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Accounting Policies of The Orissa Minerals Development Company Ltd. Company
Mar 31, 2025
1. General Information
The Orissa Minerals Development Company Limited (hereinafter referred to as âOMDCâ or the âCompanyâ) was incorporated on 16th August, 1918. It was Nationalized by the Government of India by virtue of the Bird & Company Ltd (Acquisition and Transfer of undertaking and other properties) Act, 1980 (Act No: 67 of 1980) in the year 1980. It became a Schedule-B PSU w.e.f 19th March, 2010, as a subsidiary of EIL, which also become PSU on 19th March, 2010.
Eastern Investment Limited (EIL) became a subsidiary of RINL (Rashtriya Ispat Nigam Limited) on 5th January, 2011.
The company is listed at Calcutta stock exchange (CSE), National Stock Exchange (NSE) and got trading permission to trade under permitted category in Bombay Stock Exchange (BSE).
OMDC is in possession of three mines namely Belkundi Iron and Manganese Mines, Bagiaburu Iron Mines and Bhadrasai Iron and Manganese Mine at Barbil in the district of Keonjhar, Odisa.
OMDC earlier operated three mines of BPMEL under Power of Attorney namely Dalki Manganese Mines, Kolha Roida Iron & Manganese mines, Thakurani Iron and Manganese Mines.
Presently out of the three OMDC mines, Bagiaburu Iron mine is in operation. The other two mines of OMDC are inoperative due to non-availability of Forest and Environment clearance. The Company is in process of getting the required clearances.
2. Application of new and revised Ind-AS
No new Ind ASs were introduced or no revision to any existing Ind ASs has been made before 31 March,2017.
3. Statement of Compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies Act (Indian Accounting Standards) Rules, 2015.
Up to the year ended 31 March, 2015, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2014. These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is 1 April, 2015. Refer Note 4.16 for the details of first- time adoption exemptions availed by the Company.
4. Significant accounting policies
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013.
4.1 Basis of preparation and presentation
Prior to adoption of Ind AS, the Company had been preparing its financial statements for all periods up to and including the year ended 31 March 2016, in accordance with generally accepted accounting principles in the India, including accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 (âIndian GAAPâ). These financial statements for year ended 31 March 2017 are the Companyâs first financial statements prepared in accordance with Ind ASs.
All assets and liabilities have been classified as current or noncurrent as per Companyâs operating cycle and other criteria set out in Schedule-III of the Companies Act 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current-noncurrent classification of assets and liabilities.
The Company has adopted all the issued Ind ASs and such adoption was carried out in accordance with Ind AS 101- First Time Adoption of Indian Accounting Standards. The Company has transited from Indian GAAP which is its previous GAAP, as defined in Ind AS 101.
The effect on reported financial position and financial performance of the Company on transition to Ind AS has been provided in Note 37 of Ind AS Opening Balance Sheet as on April 01, 2015, which also includes reconciliations of total equity and total comprehensive income for comparative years under Indian GAAP to those reported for respective years under Ind AS.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, except for share based payment transactions that are within the scope of Ind AS 102 - Share based Payments, leasing transactions that are within the scope of Ind AS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
4.2. Property, Plant and Equipment
Property, plant and equipment held for use in the production or/ and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The initial cost at cash price equivalent of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any asset restoration obligation or obligatory decommissioning costs for its intended use.
Expenditure incurred on development of freehold land is capitalized as part of the cost of the land.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs.
Subsequent expenditure on day- to- day servicing of an item of property, plant and equipment is recognised in profit or loss as incurred. However, expenditure on major maintenance or repairs including cost of replacing the parts of assets and overhaul costs where it is probable that future economic benefits associated with the item will be available to the Company, are capitalised and the carrying amount of the item so replaced is derecognised.
Insurance spares that are specific to a fixed asset and valuing more than Rs. 1 lakh per unit are capitalised along with the main assets. All other spares are recognised as inventory, except for spares which are having a useful life greater than a year and can to be identified as components in an asset are capitalised.
Assets in the course of construction for production or/and supply of goods or services or administrative purposes, or for purposes not yet determined, are included under capital work in progress and are carried at cost, less any recognised impairment loss.Cost includes professional fees and for qualifying asset, borrowings costs capitalised in accordance with the Companyâs accounting policy. Such capital work in progress, is transferred to the appropriate category of property, plant and equipment when completed or starts operating as per managementâs intended use.
Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
Depreciation on assets are provided over their estimated useful lives or, in the case of leased assets (including leasehold improvements), over the lease term if shorter. The lease period is considered by excluding any lease renewals options, unless the renewals are reasonably certain. Depreciation on assets are provided on a straight line basis over the useful life of the asset in the manner prescribed under Schedule II of the Companies Act, 2013.
The estimated useful lives and residual values are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately if its useful life differs from the others components of the asset.
Property, plant and equipment which are subject to componentisation, comprises of main assets, componentised assets and remainders, if any. The useful life of remainders carry the life of main assets unless the same based on technical evaluation is considered to be lower than that of the main asset, in which case, such lower useful life is considered.
The residual value of property, plant and equipment are maintained at 5% of the original cost.
Subsequent expenditure related to an item of property, plant and equipment is prospectively depreciated over the revised useful life of respective assets.
|
The estimated range of useful lives are as follows: |
Years |
|
Buildings |
30 - 60 |
|
Plant and machinery |
8 - 10 |
|
Railway Siding |
15 |
|
Motor Vehicles |
8 |
|
Furniture and fixtures |
10 |
|
Computers |
3- 10 |
Freehold land is not depreciated
Depreciation commences when the assets are ready for their intended use. Depreciated assets on property, plant and equipment and accumulated depreciation thereon are retained fully until they are derecognised or classified as non-current assets held for sale.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.
Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.3. Intangible Assets
Intangible assets acquired separately
Intangible assets acquired are reported at cost less accumulated amortisation and accumulated impairment losses. Intangible assets having finite useful life are amortised over their estimated useful lives/unit-of-production basis over the total estimated remaining commercial reserves of mining property. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
The costs of mining rights includes amounts paid for afforestation and wild life conservation as determined by the regulatory authorities are capitalised as âMining rightsâ in the year in which they are incurred. Cost of pre-production primary development expenditure other than land, buildings, plant and equipment are capitalised as part of the cost of the mining property until the mining property is capable of commercial production. Capitalised mining properties are amortised on a unit-of-production basis over the total estimated remaining commercial reserves of mining property and are subject to impairment review.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised.
The estimated useful lives for the main categories of intangibles assets having finite useful life are as follows:
(a) Acquired computer software are classified as intangible assets and carries a useful life of 4 years.
(b) Mining Rights are treated as Intangible Assets and all related costs thereof are amortized using the unit of production basis over the Commercial recoverable reserves.
In case of Mining Rights are not renewed, the balance related cost paid is charged to revenue in the year of decision of non-renewal.
Acquisition Cost i.e cost associated with acquisition of licenses, and rights to explore including related professional fees, payment towards statutory forestry clearances as and when incurred are treated as addition to the Mining rights
Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.4. Impairment
Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, 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 pretax 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.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount 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 immediately in the statementof profit and loss.
4.5. Investments in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Investment in joint ventures are accounted for at cost.
4.6. Provisions and contingencies Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable (âmore likely than notâ) that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the estimated cash flows to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability.
a. Restoration, rehabilitation and decommissioning
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mine and other manufacturing facilities. Such costs, discounted to net present value, are provided for and a corresponding amount is capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged to the statement of profit or loss over the life of the operation through the depreciation of the asset and the unwinding of the discount on the provision. The cost estimates are reviewed periodically and are adjusted to reflect known developments which may have an impact on the cost estimates or life of operations. The cost of the related asset is adjusted for changes in the provision due to factors such as updated cost estimates, changes to lives of operations, new disturbance and revisions to discount rates. The adjusted cost of the asset is depreciated prospectively over the lives of the assets to which they relate. The unwinding of the discount is shown as finance and other cost in the statements of profit or loss.
Environment liabilities are recognised when the Company becomes obliged, legally or constructively to rectify environmental damage or perform remediation work.
Provision is recognised once it has been established that the Company has a present obligation based on consideration of the information which becomes available up to the date on which the Companyâs financial statements are finalised and may in some cases entail seeking expert advice in making the determination on whether there is a present obligation.
Contingent liabilities arising from past events the existence of which would be confirmed only on occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Company or contingent liabilities where there is a present obligations but it is not probable that economic benefits would be required to settle the obligations are disclosed in the financial statements unless the possibility of any outflow in settlement is remote.
Contingent assets are not recognized in the financial statement, but are disclosed where an inflow of economic benefits is probable.
4.7. Leasing
At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement.
The Company as lessor
Amounts due from lessees under finance leases are recognised as receivables at the amount of the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
The Company as lessee
Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at 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 expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Company''s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where 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.
4.8. Inventories
Inventory of raw material, stores and spares are valued at cost net of CENVAT/ VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis.
Inventories of finished goods, semi-finished goods and work in process are valued at lower of cost and net realizable value. Cost is generally determined at first in first out basis (FIFO) and includes appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.
Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Net realizable value is taken as per the latest available price provided by IBM.
Provision is made for old/ obsolete/ surplus/ non- moving inventories as well as other anticipated losses considered wherever necessary.
Where physical stock is more than the book stock, book stock is considered for valuation of stock. However, surplus stock is valued at Re. 1 per LOT for the surplus stock available as on the date of closing.
The statutory duties and levies payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock.
4.9. Trade receivable
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
4.10. Financial Instruments
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value.
Financial assets are classified as âequity instrumentâ if it is a non-derivative and meets the definition of âequityâ for the issuer (under Ind AS 32 Financial Instruments: Presentation). All other non-derivative financial assets are âdebt instrumentsâ.
Financial assets at amortized cost and the effective interest method
Debt instruments are measured at amortised cost if both of the following conditions are met:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortised cost using the effective interest method less any impairment, with interest recognised on an effective yield basis in investment income.
Financial assets at fair value through other comprehensive income (FVTOCI)
Debt instruments are measured at FVTOCI if both of the following conditions are met:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and selling assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognised in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognised in the statement of profit and loss in investment income. When the debt instrument is derecognised the cumulative gain or loss previously recognised in other comprehensive income is reclassified to the statement of profit and loss account as a reclassification adjustment.
At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has evidence of a recent actual pattern of short-term profittaking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments revaluation reserve. Where the asset is disposed of, the cumulative gain or loss previously accumulated in the investments revaluation reserve is directly reclassified to retained earnings.
For equity instruments measured at fair value through other comprehensive income no impairments are recognised in the statement of profit and loss.
Dividends on these investments in equity instruments are recognised in the statement of profit and loss in investment income when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably.
Financial assets that do not meet the criteria of classifying as amortised cost or fair value through other comprehensive income described above, or that meet the criteria but the entity has chosen to designate as at FVTPL at initial recognition, are measured at FVTPL.
Investments in equity instruments are classified as at FVTPL, unless the Company designates an investment that is not held for trading at FVTOCI at initial recognition.
Financial assets classified at FVTPL are initially measured at fair value excluding transaction costs.
Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognised in the statement of profit and loss. The net gain or loss recognised in the statement of profit and loss is included in the âother gains and lossesâ line item.
Interest income on debt instruments at FVTPL is included in the net gain or loss described above.
Dividend income on investments in equity instruments at FVTPL is recognised in the statement of profit and loss in investment income when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably.
Trade receivables, loans and other receivables are classified as subsequently measured at amortised cost. Trade and other receivables which does not contain any significant financing component are stated at their transaction value as reduced by impairment losses, if any.
Loans and other receivables are subsequently measured at amortized cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate (EIR) method.
