Mar 31, 2023
1. Company information
Tata Steel Limited ("the Company") is a public limited Company incorporated in India with its registered office in Bombay House 24, Homi Modi Street Fort, Mumbai-400 001, Maharashtra, India. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The Company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The Company offers a broad range of steel products including a portfolio of high value added downstream products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes and wires.
The functional and presentation currency of the Company is Indian Rupee ("I") which is the currency of the primary economic environment in which the Company operates.
As on March 31, 2023, Tata Sons Private Limited owns 32.44% of the Ordinary Shares of the Company, and has the ability to influence the Company''s operations.
The financial statements for the year ended March 31,2023 were approved by the Board of Directors and authorised for issue on May 2, 2023.
2. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time and other relevant provisions of the Act.
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair value by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
In the preparation of financial statements, the Company makes judgements in the application of accounting policies; and estimates and assumptions which affects carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
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 and future periods affected.
Key source of estimation of uncertainty at the date of financial statements, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment, useful lives of property, plant and equipment, right-of-use assets and intangible assets and expected credit loss for financial instruments carried at amortised cost (detailed in note 2(n), page F34) provisions and contingent liabilities, fair value measurements of financial instruments and retirement benefit obligations as discussed below.
The Company estimates the value in use of the cash generating unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The cash flows are discounted using a suitable discount rate in order to calculate the present value. Further details of the Company''s impairment review and key assumptions are set out in note 3, page F41, note 4, page F46, note 5, page F48 and note 6, page F50.
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of
each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods. The policy has been detailed in note 2(i), page F31.
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. Further details are set out in note 20, page F83 and note 35A, page F100.
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair value. Judgements include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Further details are set out in note 39, page F110.
The Company''s retirement benefit obligations are subject to number of assumptions including discount rates, inflation and salary growth. Significant assumptions are required when setting these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Company''s balance sheet and the statement of profit and loss. The Company sets these assumptions based on previous experience and third party actuarial advice. Further details on the Company''s retirement benefit obligations, including key assumptions are set out in note 34, page F92.
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment is stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
⢠obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
⢠researching and analysing existing exploration data
⢠conducting geological studies, exploratory drilling and sampling
⢠examining and testing extraction and treatment methods
⢠compiling pre-feasibility and feasibility studies
⢠activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
I f a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
⢠sinking shafts and underground drifts (often called mine development)
⢠making permanent excavations
⢠developing passageways and rooms or galleries
⢠building roads and tunnels and
⢠advance removal of overburden and waste rock
Development (or construction) also includes the installation of infrastructure (e.g., roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its mining sites.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using an appropriate discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalised and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of time value of money on the restoration and environmental costs liability is recognised in the statement of profit and loss.
(h) Intangible assets
Patents, trademarks and software costs are included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortised on a straight-line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognised as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) ability to use or sell the intangible asset.
(iv) i t is clear that the intangible asset will generate probable future economic benefits.
(v) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available.
(vi) i t is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria are no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost or deemed cost applied on transition to Ind AS, less accumulated amortisation and accumulated impairment losses.
(i) Depreciation and amortisation of property, plant and equipment, right-of-use assets and intangible assets
Depreciation or amortisation is provided so as to write off, on a straight-line basis, the cost/deemed cost of property, plant and equipment and intangible assets, including right-of-use assets to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of right-of-use assets, over the lease period, if shorter. The estimated useful lives of assets, residual values and depreciation method are reviewed regularly and, when necessary, revised.
Depreciation on assets under construction commences only when the assets are ready for their intended use.
The estimated useful lives for main categories of property, plant and equipment and intangible assets are:
Estimated useful life (years) |
|
Buildings |
upto 60 years* |
Roads |
5 to 10 years |
Plant and machinery |
upto 40 years* |
Railway sidings |
upto 35 years* |
Vehicles and aircraft |
5 to 20 years |
Furniture, fixtures and office equipments |
3 to 10 years |
Computer software |
3 to 5 years |
Assets covered under Electricity Act (life as |
3 to 38 years |
prescribed under the Electricity Act) |
Mining assets are amortised over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto?25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represents the period over which the Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company accounts for each lease component within the contract as a lease separately from nonlease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term.
The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
Payment made towards leases for which non-cancellable term is 12 months or lesser (short-term leases) and low value leases are recognised in the statement of Profit and Loss as rental expenses over the tenor of such leases.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the
asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
(i) Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
(ii) Finance lease - When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
The Company separates two different types of stripping costs that are incurred in surface mining activity:
⢠developmental stripping costs and
⢠production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for
the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mine''s specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
⢠mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
⢠separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
⢠the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
⢠expenditures for additional infrastructure to support the second and subsequent pits are relatively large
⢠the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, the stripping costs should be attributed to the individual pit or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the production phase if, and only if, all of the following are met:
⢠it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
⢠the Company can identify the component of the ore body for which access has been improved and
⢠the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost/deemed cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss. Trade Receivables that do not contain a significant financing component are measured at transaction price.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have original maturities of less than three months. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are measured at fair value through other comprehensive income if such financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of certain equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. These investments are held for medium or long-term strategic purpose. The Company has chosen to designate these investments in equity instruments as fair value through other comprehensive income as the management believes this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in the statement of profit and loss.
Financial assets not measured at amortised cost or at fair value through other comprehensive income are carried at fair value through profit and loss.
I nterest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
Dividend income from investments is recognised when the right to receive payment has been established.
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises life time expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and
substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received.
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
⢠for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged
assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
⢠for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a nonfinancial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
I n cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
Defined contribution plans
Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the
Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.
Liabilities recognised in respect of other long-term employee benefits such as annual leave and sick leave are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date using the projected unit credit method with actuarial valuation being carried out at each year-end balance sheet date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the period in which they arise.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation.
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis.
Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity''s actions where:
(i) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(ii) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method. Under pooling of interest method, the assets and liabilities of the combining entities or businesses are reflected at their carrying amounts after making adjustments necessary to harmonise the accounting policies. The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity of the reserves is preserved in the same form in which they appeared in the financial statements of the transferor and the difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable
and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(v) Income Taxes
Tax expense for the year comprises of current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
(w) Revenue
The Company manufactures and sells a range of steel and other products.
Sale of products
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume and price discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume and price discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely method, and revenue is only recognised to the extent that it is highly probable that a significant reversal
will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are generally made with a credit term of 30-90 days, which is consistent with market practice. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Revenue from sale of power is recognised when the services are provided to the customer based on approved tariff rates established by the respective regulatory authorities. The Company doesn''t recognise revenue and an asset for cost incurred in the past that will be recovered.
The financial statements of the Company are presented in Indian Rupees ("I"), which is the functional currency of the Company and the presentation currency for the financial statements.
I n preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on the re-translation or settlement of monetary items are included in the statement of profit and loss for the period.
(y) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
I nvestment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are recognised as borrowing costs.
All other borrowing costs are recognised as expenses in the period in which it is incurred.
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid-up shares are included as fully paid equivalents according to the fraction paid-up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive.
Ministry of Corporate Affairs ("MCA") has notified the following new amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2023.
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information is material if, together with other information can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are "monetary amounts in financial statements that are subject to measurement uncertainty". Entities use measurement techniques and inputs to develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Mar 31, 2022
(c) Use of estimates and critical accounting judgements
Tata Steel Limited ("the Company") is a public limited Company incorporated in India with its registered office in Mumbai, Maharashtra, India. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The Company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The Company offers a broad range of steel products including a portfolio of high value added downstream products such as hot rolled, cold rolled, coated steel, rebars, wire rods, tubes and wires.
The functional and presentation currency of the Company is Indian Rupee ("?") which is the currency of the primary economic environment in which the Company operates.
As on March 31, 2022, Tata Sons Private Limited owns 32.46% of the Ordinary Shares of the Company, and has the ability to influence the Company''s operations.
The financial statements for the year ended March 31,2022 were approved by the Board of Directors and authorised for issue on May 3, 2022.
2. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time and other relevant provisions of the Act.
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair value by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
In the preparation of financial statements, the Company makes judgements in the application of accounting policies; and estimates and assumptions which affects carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
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 and future periods affected.
Key source of estimation of uncertainty at the date of financial statements, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment, useful lives of property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions and contingent liabilities, fair value measurements of financial instruments and retirement benefit obligations as discussed below:
Impairment
The Company estimates the value in use of the cash generating unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The cash flows are discounted using a suitable discount rate in order to calculate the present value. Further details of the Company''s impairment review and key assumptions are set out in note 3, page 310, note 4, page 314, note 5, page 316 and note 6, page 318.
Useful lives of property, plant and equipment and intangible assets
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods. The policy has been detailed in note 2(i), page 301.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been detailed in note 2(v), page 307 and its further information are set out in note 10, page 331.
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. Further details are set out in note 21, page 351 and note 36A, page 367.
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair value. Judgements include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Further details are set out in note 39, page 374.
The Company''s retirement benefit obligations are subject to number of assumptions including discount rates, inflation and salary growth. Significant assumptions are required when setting these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Company''s balance sheet and the statement of profit and loss. The Company sets these assumptions based on previous experience and third party actuarial advice. Further details on the Company''s retirement benefit obligations, including key assumptions are set out in note 35, page 360.
The Company has assessed the possible impact of COVID-19 on its financial statements based on the internal and external information and concluded no adjustments are required in these standalone financial statements. The Company continues to monitor changes in future economic conditions.
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment is stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
⢠obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
⢠researching and analysing existing exploration data
⢠conducting geological studies, exploratory drilling and sampling
⢠examining and testing extraction and treatment methods
⢠compiling pre-feasibility and feasibility studies
⢠activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
If a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
⢠sinking shafts and underground drifts (often called mine development)
⢠making permanent excavations
⢠developing passageways and rooms or galleries
⢠building roads and tunnels and
⢠advance removal of overburden and waste rock
Development (or construction) also includes the installation of infrastructure (e.g. roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
(g) Provision for restoration and environmental costs
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its mining sites.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using an appropriate discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalised and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of time value of money on the restoration and environmental costs liability is recognised in the statement of profit and loss.
(h) Intangible assets
Patents, trademarks and software costs are included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortised on a straight-line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognised as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) ability to use or sell the intangible asset.
(iv) i t is clear that the intangible asset will generate probable future economic benefits.
(v) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available.
(vi) i t is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria are no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost or deemed cost applied on transition to Ind AS, less accumulated amortisation and accumulated impairment losses.
(i) Depreciation and amortisation of property, plant and equipment, right-of-use assets and intangible assets
Depreciation or amortisation is provided so as to write off, on a straight-line basis, the cost/deemed cost of property, plant and equipment and intangible assets, including right-of-use assets to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of right-of-use assets, over the lease period, if shorter. The estimated useful lives of assets, residual values and depreciation method are reviewed regularly and, when necessary, revised.
Depreciation on assets under construction commences only when the assets are ready for their intended use.
The estimated useful lives for main categories of property, plant and equipment and intangible assets are:
Estimated useful life (years) |
|
Buildings |
upto 60 years* |
Roads |
5 to 10 years |
Plant and machinery |
upto 40 years* |
Railway sidings |
upto 35 years* |
Vehicles and aircraft |
5 to 20 years |
Furniture, fixtures and office |
3 to 10 years |
equipments |
|
Computer software |
3 to 5 years |
Assets covered under Electricity Act (life |
3 to 38 years |
Mining assets are amortised over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto ?25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represents the period over which the Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
(j) Impairment
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
(k) Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company accounts for each lease component within the contract as a lease separately from nonlease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company
recognises any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
(i) Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
(ii) Finance lease - When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
(l) Stripping costs
The Company separates two different types of stripping costs that are incurred in surface mining activity:
⢠developmental stripping costs and
⢠production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mine''s specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
⢠mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
⢠separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
⢠the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
⢠expenditures for additional infrastructure to support the second and subsequent pits are relatively large
⢠the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, the stripping costs should be attributed to the individual pit or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the production phase if, and only if, all of the following are met:
⢠it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
⢠the Company can identify the component of the ore body for which access has been improved and
⢠the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost/deemed cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have original maturities of less than one year. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are measured at fair value through other comprehensive income if such financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of certain equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. These investments are held for medium or long-term strategic purpose. The Company has chosen to designate these investments in equity instruments as fair value through other comprehensive income as the management believes
this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in the statement of profit and loss.
Financial assets not measured at amortised cost or at fair value through other comprehensive income are carried at fair value through profit and loss.
