2.1 Basis of Preparation of Financial Statements

The Financial Statements have been prepared under the historical cost convention on accrual basis except certain
financial instruments that are measured in terms of relevant Ind AS at amortized costs or fair value at the end of
each reporting period.

Historical cost convention is generally based on the fair value of the consideration given in exchange for goods
and services.

Items included in the financial statements are measured using the currency of the primary economic environment
in which the company operates (the functional currency). The financial statements are presented in Indian Rupees
(?), which is the Company’s functional and presentation currency and all values are rounded off to the ‘? in crore’
up to two decimal points.

2.2 Current and Non-Current Classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification. An
asset is treated as current by the Company when:

(a) it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;

(b) it holds the asset primarily for the purpose of trading;

(c) it expects to realise the asset within twelve months after the reporting period; or

(d) the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being exchanged
or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

(a) it expects to settle the liability in its normal operating cycle;

(b) it holds the liability primarily for the purpose of trading;

(c) the liability is due to be settled within twelve months after the reporting period; or

(d) it does not have the rightat the end of the reporting period to defer settlement of the liability for at least twelve
months after the reporting period.

All other liabilities are classified as non-current.

Having regard to the nature of the business being carried out by the Company, the Company has ascertained its
operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.

2.3 Revenue RecognitionRevenue from contracts with customers

Revenue is principally derived from the sale of coal, related ancillary services, and products. Revenue from
sales of products is recognized when control of the products has transferred, being when the products are
delivered to the customer. Delivery occurs when the products have been shipped or delivered to the specific
location as the case may be, and the risks of loss have been transferred in accordance with the sales contract.
The amount of revenue recognized reflects the consideration to which the Company is or expects to be entitled
in exchange for those goods or services. Accumulated experience is used to estimate and provide for the variable
consideration as per the sales contract, and revenue is only recognized to the extent that it is highly probable
that a significant reversal will not occur. The amount of consideration does not contain a significant financing
component as payment terms are less than one year as per the sales contracts.

The Company has a number of long-term contracts to supply products to customers in future periods. Generally,
revenue is recognized on an invoice basis, as each unit sold is a separate performance obligation, and therefore
the right to consideration from a customer corresponds directly with our performance completed to date.

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 the estimated future cash receipts through the expected life of the financial asset to that asset's
net carrying amount on initial recognition.

Dividends - Dividend income is recognised when the company’s right to receive the payment is established,
which is generally when shareholders approve the dividend.

Other Claims - Revenue in respect of Other claims (including interest on delayed realization from customers)
are recognized only when there is reasonable certainty as to the ultimate collection and the amount can be
measured reliably.

2.4 Grants from Government

Government Grants are not recognised until there is reasonable assurance that the Company will comply with
the conditions attached to the grants and that there is reasonable certainty that the grants will be received.

Government grants are recognised in Statement of Profit and Loss on a systematic basis over the periods in
which the Company recognises the related expenses or costs for which the grants are intended to compensate.

Government Grants related to assets are presented in the balance sheet by setting up the grants as deferred
income and are recognised in Statement of Profit and Loss on systematic basis over the useful life of asset.

Grants related to income (i.e. grant related to other than assets) are presented as part of statement of profit and
loss under the head ‘Other Income’.

A government grant/assistance that becomes receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Company with no future related costs,
is recognised in profit or loss of the period in which it becomes receivable.

The Government grants or grants in the nature of promoter’s contribution is recognised directly in “Capital
Reserve” which forms part of the “Shareholders fund”.

2.5 Leases (Ind AS 116)

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.

2.5.1 Company as a lessee

The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company
has substantially all of the economic benefits from use of the asset through the period of the lease and (iii)
the Company has the right to direct the use of the asset.

At the commencement date, a lessee shall recognise a right-of-use asset at cost and a lease liability at the
present value of the lease payments that are not paid at that date for all leases unless the lease term is 12
months or less or the underlying asset is of low value.

Subsequently, right-of-use asset is measured using cost model whereas, the lease liability is measured by
increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to
reflect the lease payments made and re-measuring the carrying amount to reflect any reassessment or lease
modifications.

