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Notes to Accounts of National Aluminium Company Ltd.

Mar 31, 2023

5.1 Cost of Freehold land includes cost of 43.75 acre (previous year 43.75 acre) of land handed over to Govt. of Odisha against which the alienation process is yet to be completed.

5.2 The Company incurred '' 0.80 crores (previous year '' 0.81 crores) for the year ended 31st March, 2023 towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is '' 4.08 crores (previous year '' 4.13 crores) for the year ended 31st March, 2023, including cash outflow of short-term leases and leases of low-value assets.

5.3 The Company has two wind power plants (WPP) in the state of Rajasthan and one wind power plant in the state of Maharashtra. Based on the indication from external and internal information to the Company, impairment assessment was carried out for both plants at Rajasthan & Maharashtra.

5.3.1 For the two WPPs at Rajasthan, the Company had a power purchase power agreement (PPA) for 3 years with Jodhpur Vidyut Vitran Nigam Ltd., Rajasthan which could not be extended since 01.04.2019. Since power generation is a continuous process, the Company has been injecting the power to the grid which is recorded by the DISCOM. However, the Rajasthan Renewable Energy Corporation Ltd (RRECL) had offered the Company to accept '' 2.44 per unit for both WPP at Ludherva and Devikot and execute the PPA. The Company filed an appeal in the Honâble High Court of Rajasthan for extension of PPA which is still pending. In view of non-existence of PPA and continuous generation, impairment assessment was done upto the useful life of the assets.

5.3.2 The Company has a long term (25 years) PPA with NTPC Vidyut Vyapar Nigam Ltd. (NVVNL) for supply of a minimum of 100 MU per month from its WPP at Sangli, Maharashtra with a unit (KWH) rate of '' 2.92. Considering the quantum of investment made by the Company and the rate considered for the long term PPA, an impairment assessment has been carried out upto the useful life of the assets.

6.1. The amount of capital work in progress includes directly attributable expenses of '' 166.81 crore (previous year '' 152.90 crore) for 5th Stream Alumina Refinery expansion.

6.2 The Company on 27.09.2017, had awarded a contract favouring M/s Regen Powertech. Pvt. Ltd. for supply, erection and commissioning of 25.5MW Wind Power Project (WPP) at Kayathar, Tamilnadu for a value of '' 163.13 crore. The agency had executed '' 119.63 crore worth of work till FY 2018-19. Thereafter, there was no progress in execution due to financial crisis and liquidity issue of the agency.

Insolvency resolution process was initiated against the Company under Insolvency and Bankruptcy Code, 2016. The Honâble National Company Law Tribunal (NCLT), Chennai passed the Resolution Plan on 01.02.2022 which was not acceptable to the Company. Aggrieved with the order, the Company preferred an appeal to the Honâble National Company Law Appellate Tribunal (NCLAT).

As there was no progress in the project since 2018-19 and the stringent conditions mentioned in the said order, the Company has considered these as indication for impairment assessment of the project and provided for '' 79.25 crore as on 31.03.2023 (as on 31.03.2022''44.26 crore).

Notes: 7.1 User right represent Companyâs share in jointly owned asset.

7.2 The Company has been granted lease to operate its Bauxite Mines at Panchpatmali, Odisha and Coal Mines at Angul, Odisha by the Government of Odisha. In this connection, the Company has paid Net present value (NPV) for forest land, compensatory afforestation, wild life management and other related payments which are capitalized as intangible assets under Mining Rights and amortized on straight line basis as per the Accounting Policy of the Company.

7.3 Utkal D&E coal blocks were allocated to the Company on 02.05.2016 by the Ministry of Coal, Govt. Of India with total mining reserve of 176.05 MT(Million Tonnes). On execution of mining lease on 25.03.2021 (Utkal D) and 20.01.2023 (Utkal E), the mining rights worth '' 54.79 crore in FY 2021-22 and '' 73.26 crore during the year have been capitalised.

Commencement of Mining Operation at Utkal-D Coal Mine was started w.e.f. 09.11.2022. Intimation regarding the same was sent to Deputy Director Mines, Talcher on 09.11.2022. Top soil removing, overburden cutting for opening of coal seams have been done during the period of 09.11.2022 to 31.03.2023. Seam was exposed & samples were collected by Coal Controller Organisation (CCO), Ministry of Coal office for annual grade declaration for FY 2023-24. Coal Production has started from 01.04.2023.

16.B.1 The earmarked balance of '' 61.88 crore (previous year '' 75.90 crore) with scheduled banks includes the amount deposited towards unclaimed dividend amounting to '' 4.25 crore (previous year '' 4.29 crore) and '' 11.22 crore as lien for issuance of Bank Guarantee to participate in Bauxite mines bidding. The balance amount of '' 46.40 crore (previous year '' 71.61 crore) represents deposits with State Bank of India as per direction of the Hon''ble High Court of Odisha with regard to disputed differential electricity duty.

Recently Energy Department, Govt. of Odisha have passed a resolution (Resolution No. -11797, dtd. : 30.11.2022) for One Time Settlement (OTS) of arrear Electricity Duty (ED) and interest of consumers as on dtd. 31.03.2022, who generate energy for captive consumption and not depositing the ED due to court case / litigation etc.

The Company has opted for the OTS scheme and filed necessary papers after the Confederation of Captive Power Plants, Odisha (in which the Company is a member) withdrew the legal case in the Hon''ble High Court, Odisha. As per the condition laid out in the OTS scheme, 10% of the outstanding demand raised by the Authority amounting to '' 27.83 crore has been paid during the year from the escrow account created as per order of the Hon''ble High Court. The final settlement under the scheme is yet to be completed.

16.B.2 Amount due for credit to Investor''s Education and Protection Fund at the end of the current year '' Nil (previous year '' Nil).

(i) The Company has only one class of equity shares having par value of '' 5 each. Each holder of equity shares is entitled to one vote per share and carries proportionate right to dividends declared by the Company based on their holdings.

(ii) Buy back:

During 2018-19 the Company bought back 6,73,11,386 number of equity shares of '' 5 each which led to decrease in equity share capital from '' 966.46 crore to '' 932.81 crore. During 2020-21, the Company further bought back 2,89,85,711 numbers of equity shares of '' 5 each which led to decrease in the equity share capital from '' 932.81 crore to '' 918.32 crore.

(iii) Disinvestment:

During the year 2018-19, the Government of India divested 8,89,86,323 Nos. of equity shares through Bharat ETF. Consequent to buyback and transfer of shares through ETF

by Government of India during 2018-19, the holding of Government of India has come down from 1,16,37,17,107 Nos (60.20%) as on 31.03.2018 to 97,00,81,517 Nos (51.99%) as on 31.03.2019.

During the year 2019-20, Government of India further divested 92,88,506 Nos. of equity shares through Bharat 22 ETF upon which the holding of Government of India has come down from 97,00,81,517 Nos (51.99%) as on 31.03.2019 to 96,07,93,011 Nos. (51.50%) as on 31.03.2020.

During the 2020-21, consequent upon buy-back of equity shares, the holding of Government of India has come down from 96,07,93,011 Nos. (51.5%) as on 31.03.2020 to 94,17,93,011 Nos. (51.28%) as on 31.03.2021.

19.2 During the year 2018-19, the Company had bought back 6,73,11,386 number of fully paid equity shares of '' 5 each on December 4, 2018 at an offer price of '' 75 per share. The aggregate consideration paid was '' 504.83 crore. Post buyback, the paid up equity share capital of the Company is reduced by '' 33.65 crore from '' 966.46 crore to '' 932.81 crore. The premium amount '' 471.18 crore is appropriated from general reserve. The shares were extinguished on December 7, 2018 and in terms of the provisions of Companies Act, 2013, a sum of '' 33.65 crore was transferred from general reserve to capital redemption reserve.

During the year 2020-21, the Company bought back 2,89,85,711 number of fully paid equity shares of '' 5 each on March 10, 2021 at an offer price of '' 57.50 per share. The aggregate consideration paid was '' 166.67 crore. Post buyback, the paid up equity share capital of the Company is reduced by '' 14.49 crore from '' 932.81 crore to '' 918.32 crore. The premium amount '' 152.18 crore is appropriated from general reserve. The shares were extinguished on March 17, 2021 and in terms of the provisions of Companies Act, 2013, a sum of '' 14.49 crore was transferred from general reserve to capital redemption reserve.

19.3 During the year, the Company has paid Final Dividend for FY 2021-22 at '' 1.50 per equity share amounting to '' 275.49 crore. The Company has paid first tranche of Interim dividend for FY 2022-23 at '' 1.00 per equity share amounting to '' 183.66 crore on February 14, 2023 and the second tranche of Interim dividend at '' 2.50 per equity share amounting to '' 459.16 crore was paid on March 31, 2023. With this the total payout is '' 642.82 crore. During the preceding year, the Company had paid Final Dividend for FY 2020-21 at '' 1 per equity share amounting to '' 183.66 crore. The Company had also paid first tranche Interim dividend at '' 2 per equity share amounting to '' 367.33 crore & second tranche of Interim Dividend at '' 3 per equity share amounting to '' 550.99 crore for financial year 2021-22.

25.4 Recently Energy Department, Govt. of Odisha have passed on a resolution (Resolution No-11797, dtd-30.11.2022) for One Time Settlement (OTS) of arrear Electricity Duty (ED) and interest of consumers as on dt. 31.03.2022, who generate energy for captive consumption and not depositing the ED due to court case/litigation etc.

The Company has opted for the OTS scheme and filed necessary papers after the Confederation of Captive Power Plants, Odisha (in which the Company is a member) withdrew the legal case in the Honâble High Court, Odisha. As per the condition laid out in the OTS scheme, 10% of the outstanding demand raised by the Authority amounting to '' 27.83 crore has been paid during the year from the escrow account created as per order of the Honâble High Court. The final settlement under the scheme is yet to be completed.

25.5 Consequent upon amendment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 with effect from 28th March, 2021, as per Section 8A(8) which provides that the period of mining leases, other than the mining leases granted through auction, shall be extended on payment of such additional amount as specified in the Fifth Schedule. Based on demand raised by IBM through I3MS portal for royalty, the Company has paid DMF and NMET along with additional royalty for Both North & Central Block and South Block of Panchapatmali Bauxite Mines till November 2022.

Ministry of Mines, Govt. of India vide letter dated 31.1.2023 has clarified that additional royalty payment in respect of government companies are applicable in case of extension of lease under 8A(8) of the Act or grant of fresh lease to Govt. Companies where area are reserved after 2015 as per Section 17A(2C) of Mines and Mineral (Development and Regulation) Act , 2015. Panchpatmali (South Block) and Panchpatmali (Central and North block) mining leases of the Company have been deemed to be granted for 50 years i.e. up to 19.07.2029 and 16.11.2032 respectively in accordance with the rule 3(1) of Mineral (Mining by Government Company Rule, 2015 (now Rule 72(1) of M(OAHCEM) CR, 2016. Thus these leases of the Company have not been extended under Section 8A(8) read with Rule 72(2)&(3) of M(OAHCEM)CR, 2016.

Ministry of Mines, Govt. of India has also requested to Govt. of Odisha that no additional royalty may be charged from the Company till the completion of lease period of 50 years for both the Mines and the additional Royalty already paid by the Company so far in respect of these two mining leases may be adjusted in lieu of future Royalty payments.

In the absence of any communication from Govt. of Odisha on the subject of additional Royalty on Bauxite, the Company has continued the existing practice of recognition of liability towards additional Royalty from 01.12.2022 to 31.3.2023.

27. Contingent liabilities (to the extent not provided for)				Amount in '' Crore
			As at 31.03.2023	As at 31.03.2022
Claims against the Company not acknowledged as debts
a.	Demand from statutory authority
	1.	Odisha Sales tax	3.71	4.09
	2.	Central Sales tax	277.52	280.55
	3.	VAT	0.69	12.64
	4.	Excise duty	410.44	410.44
	5.	Custom duty	102.67	102.77
	6.	Service tax	13.08	14.82
	7.	Income tax	210.27	223.75
	8.	Entry tax	217.28	222.21
	9.	Road tax	2.65	2.65
	10.	Stamp duty	0.51	0.51
	11.	Claim From Govt. (NGT)	-	109.01
	12.	Claim From PSUs	423.21	322.92
	13.	Land acquisition and interest thereon	85.55	78.07
	14.	Dept. of mines Govt. of Odisha	136.32	136.32
	15.	Water Resources Deptt. Govt. of Odisha for Water Conservation fund	119.24	119.24
b.	Claim by contractors/suppliers and others
	1.	Claims of Contractors suppliers and others	359.15	338.41
	Total		2,362.31	2,378.40

Claims against the Company not acknowledged as debt includes:

i. Demand from various statutory authorities towards income tax, sales tax, excise duty, custom duty, service tax, entry tax and other government levies. The Company is contesting the demands before the respective appellate authorities. It is expected that the ultimate outcome of these proceedings will be in favour of the Company and will not have any material adverse effect on the Companyâs financial position and results of operation.

ii. Claims of contractors for supply of materials/services pending with arbitration/courts have arisen in the ordinary course of business. The Company reasonably expects that these legal actions will be concluded and determined in favour of the Company and will not have any material adverse effect on the Companyâs results of operation or financial position.

iii. Claim from PSUs includes the energy compensation charges and the delayed payment surcharge on the same, since 2005, demanded by Odisha Hydro Power Corporation Limited (OHPC) towards loss of power generation by the Corporation due to drawal of water from the reservoir at Upper Kolab, Koraput by NALCO Refinery at M&R Complex.

iv. The claims against the company are mostly due to demands raised by the IT department at assessment stage. These claims are on account of multiple issues

of disallowances such as disallowance in respect of additional depreciation under section 32(i)(iia), disallowance of peripheral development expenses, provision for non-moving stores and spares, treatment of short term capital gain and not allowing loss under long term capital gain and treating the same as business income, disallowance u/s 14A etc. These matters are sub-judice and pending before various appellate authorities. The Company, including its tax advisors, expect that its position will likely be upheld on the ultimate resolution in view of the decisions already available in favour of the Company by higher appellate forums being CIT(A) / ITAT (Jurisdictional). Thus it will not have a material adverse effect on the Companyâs financial position and in the results of operations. Hence, there is no uncertainty in tax treatment which will affect the determination of taxable profit (loss), tax bases, unused tax losses, unused tax credits, and tax rates of the Company.

The Company has reviewed the disputed income tax matters and the demands raised by the Department/ Authorities considering the probable outcome of the dispute and possibilities of outflow of resources and disclosed as on 31.03.2023 accordingly.

27.1 Movement of contingent liabilities					Amount in '' Crore
		As at 31.03.2022	Reduction during the year	Addition during the year		As at 31.03.2023
a.	Demand by statutory authority
	1. Odisha Sales tax	4.09	(0.38)	-		3.71
	2. Central Sales tax	280.55	(3.49)	0.46		277.52
	3. VAT	12.64	(11.95)	-		0.69
	4. Excise duty	410.44	-	-		410.44
	5. Custom duty	102.77	(0.09)	-		102.67
	6. Service tax	14.82	(1.73)	-		13.08
	7. Income tax	223.75	(15.90)	2.42		210.27
	8. Entry tax	222.21	(4.94)	-		217.28
	9. Road tax	2.65	-	-		2.65
	10. Stamp duty	0.51	-	-		0.51
	11. Claim From Govt (NGT)	109.01	(109.01)	-		-
	12. Claim From PSUs	322.92	-	100.30		423.21
	13. Land acquisition and interest thereon	78.07	-	7.48		85.55
	14. Demand from Dept. of mines Govt. of Odisha	136.32	-	-		136.32
	15. Demand from Water Resources Deptt. Govt. of Odisha for Water Conservation fund	119.24	-	^-		119.24
b.	Claim by contractors/suppliers and others
	1. Claims of Contractorâs suppliers and others	338.41	(9.55)	30.30		359.15
	Total	2,378.40	(157.04)	140.95		2,362.31

28 - Commitments					Amount in '' Crore
					As at 31.03.2023	As at 31.03.2022
a) Estimated amount of Contracts remaining to be executed on capital account and not provided for					3,690.17	3,404.69
b) Other Commitments
	(1) Amount payable to the Government of India but not yet due for payment for allocation of Utkal D & E coal block.				Nil	Nil
	(2) Export obligation for import of capital goods under Export Promotion Capital Goods Scheme.				244.51	463.94
	(3) Estimated amount of commitment to Govt. of Odisha for allotment of Pottangi Bauxite Mines				Nil	Nil
	(4) Estimated amount of commitment to Govt. of India (MoEFFC) for 5th Stream Refinery project.				Nil	Nil
	(5) Corporate environment responsibility (CER) for capital investments				Nil	6.00
	Total				3,934.68	3,874.63

33.A. Employee benefit Plans 33.A.1 Defined contribution plans

a) Pension fund: The Company pays fixed contribution to the trustee bank of Pension Fund Regulatory and Development Authority (PFRDA), which in turn invests the money with the insurers as specified by the employee concerned. The companyâs liability is limited only to the extent of fixed contribution.

33.A.2 Defined benefit plans

a) Provident fund: The provident fund of the company is managed by an exempted trust under section 17 of the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952. Both the employees and the Company make monthly contributions to the provident fund at a specified percentage of employees salary. The Company contributes major part of the fund to the Trust, which invests the funds in permitted securities as per the statute. The remaining part is contributed to the Government administered Pension Fund.

The Company has an obligation to pay minimum rate of return to the members as specified by Government of India. As per the condition of exemption, the Company shall make good for the deficiency, if any, between the return from the investments of the Trust and the notified interest rate by the Government. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in profit and loss under employee benefits expense.

b) Gratuity: Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of '' 20,00,000/. The gratuity scheme is funded by the Company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

c) Post retirement medical benefit: The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the Companyâs hospital/Govt. Hospital/ hospitals as per companyâs rule. They can also avail treatment as out patient subject to maximum ceiling of expenses fixed by the Company. The liability under the scheme is recognised on the basis of actuarial valuation. The scheme is funded by the Company and is managed by a separate trust.

d) Settling-in-benefit: On superannuation/retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family from the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible. The liability for the same is recognised on the basis of actuarial valuation.

e) NALCO Benevolent Fund Scheme : The objective of the scheme is to provide financial assistance to families of the members of the scheme who die while in employment of the Company. As per the scheme there will be contribution by members @ '' 30/- per member per death, in the event of death of a member while in the service of the company and matching contribution is made by the Company. The liability for the same is recognised on the basis of actuarial valuation.

f) NALCO Retirement Welfare Scheme : The objective of the scheme is to provide financial assistance as a gesture of goodwill as post retirement support to employees retiring from the services of the company. As per the scheme the recovery from each employee member would be '' 10/- per retiring member. The Company would provide equivalent sum as matching contribution. The liability for the same is recognised on the basis of actuarial valuation.

g) Superannuation gift scheme: The objective of the scheme is to recognise the employees superannuating or retiring on medical ground from the services of the Company. The scheme includes a gift item worth of '' 25000/- per retiring employees to be presented on superannuation/ retirement. The liability for the same is recognised on the basis of actuarial valuation.