I nterest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises life time expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
I f the Company retains substantially all the risks and rewards of ownership of a transferred financial
asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received.
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are
employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
⢠for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
⢠for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a nonfinancial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred
in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
I n cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
Defined contribution plans
Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
(p) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
(q) Provisions
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity''s actions where:
(i) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(ii) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interest method. Under pooling of interest method, the assets and liabilities of the combining entities or businesses are reflected at their carrying amounts after making adjustments necessary to harmonise the accounting policies. The financial information in the financial statements in respect of prior periods is restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. The identity of the reserves is preserved in the same form in which they appeared in the financial statements of the transferor and the difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor is transferred to capital reserve.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(v) Income Taxes
Tax expense for the year comprises of current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
The Company manufactures and sells a range of steel and other products.
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely method, and
revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are generally made with a credit term of 30-90 days, which is consistent with market practice. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
Revenue from sale of power is recognised when the services are provided to the customer based on approved tariff rates established by the respective regulatory authorities. The Company doesn''t recognise revenue and an asset for cost incurred in the past that will be recovered.
The financial statements of the Company are presented in Indian Rupees ("?"), which is the functional currency of the Company and the presentation currency for the financial statements.
I n preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on the re-translation or settlement of monetary items are included in the statement of profit and loss for the period.
(y) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
I nvestment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are recognised as borrowing costs.
All other borrowing costs are recognised as expenses in the period in which it is incurred.
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid-up shares are included as fully paid equivalents according to the fraction paid-up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive.
- Interest rate Benchmark Reform Phase 2
The amendment focuses on the potential financial reporting issues that may arise when interest rate benchmarking reforms are either reformed or replaced. The key reliefs provided by the Phase 2 amendments are:
⢠Changes to contractual cash flows - When changing the basis for determining contractual cash flows for financial assets and liabilities (including lease liabilities), the reliefs have the effect that the changes that are required by an interest rate benchmark reform will not result in an immediate gain or loss in the profit and loss statement.
⢠Hedge accounting - The hedge accounting reliefs will allow most Ind AS 39 or Ind AS 109 hedge relationships that are directly affected by IBOR reform to continue. However, additional ineffectiveness might need to be recorded.
The amendments do not have significant impact on the financial statements. The disclosures as required are presented in note 39, page 374.
- Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103 - Business Combinations. The Company does not expect the amendment to have any significant impact in its financial statements.
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognized in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.
Mar 31, 2021
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been detailed in note 2(u), page 265, and its further information are set out in note 10, page 286.
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. Further details are set out in note 21, page 302 and note 36A, page 317.
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair value. Judgements include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Further details are set out in note 39, page 323.
The Company''s retirement benefit obligations are subject to number of assumptions including discount rates, inflation and salary growth. Significant assumptions are required when setting these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Company''s balance sheet and the statement of profit and loss. The Company sets these assumptions based on previous experience and third party actuarial advice. Further details on the Company''s retirement benefit obligations, including key judgements are set out in note 35, page 311.
The Company has assessed the possible impact of COVID-19 on its financial statements based on the internal and
external information available up to the date of approval of the financial statements and concluded no adjustment is required in these financial statements. The Company continues to monitor the future economic conditions.
(d) Property, plant and equipment
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment is stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
(e) Exploration for and evaluation of mineral resources
Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
⢠obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
⢠researching and analysing existing exploration data
⢠conducting geological studies, exploratory drilling and sampling
⢠examining and testing extraction and treatment methods
⢠compiling pre-feasibility and feasibility studies
⢠activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
If a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
⢠sinking shafts and underground drifts (often called mine development)
⢠making permanent excavations
⢠developing passageways and rooms or galleries
⢠building roads and tunnels and
⢠advance removal of overburden and waste rock
Development (or construction) also includes the installation of infrastructure (e.g., roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its mining sites.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using an appropriate discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalised and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of time value of money on the restoration and environmental costs liability is recognised in the statement of profit and loss.
(h) Intangible assets
Patents, trademarks and software costs are included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortised on a straight-line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognised as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) ability to use or sell the intangible asset.
(iv) i t is clear that the intangible asset will generate probable future economic benefits.
(v) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available.
(vi) i t is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria are no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost or deemed cost applied on transition to Ind AS, less accumulated amortisation and accumulated impairment losses.
Depreciation or amortisation is provided so as to write off, on a straight-line basis, the cost/deemed cost of property, plant and equipment and intangible assets, including right-of-use assets to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of right-of-use assets, over the lease period, if shorter. The estimated useful lives of assets, residual values and depreciation method are reviewed regularly and, when necessary, revised.
Depreciation on assets under construction commences only when the assets are ready for their intended use.
The estimated useful lives for main categories of property, plant and equipment and intangible assets are:
Mining assets are amortised over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto ?25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represents the period over which the Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to control the use of that asset to the Company in return for payment.
The Company accounts for each lease component within the contract as a lease separately from nonlease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception comprises of the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date.
Certain lease arrangements include options to extend or terminate the lease before the end of the lease term. The right-of-use assets and lease liabilities include these options when it is reasonably certain that such options would be exercised.
The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Lease liability is measured at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to
reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications. The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
Variable lease payments not included in the measurement of the lease liabilities are expensed to the statement of profit and loss in the period in which the events or conditions which trigger those payments occur.
In a sale and lease back transaction, the Company measures right-of-use asset arising from the leaseback as the proportion of the previous carrying amount of the asset that relates to the right-of-use retained. The gain or loss that the company recognises in the statement of profit and loss is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer.
The Company as lessor
(i) Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight- line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
(ii) Finance lease -When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
(l) Stripping costs
The Company separates two different types of stripping costs that are incurred in surface mining activity:
⢠developmental stripping costs and
⢠production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mine''s specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
⢠mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
⢠separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
⢠the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
⢠expenditures for additional infrastructure to support the second and subsequent pits are relatively large
⢠the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, the stripping costs should be attributed to the individual pit or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the production phase if, and only if, all of the following are met:
⢠it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
⢠the Company can identify the component of the ore body for which access has been improved and
⢠the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost/deemed cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have original maturities of less than one year. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are measured at fair value through other comprehensive income if such financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other
comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. These investments are held for medium or long-term strategic purpose. The Company has chosen to designate these investments in equity instruments as fair value through other comprehensive income as the management believes this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in the statement of profit and loss.
Financial assets not measured at amortised cost or at fair value through other comprehensive income are carried at fair value through profit and loss.
I nterest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises life time expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
The Company de-recognises a financial asset only when the contractual rights to the cash flows from
the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
I f the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received.
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
⢠for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
⢠for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment
or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
(o) Employee benefits
Defined contribution plans
Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity''s actions where:
(i) by an established pattern of past practice, published policies or a sufficiently specific current statement,
the entity has indicated to other parties that it will accept certain responsibilities and;
(ii) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(u) Income taxes
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
The Company manufactures and sells a range of steel and other products.
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are generally made with a credit term of 30-90 days, which is consistent with market practice. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The Company does not adjust the transaction prices for any time value of money in case of contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer does not exceeds one year.
Revenue from sale of power is recognised when the services are provided to the customer based on approved tariff rates established by the respective regulatory authorities. The Company doesn''t recognise revenue and an asset for cost incurred in the past that will be recovered.
The financial statements of the Company are presented in Indian Rupees ("?"), which is the functional currency of the Company and the presentation currency for the financial statements.
I n preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising upto March 31, 2020 on translation of long-term foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101 "First-time adoption of Indian Accounting Standards" are added/deducted to/ from the cost of assets as the case may be. Such exchange differences recognised as part of cost of assets is recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the statement of profit and loss for the period.
(x) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
I nvestment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are recognised as borrowing costs.
All other borrowing costs are recognized as expenses in the period in which it is incurred.
(y) Earnings per share
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive.
Amendment to Ind AS 116 "Leases" - Insertion of practical expedient for COVID-19 related lease concessions
The amendment provides lessee with a practical expedient and an exemption to assess whether a COVID-19 related rent concession is a lease modification to payments originally due on or before June 30, 2021. Amendment also requires disclosure of the amount recognised in statement of profit and loss to reflect changes in lease payments that arise from such concession. The Company has not recognised any amount as reversal of lease liability in the statement of profit and loss.
Amendment to Ind AS 109 "Financial Instruments" and Ind AS 107 "Financial Instruments: Disclosures" - Interest rate Benchmark Reform
The Company has applied the related amendments. The amendments provide relief from the specific hedge accounting requirements assuming that the interest rate benchmark is not altered as a result of the interest rate benchmark reform. The Company is currently evaluating the potential impact of replacement of interest rate benchmark and will accordingly manage the transition plan.
Mar 31, 2019
1. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
(a) Statement of compliance
The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as âInd ASâ) prescribed under Section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time and other relevant provisions of the Act.
(b) Basis of preparation
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair value by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
(c) Use of estimates and critical accounting judgements
I n the preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
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 and future periods affected.
Key source of estimation of uncertainty at the date of the financial statements, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment, useful lives of property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions and contingent liabilities, fair value measurements of financial instruments and retirement benefit obligations as discussed below.
Impairment
The Company estimates the value in use of the cash generating unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The cash flows are discounted using a suitable discount rate in order to calculate the present value. Further details of the Companyâs impairment review and key assumptions are set out in note 3, page 227, note 5, page 231and note 6, page 232.
Useful lives of property, plant and equipment and intangible assets
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods. The policy has been detailed in note 2(i), page 218.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been detailed in note 2 (u), page 224 and its further information are set out in note 10, page 243.
Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements. Further details are set out in note 21, page 261 and note 36A, page 276.
Fair value measurements of financial instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair value. Judgements include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Further details are set out in note 39, page 281.
Retirement benefit obligations
The Companyâs retirement benefit obligations are subject to number of judgements including discount rates, inflation and salary growth. Significant judgements are required when setting these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Companyâs balance sheet and the statement of profit and loss. The Company sets these judgements based on previous experience and third party actuarial advice. Further details on the Companyâs retirement benefit obligations, including key judgements are set out in note 35, page 269.
(d) Property, plant and equipment
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment is stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of qualifying asset.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognised in the statement of profit and loss.
(e) Exploration for and evaluation of mineral resources
Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
- obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
- researching and analysing existing exploration data
- conducting geological studies, exploratory drilling and sampling
- examining and testing extraction and treatment methods
- compiling pre-feasibility and feasibility studies
- activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
If a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
- sinking shafts and underground drifts (often called mine development)
- making permanent excavations
- developing passageways and rooms or galleries
- building roads and tunnels and
- advance removal of overburden and waste rock
Development (or construction) also includes the installation of infrastructure (e.g., roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
(g) Provision for restoration and environmental costs
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its mining sites.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using an appropriate discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalised and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of time value of money on the restoration and environmental costs liability is recognised in the statement of profit and loss.
(h) Intangible assets
Patents, trademarks and software costs are included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortised on a straight-line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognised as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) ability to use or sell the intangible asset.
(iv) it is clear that the intangible asset will generate probable future economic benefits.
(v) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available.
(vi) it is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria are no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost or deemed cost applied on transition to Ind AS, less accumulated amortisation and accumulated impairment losses.
(i) Depreciation and amortisation of property, plant and equipment and intangible assets
Depreciation or amortisation is provided so as to write off, on a straight-line basis, the cost/deemed cost of property, plant and equipment and intangible assets, including those held under finance leases to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets, residual values and depreciation method are reviewed regularly and, when necessary, revised.
Depreciation on assets under construction commences only when the assets are ready for their intended use.
The estimated useful lives for main categories of property, plant and equipment and intangible assets are:
Mining assets are amortised over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto Rs.25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represents the period over which the Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
(j) Impairment
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
(k) Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfilment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or an operating lease.
Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
(i) Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
I n the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(ii) Finance lease - Finance leases are capitalised at the commencement of lease, at the lower of fair value of the asset or the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the statement of profit and loss over the period of the lease.
The Company as lessor
(i) Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight-line basis over the lease term.