On initial recognition of the financial assets, a loss allowance for expected credit loss is recognised for debt instruments at amortised cost and FVTOCI. For debt instruments that are measured at FVTOCI, the loss allowance is recognised in other comprehensive income in the statement of profit and loss and does not reduce the carrying amount of the financial asset in the balance sheet.
Expected credit losses of a financial instrument is measured in a way that reflects:
⢠an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
⢠the time value of money; and
⢠reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
At each reporting date, the Company assess whether the credit risk on a financial instrument has increased significantly since initial recognition.
When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If, the credit risk on that financial instrument has increased significantly since initial recognition, the Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses.
The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognised as an impairment gain or loss in the statement of profit and loss.
Derecognition of financial assets
The Company derecognises a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another 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 asset 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.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in the statement of profit and loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Financial liabilities and equity instruments issued by the Company Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial liabilities âat FVTPLâ or âother financial liabilitiesâ.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been acquired or incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
⢠It is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may also be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠It forms part of a contract containing one or more embedded derivatives, and Ind AS 109 Financial Instruments permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in the statement of profit and loss, except for the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability which is recognised in other comprehensive income.
The net gain or loss recognised in the statement of profit and loss incorporates any interest paid on the financial liability.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other payables are recognised at their transaction cost, which is its fair value, and subsequently measured at amortised cost.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
4.11. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
4.12. Accounting for government grants
Government grants are recognized when there is reasonable assurance that we will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in the statement of profit and loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized in the balance sheet by setting up the grant as deferred income.
Other government grants (grants related to income) are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support with no future related costs are recognized in the statement of profit and loss in the period in which they become receivable.
Grants related to income are presented under other income in the statement of profit and loss except for grants received in the form of rebate or exemption which are deducted in reporting the related expense.
4.13. Employee Benefits
Retirement benefit, medical costs and termination benefits
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement and medical plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. In countries where there is a deep market in high-quality corporate bonds, the market rate on those bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation are used.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss. Past service cost is recognised in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠Remeasurement.
The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The Company provides retiring benefits in the nature of provident fund, superannuation and gratuity to its employees.
Obligations for contribution to provident fund and superannuation fund are classified as defined contribution plans whereas retiring gratuity is classified as defined benefit plans.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Other long-term employee benefits
Liabilities recognised in respect of other long-term employee benefits 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. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit retirement plans. 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. These obligations are valued annually by independent qualified actuaries.
The Company is providing benefits in the nature of compensated absences to its employees which are classified as other long-term employee benefits.
4.14. Income Taxes
Tax expense represents the sum of current tax and deferred tax.
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes:
⢠tax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and
⢠deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized directly in other comprehensive income is recognised in the statement of comprehensive income and not in the statement of profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
4-15- Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenues are reduced for estimated rebates and other similar allowances.
The Company derives revenue principally from sale of iron, manganese and sponge iron. Presently Bagiaburu Iron Ore Mines is in operation. Revenue is generated from sale of finished goods from this mine as well as sale of indisposed old stock of Bhadrasai Mines.
Income from dividend, interest and rentsDividend
Dividends income from investments are to be recognised when the right to receive the dividend is established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Consideration received from the authorities for use of a part of the available facilities of the Company is recognized as revenue in the year of receipt/ realization.
Claims are accounted for in the statement of Profit and Loss based on certainty of their realization.
4.16. First time adoption- mandatory exceptions, optional exemptions
4.16.1 Overall principle
The Company has prepared the opening balance sheet as per Ind AS of 1 April, 2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below:
4.16.2 Derecognition of financial assets and financial liabilities
The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after 1 April, 2015 (the transition date).
4.16.3 Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortised cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
4.16.4 Impairment of financial assets
The Company has applied the impairment requirements of ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
4.16.5 Assessment of embedded derivatives
The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.
4.16.6 Deemed cost for property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all of its plant and equipment and intangible assets recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.16.7 Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a lease to determine whether an arrangement existing at the date of transition date contains a lease on the basis of facts and circumstances existed at that date.
5. Critical accounting judgements and key sources of estimation uncertainty:
In the application of the Company''s accounting policies, which are described in note 3, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts 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.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
5.1. Critical judgements in applying accounting policies:
The following are the critical judgements, apart from those involving estimations (see note 4.2 below), that the management have made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognized in the financial statements:
5.1.1. Financial assets at amortized cost: -
The management has reviewed the Companyâs financial assets at amortised cost in the light of its business model and have confirmed the Companyâs positive intention and ability to hold these financial assets to collect contractual cash flows. The carrying amount of these financial assets is Rs. 83,361.64 Lakhs (March 31, 2016: Rs. 82,161.97 Lakhs). Details of these assets are set out in note 33.
5.1.2. Provision for Restoration and rehabilitation of mining sites: -
Provisions are recognised for costs associated with restoration and rehabilitation of mining sites as soon as the obligation to incur such costs arises. Such restoration and closure costs are typical of extractive industries and they are normally incurred at the end of the life of the mines. The costs are estimated on the basis of mine closure plans and the estimated discounted costs of dismantling and removing these facilities and the costs of restoration are capitalized when incurred reflecting the Companyâs obligations at that time.
A corresponding provision is created on the liability side. The capitalized asset is recognized in the Statement of Profit or Loss over the life of the asset through depreciation over the life of the operation and the provision is increased each period through unwinding the discount on the provision. Management estimates are based on local legislation and/or other agreements. The actual costs and cash outflows may differ from estimates because of changes in laws and regulations, changes in prices, analysis of site conditions and changes in restoration technology.
5.1.3. Ore reserve and mineral resource estimates
The Company estimates and reports ore reserves under the principles contained within the guidelines issued by the Indian Bureau of Mines (IBM) - including:
⢠Future production estimates - which include proved and probable reserves, resource estimates and committed expansions.
5.1.4. Deferred stripping expenditure
The Company defers stripping (waste removal) costs incurred during the production phase of its operations. This calculation requires the use of judgements and estimates relating to the expected tonnes of waste to be removed over the life of the mining area and the expected economically recoverable reserves to be extracted as a result. This information is used to calculate the average life of mine strip ratio (expected waste to expected mineral reserves ratio). Changes in a mineâs life and design will usually result in changes to the average life of mine strip ratio. These changes are accounted for prospectively.
5.2. Key sources of estimation uncertainty:
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:
5.2.1. Useful lives of property, plant and equ
Mar 31, 2024
4 Significant The financial statements of the Company luve been prepared m sKtortuntid wilh rjw
^counting relevant provisions of Hi* Compands Act, 2Q1 J, Indian Accounting Standards (inti AS ;¦
pohcm prescribed undar sectiOfi 133 ol the Companies Art, ?0lJ
a.ltos* of Prior to adoption of bid AS, the Cnmiwny liad twtm preparing its financial statements
urcplntltf) and far an periods up tn and inclining the y**c ended 31 March JO It, in prxnrdaiKe twlth
presentation generally a ceptod ^counting principle In the India. Including accounting standards
specified under Section LJ3 of The Comp,ir.tfcs Act, 2013 read with Rote 7 nr the companies (Accounts) Rule'',, 201A I âIndian raapt) These financial statements tor VE^r ended il March 2017 are the Company''s first financial statements prepared in ji.i.TwilrtrK* with I nil ASs
AH assets and liabilities Have* been classified as cuirant Or concurrent as per Company''s operating cycle and olh*H cmprta set Out m Schedule-111 or tl*? Cninp^nies Ail Jot 3 eased or the netlure of business, mo Company has ascertains its operating cycl* as 12 months tor the purpose of Current-noftftirTWt classification of assets and liabilities.
Che Company has adopted all the issued tod ASs and such adoption was earned out in accordance wKh Ind AS 101- First Time Adoption of Indian Accounting Stanoards The Company has transited from Jfflilao GAAP which h, Its previous GAAP as O-iined Hi tod A$ 101
The effect [>n reported financial position arm financial performance tif tht- Company on transition tv Inti A5 h** Bren provided m Note i7 of Ind AS Opening Paiance Shed as an April til, 2Bl5, which alio includes reconcuiatiuns of total equity and total cofflpnlHRitvc income tor compilative year? unaei Indian GAAP lo those requrrod for respective /t''iii under tnct AS
The rin^mhal statements, haws boon prepared on hnftqipcitr cost pasi1:, except far financial instruments thai are measured at Wr values at The end of each repurtiivg pei mo, as explained in the ecciwmng polices below.
mttoiicJl c.ii''tl i? generally based on trie ran value uf the consider at itni given in exchange Fur goods ana services
Fair value is the pnc& that would be received to sell an asset or paid to transfer 3 ¦ lability In an ohferty i Ninsactiqn between msrirtt participants et the measc-remedi date. regardless gf whoih~i rhai pric« .s directly observable or afihrrmb?d using another valuation technique In estimating the Ian value nr art asset or a liability, the Company takes mto acroumt the tharortenstits of the asset or iHbifriy if mart nr participants would lake those duraCtcristio into account when pricing the assni or lability at me measurement date teir v^lue fur measurement andy Dr HMurdS in Thes.- financial statements is determined on such a basis, except for share bawd payment trensactions that ariâ within the scope of rnp AS 102 - Sheie based Pavmenrs, leading tranwainns ttuwt ar* within the scope or [nd Ah 17 - Leases, and measorements that nave some simitanties to ran value but art not fan value, such as np| realisable value in Inn AS 3 - Inventories nr value in use In End AS 56 Impairment of Assets.
In addition, tor financial sporting purposes., lair value measurements are caiegansud into Level 1, ? or 1 Uai^d on tfve degree to which the input? Id The fair value
measurements are observable and the significance of du? inputs to the fair value measurement ki its entirety, wnkh are described as follows
⢠Level 1 mputs aie quoted pnees {uoad]i*t*d''. In active markets for identical assets or Maul lines Thar the Company can access .it the measurement d^i~
- Level 2 Inputs am Inputs, other than quoted prices Included within level 1, that are nCwrvahle rot the wot or UatnlUy., either rtirectEy qr indirectly, and
* Level i inputs arc unobservable inputs for the asset or iiali.-iry Thu principal accounting policies arc set out below
1 2 Propedy, plant Property, plant and equipment hekJ far use in the production an and supply or goods bid Equipment or service?, or tor aonumstTstive puipuscs, an; stated In ihe bafante sheet at cost, less any subsequent accum u''Ated depreciation and subsequent steumuiaiiâri impairment lusses Initial Measurement
The Lnrt''ai cost at cash price equivalent of property, plant end equipment acquired conpitses its purrhase |)ru:or indutimg import (furies and Mein-refundable purchase lanes. any dlrcctry ahncutable cost? or bring inq the assets tD its working condition and luxation and preswit value of any asset restoration obligation or obligatory decommettrqmng costs far Its intended use
Eipemjitun? mcuireq on development o-r frfreiioki land is capitalized pan of the COST of the land
in base of self constructed assets cost Includes the costs or alt materials used in Const) uctron, direct labour. allocation of overheads, directly attributable borrowing costs.
Subsequent expenditure
Subsequent e±gendlture on day- to- day servicing of in Rent of property, plant and equipment ti recognised Fn profit w los% as incur Fed However, expenditure on rpa|sf maintenance or repaiis mrhitling cost of replacing the parts of assets and overhaul costs wfwrt tt is probable mat future economic benefits associated with the Hem win be available to tht Company, are capitattseri and the carrying amount or the Hem » replaced it, dejttioqnjserJ.