33.A.3 Other long term employees benefits

a) Compensated absences : The accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed as per the Companyâs rule. The liability for the same is recognised on the basis of actuarial valuation. The obligation is funded by the Company and is managed by a separate trust.

b) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA. The liability for the same is recognised on the basis of actuarial valuation.

c) NEFFARS : In the event of disablement/death, on deposit of prescribed amount as stipulated under the scheme, the Company pays monthly benefit to the employee/ nominee at their option upto the date of notional superannuation. The liability for the same is recognised on the basis of actuarial valuation.

The employee benefit plans typically expose the Company to actuarial risks such as actuarial risk, investment risk, interest risk, longetivity risk and salary risk:-

i. Actuarial risk: It is the risk that employee benefits will cost to the Company more than expected. This can arise due to one of the following reasons:

a. Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

b. Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption then the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

c. Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

ii. Investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

iii. Interest risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

iv. Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

v. Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants beyond assumed plan will increase the planâs liability.

Note: In pursuance to Section 115BAA of the Income Tax Act, 1961 notified by the Government of India through Taxation Laws (Amendment) Ordinance, 2019, the Company had an irrevocable option of shifting to a lower tax rate foregoing other tax incentives and non applicability of Minimum alternate Tax. The Company exercised the said option for lower rates of taxes and the taxes have been recognised accordingly. The applicable rate for the current year is 25.168% (previous year 25.168%).

37 - Segment information

37.1 Products from which reportable segments derive their revenues

Information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses on the types of goods delivered. The directors of the company have chosen to organise the Company around differences in products. No reporting segment have been aggregated in arriving at the reportable segments in the Company. Specifically, the Company''s reportable segment under Ind AS 108- Operating Segments are as follows:

i) Chemical segment

ii) Aluminium segment

The Company has considered Chemicals and Aluminium as the two primary operating business segments. Chemicals include Calcined Alumina, Alumina Hydrate and other related products. Aluminium includes Aluminium ingots, wire rods, billets, strips, rolled and other related products. Bauxite produced for captive consumption for production of alumina is included under chemicals and power generated for captive consumption for production of Aluminium is included under Aluminium segment. Wind Power Plant commissioned primarily to harness the potential renewable energy sources is included in the unallocated Common segment.

39.2 Financial risk management objectives

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and

credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the

foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks.

The objectives of the Company''s risk management policy are, inter-alia, to ensure the following:

i) Sustainable business growth with financial stability;

ii) Provide a strategic framework for Companyâs risk management process in alignment with the strategic objectives including the risk management organisation structure;

iii) That all the material risk exposures of Company, both on and off-balance sheet are identified, assessed, quantified, appropriately mitigated and managed and

iv) Companyâs compliance with appropriate regulations, wherever applicable, through the voluntary adoption of international best practices, as far as may be appropriate to the nature, size and complexity of the operations.

The risk management policy is approved by the board of directors. The Internal Control Team would be responsible to evaluate the efficacy and implementation of the risk management system. It would present its findings to the Audit Committee every quarter. The Board is responsible for the Companyâs overall process of risk management. The Board shall, therefore, approve the compliance and risk management policy and any amendments thereto, and ensure its smooth implementation.

39.3 Market risk

Market risk is the risk of any loss in future earnings (spreads), in realizable fair values (economic value) or in future cash flows that may result from a change

in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange

rates, liquidity and other market changes. The Company may also be subjected to liquidity risk arising out of mismatches in the cash flows arising out of sales proceeds and funds raised and loan repayments/prepayments. Future specific market movements cannot be normally predicted with reasonable accuracy.

39.4 Foreign currency risk management

Foreign currency risk emanates from the effect of exchange rate fluctuations on foreign currency transactions. The overall objective of the currency risk management is to protect the Company''s income arising from changes in foreign exchange rates. The policy of the Company is to avoid any form of currency speculation. Hedging of currency exposures shall be effected either naturally through offsetting or matching assets and liabilities of similar currency, or in the absence of thereof, through the use of approved derivative instruments transacted with reputable institutions. The Currency risk is measured in terms of the open positions in respective currencies vis-a-vis the Companyâs operating currency viz. INR. A currency gap statement shall be prepared to find the gap due to currency mismatch.

The fluctuation in foreign currency exchange rates may have impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective consolidated entities.

The Company undertakes transactions denominated in foreign currency; consequently, exposures to exchange rate fluctuations arise. Exchange rate are managed within approved policy parameters utilising forward foreign exchange contracts.

39.4.1 Foreign currency sensitivity analysis

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in accordance with its risk management policies.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a simultaneous parallel foreign exchange rates shift in the foreign exchange rates of each currency by 10%.

The following analysis is based on the gross exposure as of the relevant balance sheet dates, which could affect the income statement. There is no exposure to the income statement on account of translation of financial statements of consolidated foreign entities.

39.5 Other price risks

39.5.1 Equity price sensitivity analysis

The Company is not exposed to equity price risk arising from equity instruments as all the equity investments are held for strategic rather than trading purposes.

39.6 Credit risk management

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. There is no significant credit exposure as advance collection from customer is made.

Financial instruments that are subject to concentrations of credit risk, principally consist of investments classified as loans and receivables, trade receivables, loans and advances and derivative financial instruments. None of the financial instruments of the Company result in material concentrations of credit risks.

39.7 Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

Company has established an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long-term funding liquidity management requirements. The Company manages liquidity risk by maintain adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and financial liabilities.

43. Regrouping of previous yearâs figures

Previous yearâs figures have been regrouped/rearranged wherever considered necessary to make them comparable

Mar 31, 2022

Notes: 5.1 Title deeds have been executed for freehold land acquired through Govt. of Odisha, except for land measuring 66.64 acres. The Company is in the process of conversion of freehold land for Industrial use and has taken-up matter with Revenue Authorities.

5.2 Cost of Freehold land includes cost of 43.75 acre of land surrendered to Govt. of Odisha against which the alienation process is yet to be completed.

5.3 The Company has 1597.35 acres of leasehold land in respect of which lease deeds are yet to be executed. However, the Company has been permitted by the concerned authorities to carry on its operation on the said land.

5.4 The Company incurred '' 0.81 crores (previous year '' 0.90 crores) for the year ended 31st March, 2022 towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is '' 4.13 crores (previous year '' 4.41 crores) for the year ended 31st March, 2022, including cash outflow of short-term leases and leases of low-value assets.

5.5 The Company has invested '' 280.62 crore (previous year '' 280.62 crore) in Wind Power Plant(WPP) with 47.6 MW of installed capacity at Ludherva, Rajasthan and '' 338.19 crore (previous year '' 338.19 crore) in Wind Power Plant with 50.0 MW of installed capacity at Devikot, Rajasthan. The said plants have carrying amount (Gross Value less accumulated depreciation and before impairment) of '' 176.27 crore and '' 258.54 crore respectively. Initially the power purchase agreement(PPA) for 3 years with Jodhpur Vidyut Vitran Nigam Ltd., Rajasthan which could not be extended since 01.04.2019.The Company filed an appeal in the Honâble High Court of Rajasthan for extension of PPA. Till now it could not be executed. However, the Company has been continuously injecting the power to the grid which is recorded by the authority. However, the Rajasthan Renewable Energy Corporation Ltd (RRECL) had offered the Company to accept '' 2.44 per unit for both WPP at Ludherva and Devikot and execute the PPA. In view of non-existence of PPA and continuous generation, impairment assessment was done for these Wind Power Plants and an amount of '' 241.11 crore has been provided during the current year.

6.A.I. The amount of capital work in progress includes an amount of '' 36.29 crore (previous year '' 53.97 crore) towards infrastructural development expenditure attributable to Utkal-D and Utkal-E Coal Block. It also includes directly attributable expenses of '' 152.90 crore (previous year '' 105.59 crore) for 5 th Stream Alumina Refinery expansion.

6.A.2. The Company on 27.09.2017, had awarded a contract favouring M/s. Regen Powertech. Pvt. Ltd. for supply, erection and commissioning of 25.5MW Wind Power Project (WPP) at Kayathar, Tamilnadu for a value of '' 163.13 crore. There was no progress in execution due to financial crisis and liquidity of the agency. The agency had executed '' 119.63 crore worth of work (previous year '' 119.63). Under Insolvency and Bankruptcy Board of India- 2016, the insolvency resolution process was initiated and Honâble National Company Law Tribunal (NCLT), Chennai passed the Resolution Plan which was not acceptable to the Company. The Company preferred an appeal in NCLAT.

As there was no progress in the project since 2018-19 and the stringent conditions mentioned in the said order, the Company considers these as indication for impairment assessment of the project and carried out the assessment internally and provided for '' 44.26 crore (previous year '' nil) during the current year.

11.1 Loans to employees and others are carried at amortised cost. Deferred employee benefits represents the benefits on account of interest rate on loans being lower than the market rate of interest. The same is amortised on a straight line basis over the remaining period of the loan.

11.2 The amount of loan outstanding from related parties (Directors) is the amount of motor vehicle and House building advance taken from the Company in their capacity as employees. Further information on these loans is set out in note 39-Related party disclosure.

11.3 Loans to the employee are secured against the mortgage of the House property and hypothication of vehicles for which such loan is given as per the policy of the Company.

15.1 Cost of inventories recognised as expenses during the year is '' 4,603.84 crore (previous year : '' 3,806.06 crore).

15.2 Cost of inventories recognised as expenses during the year includes '' 1.46 crore (previous year: '' 2.00 crore) in respect of write-downs of inventory for non moving items.

15.3 Inventories are hypothecated/pledged against cash credit facility availed from Banks.

15.4 Mode of valuation of inventories is stated in note 3.10 of Significant Accounting Policies.

16.B.1 The earmarked balance of '' 75.90 crore (previous year '' 73.26 crore) with scheduled banks includes the amount deposited towards unclaimed dividend amounting to '' 4.29 crore (previous year '' 3.87 crore). The balance amount of '' 71.61 crore (previous year '' 69.39 crore) represents deposits with State Bank of India as per direction of Honâble High Court of Odisha.

16.B.2 Amount due for credit to Investorâs Education and Protection Fund at the end of the current year '' Nil (previous year '' Nil).

(ii) Buy back:

During 2018-19 the Company bought back 6,73,11,386 number of equity shares of '' 5 each which led to decrease in equity share capital from

'' 966.46 crore to '' 932.81 crore.

During 2020-21, the Company bought back 2,89,85,711 numbers of equity shares of '' 5 each which led to decrease in the equity share capital from '' 932.81 crore to '' 918.32 crore.

(iii) Disinvestment :

During the year 2017-18 the Government of India divested 27,77,65,383 Nos. fully paid equity shares (through OFS 17,80,69,927 Nos., through employee offer 76,17,057 Nos. and through ETF 9,20,78,399 Nos.), consequent to which the holding of Government of India came down from 1,44,14,82,490 Nos. (74.58%) as on 31.03.2017 to 1,16,37,17,107 Nos. (60.2%) as on 31.03.2018.

During the year 2018-19, the Government of India further divested 8,89,86,323 Nos. of equity shares through Bharat ETF. Consequent to buyback and transfer of shares through ETF by Government of India during 2018-19, the holding of Government of India has come down from 1,16,37,17,107 Nos.

(60.20%) as on 31.03.2018 to 97,00,81,517 Nos. (51.99%) as on 31.03.2019.

During the year 2019-20, Government of India divested 92,88,506 Nos. of equity shares through Bharat 22 ETF upon which the holding of Government of India has come down from 97,00,81,517 Nos. (51.99%) as on 31.03.2019 to 96,07,93,011 Nos. (51.50%) as on 31.03.2020.

18.2 During the year 2018-19, the Company had bought back 6,73,11,386 number of fully paid equity shares of '' 5 each on December 4, 2018 at an offer price of '' 75 per share. The aggregate consideration paid was '' 504.83 crore. Post buyback, the paid up equity share capital of the Company is reduced by '' 33.65 crore from '' 966.46 crore to '' 932.81 crore. The premium amount '' 471.18 crore is appropriated from general reserve. The shares were extinguished on December 7, 2018 and in terms of the provisions of Companies Act, 2013, a sum of '' 33.65 crore was transferred from general reserve to capital redemption reserve.

18.3 During the year, the Company has paid Final Dividend for FY 2020-21 at '' 1.00 per equity share amounting to '' 183.66 crore on October 25, 2021. The Company has also paid the first tranche of Interim dividend for FY 2021-22 at '' 2.00 per equity share amounting to '' 367.33 crore on December 10, 2021. The second tranche of Interim dividend for FY 2021-22 at '' 3.00 per equity share amounting to '' 550.99 crore was paid on March 4, 2022 with the total payout is '' 918.32 crore. During the preceding year, the Company has paid first tranche Interim dividend of '' 93.28 crore & second tranche of Interim Dividend of '' 367.33 crore for financial year 2020-21.

23.1 Provision related to retirement and other long term employee benefits are provided, in the case of gratuity as per the Payment Gratuity Act 1972, and for other benefits as per the Companyâs rules. Liability for the same is recognised on the basis of actuarial valuation by the Independent Actuary.

23.2 Provision for asset restoration obligation and constructive obligation is made based on Management estimation in line with Ind AS 16: Property, Plant and Equipment and Ind AS 37: Provisions, Contingent Liabilities and Contingent Assets.

23.3 Provision for peripheral development expenditure is the unspent development obligation of the Company prior to introduction of the Companies Act 2013.

23.4 During the current year, the Company has funded '' 445.95 crore (previous year nil) to LIC as plan assets by subscribing to LIC-GLS (Group leave encashment scheme).

24.1 The Honâble CESTAT, Kolkata had issued refund order of '' 230.50 crore during FY 2020-21 in favour of the Company towards clean energy cess. In view of the various earlier judgements on identical matter where the benefit has not been allowed to the beneficiary, due to involvement of higher degree of uncertainty the Company has preferred to recognise the said amount as a liability till final outcome of the dispute. Moreover, the Department has challenged the order issued by CESTAT, Kolkata in the Honâble High Court of Orissa.

24.2 The Company obtains deposits (from the dependent of the employee pursuant to the NEFFAR Scheme who died or suffered disability) for which the Company is in the process of applying to the Ministry of Corporate Affairs, Govt. of India for availing exemption in respect of applicability of Section 73 to 76 of the Companies Act, 2013.

In pursuance to Section 115BAA of the Income Tax Act, 1961 notified by the Government of India through Taxation Laws Ordinance, 2019, the Company had an irrevocable option of shifting to a lower tax rate foregoing other tax incentives during 2020-21 and non applicability of Minimum alternate tax (MAT) u/s 115JB of Income tax Act 1961. The Company has excercised the said option during the FY 2020-21 (relevant to AY 2021-22) for lower rates of taxes and deferred tax assets and liabilities were measured accordingly. The impact of such change in rate of taxes on the deferred tax of FY 2020-21 was '' 345.15 crore. The applicable rate for the current year is 25.168% (previous year 25.168%).

Claims against the Company not acknowledged as debt includes:

iii. Claim from PSUs represents the energy compensation charges and the delayed payment surcharge on the same, since 2005, demanded by Odisha Hydro Power Corporation Limited (OHPC) towards loss of power generation by the Corporation due to drawal of water from the reservoir at Upper Kolab, Koraput by NALCO Refinery at M&R Complex.

iv. The claims against the company are mostly due to demands raised by the IT department at assessment stage. These claims are on account of multiple issues of disallowances such as disallowance in respect of additional depreciation under section 32(i)(iia), disallowance of peripheral development expenses, provision for non-moving stores and spares, treatment of short term capital gain and not allowing loss under long term capital gain and treating the same as business income, disallowance u/s 14A etc. These matters are sub-judice and pending before various appellate authorities. The Company, including its tax advisors, expect that its position will likely be upheld on the ultimate resolution in view of the decisions already available in favour of the Company by higher appellate forums being CIT(A) / ITAT (Jurisdictional). Thus it will not have a material adverse effect on the Companyâs financial position and in the results of operations. Hence, there is no uncertainty in tax treatment which will affect the determination of taxable profit (loss), tax bases, unused tax losses, unused tax credits, and tax rates of the Company.

32.A. Employee benefit Plans

32.A.1 Defined contribution plans

a) Provident fund: The Company pays fixed contribution to Provident Fund at predetermined rates, to a separate trust, which invests the funds in permitted securities. On contributions, the trust is required to pay a minimum rate of interest, to the members, as specified by Govt. of India.

b) Pension fund: The Company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insurers as specified by the employee concerned. The companyâs liability is limited only to the extent of fixed contribution.

32.A.2 Defined benefit plans

a) Gratuity: Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of '' 20,00,000/-. The gratuity scheme is funded by the Company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

b) Post retirement medical benefit: The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the Companyâs hospital/Govt. Hospital/ hospitals as per companyâs rule. They can also avail treatment as out patient subject to maximum ceiling of expenses fixed by the Company. The liability under the scheme is recognised on the basis of actuarial valuation.

c) Settling-in-benefit: On superannuation/retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family from the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible. The liability for the same is recognised on the basis of actuarial valuation.

d) NALCO Benevolent Fund Scheme : The objective of the scheme is to provide financial assistance to families of the members of the scheme who die while in employment of the Company. As per the scheme there will be contribution by members @ '' 30/- per member per death, in the event of death of a member while in the service of the company and matching contribution is made by the Company. The liability for the same is recognised on the basis of actuarial valuation.

e) NALCO Retirement Welfare Scheme : The objective of the scheme is to provide financial assistance as a gesture of goodwill as post retirement support to employees retiring from the services of the company. As per the scheme the recovery from each employee member would be Rs. 10/-per retiring member. The Company would provide equivalent sum as matching contribution. The liability for the same is recognised on the basis of actuarial valuation.

f) Superannuation gift scheme: The objective of the scheme is to recognise the employees superannuating or retiring on medical ground from the services of the Company. The scheme includes a gift item worth of '' 25000/- per retiring employees to be presented on superannuation/ retirement. The liability for the same is recognised on the basis of actuarial valuation.

32.B. Other long term employees benefits

a) Compensated absences :The accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed as per the Companyâs rule. The liability for the same is recognised on the basis of actuarial valuation.

The employee benefit plans typically expose the Company to actuarial risks such as actuarial risk, investment risk, interest risk, longetivity risk and

salary risk:-

i. Actuarial risk: It is the risk that employee benefits will cost to the Company more than expected. This can arise due to one of the following reasons:

a. Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

iii. Interest risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

iv. Longetivity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

32.C - Sensitivity analysis of defined benefit plans

Significant actuarial assumption for determination of defined benefit plan are discount rate, expected salary growth, attrition rate and mortality rate. The sensitivity analysis below have been based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using projected unit credit method at the end of the reporting period, which is same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet. There is no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

In pursuance to Section 115BAA of the Income Tax Act, 1961 notified by the Government of India through Taxation Laws (Amendment) Ordinance, 2019, the Company had an irrevocable option of shifting to a lower tax rate foregoing other tax incentives and non applicability of Minimum alternate Tax. The Company exercised the said option for lower rates of taxes and the taxes have been recognised accordingly. The applicable rate for the current year is 25.168% (previous year 25.168%).

36. Segment information

36.1 Products from which reportable segments derive their revenues

i) Chemical segment

ii) Aluminium segment

38.2 Financial risk management objectives

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which not only covers the foreign exchange risks but also other risks associated with the financial assets and liabilities such as interest rate risks and credit risks.