The lease liability is initially measured at amortized cost at the present value of the future lease payments.
The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates of these leases. Lease liabilities are premeasured with a corresponding
adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise
an extension or a termination option. Lease liability and ROU asset are separately presented in the Balance
Sheet and lease payments are classified as financing cash flows. Lease liability obligations is presented
separately under the head "Financial Liabilities".

Finance charges are recognised in finance costs in the Statement of Profit and Loss, unless the costs are
included in the carrying amount of another asset applying other applicable standards.

Right-of-use asset is depreciated over the useful life of the asset, if the lease transfers ownership of the asset
to the lessee by the end of the lease term or if the cost of the right-to-use asset reflects that the lessee will
exercise a purchase option. Otherwise, the lessee shall depreciate the right-to-use asset from the
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the
lease term.

2.5.2 Company as a lessor

Assets are given on lease either as finance lease or operating lease.

Finance Lease: A lease is classified as finance lease if it transfers substantially all the risks and rewards
incidental to ownership of an underlying asset. Initially, asset held under finance lease is recognised in
Balance Sheet and presented as a receivable at an amount equal to the net investment in the lease. Finance
income is recognised over the lease term, based on a pattern reflecting a constant periodic rate of return on
Company's net investment in the lease.

Operating Lease: A lease which is not classified as a finance lease is an operating lease. The Company
recognises lease payments in case of assets given on operating leases as income on a straight line basis.

2.6 Non-Current Assets Held for Sale

The Company classifies non-current assets and (or disposal groups) as held for sale if their carrying amounts will be
recovered principally through a sale rather than through continuing use. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be
withdrawn. Management must be committed to the sale expected to be completed within one year from the date of
classification.

For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the
exchange has commercial substance. The criteria for held for sale classification is regarded met only when the assets
or disposal group is available for immediate sale in its present condition, subject only to terms that are usual and
customary for sales of such assets (or disposal groups), its sale is highly probable; and it will genuinely be sold, not
abandoned. The Company treats sale of the asset or disposal group to be highly probable when:

> The appropriate level of management is committed to a plan to sell the asset (or disposal group),

> An active programme to locate a buyer and complete the plan has been initiated

> The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its
current fair value,

> The sale is expected to qualify for recognition as a completed sale within one year from the date of classification,
and

> Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn.

Non-current asset or disposal groups classified as held for sale are measured at the lower of carrying amount
and fair value less costs to sell.

2.7 Property, Plant and Equipment (PPE) and Depreciation

An item of PPE is recognized as an asset if it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably.

PPE are initially measured at cost of acquisition/construction including decommissioning or restoration cost
wherever required. Cost of land includes expenditures which are directly attributable to the acquisition of the land
like, rehabilitation expenses, resettlement cost and compensation in lieu of employment incurred for concerned
displaced persons etc.

After recognition, an item of all other Property, plant and equipment are carried at its cost less any accumulated
depreciation and any accumulated impairment losses under Cost Model. The cost of an item of property, plant and
equipment comprises:

(a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts
and rebates.

(b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable
of operating in the manner intended by management.

(c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is
located, the obligation for which the Company incurs either when the item is acquired or as a consequence of
having used the item during a particular period for purposes other than to produce inventories during that period.

(d) Interest on Borrowings utilized to finance the construction of qualifying assets are capitalised as part of cost of
the asset until such time that the asset is ready for its intended use.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of
the item is depreciated separately. However, significant part(s) of an item of PPE having same useful life and
depreciation method are grouped together in determining the depreciation charge.

Costs of the day to-day servicing described as ‘repairs and maintenance’ are recognised in the statement of profit
and loss in the period in which the same are incurred.

Subsequent cost of replacing parts which are significant in relation to the total cost of an item of property, plant
and equipment are recognised in the carrying amount of the item, if it is probable that future economic benefits
associated with the item will flow to the Company; and the cost of the item can be measured reliably. The
carrying amount of those parts that are replaced is derecognised in accordance with the derecognition policy
mentioned below.

When major inspection is performed, its cost is recognised in the carrying amount of the item of property, plant
and equipment as a replacement if it is probable that future economic benefits associated with the item will flow
to the Company; and the cost of the item can be measured reliably. Any remaining carrying amount of the cost
of the previous inspection (as distinct from physical parts) is derecognised.