Insurance spares (hat *m* specific to a (toed asset and valuing mart than fc I takb pet unit are capitalised along with the main assets All other spares are recognised as inventory, ^vrepl for âipares which are having a useful bte greater than * year and can tn h-1 ndFnpfied as components in an asset arc capitalised Capital work in progress
Assets In the course of consfruaion for production or/antE supply of goods or services or admiotetrotke purposes, or for purposes not yet deteimined, are included under capital wor* ai progr as.''? and are carried ar cost, ''ess any recognised rmpoirrnent ''oss.Cost inciudes professional fee, and for qualiryhog asset, borrowings coits Cipltalbed in accordence with the CnmpafFy''s accounting polity 5uth capital work in praqreSs,, i? trap erred to the appropriate category of property, plant and equipment when completed or starts npcialmg as pw inauag*fment\ branded use
Costs associated with the commissioning of an asset are capitalised where lh* asset is available lor use hut incapable of operating at normal levels until a period of coFremissibhirLg has been completod depreeWen
DUpreciitLon on assets are provided over their estimated useful lives or in thr- case or leased assets (Including leasehold improvements}, over the lease teem if shutter the lease period is considtred by excluding any lease renewals options, unPi*$s (he renewals are reasonably certain Depredation on as^ss are provided on a straight line basis ovtr the useful life of the asset ifi the manner prescribed utidor Schedule 11 of the Companies act, J0i3.
the estimated uwhii lives am) residual values are reviewed ai each year end, with the effect or any changes m estimate accounted for on a prospective base tilth component of an Item of property, plant and equipment with a cost (hat Is significant In relation to the total cost of that item Is depreciated separately if its useful iffe differs from trie others components at the asset
Property, plant and equipment which ah? subject to comptioentisatlnn, cumpriHH ot mam assets, coniponentised assets and remaJfii
The residual value or property. ptem and equipment ate maiiiittiwd at 5% .,f the imoinai cost
Subsequent expend^ure related to an item of property plant and equipment is pr&spertlu(Hy depreciated Over the revised useful life ot retpechvo assets
rttG estimated range of useful live are a?, follows Vears
Buildings id - 60
Plant and machinery 8 - Ifl
CcimpuUfs 3 - |0
freehold land is not depreciated
Depreciation commences when the .nc ru;jdy fur rheh intended use
Depreciated assets fin property, plant and equipment Anti accumulated dept sK.ia( inn thereon are retained fully until they ere deterogmsed or dessmed at non-current assets held tor sale
Disposal Of assets
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are ^vppctetf to arise front the continued use Of the asset Any gam or loss emsmg on th* dispersal or reUiemenl <>r an Kern uf property, plant and equipment H determined as the different!} between net disposal proceeds and me rflfrying aniLHint nf the Sss U and 15 retfjfplised truin'' sratHHWpl of profit and Inis
Deemed cu?1 on transition to Ind AS
For transition ut ]nd Ai, the Company has elected to continue with the carrying v&H** of all ns proper!v, P1*⢠equipment recogin/ed a> uf J April, 2015 (jtfWVitfun dale] measured as per the prevloui GAAP Jincl use that catiykng value as its deemed cost as of the transition date .
[ i intangible Intangible assets acquired separately
tsscti Intangible assets acquired are reported at cost less accumulated amortisation ana
accumulati-d impairment losses Intangible assets Having Ante usoful llle are amortised over thmr estimated useful lives. The estimated useful We and amortisation method are jeviewetl ai the end of each annual sporting period, with the i=flert or =tny changes in estimate tming accounted fnr an ^ |wusp«tivo basis
Mining Rights
The costs of mining rights includes amounts paid for afforestation and wild life conversation as determined by the regulatory authorities *re capitalised iis "M.nirtq rights'' in (he year in which they are incurred Cosl of pre production primary devckipmem expenditure isfhei than und. buildings plant .imi equffnerti capitalised as part of the cost of fhr? mining property until (he mining property iz capaljin of cornrne= naI iirixludlDi Napitafised mining properties are amortised on a umr of-production basis way the total estimated remaining commercial reserves or mining property and are subject i* iinpaiimrnt review
Dtfecognition of intangible assrfs
An lotangsplt1 asset is derecognised on dispersal or when no fuUmfr etonumic benefits are expected from u$e or disposal dims or toss?'', arising from (fereoqfiition of an intamjioio asstt. measured as the difference between the net disposal proceeds and the carrying amount ot the asset are recognised in the statement of profit and loss When the asset IS rter^oymsed
AimftlHlion
The estimated useful lives for the main categories a\ intiingtbk-s assets having finite useful life are as follows.
(d) Acquired computer software are Classified as intangibly assets and tames, a useful life of ¦* years
(&} Mining Rights comprising of HFV and related payments made to government authorities tor irqp ore apn rnanqangsa mines are amortised over the period of rease from the date of payment nr Lidte of rei^ei/ deemed renewal or mining lease whichever is earner
Deemed cost on trinsltion to ImJ AS
for transition In Ind AS, The Company has elected to continue wfth the csrrjnnq vaJmr of ill Its intangible assets retogolRO as of 1 April. JQiS (haiisJtion date) measured as per (he previous GAAP and use ttul carrying value as its deemed cost as of the tranjitkin dare
4 4 impairment impairment or tangible and intangible uhh
At UMf end Of each reporting period, the fitrfnpany review* the earring Amounts of Rs tangible and intangible assets to determine whether there ts any indjtatmn that (time assets have suffered an impair muni loss If any such indication exists, the recoverable amount ef th* a^spl t* estimated 1H order In determine tfi^ extent cit the impairment Idss t any) White it i& not possible tu estimate the recoverable amount of an iirtJhmJudl 4«e|. ihe Company esiimrif^s in* recoverable amount of the cashgenerating umrt to which the asset belongs
Recoverable- amount is llw higher or fair value Jess casts to sell and valmr in u-,« Tn assessing value in use, the rshmated future cash flows an-1 discounted to their present waiue using .. pre-LOx discount rate mat reflects current market assessments flr me time value or money end the nsks specific to Lhe usset far which the estimate tif future cash flows have not (wen adjusted
If the recoverable amount uf an asset (nr castwameratlfig unii, is estimated to be less Than ds carrying amour*, the tan-yln^ Amount of the asset ior cash-gisieralinu unit) ih educed to its recoverable amount An impairment loss is recognised immediately In the statement of profit and loss
Where? an impairment irts subsequently reverses, the carrying amount of the ior cash generating unit) is increased to the revtsrt estimate of Us recoverable amount, but so that the increased carrying amount floes not exceed the tanying amount that wnuld haw been determined hid no impair mem toes benn recognised Tor the **** tor -wsh-genecaipnfl unit] m prror yo-ira. A reversal of an Intpskiiiatt loss is renLijmsed immediately in the stai emootof profit and lc.ss
*5 Investments in IK joint vtniuTe is a mint arrangement whereby thp parties that have joir-r control or joint ventures the arrangement ha^ rights to the net greets of the joint rtrnwKwmwit Joint control is the contractually agreed sharing of control of art arrangement winch exists only when decisions about the relevant adivlttos require unanimous consent of the parties sharing Cdhtrui,
Investment m lofitf venture are acrouited far at r.usi
Mar 31, 2023
1. General Information
The Orissa Minerals Development Company Limited (hereinafter referred to as âOMDCâ or the âCompanyâ) was incorporated on 16th August, 1918. It was Nationalized by the Government of India by virtue of the Bird & Company Ltd (Acquisition and Transfer of undertaking and other properties) Act, 1980 (Act No: 67 of 1980) in the year 1980. It became a Schedule-B PSU w.e.f 19th March, 2010, as a subsidiary of EIL, which also become PSU on 19th March, 2010.
Eastern Investment Limited (EIL) became a subsidiary of RINL (Rashtriya Ispat Nigam Limited) on 5th January, 2011.
The company is listed at Calcutta stock exchange (CSE), National Stock Exchange (NSE) and got trading permission to trade under permitted category in Bombay Stock Exchange (BSE).
OMDC operates six Iron Ore and Manganese Ore mining leases at Barbil in the district of Keonjhar, Odisha, namely Dalki Manganese Mines, Kolha Roida Iron & Manganese mines, Thakurani Iron and Manganese Mines, Belkundi Iron and Manganese Mines, Bagiaburu Iron Mines and Bhadrasahi Iron and Manganese Mines.
The lease rights of all the six mines have expired. Presently, all the six mines are inoperative due to non-availability of Forest and Environment clearance. The Company is in process of getting the required clearances.
2. Application of new and revised Ind-AS
As the Ministry of Corporate Affairs (MCA) notified IND-AS - 116 -âLeasesâ from Financial Years beginning on 1st April, 2019, superseding the IND-AS -17-âLeasesâ, we have adopted IND-AS-116 from the Financial Year commencing on 1st April, 2019 using the modified Retrospective approach for transitioning to IND- AS - 116.
3. Significant accounting policies
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind-AS) prescribed under section 133 of the Companies Act, 2013.
Accounting Policies have been consistently applied except where a newly - issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
4- Basis of preparation and presentation
Prior to adoption of Ind AS, the Company had been preparing its financial statements for all periods up to and including the year ended 31 March 2016, in accordance with generally accepted accounting principles in the India, including accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 (âIndian GAAPâ).
All assets and liabilities have been classified as current or noncurrent as per Companyâs operating cycle and other criteria set out in Schedule-III of the Companies Act 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current-noncurrent classification of assets and liabilities.
The Company has adopted all the issued Ind ASs and such adoption was carried out in accordance with Ind AS 101- First Time Adoption of Indian Accounting Standards. The Company has transited from Indian GAAP which is its previous GAAP, as defined in Ind AS 101.
The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, except for share based payment transactions that are within the scope of Ind AS 102 - Share based Payments, leasing transactions that are within the scope of Ind AS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below:
4.1. Property, Plant and Equipment
Property, plant and equipment held for use in the production or/ and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The initial cost at cash price equivalent of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any asset restoration obligation or obligatory decommissioning costs for its intended use.
Expenditure incurred on development of freehold land is capitalized as part of the cost of the land.
In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs.
Subsequent expenditure on day- to- day servicing of an item of property, plant and equipment is recognized in profit or loss as incurred. However, expenditure on major maintenance or repairs including cost of replacing the parts of assets and overhaul costs where it is probable that future economic benefits associated with the item will be available to the Company, are capitalized and the carrying amount of the item so replaced is derecognised.
Insurance spares that are specific to a fixed asset and valuing more than Rs. 1 lakh per unit are capitalized along with the main assets. All other spares are recognized as inventory, except for spares which are having a useful life greater than a year and can to be identified as components in an asset are capitalized.
Assets in the course of construction for production or/and supply of goods or services or administrative purposes, or for purposes not yet determined, are included under capital work in progress and are carried at cost, less any recognized impairment loss. Cost includes professional fees and for qualifying asset, borrowings costs capitalized in accordance with the Companyâs accounting policy. Such capital work in progress, is transferred to the appropriate category of property, plant and equipment when completed or starts operating as per managementâs intended use.
Costs associated with the commissioning of an asset are capitalized where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
Depreciation on assets are provided over their estimated useful lives or, in the case of leased assets (including leasehold improvements), over the lease term if shorter. The lease period is considered by excluding any lease renewals options, unless the renewals are reasonably certain. Depreciation on assets are provided on a straight line basis over the useful life of the asset in the manner prescribed under Schedule II of the Companies Act, 2013.
The estimated useful lives and residual values are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately if its useful life differs from the others components of the asset.
Property, plant and equipment which are subject to componentisation, comprises of main assets, componentised assets and remainders, if any. The useful life of remainders carry the life of main assets unless the same based on technical evaluation is considered to be lower than that of the main asset, in which case, such lower useful life is considered.
The residual value of property, plant and equipment are maintained at 5% of the original cost.
Subsequent expenditure related to an item of property, plant and equipment is prospectively depreciated over the revised useful life of respective assets.
|
The estimated range of useful lives are as follows: |
Years |
|
Buildings |
0 1 O CO |
|
Plant and machinery |
8 - 10 |
|
Railway Siding |
15 |
|
Motor Vehicles |
8 |
|
Furniture and fixtures |
10 |
|
Computers |
3- 10 |
Freehold land is not depreciated
Depreciation commences when the assets are ready for their intended use. Depreciated assets on property, plant and equipment and accumulated depreciation thereon are retained fully until they are de-recognized or classified as non-current assets held for sale.