The objectives of the Company''s risk management policy are, inter-alia, to ensure the following:

i) Sustainable business growth with financial stability;

ii) Provide a strategic framework for Companyâs risk management process in alignment with the strategic objectives including the risk management organisation structure;

iii) That all the material risk exposures of Company, both on and off-balance sheet are identified, assessed, quantified, appropriately mitigated and managed and

38.3 Market risk

Market risk is the risk of any loss in future earnings (spreads), in realizable fair values (economic value) or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, liquidity and other market changes. The Company may also be subjected to liquidity risk arising out of mismatches in the cash flows arising out of sales proceeds and funds raised and loan repayments/prepayments. Future specific market movements cannot be normally predicted with reasonable accuracy.

38.4 Foreign currency risk management

The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:-

38.4.1 Foreign currency sensitivity analysis

38.5 Other price risks

38.5.1 Equity price sensitivity analysis

The Company is not exposed to equity price risk arising from equity instruments as all the equity investments are held for strategic rather than trading purposes.

38.6 Credit risk management

Credit risk is the risk of financial loss arising from counter party failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of credit worthiness as well as concentration risks. There is no significant credit exposure as advance collection from customer is made.

38.7 Liquidity risk management

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

42. Regrouping of previous yearâs figures

Previous yearâs figures have been regrouped/rearranged wherever considered necessary to make them comparable

Mar 31, 2021

5.A.1 Title deeds have been executed for freehold land acquired through Govt. of Odisha, except for land measuring 64.15 acres. The Company is in the process of conversion of freehold land for Industrial use and has taken-up matter with Revenue Authorities.

5.A.2 Cost of Freehold land includes cost of 43.75 acre of land surrendered to Govt. of Odisha against which the alienation process is yet to be completed.

5.A.3 The Company has 1697.71 acres of leasehold land in respect of which lease deeds are yet to be executed. However, the Company has been permitted by the concerned authorities to carry on its operation on the said land.

5.A.4. Registration formalities in respect of office space (building) of 6,459 Sq.ft at Kolkata purchased from Kolkata Municipal Development Authority with a carrying amount of ?4.59 crore is under progress.

5.A.5 The Company incurred ?0.90 crores (previous year ? 0.82 crores) for the year ended 31st March, 2021 towards expenses relating to short-term leases and leases of low-value assets. The total cash outflow for leases is ?4.41 crores (previous year ? 4.27 crores) for the year ended 31st March, 2021, including cash outflow of short-term leases and leases of low-value assets.

6.1. The amount of capital work in progress includes an amount of ?53.97 crore (previous year ?46.44 crore) towards infrastructural development expenditure attributable to Utkal-D and Utkal-E Coal Block. It also incudes directly attributable expenses of ?105.59 crore (previous year ?62.09 crore) for 5 th Stream Alumina Refinery expansion and pre-project expenses of ? 250.11 crores (previous year ?62.01 crore) towards expenditure on infrastructural development in Odisha which was a binding obligation of the Company to Govt. of Odisha for allotment of Pottangi Mines.

(i) The Company has only one class of equity shares having par value of ? 5 each. Each holder of equity shares is entitled to one vote per share and carries proportionate right to dividends declared by the Company based on their holdings.

(ii) Buy back: During the year 2016-17, the Company bought back 64,43,09,628 numbers of equity shares of ? 5 each which led to decrease in the equity share capital from ? 1,288.62 crore to ? 966.46 crore.

During 2018-19 Company again bought back 6,73,11,386 number of equity shares of ?5 each which further led to decrease in equity share capital from ?966.46 crore to ? 932.81 crore.

During the current year, the Company bought back 2,89,85,711 numbers of equity shares of ?5 each which led to decrease the equity share capital from ?932.81 crore to ?918.32 crore.

(iii) Disinvestment: During the year 2017-18 the Government of India divested 27,77,65,383 Nos fully paid equity shares (through OFS 17,80,69,927 Nos, through employee offer 76,17,057 Nos and through ETF 9,20,78,399 Nos), consequent to which the holding of Government of India came down from 1,44,14,82,490 Nos (74.58%) as on 31.03.2017 to 1,16,37,17,107 Nos (60.2%) as on 31.03.2018.

During the year 2018-19, the Government of India further divested 8,89,86,323 Nos of equity shares through ETF. Consequent to buyback and transfer of shares through ETF by Government of India during 2018-19, the holding of Government of India has come down from 1,16,37,17,107 Nos (60.20%) as on 31.03.2018 to 97,00,81,517 Nos (51.99%) as on 31.03.2019.

During the year 2019-20, Government of India divested 92,88,506 Nos. of equity shares through Bharat 22 ETF upon which the holding of Government of India has come down from 97,00,81,517 Nos (51.99%) as on 31.03.2019 to 96,07,93,011 Nos. (51.50%) as on 31.03.2020.

During the current year, consequent upon buy-back of equity shares, the holding of Government of India has come down from 96,07,93,011 Nos. (51.5%) as on 31.03.2020 to 94,17,93,011 Nos. (51.28%) as on 31.03.2021.

18.2 The Company had bought back its own equity shares on September 26, 2016 at a premium utilising general reserve amounting to ? 2834-97 crore and consequently a sum equal to the nominal value of the shares so bought back amounting to ? 322.16 crore had been transferred to the capital redemption reserve account in terms of section 69 of the Companies Act, 2013.

During the year 2018-19, the Company had bought back 6,73,11,386 number of fully paid equity shares of ?5 each on December 4, 2018 at an offer price of ?75 per share. The aggregate consideration paid was ?504-83 crore. Post buyback, the paid up equity share capital of the Company is reduced by ?33.65 crore from ?966.46 crore to ?932.81 crore. The premium amount ?471.18 crore is appropriated from general reserve. The shares were extinguished on December 7, 2018 and in terms of the provisions of Companies Act, 2013, a sum of ?33.65 crore was transferred from general reserve to capital redemption reserve.

During the current year, the Company bought back 2,89,85,711 number of fully paid equity shares of ?5 each on March 10, 2021 at an offer price of ? 57.50 per share. The aggregate consideration paid was ?166.67 crore. Post buyback, the paid up equity share capital of the Company is reduced by ?14.49 crore from ?932.81 crore to ?918.32 crore. The premium amount ?152.18 crore is appropriated from general reserve. The shares were extinguished on March 17, 2021 and in terms of the provisions of Companies Act, 2013, a sum of ?14.49 crore was transferred from general reserve to capital redemption reserve."

18.3 The Company has paid the first tranche of interim dividend @ ? 0.5 per equity share amounting to ?93.28 crore on December 16, 2020. The second tranche of interim dividend of ?2.00 per equity share amounting to ?367.33 crore was paid on 31.03.2021. During the preceding year, the Company paid interim dividend of ?279.84 crore for financial year 2019-20 and final dividend of ?233.20 crore for the FY 2018-19 along with payment of dividend tax of ? 57.52 crore, ?47.94 crore on these respective amounts of dividends.

Note:

24-1 The Honâble CESTAT, Kolkata has issued refund order of ?230.50 crore in favour of the Company towards clean energy cess. In view of the various earlier judgements on identical matter where the benefit has not been allowed to the beneficiary, due to involvement of higher degree of uncertainity the Company has preferred to recognise the said amount as a liability till final outcome of the dispute. Moreover, the Department has challenged the order issued by CESTAT, Kolkata in the Honâble High Court of Odisha.

24.2 Against the accumulated liability of disputed differential electricity duty, based on the request of the Govt. of Odisha the differential electricity duty upto 31.12.2020 amounting to ?675.23 crore has been paid to Govt. of Odisha subject to final decision of Honâble High Court of Odisha. From 01.01.2021 onwards, the monthly electricity duty amount is being paid directly to Govt. of Odisha.

24.3 Consequent upon notification no. OERC/RA/RE-5/2013/2012 dated 31.12.2019 issued by Odisha Electricity Regulatory Commission pegging rate of RPO at 3% (0.5% for Solar sources and 2.5% for non-solar sources) for the CGPs commissioned prior to 1.4.2016 and clarification by Odisha Renewable Energy Development Authority (OREDA) dated 17.06.2021, the Company reassessed its obligation as on 31st March, 2021 which stood at ?24.99 crore (previous year ?293.82 crore) after taking into consideration the renewable energy certificates physically available with the Company and claims for RECs yet to be received. Impact of such revision of liability has been considered in reduction of âOther Expensesâ, [refer note.33(j)]

25. Contingent liabilities (to the extent not provided for) (Contd.)

Claims against the Company not acknowledged as debt includes:

The Company has reviewed the disputed income tax matters and the demands raised by the Department/ Authorities considering the probable outcome of the dispute and posibilities of outflow of resources and disclosed as on 31.03.2021 accordingly.

31.A. Employee benefit Plans

31.A.1 Defined contribution plans

31.A.2 Defined benefit plans

a) Gratuity: Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of ?20,00,000/. The gratuity scheme is funded by the Company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

b) Post retirement medical benefit: The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the Companyâs hospital/Govt.Hospital/ hospitals as per companyâs rule. They can also avail treatment as out patient subject to maximum ceiling of expenses fixed by the Company. The liability under the scheme is recognised on the basis of actuarial valuation.

d) NALCO Benevolent Fund Scheme : The objective of the scheme is to provide financial assistance to families of the members of the scheme who die while in employment of the Company. As per the scheme there will be contribution by members @ ?30/- per member per death, in the event of death of a member while in the service of the company and matching contribution is made by the Company. The liability for the same is recognised on the basis of actuarial valuation.

e) NALCO Retirement Welfare Scheme : The objective of the scheme is to provide financial assistance as a gesture of goodwill as post retirement support to employees retiring from the services of the company. As per the scheme the recovery from each employee member would be ? 10/- per retiring member. The Company would provide equivalent sum as matching contribution. The liability for the same is recognised on the basis of actuarial valuation.

f) Superannuation gift scheme: The objective of the scheme is to recognise the employees superannuating or retiring on medical ground from the services of the Company. The scheme includes a gift item worth of ? 25000/- per retiring employees to be presented on superannuation/ retirement. The liability for the same is recognised on the basis of actuarial valuation.

31.B.3 Other long term employees benefits

a) Compensated absences The accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed as per the Companyâs rule. The liability for the same is recognised on the basis of actuarial valuation.

The employee benefit plans typically expose the Company to actuarial risks such as actuarial risk, investment risk, interest risk, longetivity risk and salary

risk:-

i. Actuarial risk: It is the risk that employee benefits will cost to the Company more than expected. This can arise due to one of the following reasons:

a. Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

31. Employee benefits expense (Contd.)

iii. Interest risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

35. Segment information35.1 Products from which reportable segments derive their revenues

i) Chemical segment

ii) Aluminium segment

37.2 Financial risk management objectives

The objectives of the Companyâs risk management policy are, inter-alia, to ensure the following:

i) Sustainable business growth with financial stability;

ii) Provide a strategic framework for Companyâs risk management process in alignment with the strategic objectives including the risk management organisation structure;

iii) That all the material risk exposures of Company, both on and off-balance sheet are identified, assessed, quantified, appropriately mitigated and managed and

37.3 Market risk

37.4 Foreign currency risk management

Foreign currency risk emanates from the effect of exchange rate fluctuations on foreign currency transactions. The overall objective of the currency risk management is to protect the Companyâs income arising from changes in foreign exchange rates. The policy of the Company is to avoid any form of currency speculation. Hedging of currency exposures shall be effected either naturally through offsetting or matching assets and liabilities of similar currency, or in the absence of thereof, through the use of approved derivative instruments transacted with reputable institutions. The Currency risk is measured in terms of the open positions in respective currencies vis-a-vis the Companyâs operating currency viz. INR. A currency gap statement shall be prepared to find the gap due to currency mismatch.

37-5-1 Equity price sensitivity analysis

The Company is not exposed to equity price risk arising from equity instruments as all the equity investments are held for strategic rather than trading purposes.

37-6 Credit risk management

37-7 Liquidity risk management

39. Regrouping of previous yearâs figures

Previous yearâs figures have been regrouped/rearranged wherever considered necessary to make them comparable

Mar 31, 2018

Note No. 1. Corporate Background

National Aluminium Company Limited is a Navaratna Central Public Sector Enterprise (CPSE) under Ministry of Mines, Government of India, incorporated under the relevant provisions of the Companies Act and is listed in the stock exchanges in India. The Company is engaged in the business of manufacturing and selling of Alumina and Aluminium. The Company is operating a 22.75 lakh TPA Alumina Refinery plant located at Damanjodi in Koraput district of Odisha and 4.60 lakh TPA Aluminum Smelter located at Angul, Odisha. The Company has a captive bauxite mines adjacent to refinery plant to feed the bauxite requirement of Alumina Refinery and also a 1200 MW captive thermal power plant adjacent to Smelter plant to meet the power requirement of Smelter. Besides, the Company is also operating four wind power plants with total capacity of 198.40 MW located in the state of Andhra Pradesh (Gandikota), Rajsthan (Jaisalmer & Devikot) and Maharashtra (Sangli) to harness the renewable energy and to comply with its Renewable Purchase Obligation.

The company has made strategic investments in one associates and two joint venture company also.

Note No.2. Statement of Compliance:

All the Indian Accounting Standards issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and are applicable for the year and relevant to the Company have been taken into consideration and complied with without any exception while preparing the standalone financial statements of the Company.

Note No. 3 : Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements requires the management to make complex and/or subjective judgements, estimates and assumptions about matters that are inherently uncertain. These estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent liabilities and assets at the date of the financial statements and also revenues and expenses during the reported period.

The estimates and associated assumptions are based on past experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.

3.1 Critical accounting judgments:

Apart from those involving estimations that the management have made in the process of applying the Companyâs accounting policies that have the most significant effect on the amounts recognised in the financial statements, management has decided that reporting of Companyâs financial assets at amortised cost would be appropriate in the light of its business model and have confirmed the Companyâs positive intention and ability to hold these financial assets to collect contractual cash flows.

3.2 Key sources of estimation uncertainty:

The following are the key assumptions concerning the future, and other key sources of estimation of uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

3.2.1 Impairment

Investments in Associates and other investments, loans and advances, property, plant and equipment and intangible assets are reviewed for impairment whenever events and changes in circumstances indicate that the carrying value may not be fully recoverable or atleast annually. Future cash flow estimates of Cash Generating Units which are used to calculate the assetâs fair value are based on expectations about future operations primarily comprising estimates about production and sales volumes, commodity prices, reserves and resources, operating rehabilitations and restoration costs and capital expenditure.

3.2.2 Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.

3.2.3 Assessment of Mining Reserve

Changes in the estimation of mineral reserves where useful lives of assets are limited to the life of the project, which in turn is limited to the life of the probable and economic feasibility of reserve, could impact the useful lives of the assets for charging depreciation. Bauxite reserves at Mines is estimated by experts in extraction, geology and reserve determination and based on approved mining plan submitted to Indian Bureau of Mines (IBM).

3.2.4 Obligation for post-employment benefit Liability

Liability for post-employment benefit and long term employee benefit is based on valuation by the actuary which is in turn based on realistic actuarial assumptions.

3.2.5 Provisions & Contingent Liabilities

The amount recognised as a provision, including tax, legal, restoration and rehabilitation, contractual and other exposures or obligations is the best estimate of the consideration required to settle the related liability, including any interest charges, taking into account the risks and uncertainties surrounding the obligation. The Company assess its liabilities and contingent liabilities based upon the best information available, relevant tax and other laws, contingencies involved and other appropriate requirements.

3.2.6 Fair value measurements and valuation processes

For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

4.1. Title deeds have been executed for freehold land acquired through Govt. of Odisha, except for land measuring 66.92 acres. The Company is in the process of conversion of freehold land for Industrial use and has taken-up matter with Revenue Authorities.

4.2. Registration formalities in respect of office space of 6,459 Sq.ft at Kolkata purchased from Kolkata Municipal Development Authority with a carrying amount of Rs.5.50 crore is under progress.

4.3. During the year the Company has acquired leasehold land of 715.89 acre at a cost of Rs. 105.95 crore for its Coal Mines Division. Being an operating lease, the cost of such acquisition has been recognised as prepaid expenses to be amortised over the period of lease. Besides an amount of Rs. 17.12 crore has been paid towards stamp duty and registration fees for leasehold land for Bauxite mines.

5.1 The Company has 2245.55 acres of leasehold land in respect of which lease deeds are yet to be executed. However, the Company has been permitted by the concerned authorities to carry on its operation on the said land.

5.2 Consequent to introduction of Goods and Services Tax Law w.e.f. 01.07.2017, the undisputed amount of indirect tax credit (Cenvat, Service Tax, CVD, OVAT) amounting to Rs. 95.78 crore as on the transition date has been adjusted with the GST liability. The disputed amount of tax credit of pre GST regime aggregating to Rs.209.99 crore is continuing in the books as current assets out of which an amount of Rs. 200.27 crore being doubtful of realisation has been provided for.

Note:

6.1 Cost of inventories recognised as expenses during the year is Rs. 4,143.52 crore (previous year : Rs. 3,403.89 crore).

6.2 Cost of inventories recognised as expenses includes Rs. 5.47 crore (previous year: Rs. 13.02 crore) in respect of write-downs of inventory for non moving items.

6.3 Inventories are hypothecated/pledged against cash credit facility.

6.4 Method of valuation of inventories is stated in note 3.10 of Significant Accounting Policies.

7 A.1 Earmarked balance with scheduled banks represents amount deposited towards unclaimed dividend amounting to Rs.1.70 crore and deposit of Rs.155.02 crore (including accrued interest) under courtâs directive towards disputed electricity duty.

7.A.2 Amount due for credit to Investorâs Education and Protetion Fund at the end of the current year Rs. Nil. (previous year Rs. Nil)

(i) The Company has only one class of equity shares having a par value of Rs. 5 each. Each holder of equity shares is entitled to one vote per share and carries proportionate right to dividends declared by the Company based on their holdings.

(ii) During 2016-17 Company bought back 64,43,09,628 numbers of equity shares of Rs. 5 each which has led to decrease in the equity share capital from Rs. 1,288.62 crore to Rs. 966.46 crore.

(iii) Goverment of India has divested 27,77,65,383 Nos. fully paid equity shares (through OFS 17,80,69,927 Nos, through employee offer 76,17,057 Nos and through ETF 9,20,78,399 Nos), consequent to which the holding of Government of India has come down from 1,44,14,82,490 Nos (74.58%) as on 31.03.2017 to 1,16,37,17,107 Nos (60.20%) as on 31.03.2018.

8.1 The Company had bought back its own equity shares on Septmeber 26, 2016 at a premium utilising general reserve amounting to Rs. 2,834.97 crore and consequently a sum equal to the nominal value of the shares so bought back amounting to Rs. 322.16 crore had been transferred to the capital redemption reserve account in terms of section 69 of the Companies Act, 2013.

8.2 During the year the Company has paid interim dividend @ Rs.4.7 per equity share amounting in total Rs. 908.48 crore. During the preceeding year, Company paid interim dividend of Rs. 541.22 crore for financial year 2016-17 and final dividend of Rs. 144.97 crore for financial year 2015-16. Dividend tax of Rs. 184.94 crore, Rs. 110.18 crore and Rs. 29.51 crore on these respective amounts of dividend have been paid by the Company.

8.3 The Board has recommended a final dividend of Re. 1.00 per share (20% on the eaquity shares of Rs. 5 each) amounting to Rs. 193.29 crore for approval of shareholders in the ensuing Annual General Meeting. Considering the applicable dividend distribution tax the amount of dividend payout works out to Rs. 232.64 crore.