An item of Property, plant or equipment is derecognised upon disposal or when no future economic benefits are
expected from the continuing use of assets. Any gain or loss arising on such derecognition of an item of property
plant and equipment is recognised in profit and Loss.

Depreciation on property, plant and equipment, except freehold land, is provided as per cost model on straight
line basis over the estimated useful lives of the asset as follows:

Based on technical evaluation, the management believes that the useful lives given above best represent the
period over which the management expects to use the asset. Hence the useful lives of the assets may be
different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

The estimated useful life of the assets is reviewed at the end of each financial year.

The residual value of Property, plant and equipment is considered 5% of the original cost of the asset except
for some items of assets such as mobile phones 1%, other land, site restoration asset, other mining
infrastructure, surveyed off assets, coal tub, winding ropes, haulage ropes, stowing pipes and safety lamps
etc. considered to have no residual value.

Depreciation on the assets added/disposed of during the year is provided on pro-rata basis with reference to
the month of addition / disposal.

Value of “Other Land” includes land acquired under Coal Bearing Area (Acquisition & Development)
(CBA) Act, 1957, Land Acquisition Act, 1894, Right to Fair Compensation and Transparency in Land A
cquisition, Rehabilitation and Resettlement (RFCTLAAR) Act, 2013, Long term transfer of government
land etc., which are amortised on the basis of the balance life of the project; and in case of Leasehold land
such amortisation is based on lease period or balance life of the project whichever is lower.

Assets that are fully depreciated and retired from active use are disclosed separately as surveyed off assets
at its residual value under Property, Plant Equipment and are tested for impairment.

Transition to Ind AS

The Company elected to continue with the carrying value as per the cost model (for all of its property, plant and
equipment as recognised in the financial statements as at the date of transition to Ind ASs, measured as per the
previous GAAP.

2.8 Mine Closure, Site Restoration and Decommissioning Obligation

The Company’s obligation for land reclamation and decommissioning of structures consists of spending at both
surface and underground mines in accordance with the guidelines from the Ministry of Coal, Government of
India. The Company estimates its obligation for Mine Closure, Site Restoration and Decommissioning based
upon detailed calculation and technical assessment of the amount and timing of the future cash spending to
perform the required work. Mine Closure expenditure is provided as per approved Mine Closure Plan.
The estimates of expenses are escalated for inflation, and then discounted at a discount rate that reflects current
market assessment of the time value of money and the risks, such that the amount of provision reflects the present
value of the expenditures expected to be incurred to settle the obligation. The Company records a corresponding
asset associated with the liability for final reclamation and mine closure. The obligation and corresponding assets
are recognised in the period in which the liability is incurred. The asset representing the total site restoration cost
(as estimated by Central Mine Planning and Design Institute Limited) as per the mine closure plan is recognised
as a separate item in PPE and amortised over the balance project/mine life.

The value of the provision is progressively increased over time as the effect of discounting unwinds; creating an
expense recognised as a financial expense.

Further, a specific escrow fund account is maintained for this purpose as per the approved mine closure plan.

The progressive mine closure expenses incurred on year to year basis forming part of the total mine closure
obligation are initially recognised as receivable from the escrow account and thereafter adjusted with the
obligation in the year in which the amount is withdrawn after the concurrence of the certifying agency.

2.9 Exploration and Evaluation Assets

Exploration and evaluation assets comprise costs that are attributable to the search for coal and related
resources, pending the determination of technical feasibility and the assessment of commercial viability of
an identified resource which comprises inter alia the following:

• acquisition of rights to explore

• researching and analysing historical exploration data;

• gathering exploration data through topographical, geo-chemical and geo-physical studies;

• exploratory drilling, trenching, and sampling;

• determining and examining the volume and grade of the resource;

• surveying transportation and infrastructure requirements;

• Conducting market and finance studies.

The above includes employee remuneration, cost of materials and fuel used, payments to contractors etc.

As the intangible component represents an insignificant/indistinguishable portion of the overall expected
tangible costs to be incurred and recouped from future exploitation, these costs along with other capitalised
exploration costs are recorded as exploration and evaluation assets.

