2. Material Accounting policies
I. Statement of compliance
Standalone Financial Statements have been prepared
in accordance with the accounting principles generally
accepted in India including Indian Accounting Standards
(Ind AS) prescribed under the section 133 of the
Companies Act, 2013 read with rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 (as amended
from time to time) and presentation and disclosures
requirement of Division II of revised Schedule III of the
Companies Act 2013, (Ind AS Compliant Schedule III), as
applicable to standalone financial statement.
Accordingly, the Company has prepared these Standalone
Financial Statements, on the basis that it will continue
as going concern, which comprise the Balance Sheet
as at 31 March 2026, the Statement of Profit and Loss,
the Statement of Cash Flows and the Statement of
Changes in Equity for the year ended as on that date, and
accounting policies and other explanatory information
(together hereinafter referred to as "Standalone Financial
Statements" or "financial statements").
These financial statements are approved for issue by the
Board of Directors on 14 May 2026.
II. Basis of preparation and presentation
The Standalone Financial Statements have been
prepared on the historical cost basis except for certain
financial instruments measured at fair values at the end
of each reporting year, as explained in the accounting
policies below:
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 in 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 disclosure purposes 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
116 Leases, fair value of plan assets within the scope
of Ind AS 19 Employee benefits 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 measurements 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 entity
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 Financial Statement is presented in INR and all
values are rounded to the nearest crores except when
otherwise stated.
Current and non-current classification
The Company presents assets and liabilities in the balance
sheet based on current / non-current classification.
An asset is classified as current when it satisfies any of
the following criteria:
• it is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle.
• it is held primarily for the purpose of being traded;
• it is expected to be realised within 12 months after the
reporting date; or
• it is cash or cash equivalent unless it is restricted from
being exchanged or used to settle a liability for at least
12 months after the reporting date.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of
the following criteria:
• it is expected to be settled in the Company's normal
operating cycle;
• it is held primarily for the purpose of being traded;
• it is due to be settled within 12 months after the
reporting date; or the Company does not have an
unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of
equity instruments do not affect its classification.
All other liabilities are classified as non-current.
The operating cycle is the time between the acquisition
of assets for processing and their realisation in cash and
cash equivalents. The Company has identified 12 months
as its operating cycle.
Deferred tax assets and liabilities are classified as non¬
current only.
III. Revenue recognition
A. Sale of Goods
The Company recognises revenue when control over
the promised goods or services is transferred to the
customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange
for those goods or services.
The Company has generally concluded that it is the
principal in its revenue arrangements as it typically
controls the goods or services before transferring them
to the customer.
Revenue is adjusted for variable consideration such as
discounts, rebates, refunds, credits, price concessions,
incentives, or other similar items in a contract when they
are highly probable to be provided. The amount of revenue
excludes any amount collected on behalf of third parties.
The Company recognises revenue generally at the point
in time when the products are delivered to customer or
when it is delivered to a carrier for export sale, which
is when the control over product is transferred to the
customer. In contracts where freight is arranged by the
Company and recovered from the customers, the same is
treated as a separate performance obligation and revenue
is recognised when such freight services are rendered.
In revenue arrangements with multiple performance
obligations, the Company accounts for individual
products and services separately if they are distinct -
i.e., if a product or service is separately identifiable from
other items in the arrangement and if a customer can
benefit from it. The consideration is allocated between
separate products and services in the arrangement
based on their stand-alone selling prices. Revenue from
sale of by products are included in revenue.
Revenue from sale of power is recognised when
delivered and measured based on the bilateral
contractual arrangements.
Contract balances
i) Contract assets
A contract asset is the right to consideration in
exchange for goods or services transferred to the
customer. If the Company performs by transferring
goods or services to a customer before the
customer pays consideration or before payment
is due, a contract asset is recognised for the
earned consideration.
ii) Trade receivables
A receivable is recognised when the goods
are delivered and to the extent that it has an
unconditional contractual right to receive cash or
other financial assets (i.e., only the passage of time
is required before payment of the consideration
is due).
