/or transactions relate to fixed assets / projects
and were entered into before 1-4-2004, in which case, these are
adjusted to the cost of respective fixed assets.
Revenue/expenditure earned/incurred by the overseas office is
translated at the respective month end rate during which such revenue
/expenditure is so earned / incurred.
Exchange differences arising with respect to forward contracts other
than those entered into, to hedge foreign currency risk on unexecuted
firm commitments or of highly probable forecast transactions are
recognized in the period in which they arise and the difference between
the forwards rate and exchange rate at the date of transaction is
recognized as income / expense over the life of the contract.
Keeping in view the announcement of Institute of Chartered Accountants
of India dated March 29, 2008 regarding accounting for derivatives,
mark to market losses on all other derivatives contracts (other than
forward contracts dealt as above) outstanding as at the year end , are
recognized in the accounts.
H. REVENUE RECOGNITION
All expenses and income to the extent considered payable and receivable
respectively unless specifically stated to be otherwise are accounted
for on mercantile basis.
I. SALES
Sales include excise duty, wherever applicable and rebate, discounts,
claims, expenses incurred on consignment sales etc. are excluded there
from. Sales on consignment and expenses there against are being
accounted for on receipt of sales account from the respective
consignee. Revenue against Turnkey Contracts undertaken by the Company
is recognized progressively on the basis of percentage of completion
method. Stage of completion of contracts in progress is determined by
reference to the physical proportion of the contract work completed.
J. EMPLOYEE BENEFITS
Employee benefits are accrued in the year services are rendered by the
employees.
Contribution to defined contribution schemes such as Provident Fund,
Superannuation Fund etc. are recognized as and when incurred.
Long-term employee benefits under defined benefit scheme such as
contribution to gratuity, leave etc. are determined at close of the
year at present value of the amount payable using actuarial valuation
techniques.
Actuarial gain and losses are recognized in the year when they arise.
K. RESEARCH AND DEVELOPMENT
Research and development cost (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
L. EXPORT BENEFITS
Export benefits arising on account of entitlement for duty free imports
are accounted for through import of materials. Other export benefits
are accounted for as and when accrued.
M. GOVERNMENT GRANTS
Revenue grants including subsidy/rebates are credited to Profit and
Loss Account under "Other Income" or deducted from the related
expenses. Grants relating to fixed assets are credited to Capital
Reserve Account or adjusted in the cost of such assets as the case may
be, as and when the ultimate readability of such grants are
established.
N. INCOME TAX
Provision for tax is made for current and deferred taxes. Current tax
is provided on the taxable income using the applicable tax rates and
tax laws. Deferred tax assets and liabilities arising on account of
timing differences, which are capable of reversal in subsequent periods
are recognized using tax rates and tax laws, which have been enacted or
substantively enacted. Deferred tax assets are recognized only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
will be realized. In case of carry forward of unabsorbed depreciation
and tax losses, deferred tax assets are recognized only if there is
"virtual certainty" that such deferred tax assets can be realized
against future taxable profits.
O PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events, it is probable that there will be an outflow of resources and a
reliable estimate can be made, of the amount of the obligation.
Contingent assets are neither recognized nor disclosed in the financial
statement. Contingent liabilities are not provided for and are
disclosed by way of notes.