An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.2. Intangible Assets
Intangible assets acquired separately
Intangible assets acquired are reported at cost less accumulated amortisation and accumulated impairment losses. Intangible assets having finite useful life are amortised over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
The costs of mining rights include amounts paid for afforestation and wild life conservation as determined by the regulatory authorities are capitalized as âMining rightsâ in the year in which they are incurred. Cost of pre-production primary development expenditure other than land, buildings, plant and equipment are capitalized as part of the cost of the mining property until the mining property is capable of commercial production. Capitalized mining properties are amortised on a unit-of-production basis over the total estimated remaining commercial reserves of mining property and are subject to impairment review.
Derecognition of intangible assets
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognized in the statement of profit and loss when the asset is de-recognized.
The estimated useful lives for the main categories of intangibles assets having finite useful life are as follows:
a. Acquired computer software are classified as intangible assets and carries a useful life of 4 years.
b. Mining Rights comprising of NPV and related payments made to government authorities for iron ore and manganese mines are amortized over the period of lease from the date of payment or date of renewal/ deemed renewal of mining lease whichever is earlier.
For transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.3. Impairment
Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, 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 pretax 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.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cashgenerating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the statement of profit and loss.
4.4. Investments in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Investments in joint ventures are accounted for at cost.
4-5- Provisions and contingencies Provisions
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable (âmore likely than notâ) that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation- Where a provision is measured using the estimated cash flows to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability.
a. Restoration, rehabilitation and decommissioning
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mine and other manufacturing facilities. Such costs, discounted to net present value, are provided for and a corresponding amount is capitalized at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged to the statement of profit or loss over the life of the operation through the depreciation of the asset and the unwinding of the discount on the provision. The cost estimates are reviewed periodically and are adjusted to reflect known developments which may have an impact on the cost estimates or life of operations. The cost of the related asset is adjusted for changes in the provision due to factors such as updated cost estimates, changes to lives of operations, new disturbance and revisions to discount rates. The adjusted cost of the asset is depreciated prospectively over the lives of the assets to which they relate. The unwinding of the discount is shown as finance and other cost in the statements of profit or loss.
b. Environmental liabilities
Environment liabilities are recognized when the Company becomes obliged, legally or constructively to rectify environmental damage or perform remediation work.
c. Litigation
Provision is recognized once it has been established that the Company has a present obligation based on consideration of the information which becomes available up to the date on which the Companyâs financial statements are finalized and may in some cases entail seeking expert advice in making the determination on whether there is a present obligation.
Contingent liabilities arising from past events the existence of which would be confirmed only on occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Company or contingent liabilities where there is a present obligation but it is not probable that economic benefits would be required to settle the obligations are disclosed in the financial statements unless the possibility of any outflow in settlement is remote.
Contingent assets are possible assets that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Contingent assets are disclosed in the financial statements when inflow of economic benefit is probable on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate. Contingent assets are disclosed in the financial statements when inflow of economic benefit is probable.
4.6. Leasing
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 has become effective w.e.f. 1 April 2019, which eliminates the classification of leases as either finance or operating lease as required by Ind AS 17, Leases. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Company would be recognizing a right-of-use asset and a corresponding lease liability in its balance sheet. Apart from the balance sheet, statement of profit & loss of a company would also undergo a change as operating lease expenses will be bifurcated into depreciation on the right-of-use asset and interest expense on the lease liability. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the lessee and the lessor. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.
The effective date for adoption of Ind AS 116 is annual period beginning on or after April 1, 2019. The standard permits two possible methods of transition:
⢠Full retrospective - Retrospectively to each prior period presented applying Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
⢠Modified retrospective - Retrospectively, with the cumulative effect of initially applying the Standard recognized at the date of initial application.
Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as:
⢠Its carrying amount as if the standard had been applied since the commencement of the date, but discounted at lesseeâs incremental borrowing rate at the date of initial application or
⢠An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application.
Certain practical expedients are available under both the methods.
On completion of evaluation of the effect of adoption of Ind AS 116, the company is proposing to us the âModified Retrospective Approachâ for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of initial application (April 1, 2019). Accordingly, comparatives for the year ending or ended March 31, 2019 will not be retrospectively adjusted. The company has elected certain available practical expedients on transition.
This standard applies to all leases, including leases of right-of-use assets in a sublease, except for:
⢠Leases to explore for or use minerals, oil, natural gas, and similar non-regenerative resources;
⢠Leases of biological assets within the scope of Ind AS 41, Agriculture, held by a lessee
⢠Service concession arrangements within the scope of Appendix D, Service Concession Arrangements, of Ind AS 115, Revenue from Contracts with Customer
⢠Licenses of intellectual property granted by a lessor within the scope of Ind AS 115, Revenue from Contracts with Customers
Rights held by a lessee under licensing agreements within the scope of Ind AS 38, Intangible Assets, for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights
Note: A lessee may, but is not required to, apply this Standard to leases of intangible assets other than those described in above point (v)
Below conditions need to be fulfilled if the contract is to be classified as lease:
⢠Identified asset.
⢠Lessee obtains substantially all of the economic benefits.
⢠Lessee directs the use.
Thus from the above classification of applicability of Ind AS 116 in respect of OMDC, the standard under IND AS 116 cannot be made applicable for OMDC as the main purpose of the business is exploring minerals, Intangible Assets do not cover items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights and there is no such contract where asset has been identified against economic benefits. Hence IND AS 116 could not be made applicable in FY 2019-20.
4.7. Inventories
Inventory of raw material, stores and spares are valued at cost net of CENVAT/ VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis.
Inventories of finished goods, semi-finished goods and work in process are valued at lower of cost and net realizable value. Cost is generally determined at first in first out basis (FIFO) and includes appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale.
Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Net realizable value is taken as per the latest available price provided by IBM.
Provision is made for old/ obsolete/ surplus/ non- moving inventories as well as other anticipated losses considered wherever necessary.
Where physical stock is more than the book stock, book stock is considered for valuation of stock. However, surplus stock is valued at Rs 1 per LOT for the surplus stock available as on the date of closing.
The excise duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock.
4.8. Trade receivable
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expecting to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognized on initial recognition.
All financial assets are recognized on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned- Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognized financial assets are subsequently measured in their entirety at either amortised cost or fair value.
Financial assets are classified as âequity instrumentâ if it is a non-derivative and meets the definition of âequityâ for the issuer (under Ind AS 32 Financial Instruments: Presentation). All other non-derivative financial assets are âdebt instrumentsâ.
Financial assets at amortized cost and the effective interest method
Debt instruments are measured at amortized cost if both of the following conditions are met:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortized cost using the effective interest method less any impairment, with interest recognized on an effective yield basis in investment income.
Financial assets at fair value through other comprehensive income (FVTOCI)
Debt instruments are measured at FVTOCI if both of the following conditions are met:
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and selling assets; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognized in the statement of profit and loss in investment income. When the debt instrument is derecognised the cumulative gain or loss previously recognized in other comprehensive income is reclassified to the statement of profit and loss account as a reclassification adjustment.
At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI.
A financial asset is held for trading if:
⢠it has been acquired principally for the purpose of selling it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has evidence of a recent actual pattern of short-term profittaking; or
⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the investments revaluation reserve. Where the asset is disposed of, the cumulative gain or loss previously accumulated in the investments revaluation reserve is directly reclassified to retained earnings.
For equity instruments measured at fair value through other comprehensive income no impairments are recognized in the statement of profit and loss.
Dividends on these investments in equity instruments are recognized in the statement of profit and loss in investment income when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably.
Other Financial Assets (Contract Assets)
Accounts Receivables is the right to consideration in exchange for goods or services, transferred to the Customer. If the Company performs by transferring the goods or services to a Customer before the Customer pays consideration or payment is due, Accounts Receivables (in the nature of Contract Asset) is recognized for the Earned Consideration that is conditional.
Financial assets that do not meet the criteria of classifying as amortised cost or fair value through other comprehensive income described above, or that meet the criteria but the entity has chosen to designate as at FVTPL at initial recognition, are measured at FVTPL.
Investments in equity instruments are classified as at FVTPL, unless the Company designates an investment that is not held for trading at FVTOCI at initial recognition.
Financial assets classified at FVTPL are initially measured at fair value excluding transaction costs.
Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in the statement of profit and loss. The net gain or loss recognized in the statement of profit and loss is included in the âother gains and lossesâ line item.
Interest income on debt instruments at FVTPL is included in the net gain or loss described above.
Dividend income on investments in equity instruments at FVTPL is recognized in the statement of profit and loss in investment income when the Companyâs right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably.
Trade receivables, loans and other receivables are classified as subsequently measured at amortised cost. Trade and other receivables which does not contain any significant financing component are stated at their transaction value as reduced by impairment losses, if any.
Loans and other receivables are subsequently measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate (EIR) method.
Impairment of financial assets
On initial recognition of the financial assets, a loss allowance for expected credit loss is recognized for debt instruments at amortised cost and FVTOCI. For debt instruments that are measured at FVTOCI, the loss allowance is recognized in other comprehensive income in the statement of profit and loss and does not reduce the carrying amount of the financial asset in the balance sheet.
Expected credit losses of a financial instrument is measured in a way that reflects:
⢠an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
⢠the time value of money; and
⢠reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
At each reporting date, the Company assess whether the credit risk on a financial instrument has increased significantly since initial recognition.
When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If, the credit risk on that financial instrument has increased significantly since initial recognition, the Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses.
The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in the statement of profit and
loss.
Derecognition of financial assets
The Company derecognises a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another 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 asset 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.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in the statement of profit and loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
Financial liabilities and equity instruments issued by the Company Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
Financial liabilities are classified as either financial liabilities âat FVTPLâ or âother financial liabilitiesâ.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been acquired or incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
⢠It is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may also be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠It forms part of a contract containing one or more embedded derivatives, and Ind AS 109 Financial Instruments permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in the statement of profit and loss, except for the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability which is recognized in other comprehensive income.
The net gain or loss recognized in the statement of profit and loss incorporates any interest paid on the financial liability.
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognized on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other payables are recognized at their transaction cost, which is its fair value, and subsequently measured at amortised cost.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
4.10. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
4.11. Accounting for government grants
Government grants are recognized when there is reasonable assurance that we will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in the statement of profit and loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized in the balance sheet by setting up the grant as deferred income.
Other government grants (grants related to income) are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support with no future related costs are recognized in the statement of profit and loss in the period in which they become receivable.
Grants related to income are presented under other income in the statement of profit and loss except for grants received in the form of rebate or exemption which are deducted in reporting the related expense.
4.12. Employee Benefits
Retirement benefit, medical costs and termination benefits
A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Payments to defined contribution
retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement and medical plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. In countries where there is a deep market in high-quality corporate bonds, the market rate on those bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation are used.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss. Past service cost is recognized in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠Remeasurement.
The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
When the benefit of a plan is improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expenses is recognized immediately in statement of profit and loss.
The Company provides retiring benefits in the nature of provident fund, superannuation and gratuity to its employees.
Obligations for contribution to provident fund and superannuation fund are classified as defined contribution plans whereas retiring gratuity is classified as defined benefit plans.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs. In the case of an offer made to encourage voluntary redundancy, the
termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Other long-term employee benefits
Liabilities recognized in respect of other long-term employee benefits 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. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit retirement plans. 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. These obligations are valued annually by independent qualified actuaries.
The Company is providing benefits in the nature of compensated absences to its employees which are classified as other long-term employee benefits.
4.13. Income Taxes
Tax expense represents the sum of current tax and deferred tax.
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes:
⢠tax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and
⢠deferred tax assets are recognized only to the extent that it is more likely than not that they will be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items
recognized directly in other comprehensive income is recognized in the statement of comprehensive income and not in the statement of profit or loss.
Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred Tax Assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which likely to give future economic benefits in the form of set off against future income tax liability. MAT is recognized as deferred tax asset 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.
The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments: On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax treatments which is to be 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 (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
The standard permits two possible methods of transition - (i) Full retrospective approach -Under this approach, Appendix C will be applied retrospectively to each prior reporting peiod presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and (ii) Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.
The effective date for adoption of Ind AS Appendix C is annual period beginning on or after Aprli 1, 2019. The company will adopt the standard on April 1, 2019 without adjusting comparatives. The effect on adoption of Ind AS 12 Appendix C would be insignificant in the standalone financial statements.
Amendment to Ind AS 12 - Income Taxes: On March 30, 2019, Minnitry of Corporate Affairs issued amendments to the guidance in Ind AS 12, âIncome Taxesâ, in connection with accounting for dividend distribution taxes.
The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.
Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The company is currently evaluating the effect of this amendment on the standalone financial statements.
Amendments to Ind AS 19: On March 30, 2019, Ministry of Corporate Affairs issued amendments to Ind AS 19, âEmployee benefitsâ, in connection with accounting for plan amendments, curtailments and settlements.
The amendments require an entity:
⢠To use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and
⢠To recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of asset ceiling.
Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The company does not have any impact on account of this amendment.
4.14. Revenue recognition
Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services.
The Company derives revenue principally from sale of iron, manganese and sponge iron.
Effective 1st April, 2018, the Company has adopted IND AS 115 âRevenue from Contracts with Customersâ using the cumulative which establishes a comprehensive framework for determining whether, how much and when revenue is recognized. Ind AS 115 replaces Ind AS 18 Revenue, Ind AS 11 Construction Contracts and related interpretations. The Company has adopted Ind AS 115 using the cumulative effect method (without the practical expedient), with the effect of initially applying this standard recognized at the date of initial application (i.e., 1st April, 2018). Under this transition method, the standard is applied retrospectively only to contracts that are not completed as at the date of initial application, and the comparative information is not restated- i.e., the comparative information continues to be reported under Ind AS 18 and Ind AS
11. The adoption of the standard did not have any material impact on the financial statements of the Company.
Revenue from the sale of goods is recognized at the point in time when control is transferred to the customer. Revenue from sale of goods is measured based on the transaction price, which is the consideration, adjusted for discounts and pricing incentives, if any, as specified in the contracts with the customer. GST is not received by the company for its own account. Rather, it is tax collected on sale on behalf of the Government. Accordingly, it is excluded from Revenue.
Provisions for estimated losses on incomplete contracts are recorded in the period in which such losses become probable based on the current contract cost estimates.
Other Income â Accounting Policy
Other income is comprised primarily of interest income, dividend income, gain/ loss on investments. Interest Income is recognized as it accrues in the statement of profit and loss using the effective interest method.
⢠Dividend income is recognized when the right to receive dividend is established.
⢠Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
5. Critical accounting judgements and key sources of estimation uncertainty:
In the application of the Company''s accounting policies, which are described in note 3, the management of the Company is required to make judgements, estimates and assumptions about the carrying amounts 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
Mar 31, 2021
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1. General Information |
The Orissa Minerals Development Company Limited (hereinafter referred to as "OMDC" or the "Company") was incorporated on 16th August, 1918. It was Nationalized by the Government of India by virtue of the Bird & Company Ltd (Acquisition and Transfer of undertaking and other properties) Act, 1980 (Act No: 67 of 1980) in the year 1980. It became a Schedule-B PSU w.e.f 19th March, 2010, as a subsidiary of EIL, which also become PSU on 19th March, 2010. Eastern Investment Limited (EIL) became a subsidiary of RINL (Rashtriya Ispat Nigam Limited) on 5th January, 2011. The company is listed at Calcutta stock exchange (CSE), National Stock Exchange (NSE) and got trading permission to trade under permitted category in Bombay Stock Exchange (BSE). OMDC operates six Iron Ore and Manganese Ore mining leases at Barbil in the district of Keonjhar, Odisha, namely Dalki Manganese Mines, Kolha Roida Iron & Manganese mines, Thakurani Iron and Manganese Mines, Belkundi Iron and Manganese Mines, Bariaburu Iron Mines and Bhadrasai Iron and Manganese Mines. The lease rights of all the six mines have expired. Presently, all the six mines are inoperative due to non-availability of Forest and Environment clearance. The Company is in process of getting the required clearances. |
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2. Application of new and revised Ind Ass |
As the Ministry of Corporate Affairs (MCA) notified IND-AS - 116 -"Leases" from Financial Years beginning on 1st April, 2019, superseding the IND-AS -17-"Leases", we have adopted IND-AS-116 from the Financial Year commencing on 1st April, 2019 using the modified Retrospective approach for transitioning to IND- AS - 116. |
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3. Significant accounting policies |
The financial statements of the Company have been prepared in accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013. Accounting Policies have been consistently applied except where a newly - issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. |
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4. Basis of preparation and presentation |
Prior to adoption of Ind AS, the Company had been preparing its financial statements for all periods up to and including the year ended 31 March 2016, in accordance with generally accepted accounting principles in the India, including accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 ("Indian GAAP"). All assets and liabilities have been classified as current or noncurrent as per Company''s operating cycle and other criteria set out in Schedule-III of the Companies Act 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current-noncurrent classification of assets and liabilities. The Company has adopted all the issued Ind ASs and such adoption was carried out in accordance with Ind AS 101- First Time Adoption of Indian Accounting Standards. The Company has transited from Indian GAAP which is its previous GAAP, as defined in Ind AS 101. |
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The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, except for share based payment transactions that are within the scope of Ind AS 102 - Share based Payments, leasing transactions that are within the scope of Ind AS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets. In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs for the asset or liability. The principal accounting policies are set out below. |
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4.1 Property, Plant and Equipment |
Property, plant and equipment held for use in the production or/ and supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Initial Measurement The initial cost at cash price equivalent of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any asset restoration obligation or obligatory decommissioning costs for its intended use. Expenditure incurred on development of freehold land is capitalized as part of the cost of the land. In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs. Subsequent expenditure Subsequent expenditure on day- to- day servicing of an item of property, plant and equipment is recognised in profit or loss as incurred. However, expenditure on major |
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maintenance or repairs including cost of replacing the parts of assets and overhaul costs where it is probable that future economic benefits associated with the item will be available to the Company, are capitalised and the carrying amount of the item so replaced is derecognised. |
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Insurance spares that are specific to a fixed asset and valuing more than Rs. 1 lakh per unit are capitalised along with the main assets. All other spares are recognised as inventory, except for spares which are having a useful life greater than a year and can to be identified as components in an asset are capitalised. |
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Capital work-in-progress |
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Assets in the course of construction for production or/and supply of goods or services or administrative purposes, or for purposes not yet determined, are included under capital work in progress and are carried at cost, less any recognized impairment loss. Cost includes professional fees and for qualifying asset, borrowings costs capitalised in accordance with the Company''s accounting policy. Such capital work in progress, is transferred to the appropriate category of property, plant and equipment when completed or starts operating as per management''s intended use. |
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Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed. |
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Depreciation |
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Depreciation on assets are provided over their estimated useful lives or, in the case of leased assets (including leasehold improvements), over the lease term if shorter. The lease period is considered by excluding any lease renewals options, unless the renewals are reasonably certain. Depreciation on assets are provided on a straight line basis over the useful life of the asset in the manner prescribed under Schedule II of the Companies Act, 2013. |
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The estimated useful lives and residual values are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately if its useful life differs from the others components of the asset. |
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Property, plant and equipment which are subject to componentisation, comprises of main assets, componentised assets and remainders, if any. The useful life of remainders carry the life of main assets unless the same based on technical evaluation is considered to be lower than that of the main asset, in which case, such lower useful life is considered. |
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The residual value of property, plant and equipment are maintained at 5% of the original cost. |
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Subsequent expenditure related to an item of property, plant and equipment is prospectively depreciated over the revised useful life of respective assets. |
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The estimated range of useful lives are as follows: Years Buildings 30-60 Plant and Machinery 8-10 Railway Siding 15 Motor Vehicles 8 Furniture and Fixtures 10 Computers 3-10 Freehold land is not depreciated. Depreciation commences when the assets are ready for their intended use. Depreciated assets on property, plant and equipment and accumulated depreciation thereon are retained fully until they are derecognised or classified as non-current assets held for sale. Disposal of assets An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss. Deemed cost on transition to Ind AS For transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date. |
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4.2. Intangible Assets |
Intangible assets acquired separately Intangible assets acquired are reported at cost less accumulated amortisation and accumulated impairment losses. Intangible assets having finite useful life are amortised over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Mining Rights The costs of mining rights include amounts paid for afforestation and wild life conservation as determined by the regulatory authorities are capitalised as "Mining rights" in the year in which they are incurred. Cost of pre-production primary development expenditure other than land, buildings, plant and equipment are capitalised as part of the cost of the mining property until the mining property is capable of commercial production. Capitalised mining properties are amortised on a unit-of-production basis over the total estimated remaining commercial reserves of mining property and are subject to impairment review. Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the statement of profit and loss when the asset is derecognised. |
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Amortisation The estimated useful lives for the main categories of intangibles assets having finite useful life are as follows: (a) Acquired computer software are classified as intangible assets and carries a useful life of 4 years. (b) Mining Rights comprising of NPV and related payments made to government authorities for iron ore and manganese mines are amortized over the period of lease from the date of payment or date of renewal/ deemed renewal of mining lease whichever is earlier. Deemed cost on transition to Ind AS For transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date. |
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4.3 Impairment |
Impairment of tangible and intangible assets At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, 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. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cashgenerating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit and loss. |
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4.4 Investments in joint ventures |
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Investments in joint ventures are accounted for at cost. |
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4.5 Provisions and |
Provisions |
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contingencies |
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not") that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. |
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The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the estimated cash flows to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability. |
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a) Restoration, rehabilitation and decommissioning |
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An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mine and other manufacturing facilities. Such costs, discounted to net present value, are provided for and a corresponding amount is capitalised at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged to the statement of profit or loss over the life of the operation through the depreciation of the asset and the unwinding of the discount on the provision. The cost estimates are reviewed periodically and are adjusted to reflect known developments which may have an impact on the cost estimates or life of operations. The cost of the related asset is adjusted for changes in the provision due to factors such as updated cost estimates, changes to lives of operations, new disturbance and revisions to discount rates. The adjusted cost of the asset is depreciated prospectively over the lives of the assets to which they relate. The unwinding of the discount is shown as finance and other cost in the statements of profit or loss. |
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b) Environmental liabilities |
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Environment liabilities are recognised when the Company becomes obliged, legally or constructively to rectify environmental damage or perform remediation work. |
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c) Litigation |
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Provision is recognised once it has been established that the Company has a present obligation based on consideration of the information which becomes available up to the date on which the Company''s financial statements are finalised and may in some cases entail seeking expert advice in making the determination on whether there is a present obligation. |
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Contingent Liabilities |
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Contingent liabilities arising from past events the existence of which would be confirmed only on occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Company or contingent liabilities where there is a present obligation but it is not probable that economic benefits would be required to settle the obligations are disclosed in the financial statements unless the possibility of any outflow in settlement is remote. |
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Contingent Assets Contingent assets are possible assets that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Contingent assets are disclosed in the financial statements when inflow of economic benefit is probable on the basis of judgment of management. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate. Contingent assets are disclosed in the financial statements when inflow of economic benefit is probable. |
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4.6 Leasing |