(ii) Finance lease -When assets are leased out under a finance lease, the present value of minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
(l) Stripping costs
The Company separates two different types of stripping costs that are incurred in surface mining activity:
- developmental stripping costs and
- production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mineâs specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
- mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
- separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
- the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
- expenditures for additional infrastructure to support the second and subsequent pits are relatively large
- the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, the stripping costs should be attributed to the individual pit or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the production phase if, and only if, all of the following are met:
- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
- the entity can identify the component of the ore body for which access has been improved and
- the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost/deemed cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
(m) Investments in subsidiaries, associates and joint ventures
i nvestments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
(n) Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(I) Financial assets
Cash and bank balances
Cash and bank balances consist of:
(i) Cash and cash equivalents - which include cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have original maturities of less than one year. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which include balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if such financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. These investments are held for medium or long-term strategic purpose. The Company has chosen to designate these investments in equity instruments as fair value through other comprehensive income as the management believes this provides a more meaningful presentation for medium or long-term strategic investments, than reflecting changes in fair value immediately in the statement of profit and loss.
Financial assets not measured at amortised cost or at fair value through other comprehensive income are carried at fair value through profit and loss.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the right to receive payment has been established.
Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises lifetime expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets (apart from trade receivables that do not constitute of financing transaction) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised.
Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received.
(II) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
De-recognition of financial liabilities
The Company de-recognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or they expire.
Derivative financial instruments and hedge accounting
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
- for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
- for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
(o) Employee benefits
Defined contribution plans
Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered the service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Companyâs obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
(p) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Provisions are made to cover slow-moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
(q) Provisions
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entityâs actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
(r) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
(s) Government grants
Government grants are recognised at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
(t) Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(u) Income taxes
Tax expense for the period comprises current and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
(v) Revenue
The Company manufactures and sells a range of steel and other products.
Effective April 1, 2018, the Company has applied Ind AS 115 which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS 11 Construction Contracts. The Company has adopted Ind AS 115 using the retrospective effect method. The adoption of the new standard did not have a material impact on the Company.
Sale of products
Revenue from sale of products is recognised when control of the products has transferred, being when the products are delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, the risks of loss has been transferred, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied. Sale of products include related ancillary services, if any.
Goods are often sold with volume discounts based on aggregate sales over a 12 months period. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the most likely method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. A liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are generally made with a credit term of 30-90 days, which is consistent with market practice. Any obligation to provide a refund is recognised as a provision. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The Company does not have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.
As a consequence, the Company does not adjust any of the transaction prices for the time value of money.
Sale of power
Revenue from sale of power is recognised when the services are provided to the customer based on approved tariff rates established by the respective regulatory authorities. The Company doesnât recognise revenue and an asset for cost incurred in the past that will be recovered.
(w) Foreign currency transactions and translations
The financial statements of the Company are presented in Indian Rupees (âRs.â), which is the functional currency of the Company and the presentation currency for the financial statements.
In preparing the financial statements, transactions in currencies other than the Companyâs functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on translation of long-term foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-âFirst-time adoption of Indian Accounting Standardsâ are added/deducted to/ from the cost of assets as the case may be. Such exchange differences recognised in equity or as part of cost of assets is recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the statement of profit and loss for the period.
(x) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Investment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are recognised as borrowing costs.
All other borrowing costs are recognised as expenses in the period in which it is incurred.
(y) Earnings per share
Basic earnings per share is computed by dividing profit or loss for the year attributable to equity holders by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up.
Diluted earnings per share is computed using the weighted average number of shares and dilutive potential shares except where the result would be anti-dilutive.
(z) Recent accounting pronouncements
Ministry of Corporate Affairs (âMCAâ) has notified the following new amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2019.
Ind AS 116 - âLeasesâ
Ind AS 116 âLeasesâ eliminates the classification of leases as either finance leases or operating leases. All leases are required to be reported on an entityâs balance sheet as assets and liabilities. Leases are capitalised by recognising the present value of the lease payments and showing them either as right of use of the leased assets or together with property, plant and equipment. If lease payments are made over time a financial liability representing the future obligation would be recognised.
Appendix C, âUncertainty over Income Tax Treatmentsâ, to Ind AS 12, âIncome Taxesâ
This Appendix clarifies how the recognition and measurement requirements of Ind AS 12 âIncome Taxesâ, are applied while performing the determination of taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12.
According to the Appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates.
The Company is in the process of evaluating the impact of adoption of the above pronouncements on its financial statements.
Mar 31, 2018
1. Company information
Tata Steel Limited ("the Company") is a public limited Company incorporated in India with its registered office in Mumbai, Maharashtra, India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The Company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The Company offers a broad range of steel products including a portfolio of high value added downstream products such as hot rolled, cold rolled and coated steel, rebars, wire rods, tubes and wires.
The functional and presentation currency of the Company is Indian Rupee ("''") which is the currency of the primary economic environment in which the Company operates.
As on March 31, 2018, Tata Sons Limited (or Tata Sons) owns 31.64 % of the Ordinary shares of the Company, and has the ability to influence the Company''s operations.
The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorized for issue on May 16, 2018.
2. Significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
(a) Statement of compliance
The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as "Ind AS") prescribed under section 133 of the companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, as amended from time to time.
(b) Basis of preparation
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair values by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
(c) Use of estimates and critical accounting judgments
In the preparation of financial statements, the Company makes judgments, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected.
Key source of estimation of uncertainty at the date of standalone financial statements, which may cause material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment, useful lives of property, plant and equipment and intangible assets, valuation of deferred tax assets, provisions, contingent liabilities and fair value measurements of financial instruments as discussed below. Key source of estimation of uncertainty in respect of revenue recognition and employee benefits have been discussed in the respective policies.
Impairment
The Company estimates the value in use of the cash generating unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating results and growth rate and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The cash flows are discounted using a suitable discount rate in order to calculate the present value.
Useful lives of property, plant and equipment and intangible assets
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortization expense in future periods.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been detailed in Note 2 (u)
2. Significant accounting policies (Contd.)
Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized in the financial statements. Contingent assets are neither recognized nor disclosed in the financial statements.
Fair value measurements of financial instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including Discounted Cash Flow Model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risks, credit risks and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Retirement benefit obligations
The Company''s retirement benefit obligation are subject to a number of judgment including discount rates, inflation and salary growth. Significant judgment is required when setting these criteria and a change in these assumptions would have a significant impact on the amount recorded in the Company''s balance sheet and the statement of profit and loss. The Company sets these judgment based on previous experience and third party actuarial advice.
(d) Property, plant and equipment
An item of property, plant and equipment is recognized as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognized in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is derecognized. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment is stated at cost/deemed cost, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalized. Borrowing costs incurred during the period of construction is capitalized as part of cost of qualifying asset.
The gain or loss arising on disposal of an item of property, plant and equipment is determined as the difference between sale proceeds and carrying value of such item, and is recognized in the statement of profit and loss.
(e) Exploration for and evaluation of mineral resources
Expenditures associated with search for specific mineral resources are recognized as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
- obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
- researching and analysing existing exploration data
- conducting geological studies, exploratory drilling and sampling
- examining and testing extraction and treatment methods
- compiling pre-feasibility and feasibility studies
- activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
If a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial
2. Significant accounting policies (Contd.)
viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
- sinking shafts and underground drifts (often called mine development)
- making permanent excavations
- developing passageways and rooms or galleries
- building roads and tunnels and
- advance removal of overburden and waste rock
Development (or construction) also includes the installation of infrastructure (e.g., roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalized and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
(g) Provision for restoration and environmental costs
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its mines.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using an appropriate discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalized and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalized in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of time value of money on the restoration and environmental costs liability is recognized in the statement of profit and loss.
(h) Intangible assets
Patents, trademarks and software costs are included in the balance sheet as intangible assets when it is probable that associated future economic benefits would flow to the Company. In this case they are measured initially at purchase cost and then amortized on a straight line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognized as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognized as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) it is clear that the intangible asset will generate probable future economic benefits.
(iv) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available and;
(v) it is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria are no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost/deemed cost less accumulated amortization and accumulated impairment losses.
(i) Depreciation and amortization of property, plant and equipment and intangible assets
Depreciation or amortization is provided so as to write off, on a straight line basis, the cost/deemed cost of property, plant and equipment and intangible assets, including those held under finance leases to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully written down but are still in use.
Mining assets are amortized over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto ''25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represents the period over which the Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
(j) Impairment
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognized in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognized for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognized in the statement of profit and loss immediately.
(k) Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfillment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or an operating lease.
Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
(i) Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognized as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(ii) Finance lease - Finance leases are capitalized at the commencement of lease, at the lower of fair value of the property or the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in the statement of profit and loss over the period of the lease.
The Company as lessor
(i) Operating lease - Rental income from operating leases is recognized in the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognized on a straight line basis over the lease term.
(ii) Finance lease- When assets are leased out under a finance lease, the present value of minimum lease payments is recognized as a receivable. The difference between the gross receivable and the present value of receivable is recognized as unearned finance income. Lease income is recognized over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
(l) Stripping costs
The Company separates two different types of stripping costs that are incurred in surface mining activity:
- developmental stripping costs and
- production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mine''s specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
- mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
- separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
- the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
- expenditures for additional infrastructure to support the second and subsequent pits are relatively large
- the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, the stripping costs should be attributed to the individual pits or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realized in the form of inventories.
The Company recognizes a stripping activity asset in the production phase if, and only if, all of the following are met:
- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
- the entity can identify the component of the ore body for which access has been improved and
- the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost/deemed cost less accumulated amortization and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
(m) Investments in subsidiaries, associates and joint ventures
I nvestments in subsidiaries, associates and joint ventures are carried at cost/deemed cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognized, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognized in the statement of profit and loss.
(n) Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognized in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortized cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets
Cash and bank balances
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the reporting date. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if such financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell such financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. These investments are held for medium or long term strategic purpose. The Company has chosen to designate these investments in equity instruments as fair value through other comprehensive income as the management believe this provides a more meaningful presentation for medium or long term strategic investments, than reflecting changes in fair value immediately in the statement of profit & loss.
Financial asset not measured at amortized cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of financial assets
Loss allowance for expected credit losses is recognized for financial assets measured at amortized cost and fair value through other comprehensive income.
The Company recognises life time expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognized. Loss allowance equal to the lifetime expected credit losses is recognized if the credit risk of the financial asset has significantly increased since initial recognition.
De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
I f the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received.
(b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortized cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in the statement of profit and loss.
De-recognition of financial liabilities
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire.
Derivative financial instruments and hedge accounting
I n the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward foreign exchange and interest rate contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognized immediately in the statement of profit and loss.
When hedge accounting is applied:
- for fair value hedges of recognized assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognized in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.
- for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognized directly in other comprehensive income and the ineffective portion is recognized in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative that had previously been recognized in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognized in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognized in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognized in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to the statement of profit and loss for the period.
(o) Employee benefits
Defined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each year end balance sheet date. Re-measurement gains and losses of the net defined benefit liability/(asset) are recognized immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) is recognized as an expense within employment costs.
Past service cost is recognized as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognized, whichever is earlier.
The retirement benefit obligation recognized in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value of plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized based on actuarial valuation at the present value of the obligation as on the reporting date.
(p) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is ascertained on a weighted average basis. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realizable value is the price at which the inventories can be realized in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Stores and spare parts are carried at lower of cost and net realizable value.
Provisions are made to cover slow moving and obsolete items based on historical experience of utilization on a product category basis, which involves individual businesses considering their product lines and market conditions.
(q) Provisions
Provisions are recognized in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entity''s actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge such responsibilities.
(r) Onerous contracts
A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
(s) Government grants
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfillment of obligations associated with the grant received. Total grants received less amounts credited to the statement of profit and loss at the balance sheet date are included in the balance sheet as deferred income.
(t) Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognized on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(u) Income taxes
Tax expense for the period comprises current and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company''s liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences. In contrast, deferred tax assets are only recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognized as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognized in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognized as deferred tax assets in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
(v) Revenue
Revenue is measured at the fair value of consideration received or receivable net of discounts, taking into account contractually defined terms and excluding taxes and duties collected on behalf of the government.
Sale of goods
Revenue from sale of goods is recognized when the Company has transferred to the buyer the significant risks and rewards of ownership, no longer retains control over the goods sold, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Depending on the contractual terms, risks and rewards of ownership is transferred when the delivery is completed. In case of exports sale delivery is completed on issuance of bill of lading.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and effective interest rate applicable.
Dividend income
Dividend income from investments is recognized when the right to receive payment has been established.
Rental income
Rental income is recognized on a straight line basis over the term of the relevant arrangements.
Commission income
Commission income is recognized when the services have been rendered.