Exploration and evaluation costs are capitalised on a project-by-project basis pending the determination of
technical feasibility and commercial viability of the project and disclosed as a separate line item under
non-current assets. They are subsequently measured at cost less accumulated impairment.

Once proved reserves are determined and the development of mines/projects are sanctioned, exploration and
evaluation assets are transferred to “Other Mining Infrastructure” under capital work in progress. However,
if proved reserves are not determined, the exploration and evaluation asset is derecognised.

2.10 Other mining Infrastructure (Development Expenditure)

When proved reserves are determined and the development of mines/projects are sanctioned, capitalised
exploration and evaluation cost is recognised as assets under construction and disclosed as a component of
capital work in progress under the head “Other mining Infrastructure”. All subsequent development
expenditure is also capitalised. The development expenditure capitalised is net of proceeds from the sale
of coal extracted during the development phase.

Commercial Operation

The project/mines are brought to revenue; when commercial readiness of a project/mine to yield production
on a sustainable basis is established either on the basis of conditions specifically stated in the project report
or on the basis of the following criteria:

(a) From the beginning of the financial year immediately after the year in which the project achieves physical
output of 25% of rated capacity as per the approved project report, or

(b) 2 years of touching coal, or

(c) From the beginning of the financial year in which the value of production is more than total, expenses.
Whichever event occurs first;

On being brought to revenue, the assets under capital work in progress are reclassified as a component of
property, plant, and equipment under the nomenclature “Other Mining Infrastructure”. Other Mining
infrastructures are amortised from the year when the mine is brought under revenue in 20 years or the
working life of the project whichever is less.

2.11 Intangible Assets and Amortisation

Intangible assets acquired separately are measured on initial recognition at cost. Cost includes any
directly attributable expenses necessary to make the assets ready for its intended use. After initial
recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses.

Subsequent expenditure is recognized as an increase in the carrying amount of the asset when it is
probable that future economic benefits deriving from the cost incurred will flow to the Company and the
cost of the item can be measured reliably.

An item of Intangible asset is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Gains or losses arising from the derecognition of an intangible asset
are measured as the difference between the net disposal proceeds and the carrying amount of the asset
and are recognised in the Statement of Profit and Loss when the asset is derecognised.

Internally generated intangibles, excluding capitalised development costs, are not capitalised. Instead, the
related expenditure is recognised in the statement of profit and loss and other comprehensive income in
the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite
lives are amortised over their useful economic lives and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits
embodied in the asset are considered to modify the amortisation period or method, as appropriate, and
are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite
lives is recognised in the statement of profit and loss. Amortisation of intangible asset is provided on
straight line basis over the estimated useful lives of the intangible asset as follows:

Intangible Assets Useful Life

SAP/ERP : 6 Years

Other Computer Software : License period

Rail Corridor : Life as per MoU contract period

An intangible asset with an indefinite useful life is not amortised but is tested for impairment at each reporting date.

Exploration and Evaluation assets attributable to blocks identified for sale or proposed to be sold to outside agencies
(i.e. for blocks not earmarked for CIL) are however, classified as Intangible Assets and tested for impairment.

Expenditure on research is charged to expenditure as and when incurred. Expenditure on development is capitalized
only if the expenditure can be measured reliably, the product or process is technically and commercially feasible,
future economic benefits are probable and the Company intends to and has sufficient resources to complete
development and to use or sell the asset.

2.12 Impairment of Assets (Other than Financial Assets)

The Company assesses at the end of each reporting period whether there is any indication that an asset may
be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. An
asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair
value less costs of disposal, and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets, in which case the
recoverable amount is determined for the cash-generating unit to which the asset belongs. The Company
considers individual mines as separate cash-generating units for the purpose of a test of impairment.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount
of the asset is reduced to its recoverable amount and the impairment loss is recognised in the Statement of
Profit and Loss.

2.13 Investment Property

Property (land or a building or part of a building or both) held to earn rentals or for capital appreciation or
both, rather than for, use in the production or supply of goods or services or for administrative purposes;
or sale in the ordinary course of businesses are classified as an investment property.