On March 30, 2019, Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 has become effective w.e.f. 1 April 2019, which eliminates the classification of leases as either finance or operating lease as required by Ind AS 17, Leases. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. The Company would be recognizing a right-of-use asset and a corresponding lease liability in its balance sheet. Apart from the balance sheet, statement of profit & loss of a company would also undergo a change as operating lease expenses will be bifurcated into depreciation on the right-of-use asset and interest expense on the lease liability. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the lessee and the lessor. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17. The effective date for adoption of Ind AS 116 is annual period beginning on or after April 1, 2019. The standard permits two possible methods of transition: ⢠Full retrospective - Retrospectively to each prior period presented applying Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors. ⢠Modified retrospective - Retrospectively, with the cumulative effect of initially applying the Standard recognized at the date of initial application. Under modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as: ⢠Its carrying amount as if the standard had been applied since the commencement of the date, but discounted at lessee''s incremental borrowing rate at the date of initial application or ⢠An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application. Certain practical expedients are available under both the methods. On completion of evaluation of the effect of adoption of Ind AS 116, the company is proposing to us the ''Modified Retrospective Approach'' for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of initial application (April 1, 2019). Accordingly, comparatives for the year ending or ended March 31, 2019 will not be retrospectively adjusted. The company has elected certain available practical expedients on transition. |
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Applicability of Ind AS 116: This standard applies to all leases, including leases of right-of-use assets in a sublease, except for: (a) Leases to explore for or use minerals, oil, natural gas, and similar nonregenerative resources; (b) Leases of biological assets within the scope of Ind AS 41, Agriculture, held by a lessee (c) Service concession arrangements within the scope of Appendix D, Service Concession Arrangements, of Ind AS 115, Revenue from Contracts with Customer (d) Licenses of intellectual property granted by a lessor within the scope of Ind AS 115, Revenue from Contracts with Customers Rights held by a lessee under licensing agreements within the scope of Ind AS 38, Intangible Assets, for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights Note: A lessee may, but is not required to, apply this Standard to leases of intangible assets other than those described in above point (v) Identifying a lease: Below conditions need to be fulfilled if the contract is to be classified as lease: Identified asset. Lessee obtains substantially all of the economic benefits. Lessee directs the use. Thus from the above classification of applicability of Ind AS 116 in respect of OMDC, the standard under IND AS 116 cannot be made applicable for OMDC as the main purpose of the business is exploring minerals, Intangible Assets do not cover items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights and there is no such contract where asset has been identified against economic benefits. Hence IND AS 116 could not be made applicable in FY 2019-20. |
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4.7 Inventories |
Inventory of raw material, stores and spares are valued at cost net of CENVAT/ VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis. Inventories of finished goods, semi-finished goods and work in process are valued at lower of cost and net realizable value. Cost is generally determined at first in first out basis (FIFO) and includes appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Net realizable value is taken as per the latest available price provided by IBM. |
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Provision is made for old/ obsolete/ surplus/ non- moving inventories as well as other anticipated losses considered wherever necessary. Where physical stock is more than the book stock, book stock is considered for valuation of stock. However, surplus stock is valued at '' 1 per LOT for the surplus stock available as on the date of closing. The excise duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock. |
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4.8 Trade receivable |
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expecting to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets. Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract. Loss allowance for expected life time credit loss is recognized on initial recognition. |
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4.9 Financial Instruments |
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value. Classification of financial assets Financial assets are classified as ''equity instrument'' if it is a non-derivative and meets the definition of ''equity'' for the issuer (under Ind AS 32 Financial Instruments: Presentation). All other non-derivative financial assets are ''debt instruments''. Financial assets at amortised cost and the effective interest method Debt instruments are measured at amortised cost if both of the following conditions are met: ⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and ⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortised cost using the effective interest method less any impairment, with interest recognised on an effective yield basis in investment income. Financial assets at fair value through other comprehensive income (FVTOCI) Debt instruments are measured at FVTOCI if both of the following conditions are met: ⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and selling assets; and ⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
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Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognised in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognised in the statement of profit and loss in investment income. When the debt instrument is derecognised the cumulative gain or loss previously recognised in other comprehensive income is reclassified to the statement of profit and loss account as a reclassification adjustment. |
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At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI. |
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A financial asset is held for trading if: |
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⢠it has been acquired principally for the purpose of selling it in the near term; or |
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⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has evidence of a recent actual pattern of short-term profit-taking; or |
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⢠it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. |
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Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investments revaluation reserve. Where the asset is disposed of, the cumulative gain or loss previously accumulated in the investments revaluation reserve is directly reclassified to retained earnings. |
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For equity instruments measured at fair value through other comprehensive income no impairments are recognised in the statement of profit and loss. |
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Dividends on these investments in equity instruments are recognised in the statement of profit and loss in investment income when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably. |
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Other Financial Assets (Contract Assets) |
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Accounts Receivables is the right to consideration in exchange for goods or services, transferred to the Customer. If the Company performs by transferring the goods or services to a Customer before the Customer pays consideration or payment is due, Accounts Receivables (in the nature of Contract Asset) is recognized for the Earned Consideration that is conditional. |
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Financial assets at FVTPL |
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Financial assets that do not meet the criteria of classifying as amortised cost or fair value through other comprehensive incomedescribed above, or that meet the criteria but the entity has chosen to designate as at FVTPL at initial recognition, are measured at FVTPL. |
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Investments in equity instruments are classified as at FVTPL, unless the Company designates an investment that is not held for trading at FVTOCI at initial recognition. |
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Financial assets classified at FVTPL are initially measured at fair value excluding transaction costs. |
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Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognised in the statement of profit and loss. The net gain or loss recognised in the statement of profit and loss is included in the ''other gains and losses'' line item. |
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Interest income on debt instruments at FVTPL is included in the net gain or loss described above. |
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Dividend income on investments in equity instruments at FVTPL is recognised in the statement of profit and loss in investment income when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably. |
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Trade receivables, loans and other receivables are classified as subsequently measured at amortised cost. Trade and other receivables which does not contain any significant financing component are stated at their transaction value as reduced by impairment losses, if any. |
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Loans and other receivables are subsequently measured at amortized cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate (EIR) method. |
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Impairment of financial assets |
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On initial recognition of the financial assets, a loss allowance for expected credit loss is recognised for debt instruments at amortised cost and FVTOCI. For debt instruments that are measured at FVTOCI, the loss allowance is recognised in other comprehensive income in the statement of profit and loss and does not reduce the carrying amount of the financial asset in the balance sheet. |
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Expected credit losses of a financial instrument is measured in a way that reflects: |
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⢠an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; |
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⢠the time value of money; and |
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⢠reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. |
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At each reporting date, the Company assess whether the credit risk on a financial instrument has increased significantly since initial recognition. |
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When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. |
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If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. If, the credit risk on that financial instrument has increased significantly since initial recognition, the Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. |
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The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognised as an impairment gain or loss in the statement of profit and loss. |
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Derecognition of financial assets |
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The Company derecognises a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another 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 asset 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. |
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On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in the statement of profit and loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. |
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Financial liabilities and equity instruments issued by the Company Classification as debt or equity |
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Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. |
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Equity instruments |
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An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. |
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Financial liabilities Financial liabilities are classified as either financial liabilities ''at FVTPL'' or ''other financial liabilities''. |
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Financial liabilities at FVTPL |
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Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. |
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A financial liability is classified as held for trading if: |
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⢠it has been acquired or incurred principally for the purpose of repurchasing it in the near term; or |
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⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and for which there is evidence of a recent actual pattern of short-term profit-taking; or |
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⢠It is a derivative that is not designated and effective as a hedging instrument. |
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A financial liability other than a financial liability held for trading may also be designated as at FVTPL upon initial recognition if: |
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⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or |
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⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or |
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⢠It forms part of a contract containing one or more embedded derivatives, and Ind AS 109 Financial Instruments permits the entire combined contract to be designated as at FVTPL. |
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Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in the statement of profit and loss, except for the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability which is recognised in other comprehensive income. |
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The net gain or loss recognised in the statement of profit and loss incorporates any interest paid on the financial liability. |
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Other financial liabilities |
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Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. |
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Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. |
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The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. |
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Trade and other payables are recognised at their transaction cost, which is its fair value, and subsequently measured at amortised cost. |
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Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty. |
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4.10 Cash and cash equivalents |
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. |
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4.11 Accounting for government grants |
Government grants are recognized when there is reasonable assurance that we will comply with the conditions attaching to them and that the grants will be received. Government grants are recognised in the statement of profit and loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire noncurrent assets are recognized in the balance sheet by setting up the grant as deferred income. Other government grants (grants related to income) are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support with no future related costs are recognized in the statement of profit and loss in the period in which they become receivable. Grants related to income are presented under other income in the statement of profit and loss except for grants received in the form of rebate or exemption which are deducted in reporting the related expense. |
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4.12 Employee Benefits |
Retirement benefit, medical costs and termination benefits A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. For defined benefit retirement and medical plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. In countries where there is a deep market in high-quality corporate bonds, the market rate on those bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation are used. |
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Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss. Past service cost is recognised in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows: ⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); ⢠net interest expense or income; and ⢠Remeasurement. The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item employee benefits expense. Curtailment gains and losses are accounted for as past service costs. When the benefit of a plan is improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expenses is recognized immediately in statement of profit and loss. The Company provides retiring benefits in the nature of provident fund, superannuation |
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and gratuity to its employees. Obligations for contribution to provident fund and superannuation fund are classified as |
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defined contribution plans whereas retiring gratuity is classified as defined benefit plans. |
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A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value. Short-term and other long-term employee benefits A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. |
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Other long-term employee benefits Liabilities recognised in respect of other long-term employee benefits 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. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit retirement plans. 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. These obligations are valued annually by independent qualified actuaries. The Company is providing benefits in the nature of compensated absences to its employees which are classified as other long-term employee benefits. |
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4.13 Income Taxes |
Tax expense represents the sum of current tax and deferred tax. Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes: ⢠tax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and ⢠deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized directly in other comprehensive income is recognised in the statement of comprehensive income and not in the statement of profit or loss. Deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred Tax Assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which likely to give future economic benefits in the form of set off against future income tax liability. MAT is recognized as deferred tax asset 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. The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis. |
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Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments: On March 30, 2019, |