(w) Foreign currency transactions and translations
The financial statements of the Company are presented in Indian rupees (''), which is the functional currency of the Company and the presentation currency for the financial statements.
In preparing the financial statements, transactions in currencies other than the Company''s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are re-translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on translation of long term foreign currency monetary items recognized in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognize such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-"First time adoption of Indian Accounting Standard" are added/deducted to/ from the cost of assets as the case may be. Such exchange differences recognized as part of cost of assets is recognized in the statement of profit and loss on a systematic basis.
Exchange differences arising on the re-translation or settlement of other monetary items are included in the statement of profit and loss for the period.
(x) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Investment income earned on temporary investment of specific borrowings pending their expenditure on qualifying assets is recognized in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortized over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are written off as borrowing costs when paid.
(y) Earnings per share
Basic earnings per share has been computed by dividing profit or loss for the year by the weighted average number of shares outstanding during the year. Partly paid up shares are included as fully paid equivalents according to the fraction paid up.
Diluted earnings per share has been computed using the weighted average number of shares and dilutive potential shares except where the result would be anti dilutive.
(z) Recent Accounting Pronouncements
Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing the following new amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018.
- Ind AS 115 - Revenue from contracts with customers.
- Ind AS 21 - The Effect of Changes in Foreign Exchange Rates.
Ind AS 115 - "Revenue from Contracts with Customers"
I nd AS 115 establishes a single model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard, Ind AS 18 "Revenue" and Ind AS 11 "Construction Contracts" when it becomes effective.
The core principle ofInd AS 115 is that, an entity should recognize revenue to depict the transfer of promised goods and services to customers in an account that reflects the consideration to which the entity expects to be entitled in exchange for these goods or services. The new standard also requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue.
The Company is in the process of evaluating the impact of adoption of Ind AS 115 on its financial statements.
Ind AS 21 - The Effect of Changes in Foreign Exchange Rates
The amendment clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
The Company is in the process of evaluating the impact of adoption of amendment to Ind AS 21 on its financial statements.
(iv) Rs,75.96 crore (March 31, 2017: Rs,221.25 crore) of borrowing costs has been capitalized during the year on qualifying assets under construction using a capitalization rate of 9.00% (2016-17: 9.50%).
(v) Rupee liability has increased by Rs,44.33 crore (March 31, 2017: Rs,137.11 crore) arising out of re-translation of the value of long-term foreign currency loans and liabilities for procurement of property, plant and equipment. This increase has been adjusted against the carrying value of assets and has been depreciated over their remaining useful life. The depreciation for the current year is higher by Rs,1.39 crore (2016-17: Rs,3.16 crore) on account of this adjustment.
(vi) Property, plant and equipment (including capital work-in-progress) were tested for impairment during the year where indicators of impairment existed. During the year ended March 31, 2018, the Company has recognized an impairment charge of Rs,33.99 crore (2016-17: Nil) in respect of expenditure incurred for a project (included in capital work in progress) wherein progress has been slow over the years due to certain hindrances. The impairment recognized is included within other expenses in the statement of profit and loss.
Figures in italics represent comparative figures for previous years.
(viii) Details of property, plant and equipment pledged against borrowings is presented in Note 19, Page 241.
Mar 31, 2017
1. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements and in preparing the opening Ind AS Balance Sheet as at April 1, 2015 for the purpose of transition to Ind AS, unless otherwise indicated.
(a) Statement of compliance
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 with effect from April 1, 2016.
The transition from Previous GAAP to Ind AS has been accounted for in accordance with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ; with April 1, 2015 being the transition date.
in accordance with Ind As 101 âFirst time adoption of Indian Accounting Standardâ, the Company has presented a reconciliation from the presentation of financial statements under accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (âPrevious GAAPâ) to Ind AS of total equity as at April 1, 2015 and March 31, 2016, total comprehensive income and cash flow for the year ended March 31, 2016.
(b) Basis of preparation
The financial statements have been prepared under the historical cost convention with the exception of certain assets and liabilities that are required to be carried at fair values by Ind AS.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
(c) Use of estimates and critical accounting judgements
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
(d) Property, plant and equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its working condition and location for its intended use. Trial run expenses (net of revenue) are capitalised. Borrowing costs incurred during the period of construction is capitalised as part of cost of the qualifying assets.
The gain or loss arising on disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the statement of profit and loss.
(e) Exploration for and evaluation of mineral resources
Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation assets. The following expenditure comprises cost of exploration and evaluation assets:
- obtaining of the rights to explore and evaluate mineral reserves and resources including costs directly related to this acquisition
- researching and analysing existing exploration data
- conducting geological studies, exploratory drilling and sampling
- examining and testing extraction and treatment methods
- compiling pre-feasibility and feasibility studies
- activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource.
Administration and other overhead costs are charged to the cost of exploration and evaluation assets only if directly related to an exploration and evaluation project.
If a project does not prove viable, all irrecoverable exploration and evaluation expenditure associated with the project net of any related impairment allowances is written off to the statement of profit and loss.
The Company measures its exploration and evaluation assets at cost and classifies as property, plant and equipment or intangible assets according to the nature of the assets acquired and applies the classification consistently. To the extent that tangible asset is consumed in developing an intangible asset, the amount reflecting that consumption is capitalised as a part of the cost of the intangible asset.
As the asset is not available for use, it is not depreciated. All exploration and evaluation assets are monitored for indications of impairment. An exploration and evaluation asset is no longer classified as such when the technical feasibility and commercial viability of extracting a mineral resource are demonstrable and the development of the deposit is sanctioned by the management. The carrying value of such exploration and evaluation asset is reclassified to mining assets.
(f) Development expenditure for mineral reserves
Development is the establishment of access to mineral reserves and other preparations for commercial production. Development activities often continue during production and include:
- sinking shafts and underground drifts (often called mine development)
- making permanent excavations
- developing passageways and rooms or galleries
- building roads and tunnels and
- advance removal of overburden and waste rock.
Development (or construction) also includes the installation of infrastructure (e.g., roads, utilities and housing), machinery, equipment and facilities.
Development expenditure is capitalised and presented as part of mining assets. No depreciation is charged on the development expenditure before the start of commercial production.
(g) Provision for restoration and environmental costs
The Company has liabilities related to restoration of soil and other related works, which are due upon the closure of certain of its production sites.
Such liabilities are estimated case-by-case based on available information, taking into account applicable local legal requirements. The estimation is made using existing technology, at current prices, and discounted using a discount rate where the effect of time value of money is material. Future restoration and environmental costs, discounted to net present value, are capitalised and the corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are depreciated over the life of the related asset. The effect of the time value of money on the restoration and environmental costs liability is recognised in the statement of profit and loss.
(h) Intangible assets (excluding goodwill)
Patents, trademarks and software costs are included in the balance sheet as intangible assets where they are clearly linked to long term economic benefits for the Company. In this case they are measured initially at purchase cost and then amortised on a straight line basis over their estimated useful lives. All other costs on patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Costs incurred on individual development projects are recognised as intangible assets from the date when all of the following conditions are met:
(i) completion of the development is technically feasible.
(ii) it is the intention to complete the intangible asset and use or sell it.
(iii) it is clear that the intangible asset will generate probable future economic benefits.
(iv) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available and;
(v) it is possible to reliably measure the expenditure attributable to the intangible asset during its development.
Recognition of costs as an asset is ceased when the project is complete and available for its intended use, or if these criteria no longer applicable.
Where development activities do not meet the conditions for recognition as an asset, any associated expenditure is treated as an expense in the period in which it is incurred.
Subsequent to initial recognition, intangible assets with definite useful lives are reported at cost less accumulated amortisation and accumulated impairment losses.
(i) Depreciation and amortisation of property, plant and equipment and intangible assets
Depreciation or amortisation is provided so as to write off, on a straight line basis, the cost of property, plant and equipment and other intangible assets, including those held under finance leases to their residual value. These charges are commenced from the dates the assets are available for their intended use and are spread over their estimated useful economic lives or, in the case of leased assets, over the lease period, if shorter. The estimated useful lives of assets and residual values are reviewed regularly and, when necessary, revised. No further charge is provided in respect of assets that are fully written down but are still in use.
Depreciation on assets under construction commences only when the assets are ready for their intended use.
The estimated useful lives for the main categories of property, plant and equipment and other intangible assets are:
Mining assets are amortised over the useful life of the mine or lease period whichever is lower.
Major furnace relining expenses are depreciated over a period of 10 years (average expected life).
Freehold land is not depreciated.
Assets value upto Rs.25,000 are fully depreciated in the year of acquisition.
*For these class of assets, based on internal assessment and independent technical evaluation carried out by chartered engineers, the Company believes that the useful lives as given above best represent the period over which Company expects to use these assets. Hence the useful lives for these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.
(j) Impairment
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
(k) Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfillment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or operating lease.
Leases are classified as finance leases where the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Company as lessee
(i) Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
(ii) Finance lease - Finance leases are capitalised at the commencement of lease, at the lower of the fair value of the property or the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the statement of profit and loss over the period of the lease.
The Company as lessor
(i) Operating lease - Rental income from operating leases is recognised in the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying value of the leased asset and recognised on a straight line basis over the lease term.
(ii) Finance lease - When assets are leased out under a finance lease, the present value of the minimum lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Lease income is recognised over the term of the lease using the net investment method before tax, which reflects a constant periodic rate of return.
(l) Stripping costs
The Company separates two different types of stripping costs that are incurred in surface mining activity:
- developmental stripping costs and
- production stripping costs
Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that will be mined in future periods are capitalised as part of mining assets. Capitalisation of developmental stripping costs ends when the commercial production of the mineral reserves begins.
A mine can operate several open pits that are regarded as separate operations for the purpose of mine planning and production. In this case, stripping costs are accounted for separately, by reference to the ore extracted from each separate pit. If, however, the pits are highly integrated for the purpose of mine planning and production, stripping costs are aggregated too.
The determination of whether multiple pit mines are considered separate or integrated operations depends on each mineâs specific circumstances. The following factors normally point towards the stripping costs for the individual pits being accounted for separately:
- mining of the second and subsequent pits is conducted consecutively with that of the first pit, rather than concurrently
- separate investment decisions are made to develop each pit, rather than a single investment decision being made at the outset
- the pits are operated as separate units in terms of mine planning and the sequencing of overburden and ore mining, rather than as an integrated unit
- expenditures for additional infrastructure to support the second and subsequent pits are relatively large
- the pits extract ore from separate and distinct ore bodies, rather than from a single ore body.
The relative importance of each factor is considered by the management to determine whether, on balance, the stripping costs should be attributed to the individual pit or to the combined output from the several pits.
Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to an additional component of an ore body or deeper levels of material. Production stripping costs are accounted for as inventories to the extent the benefit from production stripping activity is realised in the form of inventories.
The Company recognises a stripping activity asset in the production phase if, and only if, all of the following are met:
- it is probable that the future economic benefit (improved access to the ore body) associated with the stripping activity will flow to the Company
- the entity can identify the component of the ore body for which access has been improved and
- the costs relating to the improved access to that component can be measured reliably.
Such costs are presented within mining assets. After initial recognition, stripping activity assets are carried at cost less accumulated amortisation and impairment. The expected useful life of the identified component of the ore body is used to depreciate or amortise the stripping asset.
(m) Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability. The transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value through profit and loss are immediately recognised in the statement of profit and loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
(a) Financial assets Cash and bank balances
Cash and bank balances consist of:
(i) Cash and cash equivalents - which includes cash in hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
(ii) Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets measured at fair value
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The Company in respect of equity investments (other than in subsidiaries, associates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of such equity instruments. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments.
Financial asset not measured at amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises life time expected credit losses for all trade receivables that do not constitute a financing transaction.
For financial assets whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial instruments has significantly increased since initial recognition.
De-recognition of financial assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset to another entity.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the assets and an associated liability for amounts it may have to pay.
If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
(b) Financial liabilities and equity instruments Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest rate method where the time value of money is significant.
Interest bearing bank loans, overdrafts and issued debt are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in the statement of profit and loss.
De-recognition of financial liabilities
The Company de-recognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or they expire.
Derivative financial instruments and hedge accounting
In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign exchange and interest rate fluctuations. The instruments are confined principally to forward foreign exchange contracts, cross currency swaps, interest rate swaps and collars. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months, except for certain currency swaps and interest rate derivatives.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.
The Company adopts hedge accounting for forward and interest rate contracts wherever possible. At the inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item or transaction and the nature of the risk being hedged. At inception each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.