Investment property is measured initially at its cost, including related transaction costs and where applicable
borrowing costs.

Investment properties are depreciated using the straight-line method over their estimated useful lives.

2.14 Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability
or equity instrument of another entity.

2.14.1 Financial assets2.14.1 Initial recognition and measurement

All financial assets are recognised initially at fair value, in the case of financial assets not recorded at fair value
through profit or loss, plus transaction costs that are attributable to the acquisition of the financial asset. Purchases
or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company
commits to purchase or sell the asset. However, trade receivables that do not contain a significant financing
component are measured at transaction price.

2.14.2 Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost

• Debt instruments at fair value through other comprehensive income (FVTOCI)

• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

• Equity instruments measured at fair value through other comprehensive income (FVTOCI)

2.14.2.1 Debt instruments at amortised cost

A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:

a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows,
and

b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and
interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective
interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income
in the profit or loss. The losses arising from impairment are recognised in the profit or loss.

2.14.2.2 Debt instrument at FVTOCI

A ‘debt instrument’ is classified as at the FVTOCI if both of the following criteria are met:

a) The objective of the business model is achieved both by collecting contractual cash flows and selling the
financial assets, and

b) The asset’s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting
date at fair value. Fair value movements are recognized in the other comprehensive income (OCI).
However, the Company recognizes interest income, impairment losses & reversals and foreign exchange
gain or loss in the P&L. On derecognition of the asset, cumulative gain or loss previously recognised in
OCI is reclassified from the equity to P&L. Interest earned whilst holding FVTOCI debt instrument is
reported as interest income using the EIR method.

2.14.2.3 Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost
or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates
a measurement or recognition inconsistency (referred to as ‘accounting mismatch’). The Company has
not designated any debt instrument as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all changes recognized
in the P&L.

2.14.2.4 Equity investments in subsidiaries, associates and Joint Ventures

In accordance of Ind AS 101 (First time adoption of Ind AS), the carrying amount of these investments as
per previous GAAP as on the date of transition is considered to be the deemed cost. Subsequently
Investment in subsidiaries, associates and joint ventures are measured at cost.

In case of consolidated financial statements, Equity investments in associates and joint ventures are accounted
as per equity method as prescribed in para 10 of Ind AS 28.

2.14.2.5 Other Equity Investment

All other equity investments in scope of Ind AS 109 are measured at fair value through profit or loss.

The Company may make an irrevocable election to present in other comprehensive income subsequent
changes in the fair value. The Company makes such election on an instrument by-instrument basis. The
classification is made on initial recognition and is irrevocable.

All fair value changes of an equity instrument classified at FVTOCI, are recognized in OCI. There is no
subsequent reclassification of fair value gains and losses to the Statement of Profit and Loss. However,

the Company may transfer the cumulative gain or loss within equity. Dividends from such investments are
recognised in the Statement of Profit and Loss as “other income” when the Company’s right to receive
payments is established.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized
in the P&L.

2.14.2.6 Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the balance sheet) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement;
and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the
Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the Company continues to recognise the transferred asset to the extent of the Company’s
continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Company has
retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the
lower of the original carrying amount of the asset and the maximum amount of consideration that the Company
could be required to repay.

2.14.2.7 Impairment of financial assets (other than fair value)

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the following financial assets and credit risk exposure:

a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities,
deposits, trade receivables and bank balance

b) F inancial assets that are debt instruments and are measured as at FVTOCI

c) Lease receivables under Ind AS 116

d) Trade receivables or any contractual right to receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115.

The Company follows ‘simplified approach’ for recognition of impairment loss allowance on:

• Trade receivables or contract revenue receivables; and

• All lease receivables resulting from transactions within the scope of Ind AS 116
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it
recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

2.14.3 Financial liabilities2.14.3.1 Initial recognition and measurement

The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.

2.14.3.2 Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

2.14.3.3 Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships
as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

2.14.3.4 Financial liabilities at amortised cost

After initial recognition, these are subsequently measured at amortised cost using the effective interest rate method.
Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective
interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation
is included as finance costs in the statement of profit and loss.