9.1 Accrued wages and salaries includes liability provision of Rs.279.15 crore towards impending pay revision of non-executive employees effecting from 01.01.2017 besides oustanding dues of Rs.96.68 crore towards performance related pay and Rs. 36.80 crore for settlement of differential gratuity liability to emloyees superannuated during the period 01.01.2017 to 28.02.2018 arising due to enhancement of gratuity limit from Rs.10 lakh to Rs.20 lakh.

9.2 Dues payable to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act in respect of such dues included in trade paybales (note-21) and other financial liabilites (note-22) is as under:

10.1 Provision related to retirement and other long term employee benefits are provided, in the case of gratuity as per the Gratuity Act, and for other benefits as per Company rules. Liability for the same is recognised on the basis of actuarial valuation by independent actuary.

10.2 Provision for asset restoration obligation and constructive obligation is made based on management estimation in line with Ind AS 16 and Ind AS 37 respectively.

10.3 Provision for CSR expenditure is the unspent CSR obligation of the Company prior to introduction of Companies Act, 2013.

11.1 The Energy Department of Govt. of Odisha vide its notification dated May 12, 2017 has enhanced the rate of electricty duty from Rs.0.30 paise per unit to Rs.0.55 paise per unit of consumption. Aggrieved by the said notification, Confederation of Captive Power Plants, Odisha of which the Company is a member, has challenged the order in the Honâble High Court of Orissa. As an interim measure, the Honâble High Court in its order dated 01.06.2017 has directed the petitioner to deposit the differential electricity duty in a sepatrate interest bearing bank account which shall be subject to the result of writ petition. Accordingly, the Company provided for electricity duty expenditure at the enhanced rate and deposited the money into a separate interest bearing bank account as per direction of the Court. Interest earned on such deposits is not recognised as income but treated as liability along with the unpaid enhanced electricity duty. The liability including accrued interest on such deposits as at reporting date is Rs. 155.02 crore. Besides, the amount also includes undisputed liability for the month of Mar-18 to be paid in Apr. 18.

11.2 As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification dated 1st August 2015, the Company, being an obligated entity has the obligation to generate power equal to 7.5% (previous year 4.5%) of its total consumption from renewable sources comprising of 3% (previous year 1.50%) from solar renewable source and 4.5% (previous year 3%) from non-solar renewable sources Cumulative non-solar obligation as on 31.3.2018 is Rs.16.42 crore (as on 31.03.2017 Rs.3.16 crore) towards 1,09,444 (previous year 21,066) nos. of non-solar Renewabe Energy Certificates (REC) valued @ Rs. 1,500 (previous year Rs 1,500) per certificate. During the year 1,49,829 nos. (previous year 1,14,493 nos) of non-solar REC has been retained by the Company as a compliance to Renewable Purchase Obligation.

Due to non-fulfillment of the obligation to generate required quantum of power from renewable source of solar energy, the Company has provided cumulative liability upto 31.03.2018 for Rs. 130.45 crore (previous year Rs. 57.18 crore) towards 3,72,716 (previous year 1,63,371) nos. of solar REC value at Rs. 3,500 (previous year Rs. 3,500) per certificate.

Claims against the Company not acknowleged as debt includes:

12.1 Domestic sale of alumina and alumnium includes excise duty amounting to Rs.4.22 crore and Rs.124.74 crore considered upto 30.06.2017 (previous year Rs.15.88 crore and Rs.478.63 crore respectively for full year). Goods and service taxes collected under Goods and Service Tax Act are not included in sales.

Note:

13.1 Unclaimed deposits lying in books for a period of more than 3 years as on the reporting date are written back and recognized as income.

Notes:

14.A. Employee benefits

i) Pay revision of executive employees effective from 01.01.2017 has been implemented in the month of January, 2018. Differential expenditure over and above the liability provided till 31.03.2017 for the period from 01.01.2017 to 31.03.2017 is charged off in the current year.

ii) Pay revision of non-executive employees is due from 01.01.2017 for which Long Term Wage Settlement is awaited. The Company has provided liability for pay revision for the current year Rs.223.72 crore (Previous year Rs.55.43 crore for the period 01.01.2017 to 31.03.2017).

iii) Consequent upon the Govt of India notification dated 29.03.2018 in respect of the Payment of Gratuity Act, 1972 for enhancement of ceiling limit of gratuity from Rs. 10.00 lakh to Rs.20 lakh per employee, the Company has considered the enhanced gratuity limit for valuation of gratuity liability of its employees on roll as on 31.03.2018 based on actuarial valuation. In addition an amount of Rs. 36.80 crore has been provided towards differential gratuity to be settled directly by the Company to the employees superannuated during the period from 01.01.2017 to 31.03.2018.

iv) In terms of approval accorded by the Board of Directors in their 299th meeting held on 10th May, 2017, the Company has revised its Post Retirement Medical Benefit Scheme (PRMBS) w.e.f. 01.04.2017. The benefits as available by the ammended scheme has been considered in the valuation of liability by actuary.

14.B. Employee benefit plans

14.B.1 Defined contribution plans

a) Provident fund: The Company pays fixed contribution to Provident Fund at predetermined rates, to a separate trust,which invests the funds in permitted securities. On contributions, the trust is required to pay a minimum rate of interest, to the members, as specified by Govt. of India.

b) Pension fund: The Company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insurers as specified by the employee concerned. The companyâs liability is limited only to the extent of fixed contribution.

14.B.2 Defined benefit plans

a) Gratuity: Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of Rs.20,00,000/. The gratuity scheme is funded by the Company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

b) Post retirement medical benefit: The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the Companyâs hospital/Govt.Hospital/ hospitals as per companyâs rule. They can also avail treatment as out patient subject to ceiling limit of expenses fixed by the Company. The liability under the scheme is recognised on the basis of actuarial valuation.

c) Settling-in-benefit: On superannuation/retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family from the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible. The liability for the same is recognised on the basis of actuarial valuation.

d) NALCO Benevolent Fund Scheme : The objective of the scheme is to provide financial assistance to families of the members of the scheme who die while in employement of the Company. As per the scheme there will be contribution by members @ Rs.30/- per member per death, in the event of death of a member while in the service of the company and matching contribution by the Company. The liability for the same is recognised on the basis of actuarial valuation.

e) NALCO Retirement Welfare Scheme : The objective of the scheme is to provide financial assistance as a gesture of goodwill for post retirement support to employees retiring from the services of the company. As per the scheme the recovery form each employee member would be Rs. 10/- per retiring member. The Company would provide equivalent sum as matching contribution. The liability for the same is recognised on the basis of actuarial valuation.

f) Superannuation gift scheme:The objective of the scheme is to recognise the employees superannuating or retiring on medical ground from the services of the Company. The scheme includes a gift item worth of Rs. 25000/- per retiring employees to be presented on superannuation/ retirement. The liability for the same is recognised on the basis of actuarial valuation.

14.B.3 Other long term employees benefits

a) Compensated absences :The accumulated earned leave, half pay leave & sick leave is payble on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed as per companyâs rule.The liability for the same is recognised on the basis of actuarial valuation.

b) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA. The liability for the same is recognised on the basis of actuarial valuation.

c) NEFFARS : In the event of disablement/death, the Company pays monthly benefit to the employee/ nominee at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation. The liability for the same is recognised on the basis of actuarial valuation.

The employee benefit plans typically expose the Company to actuarial risks such as actuarial risk, investment risk, interest risk, longevity risk and salary risk:-

i. Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons: Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cashflow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption then the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

ii. Investment risk: For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.

iii. Interest risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

iv. Longevity risk: The present value of the defined benefit plan liability is calculated by refernce to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the planâs liability.

v. Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the planâs liability.

14.C Sensitivity analysis of defined benefit plans

Signficant acturial assumption for determination of defined benefit plan are discount rate, expected salary growth, attrition rate and moratlity rate. The sensitivity analysis below have been based on reasonably possible changes of the respective assumptions occuring at the end of the reporting period while holding all other assumptions constant.

There is no change in the methods and assumptions used in preparing the senstivity analysis from prior years.

15.1 Expenditure on Corporate Social Responsibility.

a) Gross amount to be spent by the company during the year ended March 31, 2018 is Rs.27.88 crore (March 31, 2017 Rs.27.56 crore)

b) Amount spent during the year ended March 31, 2018

i) Construction/acquisition of assets Rs. Nil crore (previous year Rs. 0.32 Crore)

ii) On purpose other than (i) above Rs. 29.01 crore (previous year Rs. 29.69 crore) Total Rs. 29.01 crore (previous year Rs.30.01 crore)

16.1 Dispute with the Department of Water Resources, Govt. of Odisha over interest claim on water charges dues have been settled during the year. In terms of the settlement, the Company paid Rs.58.18 crore at one go discharging the liability accrued till 31.10.2017. Consequent to the settlement excess liability of Rs. 785.71 crore provided for in the books till 31.03.2017 has been written back and considered as an exceptional item.

16.2 In conformity with DPE guidelines, the Board of Directors of the Company, in their meeting held on 5th of May 2018, approved amendment to the old pay revision circular of 2007 withdrawing the item of âInterest Subsidyâ from the cafeteria of perks. Accordingly, the value of interest subsidy on loans to employees, hitherto kept as advance recoverable from them reducing employee benefits expenditure by the corresponding amount, stands not realisable. Since the matter was challanged by the employees in Court, provisions were duly made against such advance considering the same as doubtful of recovery. The development subsequent to the balance sheet date is considered as an adjusting event and accordingly the interest subsidy amount earlier converted into advance is treated as employee benefit expenditure of the current year. The corresponding provision held there against is written back in the current year and taken to income. Both the expenditure and write back of provision have been taken as exceptional items.

16.3 The Central Government introduced Mines and Minerals (Contribution to District Mineral Foundation) Rules by which the Company is liable to contribute @30% of royalty on minerals and coals as Contribution to District Mineral Foundation (DMF). As per the Rules, contribution to be made was made effective from 12.01.2015. The date of applicability was challanged by Federation of Indian Mineral Industries of which the Company is a member. As per Honâble Supreme Court verdict dated 13.10.2017, contribution to DMF for minerals and coals will be effective from 17.09.2015 and 20.10.2015 respectively, the dates when the rates were prescribed by the Central Government or with effect from the date on which the DMF was established by the State Government whichever is later. Accordingly, the Company reversed the liability provided for the period from 12.01.2015 to 16.09.2015 for minerals and claimed refund of DMF contribution paid on coal procurement during the period from 12.01.2015 to 19.10.2015. The reversal of liabilty and claim of refund is taken into income of the current year as an exceptional item.

17. Segment information

17.1 Products from which reportable segments derive their revenues

Information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses on the types of goods delivered. The directors of the company have chosen to organise the Company around differences in products. No reporting segment have been aggregated in arriving at the reportable segments in the Company. Specifically, the Companyâs reportable segment under Ind AS 108- Operating Segments are as follows:

i) Chemical segment

ii) Aluminium segment

The Company has considered Chemicals and Aluminium as the two primary operating business segments. Chemicals include Calcined Alumina, Alumina Hydrate and other related products. Aluminium includes aluminium ingots, wire rods, billets, strips, rolled and other related products. Bauxite produced for captive consumption for production of alumina is included under chemicals and power generated for captive consumption for production of Aluminium is included under Aluminium segment. Wind Power Plant commissioned primarily to harness the potential renewable energy sources is included in the unallocated Common segment.

17.2 Segment revenues and results

The following is an analysis of the Companyâs revenue and results from operations by reportable segment

i) Inter-segment transfer of Calcined Alumina is considered at average sales realization from export sales during the period less freight from Refinery to Port at Vizag plus export incentive. Transfer of power from Aluminium segment to Chemical segment is considered at the annual / periodic average purchase price of power from State Grid at Alumina Refinery.

ii) Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities. Revenue, expenses, assets and liabilities, which relate to the enterprise as a whole and are not allocable on a reasonable basis, have been included under Unallocated Common segment.

17.2 Financial risk management objectives

The objectives of the Companyâs risk management policy are, inter-alia, to ensure the following:

i) Sustainable business growth with financial stability;

ii) Provide a strategic framework for Companyâs risk management process in alignment with the strategic objectives including the risk management organisation structure;

iii) That all the material risk exposures of Company, both on and off-balance sheet are identified, assessed, quantified, appropriately mitigated and managed and

17.3 Market risk

17.4 Foreign currency risk management

Foreign currency risk emanates from the effect of exchange rate fluctuations on foreign currency transactions. The overall objective of the currency risk management is to protect the Companyâs income arising from changes in foreign exchange rates. The policy of the Company is to avoid any form of currency speculation. Hedging of currency exposures shall be effected either naturally through offsetting or matching assets and liabilities of similar currency, or in the absence of thereof, through the use of approved derivative instruments transacted with reputable institutions. The Currency risk is measured in terms of the open positions in respective currencies vis-a-vis the Companyâs operating currency viz. INR. A currency gap statement shall be prepared to find the gap due to currency mismatch.

The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

17.4.1 Foreign currency sensitivity analysis

The following table sets forth information relating to foreign currency exposure as at March 31, 2018 and March 31, 2017.

17.5 Other price risks

17.5.1 Equity price sensitivity analysis

The Company is not exposed to equity price risk arising from equity instruments as all the equity investments are held for strategic rather than trading purposes.

17.6 Credit risk management

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. There is no signficant credit exposure as advance collection from customer is made.

17.7 Liquidity risk management

Company has established an appropriate liquidity risk management framework for the management of the Companyâs short-term, medium-term and long-term funding liquidity management requirements. The Company manages liquidity risk by maintaing adequate reserves and banking facilities by continuously monitoring forecast and actual cashflows and by matching the maturity profiles of financial assets and financial laibilities.

18. Related party disclosures

18.1 Related parties

A. Key Managerial Personnel:

I) Whole time Directors

(a) Dr. T K Chand Chairman-Cum-Managing Director

(b) Shri K C Samal Director (Finance)

(d) Shri B K Thakur Director (HR)

(e) Shri S K Roy Director (Proj & Tech)

Others

Shri K N Ravindra Executive Director-Company Secretary (upto 31.05.2017)

Shri N K Mohanty Company Secretary (w.e.f 01.06.2017)

II) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri Subhash Chandra, IFS (upto 16.02.2018)

(b) Dr N K Singh, IFS (upto 27.03.2018)

(d) Shri Anil Kumar Nayak, IOFS (w.e.f 27.03.2018)

III) Part time non official (Independent) Directors:

(a) Shri Dipankar Mahanta

(b) Shri S Sankararaman

(d) Prof.Damodar Acharya

(e) Shri Maheswar Sahu

(f) Smt. Kiran Ghai Sinha

(g) Shri N N Sharma (w.e.f 06.09.2017)

(h) Smt. Achla Sinha (w.e.f 08.09.2017)

B. Joint Ventures & associates

(a) Angul Aluminium Park Pvt. Ltd.

(b) NPCIL-NALCO power company Ltd.

C. Post Employment Benefit Plan

(a) Nalco Employees Provident Fund Trust

(b) Nalco Employees Group Gratuity Trust

D. Entity controlled by a person identified in (A) as KMP (a) Nalco Foundation

E. Government that has control or significance influence:

(a) Govt. Of India

F. Entities on which Govt. of India has control or significant influence (CPSEs)

The Company has major business transactions during the year with the following CPSEs.

i) Purchase of Goods and Services

a) Indian Oil Corporation Ltd.

b) Bharat Petroleum Corporation Ltd.

c) Hindustan Petroleum Corporation Ltd.

d) Mahanadi Coalfields Ltd.

e) Northern Coalfields Ltd.

f) Singareni Collieries Ltd.

g) Western Coalfields Ltd.

h) Eastern Coalfields Ltd.

i) Numaligarh Refinery Ltd. j) Bharat Earthmovers Ltd.

k) Bharat Heavy Electrical Ltd.

l) Mineral Exploration Corporation Ltd.

m) Balmer Lawrie & Co.

n) East Coast railways

o) Vizag Port Trust

p) MECON Limited.

q) Engineers India Ltd.

ii) Sale of Goods

a) National Small Industries Corporation (NSIC)

b) Steel Authority of India Ltd.

c) Rashtriya Ispat Nigam Ltd.

d) National Thermal Power Corporation Ltd.

19. Regrouping of previous yearâs figures

Previous yearâs figures have been regrouped/rearranged wherever necessary to make them comparable

Mar 31, 2017

Notes:

Liability towards bills discounted as at March 3I, 20I7 relates to bills raised on customers which have been discounted with the bank under the cash credit facility of the Company. For the first time the company recognizes the liability for bills discounted but not collected by the bank from the customer/ confirmed acceptance by the accepting bank on the reporting date. Source of such information is the negotiating bank and these data are maintained by the bank in the electronic mode which are updated on a real-time basis. These informationâs are not available with the bank for past periods. Hence, the figures for the corresponding period ended at March 3I, 20I6 and March 3I, 20I5 could not be made available. However, the bills discounted as on March 3I, 20I6 and March 3I, 20I5 have already been collected by the negotiating bank. As on March 3I, 20I7 there is no such case pertaining to earlier periods.

Notes:

1 The credit period on purchases varies from contract to contract based on the terms of payment in each contract. In none of the contract interest is charged. The company has financial risk management policy in place to ensure that all payables are paid as per agreed terms.

2 Accrued wages and salaries includes liability provisions towards pay revision arrear of the employees for the period January I, 20I7 to March 3I, 20I7 amounting to Rs. 8I.07 crore and diversion of PRMBS allocation to NPS amounting to Rs. 35.79 crore. [refer note 33]

3 Dues payable to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act is as under.

4 Details of provisions related to employee benefit under defined benefit plan has been disclosed at note 33.

5 Provision related to long term employee benefit i.e compensated absences (accumulated earned Leave, Half pay Leave & Sick Leave), Long service rewards are provided as per the Company''s rule and liability for the same is recognized on the basis of actuarial valuation by independent actuary.

6 Provision for asset restoration obligation and constructive obligation is made based on management estimation in line with Ind AS I6 and Ind AS 37 respectively.

7 Provision for CSR expenditure is the unspent CSR obligation of the Company prior to introduction of Companies Act 20I3.

8 As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification dated Ist August 20I5, Nalco, being an obligated entity has the obligation to generate power equal to 4.5% (Previous year 3 %) of its total consumption from renewable sources comprising of I.50% (Previous Year 0.50%) from Solar renewable source and 3 % (previous year 2.5%) from Non solar renewable source.

The company has fulfilled its non solar obligation (through wind power generation) for the current year and part obligation for previous years. Cumulative Non solar obligation as on 3I.3.20I7 is Rs.3.I6 Crore (previous year Rs.2.75 crore) towards 2I,066 (previous year 18,297 ) numbers of Non-solar REC valued @ Rs. 1,500 ( Previous year Rs I,500) per certificate.^ may be mentioned that during the year I,I4,493 Nos of Non solar REC has been self retained by the Company as a compliance to Renewable Purchase Obligation.

Due to non-fulfillment of the obligation to generate required quantum of power from renewable source of Solar energ* the company has provided cumulative liability up to 3I.3.20I7 for Rs.57.I8 crore ( previous year Rs.23.24 Crore) towards I,63,37I ( previous year 66,4I3) numbers of Solar REC valued @ Rs.3,500 ( previous year Rs.3,500) per certificate.