When hedge accounting is applied:
- for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives
- for cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in equity and the ineffective portion is taken to the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.
In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.
(n) Employee benefits
Defined contribution plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Companyâs obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
Defined benefit plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is the price at which the inventories can be realised in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling and distribution.
Stores and spare parts are carried at lower of cost and net realisable value.
Provisions are made to cover slow moving and obsolete items based on historical experience of utilisation on a product category basis, which involves individual businesses considering their product lines and market conditions.
(p) Provisions
Provisions are recognised in the balance sheet when the Company has a present obligation (legal or constructive) as a result of a past event, which is expected to result in an outflow of resources embodying economic benefits which can be reliably estimated. Each provision is based on the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Where the time value of money is material, provisions are measured on a discounted basis.
Constructive obligation is an obligation that derives from an entityâs actions where:
(a) by an established pattern of past practice, published policies or a sufficiently specific current statement, the entity has indicated to other parties that it will accept certain responsibilities and;
(b) as a result, the entity has created a valid expectation on the part of those other parties that it will discharge those responsibilities.
(q) Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
(r) Government grants
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Total grants received less the amounts credited to the statement of profit and loss at the balance sheet date are included in the balance sheet as deferred income.
(s) Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held for sale if their carrying value will be recovered through a sale transaction rather than through continuing use. This condition is only met when the sale is highly probable and the asset, or disposal group, is available for immediate sale in its present condition and is marketed for sale at a price that is reasonable in relation to its current fair value. The Company must also be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Where a disposal group represents a separate major line of business or geographical area of operations, or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, then it is treated as a discontinued operation. The post-tax profit or loss of the discontinued operation together with the gain or loss recognised on its disposal are disclosed as a single amount in the statement of profit and loss, with all prior periods being presented on this basis.
(t) Income taxes
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the statement of profit and loss, except when they relate to items credited or debited either in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or directly in equity.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.
(u) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of discounts, taking into account contractually defined terms and excluding taxes or duties collected on behalf of the government.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
Interest income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholderâs rights to receive payment have been established.
Rental income
Rental income from investment properties and subletting of properties is recognised on a straight line basis over the term of the relevant leases.
Commission income
Commission income is recognised when the services are rendered.
(v) Foreign currency transactions and translations
The financial statements of the Company are presented in Indian rupees (â), which is the functional currency of the Company and the presentation currency for the financial statements.
In preparing the financial statements, transactions in currencies other than the Companyâs functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at the end of the reporting period. Nonmonetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.
Exchange differences arising on translation of long term foreign currency monetary items recognised in the financial statements before the beginning of the first Ind AS financial reporting period in respect of which the Company has elected to recognise such exchange differences in equity or as part of cost of assets as allowed under Ind AS 101-âFirst time adoption of Indian Accounting Standardâ are recognised directly in equity or added/deducted to/ from the cost of assets as the case may be. Such exchange differences recognised in equity or as part of cost of assets is recognised in the statement of profit and loss on a systematic basis.
Exchange differences arising on the retranslation or settlement of other monetary items are included in the statement of profit and loss for the period.
(w) Borrowing costs
Borrowings costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is recognised in the statement of profit and loss.
Discounts or premiums and expenses on the issue of debt securities are amortised over the term of the related securities and included within borrowing costs. Premiums payable on early redemptions of debt securities, in lieu of future finance costs, are written off as borrowing costs when paid.
Mar 31, 2015
(a) Basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
Generally Accepted Accounting Principles, Accounting Standards notified
under Section 133 of the Companies Act, 2013 and the relevant
provisions thereof.
(b) Use of Estimates and Judgements
In preparation of the financial statements, the Company is required to
make judgements, estimates and assumptions about the carrying amount of
assets and liabilities that are not readily apparent from other
sources. The estimates and the associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and future periods affected.
Significant judgements and estimates about the carrying amount of
assets and liabilities include useful lives of tangible and intangible
assets, impairment of tangible assets, intangible assets including
goodwill, investments, employee benefits and other provisions and
recoverability of deferred tax assets.
(c) Revenue Recognition
(i) Revenue from sale of goods is recognised net of rebates and
discounts on transfer of significant risks and rewards of ownership to
the buyer. Sale of goods is recognised gross of excise duty but net of
sales tax and value added tax.
(ii) Export incentive under various schemes notified by the Government
has been recognised on the basis of amount received.
(iii) Dividend is recorded when the right to receive payment is
established. Interest income is recognised on time proportion basis
taking into account the amount outstanding and the rate applicable.
(d) Employee Benefits
(i) Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the employee has rendered services.
(ii) For defined-benefit plans, the amount recognised in the Balance
Sheet is the present value of the defined-benefit obligation less the
fair value of any plan assets and any past service costs not yet
recognised. The present value of the defined-benefit obligation is the
present value of expected future payments required to settle the
obligation resulting from employee service in the current and prior
periods. The discount rate used is the market yields on government
bonds at the Balance Sheet date with remaining terms to maturity
approximating those of the Company''s obligations.
(iii) Other long-term employee benefits are recognised as an expense in
the Statement of Profit and Loss of the year in which the employee has
rendered services. Estimated liability on account of long-term benefits
is discounted to the present value, using the market yield on
Government Bonds, as on the date of Balance Sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term benefits are charged to the Statement of Profit and Loss.
(v) In respect of the Employee Separation Scheme, the increase in the
net present value of the future liability for pension payable to
employees, who have opted for retirement under the Employee Separation
Scheme of the Company, is charged to the Statement of Profit and Loss.
(e) Tangible Assets
Tangible assets are stated at cost less accumulated depreciation and
net of impairment, if any. Pre-operation expenses including trial run
expenses (net of revenue) are capitalised. Borrowing costs during the
period of construction is added to the cost of eligible tangible
assets.
Major expenses on relining of furnace are capitalised. The written down
value of the asset consisting of lining/relining expenditure embedded
in the cost of the furnace is written off in the year of fresh
relining.
(f) Intangible Assets
I ntangible assets are stated at cost less accumulated amortisation and
net of impairments, if any. An intangible asset is recognised if it is
probable that the expected future economic benefits that are
attributable to the asset will flow to the Company and its cost can be
measured reliably. Intangible assets having finite useful lives are
amortised on a straight-line basis over their estimated useful lives.
(g) Depreciation and Amortisation
Depreciation is provided on a straight line basis over the useful lives
of assets, which is as stated in Schedule II of Companies Act 2013 or
based on technical estimate made by the Company. However, assets value
upto Rs 25,000 are fully depreciated in the year of acquisition. The
details of estimated life for each category of asset are as under:
(i) Buildings - 30 to 60 years
(ii) Roads - 5 years
(iii) Plant and Machinery used in manufacturing of Steel - 20 years*
(iv) Other Plant and Machinery - 6 to 40 years*
(v) Railway Sidings - 20 years*
(vi) Vehicles and Aircraft - 5 to 20 years
(vii) Furniture, Fixtures and Office Equipments - 4 to 6 years
(viii) Computer Software - 5 years
(ix) Assets covered under Electricity Act (life as prescribed under the
Electricity Act) Â 3 to 34 years
(x) Development of property for development of mines and collieries are
amortised over the useful life of the mine or lease period whichever is
less, subject to maximum of 10 years.
(xi) Major furnace relining expenses are depreciated over a period of
10 years (average expected life).
(xii) Freehold land is not depreciated.
(xiii) Leasehold land and other leasehold assets are amortised over the
life of the lease.
*For these class of assets, based on internal assessment and
independent technical evaluation carried out by external valuers the
Company believes that the useful lives as given above best represent
the period over which Company expects to use these assets. Hence the
useful lives for these assets are different from the useful lives as
prescribed under Part C of Schedule II of the Companies Act 2013.
(h) Impairment
Fixed assets are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amount may not be
recoverable.
An impairment loss is recognised in the Statement of Profit and Loss if
the carrying amount of an asset exceeds its recoverable amount.
Recoverable amount is the higher of an asset''s net selling price and
value in use.
An impairment loss recognised on asset is reversed when the conditions
warranting impairment provision no longer exists.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Year-end balance of foreign
currency monetary item is translated at the year-end rates. Exchange
differences arising on settlement of monetary items or on reporting of
monetary items at rates different from those at which they were
initially recorded during the period or reported in previous financial
statements are recognised as income or expense in the period in which
they arise.
The Company has elected to account for exchange differences arising on
reporting of long-term foreign currency monetary items in accordance
with Companies (Accounting Standards) Amendment Rules, 2009 pertaining
to Accounting Standard 11 (AS-11) notified by Government of India on
31st March, 2009 (as amended on 29th December, 2011). Accordingly, the
effect of exchange differences on foreign currency loans of the Company
is accounted by addition or deduction to the cost of the assets so far
it relates to depreciable capital assets and in other cases by transfer
to "Foreign Currency Monetary Item Translation Difference Account" to
be amortised over the balance period of the long-term monetary items.
Exchange differences relating to monetary items that are in substance
forming part of the Company''s net investment in non- integral foreign
operations are accumulated in Foreign Exchange Fluctuation Reserve
Account.
Foreign currency monetary items that are used as hedge instruments or
hedged items are accounted as per accounting policy on derivative
financial instruments.
(j) Derivative Financial Instruments
(i) The Company uses derivative financial instruments such as forwards,
swaps, options, etc. to hedge its risks associated with foreign
exchange fluctuations. Such derivative financial instruments are used
as risk management tools and not for speculative purposes.
(ii) Derivative financial instruments entered into for hedging foreign
exchange risks of recognised foreign currency monetary items are
accounted for as per the principles laid down in Accounting Standard -
11 "The effects of changes in Foreign Rates".
(iii) For derivative financial instruments and foreign currency
monetary items designated as Cash Flow hedges, the effective portion of
the fair value of the derivative financial instruments are recognised
in Cash Flow Hedge Reserve and reclassified in the period in which the
Statement of Profit and Loss is impacted by the hedged items. In cases
where the exposure gives rise to a non-financial asset, the effective
portion is reclassified from Hedging Reserve to the initial carrying
amount of the non-financial asset as a ''basis adjustment'' and recycled
to the Statement of Profit and Loss when the respective non-financial
asset affects the Statement of Profit and Loss in future periods. The
ineffective portion of the change in fair value of such instruments is
recognised in the Statement of Profit and Loss in the period in which
they arise. Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised, or no longer
qualifies for hedge accounting. For forecasted transactions, any
cumulative gain or loss on the hedging instrument recognised in Cash
Flow Hedge Reserve is retained there until the forecasted transaction
occurs.
If the forecasted transaction is no longer expected to occur, the net
cumulative gain or loss recognised in Cash Flow Hedge Reserve is
immediately transferred to the Statement of Profit and Loss.
(iv) I f no hedging relationship is designated, the fair value of the
derivative financial instruments is marked to market through the
Statement of Profit and Loss.
(k) Investments
Long-term investments are carried at cost less provision for diminution
other than temporary, if any,in value of such investments. Current
investments are carried at lower of cost and fair value.
(l) Inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value. Stores
and spare parts are carried at cost. Necessary provision is made and
expensed in case of identified obsolete and non- moving items.
Cost of inventories is generally ascertained on the ''weighted average''
basis. Work-in-progress and finished and semi-finished products are
valued on full absorption cost basis.
(m) Relining Expenses
Relining expenses other than major expenses on furnace relining are
charged as an expense in the Statement of Profit and Loss in the year
in which they are incurred.
(n) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the Statement of Profit and Loss
in the year in which they are incurred.
(o) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences, subject to the consideration of prudence in respect of
deferred tax assets, which arise during the year and reverse in
subsequent periods. Deferred tax is measured at substantively enacted
tax rates by the Balance Sheet date.
(a) (i) 20 Ordinary Shares of face value Rs.10 per share allotted on 1st
December, 2014 at a premium of Rs 290 per share to shareholders whose
shares were kept in abeyance in the Rights issue made in 2007.
(ii) 14 Ordinary Shares offace value 10 per share allotted on 1st
December, 2014at a premium ofRs 590 per shareto holders of Cumulative
Convertible Preference Shares in the ratio of 6:1 on conversion whose
shares were kept in abeyance in the Rights issue made in 2007.
(b) 176OrdinarySharesoffacevalueofRs 10 pershareallotted on11th March,
2014ata premium ofRs 290 pershareto shareholders whose shares were kept
in abeyance in the Rights issue made in 2007.
(c) The balance Ordinary Shares kept in abeyance are 3,01,183
(31.03.2014:3,01,218) in respect of Rights issue of 2007.