2.14.3.5 Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability. The difference between the carrying amount of a financial
liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid,
aincluding any non-cash assets transferred or liabilities assumed, shall be recognised in profit or loss.

2.14.4 Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition,
no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets
which are debt instruments, a reclassification is made only if there is a change in the business model for managing those
assets. Changes to the business model are expected to be infrequent. The Company’s senior management determines
change in the business model as a result of external or internal changes which are significant to the Company’s
operations. Such changes are evident to external parties. A change in the business model occurs when the Company
either begins or ceases to perform an activity that is significant to its operations. If Company reclassifies financial assets,
it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next
reporting period following the change in business model. The Company does not restate any previously recognised
gains, losses (including impairment gains or losses) or interest.

2.14.5 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is
a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realise the assets and settle the liabilities simultaneously.

2.14.6 Fair value measurement of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date under current market conditions.

The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the
ability to observe inputs employed for such measurement:

(a) Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

(b) Level 2: inputs other than quoted prices included within level 1 that are observable either directly or indirectly
for the asset or liability.

(c) Level 3: inputs for the asset or liability which are not based on observable market data (unobservable inputs).

The Company has an established control framework with respect to the measurement of fair values. This includes
a finance team that has overall responsibility for overseeing all significant fair value measurements who regularly
review significant unobservable inputs, valuation adjustments and fair value hierarchy under which the valuation
should be classified.

2.14.7 Cash and Cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an
original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the
purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as
defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash
management.

2.15 Borrowing Costs

Borrowing costs are expensed as and when incurred except where they are directly attributable to the acquisition,
construction or production of qualifying assets i.e. the assets that necessarily takes substantial period of time to
get ready for its intended use, in which case they are capitalised as part of the cost of related asset up to the date
when the qualifying asset is ready for its intended use.

2.16 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a
period. Taxable profit differs from “profit before income tax” as reported in the statement of profit and loss and
other comprehensive income because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible. The Company’s liability for current
tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary difference to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and interests are only recognised
to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of
the temporary differences.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered. Unrecognised deferred tax assets are reassessed at the end of each reporting year and are
recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in
other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised
in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from
the initial accounting for a business combination, the tax effect is included in the accounting for the business
combination.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.

2.17 Employee Benefits2.17.1 Short-term Benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are expected to be
settled wholly before twelve months after the end of the annual reporting period in which the employees render
the related service.

All short-term employee benefits are recognized in the period in which the services are rendered by employees.

2.17.2 Post-employment benefits and other long term employee benefits2.17.2.1 Defined contributions plans

A defined contribution plan is a post-employment benefit plan under which the Company pays a fixed
contribution into a fund maintained by a separate body and the Company will have no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as
an employee benefit expense in the statement of profit and loss in the periods during which services are rendered
by employees.

2.17.2.2 Defined benefits plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s
net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that
employees have earned in return of their service in the current and prior periods. The benefit is discounted to
determine its present value and reduced by the fair value of plan assets, if any. The discount rate is based on the
prevailing market yields of Indian Government securities as at the reporting date that have maturity dates
approximating the terms of the Company’s obligations and that are denominated in the same currency in which
the benefits are expected to be paid.

The application of actuarial valuation involves making assumptions about the discount rate, expected rates of
return on assets, future salary increases, mortality rates etc. Due to the long-term nature of these plans, such
estimates are subject to uncertainties. The calculation is performed at each balance sheet by an actuary using
the projected unit credit method. When the calculation results in the benefit to the Company, the recognised
asset is limited to the present value of the economic benefits available in the form of any future refunds from
the plan or reduction in future contributions to the plan. An economic benefit is available to the Company if it
is realisable during the life of the plan, or on settlement of plan liabilities.

Re-measurement of the net defined benefit liability, which comprises actuarial gain and losses considering the
return on plan assets (excluding interest) and the effects of the assets ceiling (if any, excluding interest) are
recognised immediately in the other comprehensive income. The Company determines the net interest expense
(income) on the net defined benefit liability (asset) for the period by applying the discount rate used to
measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit
liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period
as a result of contributions and benefit payments. Net interest expense and other expenses related to defined
benefit plans are recognised in profit and loss.