9 The Water Resources Department, Govt. of Odisha having territorial jurisdiction over the Government water sources raised the claims on the Company for water charges and interest on unpaid water charges in terms of The Orissa Irrigation Rules, I96I. The water charges have been fully paid although disputed. Interest there on has been provided for on a conservative basis although not admitted by the Company.

b) Post retirement medical benefit: The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an inpatient can be availed from the Company''s hospital/Govt .Hospital/ hospitals as per company''s rule. They can also avail treatment as outpatient subject to ceiling limit of expenses fixed by the Company. The liability under the scheme is recognized on the basis of actuarial valuation.

c) Settling-in-benefit: On superannuation /retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family for the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible. The liability for the same is recognized on the basis of actuarial valuation.

d) NALCO Benevolent Fund Scheme : The objective of the scheme is to provide financial assistance to families of the members of the scheme who die while in employment of the Company. As per the scheme there will be contribution by members @ Rs.30/- per member per death, in the event of death of a member while in the service of the company and matching contribution by the Company. The liability for the same is recognized on the basis of actuarial valuation.

e) NALCO Retirement Welfare Scheme : The objective of the scheme is to provide financial assistance as a gesture of goodwill for post retirement support to employees retiring from the services of the company. As per the scheme the recovery from each employee member would be Rs. I0/- per retiring member. The Company would provide equivalent sum as matching contribution. The liability for the same is recognized on the basis of actuarial valuation.

f) Superannuation gift scheme: The objective of the scheme is to recognize the employees superannuating or retiring on medical ground from the services of the Company. The scheme includes a gift item worth of Rs. 25000/- per retiring employees to be presented on superannuation/ retirement. The liability for the same is recognized on the basis of actuarial valuation.

9 Other long term employees benefits

a) Compensated absences : The accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed as per company''s rule. The liability for the same is recognized on the basis of actuarial valuation.

b) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA.The liability for the same is recognized on the basis of actuarial valuation.

c) NEFFARS : In the event of disablement/death, the Company pays monthly benefit to the employee/ nominee at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation. The liability for the same is recognized on the basis of actuarial valuation.

The employee benefit plans typically expose the Company to actuarial risks such as actuarial risk, investment risk, interest risk, longetivity risk and salary risk:-

i. Actuarial risk: It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:

Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in obligation at a rate that is higher than expected.

Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the gratuity benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.

Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the gratuity benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.

iii. Interest risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

10. OTHER EXPENSES Note:

11 Expenditure on Corporate Soaal Responsibility.

a) Gross amount to be spent by the company during the year ended March 3I, 20I7 is Rs. 27.56 crore ( March 3I, 20I6 Rs. 26.24 crore)

b) Amount spent during the year ended March 3I, 20I7

i) Construction/ acquisition of assets Rs. 0.32 crore (previous year Rs. Nil.)

ii) On purpose other than (i) above Rs. 29.69 crore (previous year Rs. 27.I7 crore) Total Rs. 30.01 ^ore (previous year Rs.2 7.17 crore)

Note:

12. Taking a cue from the Special Leave Petitions (SLPs) filed by other major assesses of Odisha, challenging the judgment of Hon''ble High Court of Odisha regarding levy of entry tax on imported goods, the Company also filed SLP before Hon''ble Supreme Court of India which was admitted. After examining the decision of various High Courts, the Supreme Court finally referred the matter to bench of 9 judges .

The 9 judge bench of Hon''ble Supreme Court in their judgment dated II.II.20I6 in the matter of Constitutional validity of entry tax and imposition of entry tax on imported goods have decided the constitutional validity of entry tax in favour of the State. But the Apex Court left open the matter on levy of entry tax on imported goods to be decided by the divisional bench of Supreme Court. However, on perusal of findings of individual Judges given in the judgment dated II.II.20I6, primafacie it appears in favour of the State. In consultation with legal experts, the Company has recognized Rs.37.90 crore towards liability for entry tax on imported goods during the year based on the demand for Entry Tax on imports made by State Govt up to 3I.3.20I7. The demand for entry tax pertaining to earlier years has been recognized in the current year based on court judgment, hence considered as exceptional item. Liability on account of Entry tax on import for current year amounting to Rs.3.97 crore has been charged to profit or loss for the current year. Against the total liability for entry tax on import for Rs.4I.88 crore, an amount of Rs26.33 crore has already been paid to State Govt. under protest.

Besides, on account of arbitration settlement arising out of dispute between the Company and M/s KC&CC, an amount of Rs.2.25 crore has been provided which has been considered as an exceptional item.

13. Exceptional item for the previous year relates to an amount of Rs. 53.45 crore (USD 8.05 million) received from M/s. Peak Chemicals towards final settlement of risk and cost claim on them due to non-supply of caustic soda.

14. SEGMENT INFORMATION

15. Products from which reportable segments derive their revenues

Information reported to the chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses on the types of goods delivered. The directors of the company have chosen to organize the Company around differences in products. No reporting segment have been aggregated in arriving at the reportable segments in the Company Specifically, the Company''s reportable segment under Ind AS 108- Operating Segments are as follows:

i) Chemical segment

ii) Aluminums segment

The Company has considered Chemicals and Aluminums as the two primary operating business segments. Chemicals include Calcined Alumina, Alumina Hydrate and other related products. Aluminums includes aluminum ingots, wire rods, billets, strips, rolled and other related products. Bauxite produced for captive consumption for production of alumina is included under chemicals and power generated for captive consumption for production of Aluminum is included under Aluminum segment. Wind Power Plant commissioned primarily to harness the potential renewable energ* sources is included in the unallocated Common segment.

i) Inter-segment transfer of Calcined Alumina is considered at average sales realization from export sales during the period less freight from Refinery to Port at Vizag plus export incentive. Transfer of power from Aluminum segment to Chemical segment is considered at the annual/ periodic average purchase price of power from State Grid at Alumina Refinery.

16. Financial risk management objectives

The objectives of the Company''s risk management policy are, inter-alia, to ensure the following:

i) Ensure sustainable business growth with financial stability;

ii) Provide a strategic framework for Nalco''s risk management process in alignment with the strategic objectives including the risk management organization structure;

iii) Ensure that all the material risk exposures of Nalco, both on and off-balance sheet are identified, assessed, quantified, appropriately mitigated and managed and

iv) Ensure Nalco''s compliance with appropriate regulations, wherever applicable, through the voluntary adoption of international best practices, as far as may be appropriate to the nature, size and complexity of the operations.

The risk management policy is approved by the board of directors. The Internal Control team would be responsible to evaluate the efficacy and implementation of the risk management system. It would present its findings to the Audit Committee every quarter. The Board is responsible for the Company''s overall process of risk management. The Board shall, therefore, approve the compliance and risk management policy and any amendments thereto, and ensure its smooth implementation.

17. Market risk

18. Foreign currency risk management

Foreign currency risk emanates from the effect of exchange rate fluctuations on foreign currency transactions. The overall objective of the currency risk management is to protect the Company''s income arising from changes in foreign exchange rates. The policy of the Company is to avoid any form of currency speculation. Hedging of currency exposures shall be effected either naturally through offsetting or matching assets and liabilities of similar currency, or in the absence of thereof, through the use of approved derivative instruments transacted with reputable institutions. The Currency risk is measured in terms of the open positions in respective currencies vis-a-vis The Company''s operating currency viz. INR. A currency gap statement shall be prepared to find the gap due to currency mismatch.

19. Foreign currency sensitivity analysis

The following table sets forth information relating to foreign currency exposure as at March 3I, 20I7, March 3I, 20I6 and April 0I, 20I5:_

20. Other price risks

21. Equity price sensitivity analysis

The Company is not exposed to equity price risk arising from equity instruments as all the equity investments are held for strategic rather than trading purposes.

22. Credit risk management

23. Liquidity risk management

Company has established an appropriate liquidity risk management framework for the management of the Company''s short-term, medium-term and long-term funding liquidity management requirements. The Company manages liquidity risk by maintain adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and financial liabilities.

24. RELATED PARTY DISCLOSURES

25. Related parties

A. Key Managerial Personnel:

I) Whole time Directors

(a) Dr T K Chand Chairman Cum Managing Director

(b) Shri K C Samal Director (Finance)

(d) Shri B K Thakur Director (HR) w.e.f 04.07.20I6

(e) Shri S K Roy Director (Proj & Tech) w.e.f 03.02.20I7

(f) Shri S.C. Padhy Director (Human Resources) up to 30.6.20I6

(g) Shri N.R. Mohanty Director (Project & Technical) up to 3I.I.20I7

(h) Ms Soma Mondal Director (Commercial) up to 28.2.20I7

Others

Shri K N Ravindra Executive Director-Company Secretary

II) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri Subhash Chandra ( w.e.f 20.I0.20I6)

(b) Dr N K Singh, IFS ( w.e.f I5.3.20I7)

(d) Shri N B Dhal, IAS ( up to I9.I0.20I6)

III) Part time non official (Independent) Directors:

(a) Shri Dipankar Mahanta

(b) Shri S Sankararaman

(d) Prof.Damodar Acharya

(e) Shri Maheswar Sahu

(f) Ms.Kiran Ghai Sinha ( wef 03.02.20I7)

B. Joint Ventures & associates

(a) Angul Aluminium Park Pvt Ltd.

(b) NPCIL-NALCO power company Ltd

C. Post Employment Benefit Plan

(a) Nalco Employees Provident Fund Trust

(b) Nalco Employees Group Gratuity Trust

D. Entity controlled by a person identified in (A) as KMP (a) Nalco Foundation

E. Government that has control or significance influence:

(a) Govt. Of India

F. Entities on which Govt of India has control or significant influence (CPSEs)

The Company has major business transactions during the year with the following CPSEs.

i) Purchase of Goods and Services

a) Indian Oil Corporation Ltd.

b) Bharat Petroleum Corporation Ltd.

c) Hindustan petroleum Corporation Ltd.

d) Mahandai Coal Fields Ltd.

e) Northern Coalfields Ltd.

f) Singareni Coliaries Ltd.

g) Western Coalfields Ltd.

h) Numaligarh Refinery Ltd.

i) Bharat Earthmovers Ltd.

j) Bharat Heavy Electrical Ltd.

k) Mineral Exploration Corporation Ltd.

l) Balmer Lawrie & Co.

m) East Coast railways

n) Vizag Port Trust

ii) Sale of Goods

a) National Small Industries Corporation (NSIC)

b) Steel Authority of India Ltd.

c) Rashtriya Ispat Nigam Ltd.

d) National Thermal Power Corporation Ltd.

26. OFFER FOR SALE (OFS) ( EVENTS OCCURRING AFTER BALANCE SHEET DATE)

The Govt. of India sold I4,24,55,94I shares to non-retail investors and 3,56,I3,986 shares to retail investors on 19th April, 20I7 and 20th April, 20I7 respectively through stock exchange mechanism comprising in total, 9.2I25% of the paid-up capital of the Company. Post OFS, the total shares held by the President of India have come down from 74.58% to 65.36% of the total paid-up capital of Rs. 966.47 crores.

27.REGROUPING OF PREVIOUS YEAR''S FIGURES

Previous year''s figures have been regrouped/rearranged wherever necessary to make them comparable

(a) Reclassification entry is passed in the figures with IGAAP balances in order to make better presentation in terms of Ind AS Figures. However, no adjustment entry has been passed which may affect the total equity or the profit for the year of the Company.

Mar 31, 2016

Note No.1: Renewable Purchase Obligation (RPO)

In terms of Notification dated 1st August 2015 issued by the Odisha Electricity Regulatory Commission (OERC), the Company has the obligation to generate power equal to 3% (previous year 6.5%) of its total consumption from renewable sources comprising 0.5% (previous year 0.25%) from Solar Renewable Source, 2.5% (previous year 1.8%) from Non-solar Renewable Source and 0% (previous year 4.45%) from Co-generation.

a) Company has fulfilled its non-solar obligation through wind power generation for the current year and also part obligation for previous years. Provision has been made for accumulated non-solar obligation amounting to Rs.2.75 Crore (previous year Rs.4.21 crore) towards 18,297 (previous year 28,080) numbers of Non-solar REC valued @ Rs.1,500 (previous year Rs.1,500) per REC.

b) In respect of Solar Renewable Source, the Company has accumulated liability of Rs.23.24 crore (previous year Rs.14.22 Crore) towards 66,413 (previous year 40,637) numbers of Solar REC valued @ Rs.3,500 (previous year Rs.3,500) per REC due to non-fulfillment of the obligation to generate required quantum of power. The liability has been provided for.

Note No.2: Performance Related Pay

Consequent upon finalization of Performance Related Pay (PRP) of Executives for the year 2012-13 and 2013-14, the liability provided in excess in earlier years on this account amounting to Rs.26.60 crore is written back. The reduction of estimated liability of PRP for the years 2012-13 and 2013-14 is primarily attributable to determination of the profit before tax without considering income from surplus fund as per clarification by the Department of Public Enterprises (DPE) of the Govt. of India.

Note No.3: Renewal of Bauxite mining lease

Renewal of Bauxite mining lease (North & Central Block for 1315.264 Ha and South Block for 528.262 Ha) has been sanctioned upto 31.3.2020. For renewal of lease the Company paid stamp duty amounting to Rs.6.11 crore and Rs.1.00 crore respectively, which is capitalized as part of lease- hold land to be amortized over the respective lease life. The amount disclosed as contingent liability towards the demand made by Govt. of Odisha is correspondingly reduced on payment of the above stamp duty.

Note No.4: Contribution to DMF & NMET

In terms of The Mines and Minerals (Development and Regulation) Amendment Act, 2015 and as per the Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 & Mines and Minerals (Contribution to National Mineral Exploration Trust) Rules 2015 framed thereunder and notified on 17th September 2015 by the Ministry of Mines, Government of India, effective from 12th January 2015 the Company is liable to contribute to the District Mineral Foundation (DMF) & National Mineral Exploration Trust (NMET) sums equal to 30% and 2% respectively of its royalty expenses. Accordingly a sum of Rs.34.04 crore and Rs.2.27 crore (including Rs.6.10 crore and Rs.0.41 crore for earlier period) have been recognized as expenses in the current year and taken as liability towards contribution payable to DMF & NMET respectively.

Note No.5: Exceptional Item

The Company has received an amount of Rs.53.45 crore (USD 8.05 million) from M/s Peak Chemicals towards final settlement of risk and cost claim on them due to non-supply of Caustic Soda. The income is recognized as exceptional item.

Note No 6: Impact of ICDS

Income Tax Computation and Disclosure Standards (ICDS) issued by CBDT and made effective from FY 2015-16 have been considered for the purpose of computing tax expenses. However, there is no impact on tax liability of the Company on account of introduction of ICDS.

Note No.7: CSR Expenditure

In terms of Sec 135 of the Companies Act 2013 the CSR obligation of the Company for the year 2015-16 is Rs.26.24 crore against which, the Company has spent Rs.27.17 crore on various CSR activities

Note No 8: Allocation of Coal Mines

i) The Ministry of Coal, Govt. of India, allotted Utkal D & E coal blocks to Nalco in accordance with the provisions of the Coal Mines (Special provisions) Act 2015 and has directed the Nominated Authority to execute the allotment order in favour of the Company on 11th September 2015.

ii) The allotment agreement has been executed by and between the Govt. of India and Nalco in respect of said Utkal D&E coal blocks. As per the terms of allotment agreement, the Company has paid fixed amount of Rs.8.21crore and 1st installment (50%) of the upfront amount of Rs.18.11 crore to the Govt. of India. These are considered as capital advance.

iii) The Company is in the process of acquiring lease-hold and free-hold land required for carrying out mining activities at Utkal D&E coal blocks and has so far paid Rs.91.57 crore to Odisha Industrial Development Corporation towards acquisition of land and to other Govt. agencies for development of infrastructural facilities. The title deed and possession is yet to be passed on to the Company, pending which the amount paid is treated as capital advance.

iv) The amount of Rs.39.34 crore spent till date for development of coal blocks including Rs.34.75 crores spent till the date of earlier de- allocation and expenditure thereafter during deallocation period pursuant to decision of Hon''ble Supreme Court, is included in expenditure during construction under capital work-in-progress.

Note No.9: Leases

a) The Company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha. In connection with the lease, the Company has paid NPV and other related claims, which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per Accounting Policy of the Company.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the Company. The Company has spent an amount of Rs.0.27 crore (previous year Rs.0.26 crore) towards surface and dead rent, which is charged to the statement of profit and loss.

c) The Company performs its port operations on the land taken on lease from Vizag Port Trust. The amount paid towards lease rent Rs.2.63 crore (previous year Rs.2.53 crore) is charged to the statement of profit and loss.

Note No.10: Deposit with Income Tax Authority

The Company has paid demands made by the Income Tax Authority from time to time although disputed in appeal. The aggregate amount of disputed demand is Rs.702.06 crore (previous year Rs. 653.48 crore) which is treated as deposit with income tax authority. Disputes involving demand of Rs.52.14 crore relate to AY 2003-04 & 2006-07 and are pending before Hon''ble Orissa High Court. Disputes involving balance demand amount of Rs.649.92 crore pertain to AY 2005-06 & AY 2007-08 to AY 2013-14 and are lying either before CIT (Appeals) or Income Tax Appellate Tribunal.

Note No.11: Liability for Interest on Water Charges

The Water Resources Department, Government of Odisha, having territorial jurisdiction over the Government water sources raised claims on the Company for water charges and interest on unpaid water charges in terms of The Orissa Irrigation Rules, 1961. While the Company has cleared water charges dues, payment of interest, although provided for, is pending for settlement.

Note No.12: Dues payable to Micro, Small and Medium Enterprises

Dues payable to micro and small enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act is as under.

Note No.13: Dividend for the year

Company paid interim dividend @ Rs.1.25 (previous year Rs.1.25) per equity share of Rs.5/- each for the year 2015-16 and provided the liability for payment of proposed final dividend @ Rs.0.75 (previous year Rs.0.50) per equity share for the year. The total amount of dividend for the year is Rs.515.45 crore (previous year Rs.451.02 crore), which is subject to approval by the shareholders in the ensuing Annual General Meeting.

Note No.14: Change in Accounting Policy/ Practice

The employee benefit expenditure on account of contributions towards Nalco Employees'' Benevolent Scheme, Nalco Retirement Welfare Scheme and Nalco Superannuation Gift Scheme were hitherto recognized on the basis of actual contributions made by the Company. The above items are henceforth considered as part of long-term employee benefits and liabilities are provided as per actuarial valuations. Had there been no such change, profit for the year would have increased by Rs.23.99 crore.

Note No.15: Buyback of Shares:

The Board of Directors in it''s meeting held on 25th May 2016, have approved buyback of not exceeding 64,43,09,628 equity shares of the Company at a price of Rs. 44/- per share subject to approval of shareholders of the Company by way of a special resolution through Postal Ballot and all other applicable statutory approvals.

Note No.16: Regrouping of previous year''s figures

Previous year''s figures have been regrouped or rearranged wherever considered necessary to make them comparable.

Note No.17: Related Party Disclosures

53.1 Related Parties

A) Joint Ventures

a) Angul Aluminium Park Pvt. Ltd.

b) NPCIL-NALCO Power Co. Ltd

c) GACL-NALCO Alkalies & Chemicals Pvt Ltd.