(3) Particulars of securities convertible into Ordinary Shares:
In November 2009, the Company had issued 5,469.35 numbers of 4.5%
Foreign Currency Convertible Bonds (FCCBs) of face value USD 0.1
million each aggregating to USD 546.935 million. As on 30th September,
2014, these represented 4,33,51,989 (31.3.2014: 4,28,28,141) underlying
shares and are convertible at any time on or after 31st December, 2009
and upto 11th November, 2014 by the holders of such FCCBs at a
conversion price of Rs 584.8845 per share (31.3.2014: Rs 592.0385 per
share) and at a fixed USD/INR conversion rate of 46.36.
Since, the FCCBs holders did not exercise the option of conversion
until 11th November, 2014, the FCCBs were redeemed on 20th November,
2014 at an aggregate amount Rs 3,381.22 crores.
(4) 1,79,07,847 shares (31.03.2014:2,88,75,320 shares) of face value of
Rs 10 per share represent the shares underlying GDRs which were issued
during 1994 and 2009. Each GDR represents one underlying Ordinary
Share.
(5) The rights, powers and preferences relating to each class of share
capital and the qualifications, limitations and restrictions thereof
are contained in the Memorandum and Articles of Association of the
Company. The principal rights are as follows:
A. Ordinary Shares of Rs 10 each
(a) In respect of every Ordinary Share (whether fully paid or partly
paid), voting right shall be in the same proportion as the capital paid
up on such Ordinary Share bears to the total paid up Ordinary Capital
of the Company.
(b) The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend.
(c) In the event of liquidation, the shareholders of Ordinary Shares
are eligible to receive the remaining assets of the Company after
distribution of all preferential amounts, in proportion to their
shareholding.
B. ''A'' Ordinary Shares of Rs 10 each
(a) (i) The holders of ''A'' Ordinary Shares shall be entitled to such
rights of voting and/or dividend and such other
rights as per the terms of the issue of such shares, provided always
that:
- i n the case where a resolution is put to vote on a poll, such
differential voting entitlement (excluding fractions, if any) will be
applicable to holders of ''A'' Ordinary Shares.
- in the case where a resolution is put to vote in the meeting and is
to be decided on a show of hands, the holders of ''A'' Ordinary Shares
shall be entitled to the same number of votes as available to holders
of Ordinary Shares.
(ii) The holders of Ordinary Shares and the holders of ''A''Ordinary
Shares shall vote as a single class with respect to all matters
submitted for voting by shareholders of the Company and shall exercise
such votes in proportion to the voting rights attached to such shares
including in relation to any scheme under Sections 391 to 394 of the
Companies Act, 1956.
(b) The holders of ''A'' Ordinary Shares shall be entitled to dividend on
each ''A'' Ordinary Share which may be equal to or higher than the amount
per Ordinary Share declared by the Board for each Ordinary Share, and
as may be specified at the time of the issue. Different series of ''A''
Ordinary Shares may carry different entitlements to dividend to the
extent permitted under applicable law and as prescribed under the terms
applicable to such issue.
C. Preference Shares
The Company has two classes of preference shares i.e. Cumulative
Redeemable Preference Shares (CRPS) of '' 100 per share and Cumulative
Convertible Preference Shares (CCPS) of '' 100 per share.
(a) Such shares shall confer on the holders thereof, the right to a
fixed preferential dividend from the date of allotment, at a rate as
may be determined by the Board at the time of the issue, on the capital
for the time being paid up or credited as paid up thereon.
(b) Such shares shall rank for capital and dividend (including all
dividend undeclared upto the commencement of winding up) and for
repayment of capital in a winding up, pari passu inter se and in
priority to the Ordinary Shares of the Company, but shall not confer
any further or other right to participate either in profits or assets.
However, in case of CCPS, such preferential rights shall automatically
cease on conversion of these shares into Ordinary Shares.
(c) The holders of such shares shall have the right to receive all
notices of general meetings of the Company but shall not confer on the
holders thereof the right to vote at any meetings of the Company save
to the extent and in the manner provided in the Companies Act, 1956, or
any re-enactment thereof.
(d) CCPS shall be converted into Ordinary Shares as per the terms,
determined by the Board at the time of issue; as and when converted,
such Ordinary Shares shall rank pari passu with the then existing
Ordinary Shares of the Company in all respects.
(b) The amount recognised in Cash Flow Hedge Reserve is expected to
impact Statement of Profit and Loss within the next one year.
(c) Ineffective portion taken to Statement of Profit and Loss during
the year Rs 0.44 crore (31.03.2014: Rs 0.21 crore).
(2) The Company has elected to account for exchange differences arising
on reporting of long-term foreign currency monetary item in accordance
with Companies (Accounting Standards) Amendment Rules 2009 pertaining
to Accounting Standard 11 (AS-11) notified by Government of India on
31st March, 2009 (as amended on 29th December, 2011) which allows
foreign exchange differences on long-term monetary items arising on or
after 1st April, 2011 to be capitalised to the extent they relate to
acquisition of depreciable assets and in other cases to amortise over
the balance period of the respective monetary items. As on 31st March,
2015, Rs 0.12 crore (31.03.2014: Rs 276.75 crores) remains to be
amortised in the "Foreign Currency Monetary Item Translation Difference
Account".
(3) During the year, the Company has revised depreciation rate on
certain fixed assets as per the useful life specified in the Companies
Act, 2013 or re-assessed by the Company based on technical evaluation.
Accordingly, depreciation of Rs 127.80 crores (net of deferred tax of
Rs 67.64 crores) on account of assets with no remaining useful life as
on 1st April, 2014 has been adjusted to retained earnings.
Had there been no change in useful life of assets, depreciation for the
year ended 31st March, 2015 would have been higher by Rs 34.87 crores.
(1) The Company had issued Hybrid Perpetual Securities of Rs 775.00
crores and Rs 1,500.00 crores in May 2011and March 2011 respectively.
These securities are perpetual in nature with no maturity or redemption
and are callable only at the option of the Company. The distribution on
these securities are 11.50% p.a. and 11.80% p.a. respectively, with a
step up provision if the securities are not called after 10 years. The
distribution on the securities may be deferred at the option of the
Company if in the six months preceding the relevant distribution
payment date, the Company has not made payment on, or repurchased or
redeemed, any securities ranking pari passu with, or junior to the
instrument. As these securities are perpetual in nature and the Company
does not have any redemption obligation, these are not classified as
''debt''
(1) Details of outstanding secured borrowings are as follows:
(a) Loan from Joint Plant Committee - Steel Development Fund which
includes funded interest Rs 593.03 crores (31.03.2014: Rs 488.32
crores). It is repayable in 16 equal semi-annual installments after
completion of 4 years from the date of receipt of the last tranche.
It is secured by mortgages on, all present and future immovable
properties wherever situated and hypothecation of movable assets,
excluding land and building mortgaged in favour of Government of India
under the deed of mortgage dated 13th April, 1967 and in favour of
Government of Bihar under two deeds of mortgage dated 11th May, 1963,
immovable properties and movable assets of the Tube Division, Bearing
Division, Ferro Alloys Division and Cold Rolling Complex (West) at
Tarapur and all investments and book debts of the Company subject to
the prior charges created and/or to be created in favour of the bankers
for securing borrowing for the working capital requirement and charges
created and/or to be created on specific items of machinery and
equipment procured/to be procured under Deferred Payment schemes/Bill
Re-discounting schemes/Asset Credit schemes.
The Company has filed a writ petition before the High Court at Kolkata
in February 2006 claiming waiver of the outstanding loan and interest
and refund of the balance lying with Steel Development Fund and the
matter is sub-judice.
Loan from the Joint Plant Committee-Steel Development Fund includes Rs
1,639.33 crores (31.03.2014: Rs 1,599.73 crores) representing repayments
and interest on earlier loans for which applications of funding are
awaiting sanction is not secured by charge on movable assets of the
Company.
Mar 31, 2014
(a) basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
Generally Accepted Accounting Principles, Accounting Standards notified
under Section 211(3C) of the Companies Act, 1956 and the relevant
provisions thereof.
(b) Use of Estimates and Judgements
In preparation of the financial statements, the Company is required to
make judgements, estimates and assumptions about the carrying amount of
assets and liabilities that are not readily apparent from other
sources. The estimates and the associated assumptions are based on
historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and future periods affected.
Significant judgements and estimates about the carrying amount of assets
and liabilities include useful lives of tangible and intangible assets,
impairment of tangible assets, intangible assets including goodwill,
investments, employee Benefits and other provisions and recoverability
of deferred tax assets.
(c) Revenue Recognition
(i) Revenue from sale of goods is recognised net of rebates and
discounts on transfer of significant risks and rewards of ownership to
the buyer. Sale of goods is recognised gross of excise duty but net of
sales tax and value added tax.
(ii) Export incentive under various schemes notified by the Government
has been recognised on the basis of amount received.
(d) Employee Benefits
(i) Short-term employee Benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the employee has rendered services.
(ii) For defined-benefit plans, the amount recognised in the Balance
Sheet is the present value of the defined-benefit obligation less the
fair value of any plan assets and any past service costs not yet
recognised. The present value of the defined-benefit obligation is the
present value of expected future payments required to settle the
obligation resulting from employee service in the current and prior
periods. The discount rate used is the market yields on government
bonds at the Balance Sheet date with remaining terms to maturity
approximating those of the Company''s obligations.
(iii) Other long-term employee Benefits are recognised as an expense in
the Statement of Profit and Loss of the year in which the employee has
rendered services. Estimated liability on account of long-term Benefits
is discounted to the present value, using the market yield on
Government Bonds, as on the date of Balance Sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term Benefits are charged to the Statement of Profit and Loss.
(v) In respect of the Employee Separation Scheme, the increase in the
net present value of the future liability for pension payable to
employees, who have opted for retirement under the Employee Separation
Scheme of the Company, is charged to the Statement of Profit and Loss.
(e) Tangible Assets Tangible assets are stated at cost less accumulated
depreciation and net of impairment, if any. Pre-operation expenses
including trial run expenses (net of revenue) are capitalised.
Borrowing costs during the period of construction is added to the cost
of eligible tangible assets.
Major expenses on relining of furnace are capitalised. The written down
value of the asset consisting of lining/relining expenditure embedded
in the cost of the furnace is written off in the year of fresh
relining.
(f) Intangible Assets
Intangible assets are stated at cost less accumulated amortisation and
net of impairments, if any. An intangible asset is recognised if it is
probable that the expected future economic Benefits that are
attributable to the asset will flow to the Company and its cost can be
measured reliably. Intangible assets having finite useful lives are
amortised on a straight-line basis over their estimated useful lives.
(g) Depreciation and Amortisation
(i) Capital assets whose ownership does not vest with the Company are
depreciated over their estimated useful life or five years, whichever is
less.
(ii) In respect of other assets, depreciation is provided on a straight
line basis applying the rates specified in Schedule XIV to the Companies
Act, 1956 or rates based on estimated useful life whichever is higher.
However, asset value upto Rs. 25,000 is fully depreciated in the year of
acquisition. The details of estimated life for each category of asset
are as under:
(a) Buildings and Roads  30 to 62 years
(b) Plant and Machinery  3 to 30 years
(c) Railway Sidings  21 years
(d) Vehicles and Aircraft  5 to 18 years
(e) Furniture, Fixtures and Office Equipments  5 years
(f) Intangibles (Computer Soft wares) Â 5 to 10 years
(g) Development of property for development of mines and collieries are
amortised over the useful life of the mine or lease period whichever is
less, subject to maximum of 10 years.
(h) Major furnace relining expenses are depreciated over a period of 10
years (average expected life).
(i) Freehold land is not depreciated.
(j) Leasehold land and other leasehold assets are amortised over the
life of the lease.
(h) Impairment
Fixed assets are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amount may not be
recoverable.
An impairment loss is recognised in the Statement of Profit and Loss if
the carrying amount of an asset exceeds its recoverable amount.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Year-end balance of foreign
currency monetary item is translated at the year-end rates. Exchange
differences arising on settlement of monetary items or on reporting of
monetary items at rates different from those at which they were
initially recorded during the period or reported in previous financial
statements are recognised as income or expense in the period in which
they arise. The Company has elected to account for exchange
differences arising on reporting of long-term foreign currency monetary
items in accordance with Companies (Accounting Standards) Amendment
Rules, 2009 pertaining to Accounting Standard 11 (AS-11) notified by
Government of India on 31st March, 2009 (as amended on 29th December,
2011). Accordingly, the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases by transfer to "Foreign Currency Monetary Item
Translation Difference Account" to be amortised over the balance period
of the long-term monetary items. Exchange differences relating to
monetary items that are in substance forming part of the Company''s net
investment in non- integral foreign operations are accumulated in
Foreign Exchange Fluctuation Reserve Account.