When the benefits of the plan are improved, the portion of the increased benefit relating to past service by
employees is recognised as an expense immediately in the statement of profit and loss.

2.17.3 Other long-term employee benefits

Other long-term employee benefits are all employee benefits other than short-term employee benefits, post¬
employment benefits and termination benefits.

Other long-term employee benefits include items which are not expected to be settled wholly before twelve
months after the end of the annual reporting period in which the employees render the related service.

For other long-term employee benefits, net total of the following amounts is recognized in the statement of
profit or loss:

(^a) Service cost

(b) Net interest on the net defined benefit liability (asset)

(c) Re-measurements of the net defined benefit liability (asset)

2.18 Foreign Currency

Transactions in foreign currencies are initially recognised using the exchange rate prevailing at the
transaction date. Monetary assets and liabilities denominated in foreign currencies outstanding at the end
of the reporting period are translated at the exchange rates prevailing as at the end of reporting period.
Exchange differences arising on the settlement of monetary assets and liabilities or on translating monetary
assets and liabilities at rates different from those at which they were translated on initial recognition during
the period or in previous financial statements are recognised in statement of profit and loss in the period in
which they arise.

Non-monetary items denominated in foreign currency are valued at the exchange rates prevailing on the
date of transactions.

2.19 Stripping Activity

In case of opencast mining, the mine waste materials (“overburden”) which consists of soil and rock on the
top of coal seam is required to be removed to get access to the coal and its extraction. The process of
removing overburden to access coal is referred to as stripping. Stripping is necessary to obtain access to
coal and occurs throughout the life of an opencast mine. Stripping costs during development and production
phases are classified in property, plant, and equipment. Stripping costs are accounted for separately for
individual mines.

The company accounts for stripping activities as follows:

Stripping costs during the Development phase -

These are initial overburden removal costs incurred to obtain access to coal to be extracted. These costs are
capitalised when it is probable that future economic benefits will flow to the company and costs can be
measured reliably. Once the production phase begins, capitalised development stripping costs are amortised
over the mine life.

Stripping costs during the production phase -

These are overburden removal costs incurred after the mine has been brought to revenue as per the policy of
the company. Stripping costs during the production phase can give rise to two benefits, the extraction of coal

in the current period and improved access to coal which will be extracted in future periods. Stripping costs
during the production phase are allocated between the inventory produced and the stripping activity asset
using a standard strip ratio (overburden-to-coal). The standard strip ratio is the total volume of Overburden
expected to be removed over the life of the mine against the total coal to be extracted over the life of the
mine. When the actual volume of overburden removed is greater than the expected volume of overburden
removal, the stripping cost for excess overburden removed over the expected overburden removal is
capitalised to the stripping activity asset. The stripping activity asset is amortised over the expected useful
life of the mine. Changes in geo-mining conditions may have an impact on the standard strip ratio. Changes
to the ratio are accounted for prospectively. Stripping activity asset are included separately under Property,
plant, and equipment.

Stripping activity asset for stripping costs during the production phase is recognised in the mines with a
rated capacity of one million tonnes per annum and above.

The stripping activity accounting is not applied in Mine Developer and Operator (MDO) arrangements
structured as a revenue-sharing arrangement.

2.20 Inventories2.20.1 Stock of Coal

Inventories of coal/coke are stated at lower of cost and net realisable value. The cost of inventories are
calculated using the Weighted Average method. Net realisable value represents the estimated selling
price of inventories less all estimated costs of completion and costs necessary to make the sale.

Book stock of coal is considered in the accounts where the variance between book stock and measured
stock is up to /- 5% and in cases where the variance is beyond /- 5% the measured stock is considered.
Coke is considered as a part of the stock of coal.

Slurry (coking/semi-coking), middling of washeries, and by products are valued at net realisable value
and considered as a part of the stock of coal.

2.20.2 Stores, Spares, and Other Inventories

The Stock of stores and spares including other inventories are valued at cost calculated on the basis of
the weighted average method.

Provisions are made at the rate of 100% for unserviceable, damaged and obsolete stores and spares and
at the rate of 50% for stores & spares not moved for 5 years.