B) Co-venturer/ Investors in Joint Venture Company

a) Gujarat Alkalies & Chemicals Ltd.

C) Key Managerial Personnel:

i) Whole-time Directors

(a) Shri Ansuman Das (upto 30.04.2015) Chairman-cum-Managing Director

(b) Dr. T K Chand (w.e.f. 27.07.2015) Chairman-cum-Managing Director

(c) Shri N R Mohanty Director (Project & Technical)

(d) Shri S C Padhy Director (Human Resources)

(e) Shri K C Samal Director (Finance)

(f) Ms. Soma Mondal Director (Commercial)

(g) Shri V Balasubramanyam Director (Production)

ii) Others

(a) Shri K N Ravindra Executive Director-Company Secretary

D) Part-time Official Directors: (Nominee of Govt. of India):

(a) Dr. N K Singh, IFS (upto 22.12.2015)

(b) Shri R Sridharan, IAS

(c) Shri N B Dhal, IAS (w.e.f. 23.12.2015)

E) Part time non official (Independent) Directors:

(a) Shri Qaiser Shamim (upto 09.07.2015)

(b) Shri Sanjiv Batra (upto 09.07.2015)

(c) Shri S Sankararaman (w.e.f. 21.11.2015)

(d) Shri Pravat Keshari Nayak (w.e.f. 21.11.2015)

(e) Shri Maheswar Sahu (w.e.f. 21.11.2015)

(f) Shri Dipankar Mahanta (w.e.f. 21.11.2015)

(g) Prof. Damodar Acharya (w.e.f. 21.11.2015)

Mar 31, 2015

Particulars Figures as at the Figures as at the end end of current of previous reporting period reporting period

Note 1 : Contingent Liabilities not provided for

Claims against the company not acknowledged as debts :

1. Sales tax 445.60 438.02

2. Excise duty 83.35 142.55

3. Customs duty 5.77 7.99

4. Service tax 2.26 1.62

5. Income tax 1,079.37 817.55

6. Entry tax and Road tax 214.46 186.01

7. Land acquisition and interest there on 43.83 50.73

8. Stamp duty 211.64 211.64

9. Demand from Dept. of mines Govt. of Odisha 90.05 0.48

10. NPV and related expenses under mining lease 106.04 106.04

11. Claims of contractor''s suppliers & others 163.27 114.06

12. Employee state insurance 0.32 0.32

13. Provident fund commissioner 0.05 0.08

Total : 2,446.01 2,077.09

Claims against the company not acknowledged as debts includes:

a. Demand from various statutory authorities towards Income Tax, Sales Tax, Excise Duty, Customs Duty, Service Tax, Entry Tax and other government levies. The company is contesting the demand at appealate authorities. It is expected that the ultimate outcome of these proceddings will not have any material adverse effect on the company''s fnancial position and results of operation.

b. Claims ofcontractors'' for supply of material/services pending with arbitration/courts those have arisen in the ordinary course of business. The company reasonably expect that these legal actions when ultimately concluded and determined will not have material adverse effect on the company''s results of operation or fnancial condition.

Note 2 : Capital and other commitments

a) Capital Commitments

Estimated amount of contracts on capital account and not provided for, remaining to be executed. 207.54 357.15

b) Other Commitments

The company has imported capital goods under the Export promotion capital goods scheme(EPCG) of the Govt. of India at concessional rates of duty under the scheme to fulfill quantified exports for duty saved Rs. 8.90 crore(previous year Rs. 53.34 crore). 53.41 423.84

Total : 260.95 780.99

D. General description of various defined benefit schemes are as under

(i) Provident Fund : The company pays fxed contribution to Provident Fund at predetermined rates, to a separate trust, which invests the funds in permitted securities.On contributions, the trust is required to pay a minimum rate of interest, to the members, as specified by Govt.of India. Where the trust is unable to pay interest at the declared rate for the reasons that the return on investment is less or for any other reason, then the deficiency shall be made good by the company.

(ii) Pension Fund : The company pays fxed contribution to the trustee bank of PFRDA,which in turn invests the money with the insurers as specified by the employee concerned.The company''s liability is limited only to the extent of fxed contribution.

(iii) Gratuity : Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of Rs. 10,00,000/-. The gratuity scheme is funded by the company and is managed by a separate trust.The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit : The benefit is available to retired employees and their spouses who have opted for the benefit.Medical treatment as an inpatient can be availed from the company''s hospital/Govt.Hospital/ hospitals as per company''s rule.They can also avail treatment as out patient subject to ceiling limit of expenses fxed by the company.The liability under the scheme is recognised on the basis of actuarial valuation.

(v) Settling-in- Benefit : On superannuation /retirement/termination of service, if opted for the scheme, the transfer TA is admissible to the employees and / or family for the last head quarters to the hometown or any other place of settlement limited to distance of home town. Transport of personal conveyance shall also be admissible.The liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA.The liability for the same is recognised on the basis of actuarial valuation.

(vii) NEFFARS : In the event of disablement/death,the company pays monthly benefit to the employee/ nominee at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation.The liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment : The accumulated earned leave,half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the company.During the service period encashment of accumulated leave is also allowed as per company''s rule.The liability for the same is recognised on the basis of actuarial valuation.

Note No. 3. Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power equal to 6.5% (Previous year 6%) of its total consumption from renewable sources comprising of 4.45% (Previous year 4.20%) from Co- generation, 0.25% (Previous Year 0.20%) from Solar renewable source and 1.80% (previous year 1.60%) from Non solar renewable source.

a) The company has fulfilled the Co-generation obligation for the year 2014-15 through generation of power from Steam & Power Plant at Refinery Plant.

b) The company has also fulfilled its Non solar obligation (through wind power generation) for the current year and part obligation for previous years. Cumulative Non solar obligation as on 31.3.2015 is Rs.4.21 Crore (previous year Rs.15.54 crore) towards 28,080 (previous year 1, 03,656 ) numbers of Non-solar REC.

c) Due to non-fulfillment of the obligation to generate required quantum of power from renewable source of Solar the company has provided cumulative liability up to 31.3.2015 for Rs.14.22 crore (previous year Rs.24.98 Crore) towards 40,637 ( previous year 26,855) numbers of Solar REC valued @ Rs.3,500 (previous year Rs.9,300) per certificate.

Note No. 4. Settlement of Disputed Electricity Duty and Interest thereon

During the year, there was out of court settlement by the Company with Govt of Odisha with regards to disputed Electricity duty, Interest on unpaid Electricity Duty and Electricity duty on Transmission and Transformation loss. As per settlement, the unpaid electricity duty in respect to auxiliary consumption and differential duty is fully paid amounting to Rs. 520.02 crore after adjustment of Electricity duty on Transmission and Transformation loss of an amount of Rs. 38.81 Crore.

Out of the Interest liability on the unpaid electricity duty and interest earned on FD/ Escrow (deposited as per court order) up to the date of settlement amounting to Rs. 355.08 Crore, an amount of Rs. 352.11 Crore has been paid leaving Rs. 2.97 crore to be paid subsequently.

After the settlement, the excess amount provided in the accounts over and above the settled amount is written back, thereby increasing the profit by Rs. 196.82 Crore (current year Rs. 48.40 crore and earlier years Rs. 148.42 Crore). The expenditures for earlier years it is treated as exceptional items (Ref Note 30).

Note No 5. Asset Componentization:

In pursuant to Schedule-II of the Companies Act, 2013, the fxed assets (Plant & machinery) of significant value are componentized with separate useful life. The cut off limit of component value to capitalize separately with different useful life is considered as Rs. 1 Crore and above in each case except Hydrate process at Alumina Refinery and thermal power generation plant at CPP For Hydrate process the componentization under each sub process is based on % of its constituent elements and for Thermal power generation plant at CPP, the componentization is based on broad billing break up by the equipment provider M/s BHEL.

Note No 6. Effect of schedule-II-Transitional provision

In accordance with Schedule-II of the Companies Act, 2013, the company has revised the useful life of the fxed assets. As per the transitional provision the company has adjusted Rs.160.46 crore towards carrying amount of assets where the remaining useful life is nil to opening balance of Reserve & Surplus and deferred tax liability by Rs.105.92 crore and Rs.54.54 Crore respectively.

Apart from the above, due to revision of useful life of the fxed assets in compliance to Schedule-II of the Companies Act, 2013, on account of lower depreciation, profit for the year increased by Rs 130.13 crore.

Note No.7. CSR Expenditure

In terms of Sec 135 of the Companies Act, 2013, the CSR obligation of the Company for the year 2014-15 works out to to Rs.20.14 crore, the Company has spent Rs.19.09 crore (includes capital expenditure of Rs. 0.83 Crore towards renewable energy) on various CSR activities leaving an obligation of Rs.1.05 crore to be spent in the succeeding years which has been provided in Accounts.

Note No 8. Utkal E Coal Block

Utkal E Coal Block was allotted to Nalco by Govt. of India. The Company has paid Rs. 91.57 Crore to M/s Odisha Industrial Development Corporation for acquisition of land and other Govt. Agencies for development of infrastructural facilities. Besides the company has spent Rs. 34.75 Crore towards infrastructural development expenses for Utkal E Coal Block. The process of alienation of land in the name of Nalco is yet to be completed. Pursuant to The Coal Mines (Special Provisions) ordinance, 2014 issued by GOI dated 21st October 2014, consequent upon de-allocation of Utkal E Coal Block, the amount of Rs. 34.75 crore spent on development of infrastructure expenses till the date of de-allocation has been put under claim with Government of India. Such expenditure incurred after the date of de-allocation is charged to revenue.

The company has applied for reallocation of Utkal E Coal Block in its favour and the matter is being pursued with Government of India.

Note No. 9: Jointly Controlled assets

The Company has entered in to an MOU with M/s Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for drawing power for their plants.

The facility shall be used exclusively by the beneficiaries. The operation and maintenance expenses shall also be shared proportionately by the co-beneficiaries. Following are the disclosure in compliance to AS27.

a. Name of the asset 220 KV switching at Laxmipur

b. Nature of Asset Electrical Installation

c. Nature of benefit envisaged Drawing power for plant operation through Feeder

d. Total Value of the work Rs.53.97 Crore ( previous year Rs.45.70 crore)

e. Nalco''s share in joint asset 33.33% (1/3rd)

f. Value of asset capitalized Rs.17.99 Crore (previous year Rs.15.23 crore)

g. Liability as on 31.3.2015 Rs.4.40 Crore (previous year Rs.3.99 crore)

h. Income from sale/use of output Nil

i. Expenses in respect of Nalco''s interest Nil

Note No.10 Operating Leases:

a) The company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha. In connection with lease renewal, the company has paid NPV and related payments which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per the Accounting policies of the company.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the company. The company has paid an amount of Rs.0.26 crore (previous year Rs.0.19 Crore) towards surface and dead rent and charged to statement of profit and loss of the respective year.

c) The port facilities is being operated on the land taken on Lease from Vizag Port Trust. The amount spent during the year is T2.53 crore (previous year Rs.2.58 Crore).

Note No.11. Dividend for the year:

11.1 The Company has paid interim dividend of Rs.1.25 per equity share of Rs.5/-each for the year 2014-15 (previous year Rs.1.10 per equity share of Rs.5/- each).

11.2 The provision for fnal dividend of Rs.0.50 per equity share of Rs.5/- each is made for the year 2014-15 (previous year Rs.0.40 per equity share of Rs.5/- each) .

11.3 Total dividend for the year 2014-15 works out to Rs.1.75/- per equity share of Rs.5/- each (previous year Rs.1.50 per equity share of Rs.5/- each).Total amount of proposed dividend for the year 2014-15 is Rs.451.02 crore (previous year Rs.386.59 crore).

Note No.12. Change in Accounting Policy/ Practice:

12.1. a) Increase in the minimum asset value for 100% depreciation in the year of acquisition from Rs.5,000 to Rs.10,000 in each case. The above change in accounting policy has led to increase in the depreciation expenditure for the current year by an amount of Rs.4.27 Crore.

b) Life of Intangible Assets License (RTA technical knowhow) has been changed from 18 years to 10 years. Besides, life of 220 KV switching station (jointly controlled Assets) earlier considered as tangible fxed assets to be amortized over 5 years has been changed as Intangible assets (User License) to be amortized over 10 years. The above change in accounting policy has led to net increase in the depreciation expenditure for the current year by an amount of Rs.0.17 Crore.

Note No.13. Regrouping of previous year''s fgures:

Previous year''s fgures have been regrouped/rearranged wherever necessary to make them comparable.

Mar 31, 2014

(Rs. in Crore) Particulars Figures as at the Figures as at the end of current end of previous reporting period reporting period

Note 1 : Contingent Liabilities not provided for

Claims against the company not acknowledged as debts :

1. Sales tax 438.02 534.81

2. Excise duty 142.55 169.17

3. Customs duty 7.99 0.92

4. Service tax 1.62 -

5. Claims of contractor''s suppliers & others 114.06 185.83

6. Land acquisition and interest there on 50.73 49.30

7. Income tax 817.55 486.19

8. Entry tax and Road tax 186.01 147.92

9. Employee state insurance 0.32 0.32

10. Provident fund commissioner 0.08 0.08

11. Royality 0.48 0.48

12. Stamp duty 211.64 -

13. NPV and related expenses under mining lease 106.04 106.71

Total : 2,077.09 1,681.73

D. General description of various defined benefit schemes are as under :

(i) Provident Fund : The company pays fixed contribution to Provident Fund at predetermined rates, to a separate trust, which invests the funds in permitted securities. On contributions, the trust is required to pay a minimum rate of interest ,to the members, as specified by Govt. of India. Where the trust is unable to pay interest at the declared rate for the reasons that the return on investment is less or for any other reason, then the deficiency shall be made good by the company.

(ii) Pension Fund : The company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insurers as specified by the employee concerned. The company''s liability is limited only to the extent of fixed contribution.

(iii) Gratuity : Gratuity payable to employees as per The Payment of Gratuity Act subject to a maximum of Rs.10,00,000/. The gratuity scheme is funded by the company and is managed by a separate trust. The liability for gratuity under the scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit : The benefit is available to retired employees and their spouses who have opted for the benefit. Medical treatment as an in-patient can be availed from the company''s hospital/Govt.Hospital/hospitals notified by the company. They can also avail treatment as out-patient subject to ceiling limit of expenses fixed by the company. The liability under the scheme is recognised on the basis of actuarial valuation.

(v) Settling-in-benefit : On superannuation /retirement/termination, the employees who have opted for the benefit and/or family shall be entitled to get travelling allowance as fixed by the company (as per TA rule) from the last headquarters to the home town or any other place of settlement. The liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward : The employee who completes 25 years of service are entitled for a long service reward which is equal to one month basic pay and DA. The liability for the same is recognised on the basis of actuarial valuation.

(vii) NEFFARS : In the event of disablement/death,the company pays monthly benefit to the employee/legal heir(s) at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of notional superannuation. The liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment : The accumulated earned leave, half pay leave & sick leave is payble on separation, subject to maximum permissible limit as prescribed in the leave rules of the company.During the service period encashment of accumulated leave is also allowed as per company''s rule.The liability for the same is recognised on the basis of actuarial valuation.

Note No.2.Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power 6% (Previous year 5.5%) of its total consumption from renewable sources comprising of 4.20% (Previous year 3.95%) from Co- generation, 0.20% (Previous Year 0.15%) from Solar renewable source and 1.60% (previous year 1.40%) from Non solar renewable source.

a) The company has fulfilled the requirement of its Co-generation obligation for the year 2013-14 through co-generation of power fromSteam & Power Plant at Refinery Unit.

b) On complete commissioning and generation of wind power at Gandikota (AP) and Jaisalmer (Rajsthan) the company has fulfilled its Non solar obligation (through wind power generation) for the current year and part obligation for previous years. Cumulative Non solar REC obligation as on 31.3.2014 is Rs.15.54 Crore towards 1, 03,656 numbers of Non-solarREC.

c) Due to non-fulfillment of the obligation to generate power from renewable source of Solar the company has provided cumulative liability up to 31.3.2014 for Rs.24.98 Crore towards 26,855 numbers of Solar REC.

Note No. 3: Electricity Duty

As per the Judgment of Hon''ble High Court of Orissa dated 6th May 2010 (OJC No 966 of 2001), Electricity duty is a consumption based levy. Power lost in the course of transmission from the point of generation to the point of consumption is not subject to levy of Electricity duty.

Electricity Duty on power consumed out of generation from Captive Power Plant,Angul and Steam & Power Plant at Refinery is considered after allowing transmission loss @ 5.421% and 12.47% of gross generation respectively based on in-house technical estimation. The technical estimation is not accepted by the State Govt. The claim for refund of duty paid up to 31.3.2014 amounts to Rs. 94.55 Crore (up to previous year Rs. 90.17 Crore) which could not be pursued due to Interim Order of Hon''bleSupreme Court.

Note No. 4: Jointly Controlled assets

The Company has entered in to an MOU with M/s Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for drawing power to their respective premises.

The facility shall be used exclusively by the beneficiaries. The operation and maintenance expenses shall also be shared proportionately by the co-beneficiaries. Following are the disclosure in compliance toAS27:

a. Name of the asset : 220KV substationat Laxmipur

b. NatureofAsset : Electrical Installation

c. Natureof benefit envisaged : Drawing power for plant operation through feeder

d. Total Valueofthe work : Rs.45.70 Crore

e. Nalco''s shareinjoint asset : 33.33% (1/3rd)

f. Valueofasset capitalized : Rs.15.23 Crore

g. Liabilityason31.3.2014 : Rs.3.99 Crore h. Income from sale/useofoutput : Nil

i. Expenses in respect of Nalco''s interest : Nil

NoteNo.40 Operating Leases:

a) The company is operating its mining activities at Panchpatmali bauxite mines based on lease granted by Government of Odisha renewable after every 20 years. In connection with lease renewal, the company has paid NPV and related payments which is capitalized as intangible assets under Mining Rights and amortized on straight line basis as per the Accounting policies of the company for intangible assets.

b) The Mining lease is subject to payment of surface rent and dead rent on the land acquired by the company. The company has paid an amount of Rs. 0.19 crore (previous year Rs. 0.16 Crore) towards surface and dead rent and charged to statement of profit and loss of the respective year.

Note No.5. Dividend for the year:

5.1 The Company has paid interim dividend of Rs. 1.10 per equity share of Rs. 5/- each for the year 2013-14 (previous year Rs. 0.75 per equity share of Rs. 5/- each).

5.2 The provision for final dividend of Rs. 0.40 per equity share of Rs. 5/- each is made for the year 2013-14 (previous year Rs. 0.50 per equity share of Rs. 5/- each) .

5.3 Total dividend for the year 2013-14 works out to Rs. 1.50/- per equity share of Rs. 5/- each (previous year Rs. 1.25 per equity share of Rs.5/-each).Total amount of proposed dividend for the year 2013-14 isRs.386.59 crore (previous yearRs.322.15 crore).