Foreign currency monetary items that are used as hedge instruments or
hedged items are accounted as per accounting policy on derivative
financial instruments.
(j) Derivative Financial Instruments
(i) The Company uses derivative financial instruments such as Forwards,
Swaps, Options, etc. to hedge its risks associated with foreign
exchange fluctuations. Such derivative financial instruments are used as
risk management tools and not for speculative purposes.
(ii) Derivative financial instruments entered into for hedging foreign
exchange risks of recognised foreign currency monetary items are
accounted for as per the principles laid down in Accounting Standard -
11 "The effects of changes in Foreign Rates".
(iii) For derivative financial instruments and foreign currency monetary
items designated as Cash Flow hedges, the effective portion of the fair
value of the derivative financial instruments are recognised in Cash
Flow Hedge Reserve and reclassified in the period in which the Statement
of Profit and Loss is impacted by the hedged items. In cases where the
exposure gives rise to a non-financial asset, the effective portion is
reclassified from Hedging Reserve to the initial carrying amount of the
non-financial asset as a ''basis adjustment'' and recycled to the
Statement of Profit and Loss when the respective non-financial asset
affects the Statement of Profit and Loss in future periods. The
ineffective portion of the change in fair value of such instruments is
recognised in the Statement of Profit and Loss in the period in which
they arise. Hedge accounting is discontinued when the hedging
instrument expires or is sold, terminated, or exercised, or no longer
qualifies for hedge accounting. For forecasted transactions, any
cumulative gain or loss on the hedging instrument recognised in Cash
Flow Hedge Reserve is retained their until the forecasted transaction
occurs.
If the forecasted transaction is no longer expected to occur, the net
cumulative gain or loss recognised in Cash Flow Hedge Reserve is
immediately transferred to the Statement of Profit and Loss.
(iv) If no hedging relationship is designated, the fair value of the
derivative financial instruments is marked to market through the
Statement of Profit and Loss.
(k) Investments
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
(l) Inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value.
Stores and spare parts are carried at cost. Necessary provision is made
and expensed in case of identified obsolete and non- moving items.
Cost of inventories is generally ascertained on the ''weighted average''
basis. Work-in-progress and finished and semi-finished products are
valued on full absorption cost basis.
(m) Relining Expenses
Relining expenses other than major expenses on furnace relining are
charged as an expense in the Statement of Profit and Loss in the year in
which they are incurred.
(n) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the Statement of Profit and Loss
in the year in which they are incurred.
(o) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences, subject to the consideration of prudence in respect of
deferred tax assets, which arise during the year and reverse in
subsequent periods. Deferred tax is measured at substantively enacted
tax rates by the Balance Sheet date.
Mar 31, 2013
(a) Basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
Generally Accepted Accounting Principles, Accounting Standards notified
under Section 211(3C) of the Companies Act, 1956 and the relevant
provisions thereof.
(b) Revenue Recognition
(i) Revenue from sale of goods is recognised net of rebates and
discounts on transfer of significant risks and rewards of ownership to
the buyer. Sale of goods is recognised gross of excise duty but net of
sales tax and value added tax.
(ii) Export incentive under various schemes notified by the Government
has been recognised on the basis of credits afforded in the pass
book/amount received.
(c) Employee Benefits
(i) Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the employee has rendered services.
(ii) For defined-benefit plans, the amount recognised in the balance
sheet is the present value of the defined-benefit obligation less the
fair value of any plan assets and any past service costs not yet
recognised. The present value of the defined-benefit obligation is the
present value of expected future payments required to settle the
obligation resulting from employee service in the current and prior
periods. The discount rate used is the market yields on government
bonds at the balance sheet date with remaining terms to maturity
approximating those of the Company''s obligations.
(iii) Other long-term employee benefits are recognised as an expense in
the Statement of Profit and Loss for the year in which the employee has
rendered services. Estimated liability on account of long-term benefits
is discounted to the present value, using the market yield on
Government Bonds, as on the date of balance sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term benefits are charged to the Statement of Profit and Loss.
(v) In respect of the Employee Separation Scheme, the increase in the
net present value of the future liability for pension payable to
employees, who have opted for retirement under the Employee Separation
Scheme of the Company, is charged to the Statement of Profit and Loss.
(d) Tangible Assets
Tangible assets are stated at cost less accumulated depreciation and
net of impairment, if any. Pre-operation expenses including trial run
expenses (net of revenue) are capitalised. Borrowing costs during the
period of construction is added to the cost of eligible tangible
assets.
Blast Furnace relining is capitalised. The written down value of the
asset consisting of lining/relining expenditure embedded in the cost of
the furnace is written off in the year of fresh relining.
(e) Intangible Assets
Intangible assets are stated at cost less accumulated amortisation and
net of impairments, if any. An intangible asset is recognised if it is
probable that the expected future economic benefits that are
attributable to the asset will flow to the Company and its cost can be
measured reliably. Intangible assets having finite useful lives are
amortised on a straight-line basis over their estimated useful lives.
(f) Depreciation and Amortisation
(i) Capital assets whose ownership does not vest with the Company are
depreciated over their estimated useful life or five years, whichever
is less.
(ii) In respect of other assets, depreciation is provided on a straight
line basis applying the rates specified in Schedule XIV to the
Companies Act, 1956 or rates based on estimated useful life whichever
is higher. However, asset value upto Rs. 25,000 is fully depreciated in
the year of acquisition. The details of estimated life for each
category of asset are as under:
(a) Buildings and Roads  30 to 62 years
(b) Plant and Machinery  3 to 30 years
(c) Railway Sidings  21 years
(d) Vehicles and Aircraft  5 to 18 years
(e) Furniture, Fixtures and Office Equipments  5 years
(f) Intangibles (Computer Softwares) Â 5 to 10 years
(g) Development of property for development of mines and collieries are
amortised over the useful life of the mine or lease period whichever is
less, subject to maximum of 10 years.
(h) Blast Furnace relining is depreciated over a period of 10 years
(average expected life).
(i) Freehold land is not depreciated.
(j) Leasehold land and other leasehold assets are amortised over the
life of the lease.
(g) Impairment
Fixed assets are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amount may not be
recoverable.
An impairment loss is recognised in the Statement of Profit and Loss if
the carrying amount of an asset exceeds its recoverable amount.
(h) Foreign Currency Transactions
Foreign Currency Transactions (FCT) and forward exchange contracts
entered into to hedge FCT are initially recognised at the spot rate on
the date of the transaction/contract. Monetary assets and liabilities
denominated in foreign currency and forward exchange contracts
remaining unsettled at the end of the year are translated at year end
rates.
The Company has elected to account for exchange differences arising on
reporting of long-term foreign currency monetary items in accordance
with Companies (Accounting Standards) Amendment Rules, 2009 pertaining
to Accounting Standard 11 (AS-11) notified by Government of India on
31st March, 2009 (as amended on 29th December, 2011). Accordingly, the
effect of exchange differences on foreign currency loans of the Company
is accounted by addition or deduction to the cost of the assets so far
it relates to depreciable capital assets and in other cases by transfer
to "Foreign Currency Monetary Item Translation Difference Account" to
be amortised over the balance period of the long-term monetary items.
The differences in translation and settlement of FCT and forward
exchange contracts used to hedge FCT [excluding the long- term foreign
currency monetary items accounted in accordance with Companies
(Accounting Standards) Amendment Rules 2009 on Accounting Standard 11
notified by Government of India on 31st March, 2009 as amended on 29th
December, 2011] are recognised in the Statement of Profit and Loss. The
outstanding derivative contracts at the balance sheet date other than
forward exchange contracts used to hedge FCT are valued by marking them
to market and losses, if any, are recognised in the Statement of Profit
and Loss.
Exchange differences relating to monetary items that are in substance
forming part of the Company''s net investment in non integral foreign
operations are accumulated in Foreign Exchange Fluctuation Reserve
Account.
(i) Investments
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
(j) Inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value.
Stores and spare parts are carried at cost. Necessary provision is made
and expensed in case of identified obsolete and non- moving items.
Cost of inventories is generally ascertained on the ''weighted
average'' basis. Work-in-progress and finished and semi-finished
products are valued on full absorption cost basis.
(k) Relining Expenses
Relining expenses other than expenses on blast furnace relining are
charged as an expense in the Statement of Profit and Loss in the year
in which they are incurred.
(l) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the Statement of Profit and Loss
in the year in which they are incurred.
(m) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences which arise during the year and reverse in subsequent
periods.
Mar 31, 2012
(a) basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
Generally Accepted Accounting Principles, Accounting Standards notified
under Section 211(3C) of the Companies Act, 1956 and the relevant
provisions thereof.
During the year, Revised Schedule vI notified under the Companies Act,
1956 has become applicable to the Company for preparation and
presentation of its financial statements. The Company has reclassifed
the previous year fgures in accordance with the requirements applicable
in the current year.
(b) Revenue Recognition
(i) Revenue from sale of goods is recognised net of rebates and
discounts on transfer of significant risks and rewards of ownership to
the buyer. Sale of goods is recognised gross of excise duty but net of
sales tax and value added tax.
(ii) Revenue from services rendered is recognised on pro-rata basis in
proportion to the stage of completion of the related transaction.
(iii) Export incentive under various schemes notified by the Government
has been recognised on the basis of credits afforded in the pass
book/amount received.
(c) Employee Benefits
(i) Short-term employee Benefits are recognised as an expense at the
undiscounted amount in the Statement of Profit and Loss of the year in
which the employee has rendered services.
(ii) Post employment Benefits are recognised as an expense in the
Statement of Profit and Loss for the year in which the employee has
rendered services. The expense is recognised at the present value of
the amount payable towards contributions. The present value is
determined using the market yields of government bonds, at the balance
sheet date, as the discounting rate.
(iii) Other long-term employee Benefits are recognised as an expense in
the Statement of Profit and Loss for the year in which the employee has
rendered services. Estimated liability on account of long-term Benefits
is discounted to the present value, using the market yield on
government bonds, as on the date of balance sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term Benefits are charged to the Statement of Profit and Loss.
(v) In respect of the Employee Separation Scheme, the increase in the
net present value of the future liability for pension payable to
employees, who have opted for retirement under the Employee Separation
Scheme of the Company, is charged to the Statement of Profit and Loss.
(d) Tangible Assets
Tangible assets are stated at cost less accumulated depreciation and
net of impairment, if any. Pre-operation expenses including trial run
expenses (net of revenue) are capitalised. Borrowing costs during the
period of construction is added to the cost of eligible tangible
assets.
Blast Furnace relining is capitalised. The written down value of the
asset consisting of lining/relining expenditure embedded in the cost of
the furnace is written off in the year of firesh relining.
(e) Intangible Assets
Intangible assets are stated at cost less accumulated amortisation and
net of impairments, if any. An intangible asset is recognised if it is
probable that the expected future economic Benefits that are
attributable to the asset will flow to the Company and its cost can be
measured reliably. Intangible assets having fnite useful lives are
amortised on a straight-line basis over their estimated useful lives.
(f) Depreciation and Amortisation
(i) Capital assets whose ownership does not vest with the Company are
depreciated over their estimated useful life or five years, whichever is
less.
(ii) In respect of other assets, depreciation is provided on a straight
line basis applying the rates specified in Schedule XIv to the Companies
Act, 1956 or rates based on estimated useful life whichever is higher.
However, asset value upto Rs. 25,000 is fully depreciated in the year of
acquisition. The details of estimated life for each category of asset
are as under:
(a) Buildings and Roads à 30 to 62 years
(b) Plant and Machinery à 3 to 30 years
(c) Railway Sidings à 21 years
(d) vehicles and Aircraft à 5 to 18 years
(e) Furniture, Fixtures and Office Equipments à 5 years
(f) Intangibles (Computer Softwares) Ã 5 to 10 years
(g) Development of property for development of mines and collieries are
depreciated over the useful life of the mine or lease period whichever
is less, subject to maximum of 10 years.
(h) Blast Furnace relining is depreciated over a period of 10 years
(average expected life).
(i) Fireehold land is not depreciated.
(j) Leasehold land and other leasehold assets are amortised over the
life of the lease.