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Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax treatments which is to be 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 (tax loss), tax bases, unused tax losses, unused tax credits and tax rates. The standard permits two possible methods of transition - (i) Full retrospective approach - Under this approach, Appendix C will be applied retrospectively to each prior reporting peiod presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight and (ii) Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives. The effective date for adoption of Ind AS Appendix C is annual period beginning on or after Aprli 1, 2019. The company will adopt the standard on April 1, 2019 without adjusting comparatives. The effect on adoption of Ind AS 12 Appendix C would be insignificant in the standalone financial statements. Amendment to Ind AS 12 - Income Taxes: On March 30, 2019, Minnitry of Corporate Affairs issued amendments to the guidance in Ind AS 12, ''Income Taxes'', in connection with accounting for dividend distribution taxes. The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The company is currently evaluating the effect of this amendment on the standalone financial statements. Amendments to Ind AS 19: On March 30, 2019, Ministry of Corporate Affairs issued amendments to Ind AS 19, ''Employee benefits'', in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity: ⢠To use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and ⢠To recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of asset ceiling. Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The company does not have any impact on account of this amendment. |
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4.14 Revenue recognition |
Revenue is recognized upon transfer of control of promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. |
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Sales of Goods |
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The Company derives revenue principally from sale of iron, manganese and sponge iron. |
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Effective 1st April, 2018, the Company has adopted IND AS 115 "Revenue from Contracts with Customers" using the cumulative which establishes a comprehensive framework for determining whether, how much and when revenue is recognized. Ind AS 115 replaces Ind AS 18 Revenue, Ind AS 11 Construction Contracts and related interpretations. The Company has adopted Ind AS 115 using the cumulative effect method (without the practical expedient), with the effect of initially applying this standard recognized at the date of initial application (i.e., 1st April, 2018). Under this transition method, the standard is applied retrospectively only to contracts that are not completed as at the date of initial application, and the comparative information is not restated- i.e., the comparative information continues
Mar 31, 2018
1. General Information The Orissa Minerals Development Company Limited (hereinafter referred to as "OMDC" or the "Company") was incorporated on 16th August, 1918. Itwas Nationalized by the Government of India by virtue of the Bird & Company Ltd (Acquisition and Transfer of undertaking and other properties) Act, 1980 (Act No: 67 of 1980) in the year 1980. It became a Schedule-B PSU w.e.f 19th March, 2010, as a subsidiary of EIL, which also become PSU on 19th March, 2010. Eastern Investment Limited (EIL) became a subsidiary of RINL (Rashtriya Ispat Nigam Limited) on 5th January, 2011. The company is listed at Calcutta stock exchange (CSE), National Stock Exchange (NSE) and got trading permission to trade under permitted category in Bombay Stock Exchange (BSE). OMDC operates six Iron Ore and Manganese Ore mining leases at Barbil in the district of Keonjhar, Odisha, namely Dalki Manganese Mines, Kolha Roida Iron & Manganese mines, Thakurani Iron and Manganese Mines, Belkundi Iron and Manganese Mines, Bariaburu Iron Mines and Bhadrasai Iron and Manganese Mines. The lease rights of all the six mines have expired. Presently, all the six mines are inoperative due to non-availability of Forest and Environment clearance. The Company is in process of getting the required clearances. 2. Application of new No new Ind ASs were introduced or no revision to any existing Ind and revised Ind Ass ASs has been made before 31 March,2018. 3. Statement of The financial statements have been prepared in accordance with Ind ASs compliance notified under the Companies Act (Indian Accounting Standards) Rules, 2015. Upto the year ended 31 March, 2015, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2014. 4. Significant The financial statements of the Company have been prepared in accounting policies accordance with the relevant provisions of the Companies Act, 2013, Indian Accounting Standards (Ind AS) prescribed under section 133 of the Companies Act, 2013. 4.1 Basis of Prior to adoption of Ind AS, the Company had been preparing its financial preparation and statements for all periods up to and including the year ended 31 March presentation 2016, in accordance with generally accepted accounting principles in the India, including accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 ("Indian GAAP"). All assets and liabilities have been classified as current or noncurrent as per Company''s operating cycle and other criteria set out in Schedule-Ill of the Companies Act 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of Current-noncurrent classification of assets and liabilities. The Company has adopted all the issued Ind ASs and such adoption was carried out in accordance with Ind AS 101 - First Time Adoption of Indian Accounting Standards. The Company has transited from Indian GAAP which is its previous GAAP, as defined in Ind AS 101. The financial statements have been prepared on historical cost basis, except for financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a IiabiIity, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosures in these financial statements is determined on such a basis, except for share based payment transactions that are within the scope of Ind AS 102 -Share based Payments, leasing transactions that are within the scope of Ind AS 17 - Leases, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 -Inventories or value in use in Ind AS 36 - Impairment of Assets. In addition, for financial reporting purposes, fair value measurements are categorized into Level 1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: - Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date; - Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and - Level 3 inputs are unobservable inputs for the asset or liability. The principal accounting policies are set out below. 4.2 Property, Property, plant and equipment held for use in the production or/ and Plant and Equipment supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Initial Measurement The initial cost at cash price equivalent of property, plant and equipment acquired comprises its purchase price, including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets to its working condition and location and present value of any asset restoration obligation or obligatory decommissioning costs for its intended use. Expenditure incurred on development of freehold land is capitalized as part of the cost of the land. In case of self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of overheads, directly attributable borrowing costs. Subsequent expenditure Subsequent expenditure on day- to- day servicing of an item of property, plant and equipment is recognized in profit or loss as incurred. However, expenditure on major maintenance or repairs including cost of replacing the parts of assets and overhaul costs where it is probable that future economic benefits associated with the item will be available to the Company, are capitalized and the carrying amount of the item so replaced is derecognised. Insurance spares that are specific to a fixed asset and valuing more than Rs. 1 lakh per unit are capitalized along with the main assets. All other spares are recognized as inventory, except for spares which are having a useful life greater than a year and can to be identified as components in an asset are capitalized. Capital work-in-progress Assets in the course of construction for production or/and supply of goods or services or administrative purposes, or for purposes not yet determined, are included under capital work in progress and are carried at cost, less any recognized Costs associated with the commissioning of an asset are capitalized where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed. Depreciation Depreciation on assets are provided over their estimated useful lives or, in the case of leased assets (including leasehold improvements), over the lease term if shorter. The lease period is considered by excluding any lease renewals options, unless the renewals are reasonably certain. Depreciation on assets are provided on a straight line basis over the useful life of the asset in the manner prescribed under Schedule II of the Companies Act, 2013. The estimated useful lives and residual values are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Each component of an item of property, plant and equipment with a cost that is significant in relation to the total cost of that item is depreciated separately if its useful life differs from the others components of the asset. Property, plant and equipment which are subject to componentization, comprises of main assets, componentized assets and remainders, if any. The useful life of remainders carry the life of main assets unless the same based on technical evaluation is considered to be lower than that of the main asset, in which case, such lower useful life is considered. The residual value of property, plant and equipment are maintained at 5% of the original cost. Subsequent expenditure related to an item of property, plant and equipment is prospectively depreciated over the revised useful life of respective assets. Freehold land is not depreciated. Depreciation commences when the assets are ready for their intended use. Depreciated assets on property, plant and equipment and accumulated depreciation thereon are retained fully until they are derecognized or classified as non-current assets held for sale. Disposal of assets An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the statement of profit and loss. Deemed cost on transition to Ind AS For transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carry i ng value as its deemed cost as of the transition date. 4.3 Intangible Assets Intangible assets acquired separately Intangible assets acquired are reported at cost less accumulated amortization and accumulated impairment losses. Intangible assets having finite useful life are amortized over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Mining Rights The costs of mining rights includes amounts paid for afforestation and wild life conservation as determined by the regulatory authorities are capitalized as "Mining rights" in the year in which they are incurred. Cost of pre-production primary development expenditure other than land, buildings, plant and equipment are capitalized as part of the cost of the mining property until the mining property is capable of commercial production. Capitalized mining properties are amortized on a unit-of-production basis over the total estimated remaining commercial reserves of mining property and are subject to impairment review. Derecognition of intangible assets An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognized in the statement of profit and loss when the asset is derecognized. Amortization The estimated useful lives for the main categories of intangibles assets having finite useful life are as follows: (a) Acquired computer software are classified as intangible assets and carries a useful life of 4 years. (b) Mining Rights comprising of NPV and related payments made to government authorities for iron ore and manganese mines are amortized over the period of lease from the date of payment or date of renewal/ deemed renewal of mining lease whichever is earlier. Deemed cost on transition to Ind AS For transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognized as of 1 April, 2015 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date. 4.4 Impairment Impairment of tangible and intangible assets At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, 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. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and loss. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the statement of profit and loss. 4.5 Investments in A joint venture is a joint arrangement whereby the parties that have joint joint ventures control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Investments in joint ventures are accounted for at cost. 4.6 Provisions and Provisions contingencies Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not") that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the estimated cash flows to settle the present obligation, its carrying amount is the present value of those cash flows. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money in that jurisdiction and the risks specific to the liability. (a) Restoration, rehabilitation and decommissioning An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production of a mine and other manufacturing facilities. Such costs, discounted to net present value, are provided for and a corresponding amount is capitalized at the start of each project, as soon as the obligation to incur such costs arises. These costs are charged to the statement of profit or loss over the life of the operation through the depreciation of the asset and the unwinding of the discount on the provision. The cost estimates are reviewed periodically and are adjusted to reflect known developments which may have an impact on the cost estimates or life of operations. The cost of the related asset is adjusted for changes in the provision due to factors such as updated cost estimates, changes to lives of operations, new disturbance and revisions to discount rates. The adjusted cost of the asset is depreciated prospectively over the lives of the assets to which they relate. The unwinding of the discount is shown as finance and other cost in the statements of profit or loss. (b) Environmental liabilities Environment liabilities are recognized when the Company becomes obliged, legally or constructively to rectify environmental damage or perform remediation work. (C) Litigation Provision is recognized once it has been established that the Company has a present obligation based on consideration of the information which becomes available up to the date on which the Company''s financial statements are finalized and may in some cases entail seeking expert advice in making the determination on whether there is a present obligation. Contingent Liabilities Contingent liabilities arising from past events the existence of which would be confirmed only on occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Company or contingent I iabi I ities where there is a present obligations but it is not probable that economic benefits would be required to settle the obligations are disclosed in the financial statements unless the possibility of any outflow in settlement is remote. Contingent Assets Contingent assets are not recognized in the financial statement, but are disclosed where an inflow of economic benefits is probable. 4.7 Leasing At the inception of a lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement. The Company as lessor Amounts due from lessees under finance leases are recognized as receivables at the amount of the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Company''s net investment outstanding in respect of the leases. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. The Company as lessee Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at 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 expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred. Operating lease payments are recognized as an expense on a straight-line basis over the lease term, except where 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. 4.8 Inventories Inventory of raw material, stores and spares are valued at cost net of CENVAT/ VAT credit wherever applicable. Cost is determined on moving weighted average price on real time basis. Inventories of finished goods, semi-finished goods and work in process are valued at lower of cost and net realizable value. Cost is generally determined at first in first out basis (FIFO) and includes appropriate share of labour and related overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated cost necessary to make the sale. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Net realizable value is taken as per the latest available price provided by IBM. Provision is made for old/ obsolete/ surplus/ non- moving inventories as well as other anticipated losses considered wherever necessary. Where physical stock is more than the book stock, book stock is considered for valuation of stock. However, surplus stock is valued at Re 1 per LOT forthe surplus stock available as on the date of closing. The excise duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock. 4.9 Trade receivable Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to becollected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets. Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract. Loss allowance for expected life time credit loss is recognized on initial recognition. 4.10 All financial assets are recognized on trade date when the purchase of a Financial Instruments financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value. Classification of financial assets Financial assets are classified as ''equity instrument'' if it is a no derivative and meets the definition of ''equity'' for the issuer (under Ind AS 32 Financial Instruments: Presentation). All other non-derivative financial assets are ''debt instruments''. Financial assets at amortized cost and the effective interest method Debt instruments are measured at amortized cost if both of the following conditions are met: - the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and - the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at amortized cost using the effective interest method less any impairment, with interest recognized on an effective yield basis in investment income. Financial assets at fair value through other comprehensive income(FVTOCI) Debt instruments are measured at FVTOCI if both of the following conditions are met: - the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and selling assets; and - the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognized in the statement of profit and loss in investment income. When the debt instrument is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified to the statement of profit and loss account as a reclassification adjustment. At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI. Financial asset is held for trading if: - it has been acquired principally for the purpose of selling it in the near term; or - on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has evidence of a recent actual pattern of short-term profit-taking; or - it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the investments revaluation reserve. Where the asset is disposed of, the cumulative gain or loss previously accumulated in the investments revaluation reserve is directly reclassified to retained earnings. For equity instruments measured at fair value through other comprehensive income no impairments are recognized in the statement of profit and loss. Dividends on these investments in equity instruments are recognized in the statement of profit and loss in investment income when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably. Financial assets at FVTPL Financial assets that do not meet the criteria of classifying as amortized cost or fair value through other comprehensive income described above, or that meet the criteria but the entity has chosen to designate as at FVTPL at initial recognition, are measured at FVTPL. Investments in equity instruments are classified as at FVTPL, unless the Company designates an investment that is not held for trading at FVTOCI at initial recognition. Financial assets classified at FVTPL are initially measured at fair value excluding transaction costs. Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in the statement of profit and loss. The net gain or loss recognized in the statement of profit and loss is included in the ''other gains and losses'' line item. Interest income on debt instruments at FVTPL is included in the net gain or loss described above. Dividend income on investments in equity instruments at FVTPL is recognized in the statement of profit and loss in investment income when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably. Trade receivables, loans and other receivables are classified as subsequently measured at amortized cost. Trade and other receivables which does not contain any significant financing component are stated at their transaction value as reduced by impairment losses, if any. Loans and other receivables are subsequently measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the effective interest rate (EIR) method. Impairment of financial assets On initial recognition of the financial assets, a loss allowance for expected credit loss is recognized for debt instruments at amortized cost and FVTOCI. For debt instruments that are measured at FVTOCI, the loss allowance is recognized in other comprehensive income in the statement of profit and loss and does not reduce the carrying amount of the financial asset in the balance sheet. Expected credit losses of a financial instrument is measured in a way that reflects: - an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; - the time value of money; and - reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. At each reporting date, the Company assess whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and consider reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. If, at the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrumental an amount equal to 12-month expected credit losses. If, the credit risk on that financial instrument has increased significantly since initial recognition, the Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date is recognized as an impairment gain or loss in the statement of profit and loss. Derecognition of financial assets The Company derecognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another 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 recognizes its retained interest in the asset 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 recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received. On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in the statement of profit and loss. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts. Financial liabilities and equity instruments issued by the Company Classification as debt or equity Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Financial liabilities Financial liabilities are classified as either financial liabilities ''at FVTPL'' or'' other financial liabilities''. Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: O it has been acquired or incurred principally for the purpose of repurchasing it in the near term; or - on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and for which there is evidence of a recent actual pattern of short-term profit-taking; or - It is a derivative that is not designated and effective as a hedging instrument. A financial liability other than a financial liability held for trading may also be designated as at FVTPL upon initial recognition if: - such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or - the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or - It forms part of a contract containing one or more embedded derivatives, and Ind AS 109 Financial Instruments permits the entire combined contract to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in the statement of profit and loss, except for the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability which is recognized in other comprehensive income. The net gain or loss recognized in the statement of profit and loss incorporates any interest paid on the financial liability. Other financial liabilities Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Trade and other payables are recognized at their transaction cost, which is its fair value, and subsequently measured at amortized cost. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counter party. 4.11 Cash and cash Cash and cash equivalents comprise cash at bank and in hand and equivalents short-term deposits with an original maturity of three months or less. 4.12 Accounting for Government grants are recognized when there is reasonable assurance government grants that we will comply with the conditions attaching to them and that the grants will be received. Government grants are recognized in the statement of profit and loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized in the balance sheet by setting up the grant as deferred income. Other government grants (grants related to income) are recognized as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support with no future related costs are recognized in the statement of profit and loss in the period in which they become receivable. Grants related to income are presented under other income in the statement of profit and loss except for grants received in the form of rebate or exemption which are deducted in reporting the related expense. 4.13 Employee Benefits Retirement benefit, medical costs and termination benefits A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions. For defined benefit retirement and medical plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. In countries where there is a deep market in high- quality corporate bonds, the market rate on those bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation are used. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to the statement of profit and loss. Past service cost is recognized in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows: - service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); - net interest expense or income; and - remeasurement. The Company presents the first two components of defined benefit costs in the statement of profit and loss in the line item employee benefits expense. Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. The Company provides retiring benefits in the nature of provident fund, superannuation and gratuity to its employees. Obligations for contribution to provident fund and superannuation fund are classified as defined contribution plans whereas retiring gratuity is classified as defined benefit plans. A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value. Short-term and other long-term employee benefits A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period the related service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that service. Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service. Other long-term employee benefits Liabilities recognized in respect of other long-term employee benefits 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. The expected costs of these benefits are accrued over the period of employment using the same accounting methodology as used for defined benefit retirement plans. 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. These obligations are valued annually by independent qualified actuaries. The Company is providing benefits in the nature of compensated absences to its employees which are classified as other long-term employee benefits. 4.14 Income Taxes Tax expense represents the sum of current tax and deferred tax. Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes: O tax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and O deferred tax assets are recognized only to the extent that it is more likely than not that they will be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized directly in other comprehensive income is recognized in the statement of comprehensive income and not in the statement of profit or loss. The carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis. 4.15 Revenue Revenue is measured at the fair value of the consideration received or recognition receivable. Revenues are reduced for estimated rebates and other similar allowances. Sales of Goods The Company derives revenue principally from sale of iron, manganese and sponge iron. The Lease rights of all the six mines have expired. Presently, all the six mines are inoperative due to non-availability of Forest and Environment clearance and hence the Company does not has any revenue from sale of goods. Income from dividend, interest and rents Dividend Dividends income from investments are to be recognized when the right to receive the dividend is established. Interest Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition. Consideration received from the authorities for use of a part of the available facilities of the Company is recognized as revenue in the year of receipt/ realization. Claims are accounted for in the statement of Profit and Loss based on certainty of their realization.
Mar 31, 2016
1.1 Financial Statements are prepared on an accrual basis under the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) applicable in India and to comply with the Accounting Standards notified under the Companies (Accounts) Rules,2014 and relevant provisions of the Companies Act,2013. 1.2 The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP), requires that Management makes estimates and reports for revenues & expenses during the reported period accordingly. The Management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between the actual results and the estimates are recognized in the periods in which the results are known/ materialize. 2.0 FIXED ASSETS 2.1 Fixed Assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment, if any. The cost of acquisition comprises purchase price inclusive of duties (net of Convert), taxes, incidental expenses, erection/commissioning/trial run expenses and interest etc, up to the date the assets are ready for intended use. 2.2 Prospecting and development expenses incurred to prepare the mines ready for commercial exploration (i.e. in the nature of preliminary and preoperative expenses) are capitalized. 2.3 Expenditure incurred for obtaining required clearance to operate the mines subsequent to the allotment of their lease is capitalized as intangible assets. 2.4 Expenditure incurred for renewal of mining lease is capitalized under Mining Lease. 2.5 Machinery spare-parts which can be used only in connection with an item of fixed assets and whose use, as per technical assessment, is expected to be irregular are capitalized and depreciated over the residual life of the respective assets. 2.6 Assets awaiting disposal are valued at the lower of written down value and net realizable value and disclosed separately. 2.7 Capital work-in-progress includes machinery or other fixed assets to be installed and unfinished construction & erection materials. 3. DEPRECIATION AND AMORTISATION 3.1 Depreciation is provided on straight line method (SLM) on full value of the cost of the assets over the specified period in accordance with the provision of Schedule II of the Companies Act, 2013. 3.2 Depreciation on fixed Assets added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/disposal. 3.3 Intangible Assets such as; Premium for Mining lease are amortized over the period of lease. 3.4 Leasehold land is amortized over the period of lease. 3.5 Intangible asset is amortized over the period of their useful life. 3.6 Where the remaining useful life of any asset is NIL as on 1st April,2014, the carrying value of the assets net off the residual value has been adjusted in 2014-15 against opening reserves amounting to Rs.678.26 lacs in accordance with transitional provision of Schedule-II. 4. IMPAIRMENT OF FIXED ASSETS The carrying amounts of assets are reviewed at each balance sheet date to determine if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount which is the greater of the net selling price of the assets and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. After impairment, depreciation is provided on the revised carrying amount of the assets over their remaining useful life. A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment. 6. INVENTORIES 6.1 Stock-in trade of finished goods is valued on FIFO basis at lower of cost and Net Realizable Value. Cost includes direct material, Labour Cost and a proportion of manufacturing overhead based on normal operating Capacity. 6.2 Raw Materials, Stock of Stores and spare parts, loose tools are valued at Weighted Average cost. 6.3 Provision is made for Old/Obsolete/Surplus/Non-moving inventories as well as other anticipated losses considered wherever necessary. 6.4 Quantities of Closing Stock including stock of stores & spare parts have been taken as per the physical verification done. 6.5 Where physical stock is more than book stock, book stock is considered for valuation of stock. However Surplus stock is valued at Rs. 1/- per LOT for the Surplus stock available as on date of closing. 6.6 The Excise Duty payable on closing stock of finished goods at the time of sale is not considered in valuation of closing stock. 7. Retirement and Other EMPLOYEE BENEFITS - Defined Benefit Scheme: 7.1 Gratuity: Gratuity is payable on separation @ 15 days pay for each completed year of service to eligible employees who render continuous service of 5 years or more and the maximum payable amount is calculated as per Gratuity Act. The sum of Gratuity is being covered under "Group Gratuity cum Life Insurance Scheme" with LIC of India and the provision on account of gratuity is being made as per the actuarial valuation. 7.2 Leave Encashment: (i) Earned Leave: Payable if encashment of leave is applied for during the tenure of service of employee as per Company Rule and on separation to eligible employees who have accumulated earned leave balance. Maximum accumulated leave for 300 days is en-cashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS-15 (Revised, 2005). (ii) Half Pay Leave: Payable on separation to eligible employees who have accumulated half pay leave balance. Maximum accumulated leave for 180 days is en-cashable at the time of separation. Liability of Leave salary is provided on the basis of actuarial valuation as per AS-15 (Revised, 2005). 7.3 Superannuation Benefit: The Company pays fixed contribution @13% on (Basic IDA) on a/c of Superannuation fund only for the executives. This amount is deposited with a separate trust maintained by "The Orissa Minerals Development Company Limited Superannuation Fund". Company has no other liabilities apart from its contribution to the fund. 7.4 Provident Fund: (i) For Head Office Employee: The Company pays fixed contribution of Provident Fund at predetermined rates, to a separate trust i.e. The Orissa Minerals Development Company Limited Provident Institution. (ii) For Mines Employees: The Company pays fixed contribution of Provident Fund at the rate of 12% on Salary (i.e. Basic IDA) to RPFC, Keonjhar. 8. TAXATION Tax expenses comprise of Current, Deferred and Prior year tax expenses, if any. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The Company re-assesses unrecognized deferred tax assets at each balance sheet date. 9. REVENUE RECOGNITION Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. 9.1 Sale of Goods- Sale of goods is recognized on dispatch of goods to customers, which is incidental to transfer of significant risk and reward of ownership. Sales are net of Excise Duty, Sales Tax, Entry Tax, Returns, Claims, Discounts, etc. 9.2 Interest- Interest is recognized on a time proportion basis taking into account the amount outstanding at the rate applicable. 9.3 Dividend- Income from dividend is recognized when the shareholders'' right to receive payment is established by the balance sheet date. 9.4 Consideration for use of Company''s facilities- Consideration received from the Authorities for use of a part of the available facilities of the Company is recognized as revenue in the year of receipt / realization. 9.5 The Consolidation of Accounts with JV, EIML by OMDC could not be made due to legal dispute of the company with EIML. 10. GOVERNMENT GRANTS AND SUBSIDIES Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset , its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset. 11. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS 11.1 A provision is recognized when the company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions made in terms of AS-29 are not discounted to its present value and are determined based on management estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. 11.2 Contingent liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed by way of notes to the accounts. 11.3 Contingent Assets are neither recognized nor disclosed in the financial statements. 12. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. 13. SEGMENT REPORTING Identification of segments : The Company''s operating businesses are organized and managed separately according to the nature of Products and services provided, with each segment representing a strategic business unit that offers different products to different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate. Inter segment Transfers : The Company generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices. Allocation of common costs : Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items: Includes general corporate income and expense items which are not allocated to any business segment. 14. Excise duty/Royalty Excise duty is payable on dispatch of Sponge Iron from Sponge Iron Plant and royalty is payable on dispatch of Iron Ore & Manganese Ore from mines. 15. Cash and Cash equivalents Cash and cash equivalents as indicated in the cash flow statement comprise cash in hand, cash at bank and short-term investments with an original maturity of three months or less.
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Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article More Information on The Orissa Minerals Development Company Ltd.
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