Note No.6. Change in Accounting Policy/ Practice:

6.1. InclusionofCaptive power generationinAluminium Segment.

Nature of Change:

Captive generation of power is an integral part of Aluminium metal production in the Smelter plant. Aluminium smelting is power intensive and accordingly the project was conceived with adequate captive generation of power as the aluminium smelter is not viable without captive power support. Every capacity increase in CPP is directly related to capacity increase in aluminum smelter. Of late Smelter operation with purchase of power from State (Grid) will not be economically viable and is not part of the business model. Sustained power supply at reasonable cost is one of the predominant sources of risk and return for Aluminium smelter. It can influence the risk and return to a larger extent.As such, major strategic or managerial decisions concerning either of the plant are interdependent.

Accordingly, the policy of reporting Captive power generation as a separate reportable segment has been dispensed. Power generation at CPP for captive consumption for Aluminium production is included in Aluminium segment.

Previous year''s figures have been recasted accordingly to make it comparable.

6.2. Change in price for transfer of Alumina from Chemical Segment to Aluminium Segment and transfer of powerfromAluminiumsegmenttoChemicalsegment

Nature of Change:

Inter-segment transfers should be measured on the basis that the enterprise actually used to price those transfers. In other words, the price that is actually used in the books of account to reflect the transaction between different segments and the price that is used to reflect segment results for the purpose of segment reporting under AS 17, should be same.Accordingly the following change in policy has been brought from current year.

a) Transfer price ofAlumina from Chemical segmenttoAluminium Segment Old: Lower of average price from export sales during the period less freight and cost plus 15.50% return on investment on gross fixed assets

New: Average sales realization from export sales during the period less freight from Refinery to Port at Vizag plus export incentive.

b) Transfer of Power fromAluminium Segment to Chemical segment Old: Lower of average sales price to GRIDCO and cost plus 15.50% return on investment on gross fixed assets. New:Annual/ periodic average purchase price of power from state GRID at Alumina Refinery. Previous year''s figures have been recasted accordingly to make it comparable.

Note No.7. Regrouping of previous year''s figures:

Previous year''s figures have been regrouped/rearranged wherever necessary to makethem comparable.

Note No.45 RelatedParty Disclosures:

7.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below:-

i) Whole timeDirectors:

(a) ShriAnsuman Das

(b) Shri B.L. Bagra (up to 01.05.2013)

(c) Shri S.S. Mahapatra

(d) Shri N.R. Mohanty

(e) Shri S.C. Padhy

(f) Shri K C Samal (from 3.1.2014)

(g) Ms Soma Mondal (from 11.3.2014)

ii) Part timeOfficialDirectors: (NomineeofGovt.ofIndia):

(a) Ms. Gauri Kumar, IAS (up to 1.7.2013)

(b) Shri R Sridharan, IAS (from 30.8.2013)

(c) Shri D S Mishra,IAS (Upto 22.04.2013andfrom 04.07.2013)

iii)Part timenon official (Independent) Directors:

(a) Shri Ved Kumar Jain ( up to 20.3.2014)

(b) Shri P.C. Sharma, IAS (Retd.) (up to 20.3.2014)

(c) Shri G.P. Joshi, IAS (Retd.)

(d) Shri S.S. Khurana

(e) Shri Madhukar Gupta, IAS (Retd)

(f) ShriGHAmin

(g) Shri Qaiser Shamim

(h) Shri Sanjiv Batra

iv) The company has interest in joint ventureAngul Aluminium Park Pvt Ltd. and NPCIL-NALCO Power Company Ltd. with 49.5% and 26% share holding respectively. During the year the company has not made any transaction with the JVs (Previous year Nil)

Mar 31, 2013

Note No.1. Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, Nalco, being an obligated entity has the obligation to generate power for 5.50% (Previous year 5.00%) of its total consumption from renewable sources comprising of 3.95% (Previous year 3.70%) from Co-generation, 0.15% (Previous Year 0.10%) from Solar renewable source and 1.40% (previous year 1.20%) from Non-solar renewable source. The company has fulfilled the requirement of its Co-generation obligation for the year 2012-13 through co-generation of power from Steam Power Plant at Refinery Unit.

The Company has provided an amount of Rs. 19.59 Crore (Previous Year Rs. 29.29 crore) towards Renewable Purchase Obligation (RPO) for the year due to non-fulfillment of the obligation to generate power from renewable source of Solar and Non-solar. The obligation towards Solar and Non-solar obligation as on the end of the year has been valued at weighted average price of respective certificates quoted at I EX and PXIL.

Note No 2: Extra claim by GRIDCO towards billing @ 15 minutes slot:

During the year M/s. GRIDCO has raised claim of Rs. 15.56 crore ( from Dec'' 2011 to Jan 2013) on the company towards extra charges on account of billing @ 15 minutes slot (injection by CPP and drawal at Refinery at every 15 minutes slot). The extra amount is claimed by GRIDCO considering the part of power wheeled by the Company for its Refinery Unit as inadvertent power. While recognizing the amount, the inadvertent power as claimed by GRIDCO is considered as sale of Power by the company at the price considered by GRIDCO. To that extent the quantity of Power drawal at Refinery has been considered as Purchase power. The company has recognized the above claim of GRIDCO including estimated additional liability up to the month of March 2013 amounting to Rs. 17.12 Crore.

Note No. 3:Jointly Controlled assets:

The Company has entered in to an MOU with M/s. Aditya Aluminium & M/s Utkal Alumina International Limited for construction of a 220 KV switch station at Laxmipur area of Koraput District in the state of Odisha for supply of power to their respective premises. Each beneficiary shares the capital expenditure in equal proportion. Total amount of investment in jointly controlled asset by the Company as on 31.3.2013 is Rs. 8.13 crore and included in Capital work in progress. The facility shall be used exclusively by the beneficiaries and the operation and maintenance expenses shall also be jointly shared.

Note No.4.Dues payable to Micro, Small and Medium Enterprises:

Dues payable to Micro and Small Enterprises as defined in the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the Company. The disclosure pursuant to said Act is as under :

Note No.5.Dividend for the year:

5.1 The Company has paid interim dividend of Rs. 0.75 per equity share of Rs. 5/- each for the year 2012-13 (previous year Rs. 0.90 per equity share of Rs. 5/- each).

5.2 The provision for final dividend of Rs. 0.50 per equity share of Rs. 5/- each is made for the year 2012-13 (previous year Rs. 0.10 per equity share of Rs. 5/- each) .

5.3 Total dividend for the year 2012-13 works out to Rs.1.25/- per equity share of Rs. 5/- each (previous year Rs. 1/- per equity share of Rs. 5/- each).Total amount of proposed dividend for the year 2012-13 is Rs. 322.15 crore (previous year Rs. 257.72 crore).

Note No.6. Change in Accounting Policy/ Practice:

6.1. Increase in limit of prior period and prepaid expenses.

During the year, limit for Pre-paid transaction has been increased from Rs. 1.00 lakh in each case to Rs. 5.00 lakh in each case. This change in policy has resulted decrease in profit for the year by Rs. 0.19 Crore.

During the year, limit for Prior Period transaction has been increased from Rs. 1.00 lakh in each case to Rs. 5.00 lakh in each case. Due to this change in policy, there is no change overall profitability of the company for the current year. However the change in policy has resulted in regrouping of figures between current year expenses and prior period expenses by Rs. 0.43 Crore.

6.2. Change in treatment of Government Grant by transferring from capital reserve to subsidy reserve.

Fixed assets acquired out of financial grant from Government are shown at cost by crediting the grant in aid received to capital reserve up to last year and the corresponding depreciation on the said asset for each year was adjusted between capital reserve and General Reserve/surplus.

During the year the amount of depreciation on the said assets has been reduced by transferring equal amount from Subsidy Reserve.

Impact of this change in policy have resulted increase in profit by Rs. 0.05 crore.

Note No.7.Regrouping of previous year''s figures:

Previous year''s figures have been regrouped/rearranged wherever necessary to make them comparable.

Note No.8 Related Party Disclosures:

8.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below:-

i) Whole time Directors:

(a) Shri Ansuman Das

(b) Shri B.L. Bagra

(c) Shri S.S. Mahapatra

(d) Shri N.R. Mohanty

(e) Shri S.C. Padhy (w.e.f. 20.12.2012)

(f) Shri Joy Varghese (Up to 31.08.2012)

(g) Shri A.K. Srivastava (up to 11.12.2012)

ii) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri S.K. Srivastava, IAS (Up to 24.09.2012)

(b) Shri Arun Kumar, IAS (from 30.04.2012 to 26.02.2013)

(c) Ms. Gauri Kumar, IAS (w.e.f.24.09.2012)

(d) Shri Durga Shanker Mishra, IAS (w.e.f.26.02.2013)

iii) Part time non official (Independent) Directors:

(a) Shri Ved Kumar Jain

(b) Shri P.C. Sharma, IAS (Retd.)

(c) Shri G.P. Joshi, IAS (Retd.)

(d) Shri S.S. Khurana

(e) Shri Madhukar Gupta, IAS (Retd.)

(f) Shri G.H. Amin

(g) Shri Qaiser Shamim (w.e.f.10.07.2012)

(h) Shri Sanjiv Batra (w.e.f.10.07.2012)

Mar 31, 2012

Note 1: Share Capital

a) The Government of India holds 224,59,98,540 equity shares (87.15%) of the total equity shares of the Company and no toher shareholder of the Company holds more than 5 percent of the equity shares(Previous year same).

b) The holders of the equity shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.

c) During the financial year 2010-11, the company has issued 128,86,19,256 equity shares as fully paid bonus shares. Other than the said bonus issues, the company has not issued/bought back any equity shares in the last 5 years. the bonus issues was made subsequent to splitting up of shares from the face value of Rs. 10/- each into 2 equity shares of Rs. 5/- each in the said year.

Note 2: Contingent Liabilities not provided for

Particulars Figures as at Figures as at the end of the end of current previous reporting reporting period period

Claims against the company not acknowledged as debits:

1. Sales Tax 470.37 456.67

2. Excise Duty 112.68 294.56

3. Customs Duty 0.62 0.68

4. Claims of Contractors' Suppliers & Others 98.90 153.42

5. Land acquisition and interest there on 47.89 46.50

6. Income Tax & wealth Tax 361.16 276.50

7. Entry Tax and Road Tax 110.09 78.20

8. Employee State Insurance 0.40 0.32

9. Provident Fund Commissioner - 0.05

10. Royalty 0.48 15.48

11. NPV and related expenses under mining lease 108.04 59.82

Total 1,309.08 1,382.20

Note 3: Employee Benefit Expenses

D. General description of various defined benefit schemes are as under:

(i) Provident Fund: The company pays fixed contribution to Provident Fund, at pre-determined rates, so a separate trust, which invests the funds in permitted securities. On contributions the trust is required to pay a minimum rate of interest, to the members, as specified by Govt. of India. The obligation of the Company is limited to the shortfall in the rate of interest on the contribution based on its return on investments as compared to the declared rate.

(ii) Pension Fund: The Company pays fixed contribution to the trustee bank of PFRDA, which in turn invests the money with the insuries as specified by the employee concerned. The Company's liability is limited only to the extent of fixed contribution.

(iii) Gratuity: Gratuity payable to employees who render continues service of years or more, on separation at 15 days of last drawn pay (basic plus DA) for each completed years of service subject to a minimum of Rs. 10,00,000/-. the gratuity scheme is funded by the Company and are managed by a separate trust. the liability for under gratuity scheme is recognised on the basis of actuarial valuation.

(iv) Post Retirement Medical Benefit: The benefit is available to retired employees and their spouses in the Company's hospital/Govt. Hospital/hospital notified by the Company. they can also avail treatment as out patient subject to ceiling fixed by the Company. the liability under the scheme is recognised on the basis of actuarial valuation.

(v) Retirement Benefit: on superannuation/retirement/termination the employees and/or family shall be entitled to get travelling allowance as fixed by the Company (as per TA rule) from the last headquarters to the home town or any other place of settlement. the liability for the same is recognised on the basis of actuarial valuation.

(vi) Long Service Reward: The employees who complete 25 years of service are entitled for long service which is equal to one month basic pay. The liability for the same is recognised on the basis of actuarial valuation.

(viii) NEFARS: In the event of disablement/death, the Company pays monthly benefit to the employees/legal heir at their option and on deposit of prescribed amount as stipulated under the scheme upto the date of national superannuation. the liability for the same is recognised on the basis of actuarial valuation.

(viii) Leave Encashment: the accumulated earned leave, half pay leave & sick leave is payable on separation, subject to maximum permissible limit as prescribed in the leave rules of the Company. During the service period encashment of accumulated leave is also allowed once in a calendar year subject to limits. The liability for the same is recognised on the basis of actuarial valuation.

Note No. 4 : Land & Building:

4.1 Title deeds have been executed tor freehold lend acquired through Stale Government, except for land measuring 17.25 acres. Process of conversion of freehold lend for Industrial use has been taken-up with Revenue Authorities.

4.2 Leasehold land Includes 1238.63 acres of land in respect of which lease deeds are yet to be executed. However, the Company has been permitted by the State Government to carry on its operations on the said land.

4.3 Registration formalities in respect of office space for 6,450 Sq.ft purchased from Kolkata Municipal Development Authority, valuing Rs. 5.50 Crore in Kolkata is under process.

Note No.5 : Compensation to land displaced persons:

In order to compensate substantially land effected persons (SAP's) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the area of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by State Government for the purpose. Compensation paid/payable to such SAPs as on 31.03.2012 is Rs. 7.69 crores.

Note No.6 : Investments Joint Ventures and New Projects:

6.1 The Company has entered in to a joint venture with IDCO (A Govt. of Odisha Undertaking) under the name and style "Angul Aluminium Park Pvt Ltd, in the share holding pattern between NALCO and IDCO in the ratio of 49.5% and 50.5% respectively. As on date, the Company has paid Rs. 0.99 crore towards equity contribution. The payment towards equity contribution has been shown under the head 'investments'.

6.2 The Company has also entered in to a Joint venture with Nuclear Power corporation of India Limited (PJPClL) under the name & style of NPCIL-NALCO Power Company Limited incorporated on 2nd March, 2012 in which NALCO has 26% stake. No equity contribution has been made by NALCO till 31.03.2012.

6.3 The Company has paid Rs. 151 crore to Gujarat Mineral Development Corporation Ltd (GMDC) towards upfront payment while bidding for a new project for establishing Alumna Refinery and Aluminium Smeller with supply of Bauxite by GMDC. The decision of GMDC on the bid is awaited.

Note No. 7.: Exceptional Item:

7.1 Employee Benefit

Performance Related Pay (PRP) payable to Executives w.e.f. financial year 2007-06 was finalized during the year. The additional impact over and above the liability provided up to 31.03.2011 works out to Rs. 54.77 crore mainly due to certain new clarification issued by Govt of India during the year. As per the long term wage settlement for unionized employees, contribution for pension benefit under New Pension scheme up to 31.03.2011 has been provided in the current year amounting to Rs. 85.84 Qaiser

7.2 Electricity Duty:

Based on the Judgment of Hon'ble High Court of Odisha, Transformer end Transmission Loss of power is not subject to levy of Electricity Duty and amount paid, if any is refundable. The unpaid of liability provided on this account up to last year amounts to Rs. 118.71 crore, written back now.

The above amounts being material and relevant to users for understanding the financial performance, the same has been considered exceptional terms. The net impact is additional expenditure of Rs. 21.90 Qaiser

Note No. 8 : Pay Revision of Unionized Employees:

5th Long Term Wage Settlement of Unionized employees was finalized and implemented during the year. Additional amount of Rs. 45.54 crore over and above the liability provided up to last year (Rs. 395 crore) has been charged to current year accounts.

Note No.9 : Renewable Purchase Obligation (RPO):

As per the provisions of Odisha Electricity Regulatory Commission (OERC) notification, NALCO, being en obligated entity has the obligation to generate power for 5% of its total consumption from renewable sources comprising of 3.70% from co-generation. 0.10% from Solar renewable source and 1.20% from Non solar renewable source. The company has fulfilled the requirement of its co-generation obligation for the year 2011-12 through co-generation of power from Steam Power Plant at Refinery Unit.

The Company has spent and provided en amount of Rs. 29.20 crore towards Renewable Purchase Obligation (RPO) to the year due to non-fulfillment of the obligation to generate power from renewable source of Solar end Non-solar, as detailed below.

a) Procurement of REC against Non-solar obligation - Rs. 8.93 crore

b) Balance liability or Non-solar obligation - Rs. 12.81 crore

c) Liability for solar obligation - Rs. 7.46 crore

Total: - Rs. 29.20 crore

An appeal, however, is pending before OERC to postpone RPO for the year to next year.

Note No.10 : Dividend for the year:

10.1 The Company has paid interim dividend of Rs. 0.90 per equity share of Rs. 5/- each for the year 2011-12 (previous year Rs. 2/- per equity share of Rs. 10/- each before splitting and bonus Issue, which is equivalent Rs. 0.50/- per equity share of Rs. 5/- each).

10.2 The provision for final dividend of Rs. 0.10 per equity share of Rs. 5/- each is made for the year 2011-12 (previous year Rs. 0.50/- per equity share of Rs. 5/- each after splitting and bonus issue).

10.3 Total dividend for the year 2011-12 worts out to Rs. 1/- per equity share of Rs. 5/- each {previous year Rs. 1/- per equity share of Rs. 5/- each Total amount of proposed dividend for the year 2011-12 is Rs. 257.72 crore (previous year Rs. 257.72 crore).

Note No.11: Regrouping of previous year's figures:

Previous year's figures have been regrouped/rearranged wherever necessary to make them comparable.

Note No.12 : Related Party Disclosures:

12.1 As per AS-18 on "Related Party Disclosures* issued by the Institute of Chartered Accountants of India, the names of the related parties during the year are given below.

i. Whole time Directors:

(a) Shri A.K. Srivastava

(b) Shri B.L. Bagra

(c) Shri Joy Varghese

(d) Shri A.K. Sharma (Up to 30.09.2011)

(e) Shri P.K. Padhi (Up to 31.01.2012)

(f) Shri Ansuman Das

(g) Shri S.S. Mohapatra (w.e.f 01.10.2011)

(h) Shri N.R. Mohanty (w.e.f. 01.02.2012)

ii) Part time Official Directors: (Nominee of Govt. of India):

(a) Shri S.K. Nayak, IAS (Up to 05.09.2011)

(b) Shri S.K. Srivastava, IAS

iii) Part time Official (Independent) Directors:

(a) Shri Ved Kumar jain

(b) Shri P.C. Sharma, IAS (Retd.)

(c) Shri G.P. Joshi, IAS (Retd.) (w.e.f. 15.09.2011)

(d) SHri Madhukar Gupta, IAS (Retd.) (w.e.f. 27.12.2011)

(f) Shri G.H. Amin (w.e.f. 27.12.2011)

Mar 31, 2011

1. Balance Sheet:

1.1 Share capital:

As per approval in the Extra Ordinary General Meeting of the company held on 5th March 2011, the following changes in the share capital has taken place during the year:

i) Increase in authorized share capital of the Company from Rs. 1,300 crore to Rs. 3,000 crore.

ii) Splitting up of shares of the Company from the face value of Rs. 10/- each into two equity shares of Rs. 5/- each.

iii) Issue of Bonus share to the existing share holders of the Company in the proportion of l(one) Bonus Share for every 1 (one) existing fully paid up equity share held.

iv) Provision in Articles of Association for offer of shares to the employees of the Company under employee stock option plan (ESOP).