(g) impairment
Fixed assets are reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amount may not be
recoverable.
An impairment loss is recognised in the Statement of Profit and Loss if
the carrying amount of an asset exceeds its recoverable amount.
(h) Foreign Currency Transactions
Foreign Currency Transactions (FCT) and forward exchange contracts
entered into to hedge FCT are initially recognised at the spot rate on
the date of the transaction/contract. Monetary assets and liabilities
denominated in foreign currency and forward exchange contracts
remaining unsettled at the end of the year are translated at year end
rates.
The Company has elected to account for exchange differences arising on
reporting of long-term foreign currency monetary items in accordance
with Companies (Accounting Standards) Amendment Rules, 2009 pertaining
to Accounting Standard 11 (AS-11) notified by Government of India on
31st March, 2009 (as amended on 29th December, 2011). Accordingly, the
effect of exchange differences on foreign currency loans of the Company
is accounted by addition or deduction to the cost of the assets so far
it relates to depreciable capital assets and in other cases by transfer
to "Foreign Currency Monetary Item Translation Difference Account" to
be amortised over the balance period of the long-term monetary items.
The differences in translation and settlement of FCT and forward
exchange contracts used to hedge FCT (excluding the long- term foreign
currency monetary items accounted in line with Companies (Accounting
Standards) Amendment Rules 2009 on Accounting Standard 11 notified by
Government of India on 31st March, 2009 as amended on 29th December,
2011) are recognised in the Statement of Profit and Loss. The
outstanding derivative contracts at the balance sheet date other than
forward exchange contracts used to hedge FCT are valued by marking them
to market and losses, if any, are recognised in the Statement of Profit
and Loss.
Exchange differences relating to monetary items that are in substance
forming part of the Company's net investment in non integral foreign
operations are accumulated in Foreign Exchange Fluctuation Reserve
Account.
(i) investments
Long-term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
(j) inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value.
Stores and spare parts are carried at cost. Necessary provision is made
and charged to revenue in case of identifed obsolete and non-moving
items.
Cost of inventories is generally ascertained on the 'weighted average'
basis. Work-in-progress and finished and semi-finished products are
valued on full absorption cost basis.
(k) Relining Expenses
Relining expenses other than expenses on blast furnace relining are
charged as an expense in the Statement of Profit and Loss in the year in
which they are incurred.
(l) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the Statement of Profit and Loss
in the year in which they are incurred.
(m) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences which arise during the year and reverse in subsequent
periods.
Mar 31, 2011
(a) Basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
generally accepted accounting principles, Accounting Standards notifi
ed under Section 211(3C) of the Companies Act, 1956 and the relevant
provisions thereof.
(b) Revenue Recognition
(i) Sales comprises sale of goods and services, net of trade discounts.
(ii) Export incentive under the Duty Entitlement Pass Book Scheme has
been recognised on the basis of credits afforded in the pass book.
(c) Employee Benefits
(i) Short-term employee benefi ts are recognised as an expense at the
undiscounted amount in the Profit and Loss Account of the year in
which the related service is rendered.
(ii) Post employment benefi ts are recognised as an expense in the
Profit and Loss Account for the year in which the employee has
rendered services. The expense is recognised at the present value of
the amount payable towards contributions. The present value is
determined using the market yields of government bonds, at the balance
sheet date, as the discounting rate.
(iii) Other long-term employee benefi ts are recognised as an expense
in the Profit and Loss Account for the period in which the employee
has rendered services. Estimated liability on account of long-term
benefi ts is discounted to the current value, using the market yield on
government bonds, as on the date of balance sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term benefi ts are charged to the Profit and Loss Account.
(v) In respect of the Employee Separation Scheme (ESS), the increase in
the net present value of the future liability for pension payable to
employees, who have opted for retirement under the Employee Separation
Scheme of the Company, is charged to the Profit and Loss Account.
(d) Fixed Assets
All fixed assets are valued at cost less depreciation. Pre-operation
expenses including trial run expenses (net of revenue) are capitalised.
Borrowing costs during the period of construction is added to the cost
of eligible fixed assets.
Blast Furnace relining is capitalised. The written down value of the
asset consisting of lining/relining expenditure embedded in the cost of
the furnace is written off in the year of fresh relining.
(e) Depreciation
(I) Capital assets whose ownership does not vest in the Company is
depreciated over their estimated useful life or five years, whichever
is less.
(II) In respect of other assets, depreciation is provided on a straight
line basis applying the rates specifi ed in Schedule XIV to the
Companies Act, 1956 or rates based on estimated useful life whichever
is higher. However, asset value upto ? 25,000 is fully depreciated in
the year of acquisition. The details of estimated life for each
category of asset is as under :
(i) Buildings à 30 to 62 years
(ii) Plant and Machinery à 4 to 21 years
(iii) Railway Sidings à 21 years
(iv) Vehicles and Aircraft à 5 to 18 years
(v) Furniture, Fixtures and office Equipment à 4 to 5 years
(vi) Intangibles (Computer Software) Ã 5 to 10 years
(vii) Development of property for development of mines and collieries
are depreciated over the useful life of the mine or lease period
whichever is less, subject to maximum of 10 years
(viii) Blast Furnace relining is depreciated over a period of 10 years
(average expected life).
(ix) Freehold land is not depreciated.
(x) Leasehold land is amortised over the life of the lease.
(xi) Roads à 30 to 62 years
(f) Foreign Currency Transactions
Foreign Currency Transactions (FCT) and forward exchange contracts used
to hedge FCT are initially recognised at the spot rate on the date of
the transaction/contract. Monetary assets and liabilities relating to
foreign currency transactions and forward exchange contracts remaining
unsettled at the end of the year are translated at year end rates.
The company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notifi ed by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases by transfer to "Foreign Currency Monetary Items
Translation Difference Account" to be amortised over the balance period
of the long- term monetary items or period upto 31st March, 2011
whichever is earlier.
The differences in translation of FCT and forward exchange contracts
used to hedge FCT (excluding the long term foreign currency monetary
items accounted in line with Companies (Accounting Standards) Amendment
Rules 2009 on Accounting Standard 11 notifi ed by Government of India
on 31st March, 2009) and realised gains and losses, other than those
relating to fixed assets are recognised in the Profit and Loss
Account. The outstanding derivative contracts at the balance sheet date
other than forward exchange contracts used to hedge FCT are valued by
marking them to market and losses, if any, are recognised in the Profi
t and Loss Account.
Exchange difference relating to monetary items that are in substance
forming part of the Companys net investment in non integral foreign
operations are accumulated in Foreign Exchange Fluctuation Reserve
Account.
(g) Investments
Long term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
(h) Inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value.
Stores and spare parts are carried at cost. Necessary provision is made
and charged to revenue in case of identifi ed obsolete and non-moving
items.
Cost of inventories is generally ascertained on the weighted average
basis. Work-in-progress and finished and semi-finished products are
valued on full absorption cost basis.
(i) Relining Expenses
Relining expenses other than expenses on Blast Furnace relining are
charged as an expense in the year in which they are incurred.
(j) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
(k) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences which arise during the year and reverse in subsequent
periods.
Mar 31, 2010
(a) Basis for Accounting
The financial statements are prepared under the historical cost
convention on an accrual basis of accounting in accordance with the
generally accepted accounting principles, Accounting Standards notified
under Section 211(3C) of the Companies Act, 1956 and the relevant
provisions thereof.
(b) Revenue Recognition
(i) Sales comprises sale of goods and services, net of trade discounts.
(ii) Export incentive under the Duty Entitlement Pass Book Scheme has
been recognised on the basis of credits afforded in the pass book.
(c) Employee Benefits
(i) Short-term employee benefits are recognised as an expense at the
undiscounted amount in the Profit and Loss Account of the year in which
the related service is rendered.
(ii) Post employment benefits are recognised as an expense in the
Profit and Loss Account for the year in which the employee has rendered
services. The expense is recognised at the present value of the amount
payable towards contributions. The present value is determined using
the market yields of government bonds, at the balance sheet date, as
the discounting rate.
(iii) Other long-term employee benefits are recognised as an expense in
the Profit and Loss Account for the period in which the employee has
rendered services. Estimated liability on account of long-term benefits
is discounted to the current value, using the market yield on
government bonds, as on the date of balance sheet.
(iv) Actuarial gains and losses in respect of post employment and other
long-term benefits are charged to the Profit and Loss Account.
(v) Miscellaneous Expenditure
In respect of the Employee Separation Scheme (ESS), net present value
of the future liability for pension payable is amortised equally over
five years or upto financial year ending 31st March, 2010, whichever is
earlier.
The increase in the net present value of the future liability for
pension payable to employees who have opted for retirement under the
Employee Separation Scheme of the Company is charged to the Profit and
Loss Account.
(d) Fixed Assets
All fixed assets are valued at cost less depreciation. Pre-operation
expenses including trial run expenses (net of revenue) are capitalised.
Borrowing costs during the period of construction is added to the cost
of eligible fixed assets.
Blast Furnace relining is capitalised. The written down value of the
asset consisting of lining/relining expenditure embedded in the cost of
the furnace is written off in the year of fresh relining.
(e) Depreciation
(I) Capital assets whose ownership does not vest in the Company is
depreciated over their estimated useful life or five years, whichever
is less.
(II) In respect of other assets, depreciation is provided on a straight
line basis applying the rates specified in Schedule XIV to the
Companies Act, 1956 or rates based on estimated useful life whichever
is higher. However, asset value upto Rs. 25,000 is fully depreciated in
the year of acquisition. The details of estimated life for each
category of asset is as under :
(i) Buildings à 30 to 62 years.
(ii) Plant and Machinery à 6 to 21 years.
(iii) Railway Sidings à 21 years.
(iv) Vehicles and Aircraft à 5 to 18 years.
(v) Furniture, Fixtures and Office Equipment à 5 years.
(vi) Intangibles (Computer Software) Ã 5 to 10 years.
(vii) Development of property for development of mines and collieries
are depreciated over the useful life of the mine or lease period
whichever is less, subject to maximum of 10 years.
(viii) Blast Furnace relining is depreciated over a period of 10 years
(average expected life).
(ix) Freehold land is not depreciated.
(x) Leasehold land is amortised over the life of the lease.
(xi) Roads à 30 to 62 years.
(f) Foreign Currency Transactions
Foreign Currency Transactions (FCT) and forward exchange contracts used
to hedge FCT are initially recognised at the spot rate on the date of
the transaction/contract. Monetary assets and liabilities relating to
foreign currency transactions and forward exchange contracts remaining
unsettled at the end of the year are translated at year end rates.
The company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases by transfer to ÃForeign Currency Monetary Items
Translation Difference Accountà to be amortised over the balance period
of the long- term monetary items or period upto 31st March, 2011
whichever is earlier.
The differences in translation of FCT and forward exchange contracts
used to hedge FCT (excluding the long term foreign currency monetary
items accounted in line with Companies (Accounting Standards) Amendment
Rules 2009 on Accounting Standard 11 notified by Government of India on
31st March, 2009) and realised gains and losses, other than those
relating to fixed assets are recognised in the Profit and Loss Account.
The outstanding derivative contracts at the balance sheet date other
than forward exchange contracts used to hedge FCT are valued by marking
them to market and losses, if any, are recognised in the Profit and
Loss Account.
Exchange difference relating to monetary items that are in substance
forming part of the CompanyÃs net investment in non integral foreign
operations are accumulated in Foreign Exchange Fluctuation Reserve
Account.
(g) Investments
Long term investments are carried at cost less provision for diminution
other than temporary, if any, in value of such investments. Current
investments are carried at lower of cost and fair value.
(h) Inventories
Finished and semi-finished products produced and purchased by the
Company are carried at lower of cost and net realisable value.
Work-in-progress is carried at lower of cost and net realisable value.
Coal, iron ore and other raw materials produced and purchased by the
Company are carried at lower of cost and net realisable value.
Stores and spare parts are carried at lower of cost and net realisable
value. Necessary provision is made and charged to revenue in case of
identified obsolete and non-moving items.
Cost of inventories is generally ascertained on the Ãweighted averageÃ
basis. Work-in-progress and finished and semi-finished products are
valued on full absorption cost basis.
(i) Relining Expenses
Relining expenses other than expenses on Blast Furnace relining are
charged as an expense in the year in which they are incurred.
(j) Research and Development
Research and Development costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred.
(k) Deferred Tax
Deferred Tax is accounted for by computing the tax effect of timing
differences which arise during the year and reverse in subsequent
periods.
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