With the above change, the authorized share capital of the Company is 6,00,00,00,000 equity share of Rs. 5/- each and paid up equity share capital after the bonus issue is Rs. 1288,61,92,560/- comprising of 257,72,38,512 equity share of Rs. 5/- each.

The Employee Stock Option Plan is yet to be finalized.

Consequent upon splitting of shares and issue of bonus shares, EPS for the year is Rs. 4.15 and the previous Financial Year figure is restated toRs.3.16 (earlierRs. 12.64).

1.2 Land & Building:

a) Freehold land includes land acquired through Government of Odisha, for which relevant title deeds have been executed except for land measuring Rs. 17.25 acres. Process of conversion of freehold land for Industrial use has been taken-up with Revenue Authority.

b) Leasehold land includes 1256.84 acres of land in respect of which lease deed are yet to be executed. However, the Company has been permitted by the Government to carry on its operations on the said land.

c) Registration formalities in respect of office space for 6,459 Sq.ft purchased from Kolkata Municipal Development Authority, valuing Rs. 5.50 Crore in Kolkata is under process.

1.3 NPV and related payments.

The company has received demand of Rs. 196.46 crore towards NPV, being the present value of expenditure to be incurred by forest authorities in future on forest land leased to the company, and related payments at the time of renewal of lease. A sum of Rs. 104.68 crore has been paid on this account and is being amortized over a period of 20 years from the date of payment or due date of renewal which ever is earlier on the basis of probable use. A sum of Rs. 46.23 crore has been paid under protest against the part lease surrendered in terms of Para 29 of Mines Concession Rules 1960 under direction of Central Empowered Committee (constituted by Supreme Court of India) under deposits (current assets). The balance unpaid sum of Rs. 46.23 crore has been shown as contingent liability.

1.4 In order to compensate substantially land affected persons (SAPs) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the quantum of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by Government of Odisha for the said purpose. Compensation paid/payable to such SAPs as on 31.03.2011 is Rs. 7.69 crore.

1.5 58 nos of EPCG licences have been obtained between the period from 18.10.2006 to 21.12.2010 for 2nd phase of expansion on payment of concessional import duty. The value of concession availed by paying duty at lower rate amounts to Rs. 220.48 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1* to 6* year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of issue of authorization.

Besides, there is specific export obligation against EPCG license obtained by Rolled Product Unit at angul established earlier as a 100% Export Oriented Unit (EOU) which was debonded w.e.f. 15.05.2007, as one time option to exit from 100% EOU Scheme to EPCG Scheme. The value of concession availed by paying duty at lower rate amounts to Rs. 27.83 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1* to 6* year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of EPCG license.

It is expected that the export obligation over the block period of 1* to 6* year will be fully met out of increased export sales based on additional capacity from expansion plant and expected better market realization during 2011-12.

1.6 The Company has availed Bank Guarantees, Letters of Credit facilities, secured against stock and book debts from State Bank of India, HDFC Bank and ICICI Bank.

1.7 Contingent Liabilities not provided for:(Rs.in crore)

As at As at

31st March 2011 31st March 2010

a) Estimated amount of contracts to be executed on capital account (net of advances and L/Cs opened) 806.16 905.73

b) Letter of Credit Guarantees and counter guarantees 153.94 238.78

c) Claims against the Company not acknowledged as debts:

i) Sales Tax 456.67 442.74

ii) Excise Duty 294.56 253.55

iii) Customs Duty 0.68 3.66

iv) Claims of contractors, suppliers & others 153.42 122.90

v) Land acquisition and interest thereon 46.50 78.00

vi) Unrealized bank guarantees due to court injunctions 0.57 2.55

vii) Income Tax & Wealth Tax 276.50 231.35

viii) Entry Tax and Road Tax 78.20 69.72

ix) Employee State Insurance 0.32 0.32

x) Provident Fund Commissioner 0.05 0.05

xi) Water charges - 2.23

xii) Royalty on bauxite and interest thereon 15.48 15.48

xiii) NPV and related expenses under mining lease 59.82 144.00

TOTAL 1,382.77 1,366.55

1.9 Investment in Joint Venture:

The company has entered in to a joint venture with IDCO (A Govt, of Odisha Undertaking) under the name and style "Angul Aluminium Park Pvt.Ltd." registered on 30.07.2010 under the Companies Act, 1956 in the share holding pattern between NALCO and IDCO in the ratio of 49.5% and 50.5% respectively. As on date the company has paid Rs. 0.99 crore towards equity contribution and Rs. 0.16 crore to meet the preliminary expenses of the Joint Venture. The payment towards equity contribution has been shown under the head 'investments'. The shares are yet to be allotted.

2. PROFIT AND LOSS ACCOUNT:

2.1 Depreciation was charged in respect of main Plant and Machinery and related Factory Buildings and Storage godowns etc., at the rate of 5 per cent up to 31st March 1994, based on estimated useful life of assets being 20 years without retention of 5 per cent residual value. The useful life of these assets has been revised to 18 years to bring it at par with the life of "Continuous process plant" as envisaged in Schedule XIV to Companies Act, 1956. Such change in life of assets has been considered from 1.4.93 i.e. from the year of introduction of "Continuous process plant" in Schedule XIV to Companies Act, 1956. Depreciation rates on all such assets have been recomputed based on guidelines issued under Circular No.14/93 dated, 20.12.93 by Department of Company Affairs, by allocating the unamortized value over the remaining life after retention of 5 per cent residual value except for assets already written off fully.

2.2 The NPV and related payments to Govt, authorities is amortized over a period of 20 years from the date of payment or due date of renewal which ever is earlier on the basis of probable use. Excess amount amortized up to last year Rs. 8.34 crore has been written back.

2.3 Due to change in operating procedure after ERP implementation, freight and Entry Tax paid on alumina is loaded to cost of materials and charged to P&L Account through material consumptions expenses (internal consumption of alumina). In the last year accounts as per legacy practice freight and Entry Tax paid on alumina amounting to Rs. 60.60 crore was accounted as a separate item (freight inwards) under the head other manufacturing expenses. Due to change in procedure, in the current year the corresponding value is zero.

2.4 Liability on account of pay revision of non-executives w.e.f. 1.1.2007 has been calculated provisionally. Considering the development in the process of wage negotiation till date (which is yet to be concluded), the total liability for non-executives, so accounted, works out to Rs. 395 crore as on 31.03.2011 (during the year additional amount provided Rs. 128 crore).

2.5 Electricity power required for execution of project activity for expansion at all units of the company has been met from captive power plant.

2.6 Liabilities in respect of employees benefit as per AS-15 (Revised 2005) has been provided on the basis of Actuarial valuation.

3. IMPAIREMENT PROVISION:

3.1 In case of SGA (Special Grade Alumina) plant under chemical segment, impairment loss of Rs. 41.31 crore, comprising of book value of plant and machinery and corresponding plant building has been recognized, as its recoverable amount from discounted future cash flow, has been assessed to be less than its carrying amount due to economic non-viability and increased input prices.

4. CSR (CORPORATE SOCIAL RESPONSIBILITY) EXPENSES:

4.1 Apart from peripheral development expenses contributed @ 1% of net profit, another 1% of net profit of the Company for the year 2009-10 amounting to Rs. 8.14 crore has been provided as CSR liability for the year 2010-11. Expenditure from the additional contribution will be regulated through a separate trust named as "NALCO FOUNDATION".

5. SIGNIFICANT ADDITIONS/MODIFICATIONS:

5.1 The company has adopted ERP system of business process since last year. A few supporting modules such as (i) Sales and Distribution (ii) Quality Management (iii) Human Resource Management, not implemented last year has been implemented in the current year. There is no significant change in accounting practices due to implementation of these modules as because all changes were taken care of during implementation of Finance (Fl) and Materials Management (MM) module implemented last year.

6. RELATED PARTY DISCLOSURES:

6.1 As per AS-18 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties

i) whole time Directrrs:

a) ShriAK.Srivastava

b) Shri B.L. Bagra

c) Shri Joy Varghese

d) ShriAK.Sharma

e) Shri P.K. Padhi

f) Shri Ansuman Das

ii) Part time Official Directors: (Nominee of Govt, of India)

a) Shri Vijay Kumar (Ceased to be director from 01.08.2010)

b) Shri S.K.Nayak, IAS

c) Shri S.K. Srivastava, IAS (joined on 30.08.2010).

iii) Part time non-official Directors:

a) Dr. A Sahay (Ceased to be director from 27.9.2010)

b) Shri S.S. Sohoni, IAS (Retired) (Ceased to be director from 27.9.2010)

c) Shri K.S. Raju (Ceased to be director from 27.9.2010)

d) Shri S.B.Mishra, IAS (Retired)

e) Shri N.R. Mohanty

f) Dr.JyotiMukhopadhyay

g)ShriR.K.Sharma

h)Maj. Gen. (Retired) Samay Ram

i) ShriPCSharma (joined on 21.3.2011)

j) Shri Ved Kumar Jain (joined on 21.3.2011)

Note: Only sitting fee is payable to part time non-official Directors.

6.2 Related party transactions:

Remuneration and loans to whole time directors are disclosed in Note No.l of Additional information forming part of accounts.

7. SEGMENT REPORTING:

7.5 Segment report of elertricity does not include electricity co-generated at Refinery Division, as it is an integral part of steam generation

8. Previous year's figures have been regrouped / rearranged wherever necessary to make them comparable.

Mar 31, 2010

1. Balance Sheet:

1.1 Land:

a) Freehold land includes land acquired through Government of Odisha, for which relevant title deeds have been executed except for land measuring 17.25 acres. Process of conversion of freehold land for Industrial use has been taken-up with Revenue Authority.

b) Leasehold land includes payment to the Government of Odisha in respect of which lease deeds are yet to be executed for 1 238.63 acres, though the Company has been permitted by the Government to use such land for industrial purposes.

1.2 In order to compensate substantially land affected persons (SAPs) at Angul Sector in lieu of employment, the Company has offered a cash assistance package ranging from Rs. 2.50 lakhs to Rs. 15.00 lakhs per person depending upon the quantum of land, based on recommendation of Rehabilitation Advisory Committee (RAC), constituted by Government of Odisha for the said purpose. Compensation paid/payable to such SAPs has been determined at Rs. 8.32 crore.

1.3 Registration formalities in respect of office space for 6,459 Sq.ft purchased from Kolkata Municipal Development Authority, valuing 5.50 Crore in Kolkata is under process.

1.4 Rolled Products Unit at Angul, established earlier as a 1 00% Export Oriented Unit (EOU), was debonded w.e.f 1 5.05.2007, as one time option to exit from 1 00% EOU Scheme to EPCG Scheme by paying additional import duty of Rs. 6.44 crore after furnishing legal undertaking to the Development Commissioner, FALTA special Economic Zone, Kolkata. As per the direction of the juridictional Commissioner of Central Excise, Bhubaneswar a Bank Guarantee of Rs. 14.31 crore and a bond of Rs. 143.08 crore has been furnished towards Central Excise Duty liability.

1.5 52 nos of EPCG licences have been obtained between the period from 1 8.1 0.2006 to 31.03.201 0 for 2nd phase of expansion on payment of concessional import duty. The value of concession availed by paying duty at lower rate amounts to Rs. 272.46 crore, on the stipulation that the export obligation to the extent of (i) 50% of the duty saved has to be fulfilled over a block period of 1st to 6th year and (ii) 50% of the duty saved over a period of 7th and 8th year, commencing from the date of issue of authorisation.

1.6 The Company has obtained plot of land measuring 1 8.21 0 acres at Gothapatna in exchange of plot of land measuring 1 1.700 acres at Chandaka Industrial Estate, both at Bhubaneswar for a lease period upto 30.1 1.2097 as per decision of a committee set up by Honble High Court of Odisha consisting of Cabinet Secretary, Government of India (Chairman), Secretary (Mines), Government of India, Chief Secretary, Government of Odisha, Secretary Industries, Government of Odisha and CMD of the Company. The lease deed is yet to be executed.

1.7 The Company has availed Bank Guarantees, Letters of Credit and PCFC credit facilities, secured against stock and book debts from State Bank of India, HDFC Bank and Axis Bank.

1.8 Contingent Liabilities not provided for:

(Rs. in crore)

As at As at

31 st March 2010 31 st March 2009

a) Estimated amount of contracts to be executed on capital account (net of advances and L/Cs opened) 905.73 1,015.98

b) Outstanding letter of credit. Guarantees and counter guarantees 238.78 217.83

c) Claims against the Company not acknowledged as debts:

i) Sales Tax 442.74 464.33

ii) Excise Duty 253.55 105.66

iii) Customs Duty 3.66 3.57

iv) Claims of contractors, suppliers & others 122.90 89.77

v) Land acquisition and interest thereon 222.00 39.84

vi) Unrealised bank guarantees due to court injunctions 2.55 2.55

vii) Income Tax & Wealth Tax 231.35 203.48

viii) Entry Tax and Road Tax 69.72 55.77

ix) Employee State Insurance 0.32 0.32

x) Provident Fund Commission 0.05 0.05

xi) Water charges 2.23 0.74

xii) Royalty on bauxite and interest thereon 15.48 13.71

xiii) NPV on forest land under Mining lease 144.00 -

TOTAL 1510.55 979.79

2. Profit and Loss Account:

2.1 Depreciation was charged in respect of main Plant and Machinery and related Factory Buildings and Storage go-downs etc., at the rate of 5 per cent up to 31st March 1994, based on estimated useful life of assets being 20 years without retention of 5 per cent residual value. The useful life of these assets has been revised to 1 8 years to bring it at par with the life of "Continuous process plant- as envisaged in Schedule XIV to Companies Act, 1 956. Such change in life of assets has been considered from 1.4.93 i.e. from the year of introduction of "Continuous process plant" in Schedule XIV to Companies Act, 1 956. Depreciation rates on all such assets have been recomputed based on guidelines issued under Circular No.14/93 dated, 20.1 2.93 by Department of Company Affairs, by allocating the unamortized value over the remaining life after retention of 5 per cent residual value except for assets already written off fully.

2.2 Liability on account of pay revision of non-executives w.e.f. 1.1.2007 has been calculated provisionally, considering the benefits extended to executive employees. The total liability for non-executives, so accounted, works out to Rs. 70.87 crore during the year.

2.3 Expenses on employees working exclusively for 2nd phase expansion project amounting to Rs. 32.08 crore charged to Profit & Loss Account upto the Financial Year 2008-09 and Rs. 9.30 crore for the Financial Year 2009-1 0 have been capitalized relating to units commissioned and those in progress. Depreciation on such capitalized amount has been charged prospectively.

2.4 The valuation of 7821.780 MT of Alumina valuing at Rs. 6.48 crore lying under Goods in Transit (GIT) was not valued last year which has been corrected.

2.5 Liabilities in respect of employees benefit as per AS-1 5 (Revised 2005) has been provided on the basis of Actuarial valuation.

2.6 As a result of amendment in Payment of Gratuity Act with effect from 24th of May 201 0, enhancing the maximum ceiling limit from Rs. 3,50,000/- to Rs. 1 0,00,000/-, the Company has provided an additional net liability of Rs. 92,40,43,063/- in respect of non-executive employees. In respect of executive employees, the enhanced ceiling of Rs. 1 0,00,000/- was already considered in previous year, based on Presidential Directives on revision of pay of executives.

2.7 Electricity power required for execution of project activity for expansion at all units of the company has been met from captive power plant.

2.8 SIGNIFICANT ADDITIONS / MODIFICATIONS:

The Company has adopted ERP system of business process during current year. The treatment of certain transactions in ERP system differ from the one adopted by the Company hitherto. These additions and modifications confirm to relevant Accounting Standards and are exhibited at Schedule-X (Significant Accounting Policies). The implication of these additions and modification is not material.

3. CHANGES IN ACCOUNTING PRACTICES DUE TO IMPLEMENTATION OF ERP:

3.1 Company has gone live to ERP system in February 201 0. The essential modules required for preparation of financial results namely (i) Finance (ii) Materials Management and (iii) Production Planning have been activated and these accounts have been prepared based on these modules under ERP. A few more supporting modules such as (i) Sales and Distribution (ii) Quality Management and (iii) Human Resource will be implemented in a phased manner. Due to implementation of ERP system, there have been a few changes in Accounting practices which has resulted in improved presentation of financial results whose implication on net result is not material, are enumerated here under:

a) In case of fixed assets, where gross value has undergone change due to value adjustment at subsequent date, depreciation has been accounted for prospectively over the residual useful life of the asset, in line with the provisions of AS-1 0.

b) Stock of steel (imported and indigenous) and cement for construction work was grouped under work-in-progress. On implementation of ERP system, steel and cement other than expansion project has been accounted under inventory.

c) Entry tax on raw-material was booked separately and charged against "other manufacturing expenses". In ERP, it is loaded to the cost of input materials at the time of receipt of goods.

d) Semi finished goods i.e. raw-water, clarified water, filter water, DM water, feed water. Steam, overburden, spent anode and dross have been inventorised and valued under ERP system as intermediary products.

4. RELATED PARTY DISCLOSURES:

4.1 As per AS-1 8 on "Related Party Disclosures" issued by the Institute of Chartered Accountants of India, the names of the related parties are given below:- i) Whole time Directors:

a) ShriA.K.Srivastava (joined on 01.10.2009)

b) Shri B.L. Bagra

c) Shri joy Varghese

d) Shri AX. Sharma (joined on 01.05.2009)

e) Shri PX. Padhi (joined on 03.09.2009)

f) Shri Ansuman Das (joined on 28.1 0.2009)

g) Shri C.R. Pradhan (superannuated on 30.09.2009)

h) Shri KX. Mallick (superannuated on 30.09.2009) and i) Shri PX. Routray (superannuated on 30.04.2009). ii) Part time Official Directors:

a) Shri S.Vijay Kumar, IAS

b) Shri VX. Thakral, IAS (ceased to be Director from 07.01.201 0).

c) Shri SX. Nayak, IAS (appointed as Director from 07.01.201 0). iii) Part time non-official Director:

a) Dr.ASahay

b) Shri S.S.Sohoni, IAS (Retired)

c) ShriK.S.Raju

d) Shri S.B.Mishra, IAS (Retired)

e) Shri N.R. Mohanty

f) Dr.jyotiMukherjee

g) Shri RX Sharma

h) Maj. Gen. (Retired) Samay Ram Note: Only sitting fee is payable to part time non-official Director.

4.2 Related party transactions:

Remuneration and loans to whole time directors are disclosed in Note No.l of Additional information forming part of accounts. 5. SEGMENT REPORTING:

5.1 The Company has considered Chemicals, Aluminium and Electricity as the three primary business segments. Chemicals include calcined alumina, alumina hydrate and other related products. Aluminium includes aluminium ingots, wire rods, billets, strips, rolled and other related products. Bauxite produced for captive consumption for production of alumina is included under chemicals.

5.2 India and Outside India are the two geographical segments. Since all production and other facilities are located in India, segment assets except export debtors are shown under one geographic segment i,e. India.

5.3 Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities. Revenue, expenses, assets and liabilities, which relate to the enterprise as a whole and are not allocable on a reasonable basis, have been included under Unallocated Common segment.

5.4 Segment report of electricity does not include electricity co-generated at Refinery Division, as it is an integral part of steam generation plant.

6. Previous years figures have been regrouped / rearranged wherever necessary to make them comparable.

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