Trade receivables is derecognised when the
Company transfers substantially all the risks and
rewards of ownership of the asset to another
party including discounting of bills on a non¬
recourse basis.
Trade receivables which are subject to a factoring
arrangement without recourse are de-recognized in
its entirety. Under this arrangement, the Company
transfers relevant receivables to the factor in
exchange for cash and does not retain late payment
and credit risk.
iii) Contract liabilities
A contract liability is the obligation to transfer
goods or services to a customer for which the
Company has received consideration (or an amount
of consideration is due) from the customer. If a
customer pays consideration before the Company
transfers goods or services to the customer, a
contract liability is recognised when the payment is
made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when
the Company performs under the contract including
Advance received from Customer.
iv) Refund liabilities
A refund liability is the obligation to refund some or
all of the consideration received (or receivable) from
the customer and is measured at the amount the
Company ultimately expects it will have to return
to the customer including volume rebates and
discounts. The Company updates its estimates of
refund liabilities at the end of each reporting period.
B. Sale of Services
Revenue from job work services is recognised as other
operating revenue over the period when the performance
obligation is satisfied. Revenue is measured using the
output method, based on actual quantity processed/
dispatched, in accordance with the terms of the bilateral
contractual arrangements.
C. Dividend and interest income
Dividend income from investments is recognised
when the shareholder's right to receive payment has
been established (provided that it is probable that the
economic benefits will flow to the Company and the
amount of income can be measured reliably).
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.
IV. Leases
The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
Company as lessor
Leases in which the Company does not transfer
substantially all the risks and rewards incidental to
ownership of an asset are classified as operating leases.
Rental income arising is accounted for on a straight-line
basis over the lease terms. Initial direct costs incurred in
negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised
over the lease term on the same basis as rental income.
Contingent rents are recognised as revenue in the period
in which they are earned.
Company as lessee
The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.
Right-of-use assets
The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets
are measured at cost, less any accumulated depreciation
and accumulated impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities
recognised, initial direct costs incurred, and lease
payments made at or before the commencement date
less any lease incentives received. Unless the Company
is reasonably certain to obtain ownership of the leased
asset at the end of the lease term, the recognised right-
of-use assets are depreciated on a straight-line basis
over the shorter of its estimated useful life and the lease
term is as follows.
If ownership of the leased asset transfers to the Company
at the end of the lease term or the cost reflects the
exercise of a purchase option, depreciation is calculated
using the estimated useful life of the asset. Right-of-use
assets are subject to impairment test.
The Company accounts for sale and lease back
transaction, recognising right-of-use assets and lease
liability, measured carrying value of assets transferred
and rights retained on lease commencement date. Gain
or loss on the sale transaction is recognised in statement
of profit and loss.
Lease liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The
lease payments include fixed payments (including in¬
substance fixed payments) less any lease incentives
receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under
residual value guarantees.
The variable lease payments that do not depend on
an index or a rate are recognised as expense in the
period on which the event or condition that triggers the
payment occurs.
I n calculating the present value of lease payments, the
Company uses the incremental borrowing rate at the lease
commencement date if the interest rate implicit in the
lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease
payments made. In addition, the carrying amount of lease
liabilities is remeasured if there is a modification, a change
in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in
an index or rate used to determine such lease payments)
or a change in the assessment of an option to purchase
the underlying asset.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition
exemption to its short-term leases (i.e., those leases
that have a lease term of 12 months or less from the
commencement date and do not contain a purchase
option). It also applies the lease of low-value assets
recognition exemption to leases that are considered of
low value (i.e., below I 5,00,000). Lease payments on
short-term leases and leases of low-value assets are
recognised as expense on a straight-line basis over the
lease term.
V. Foreign currencies
The functional currency of the Company is determined on
the basis of the primary economic environment in which
it operates. The functional currency of the Company is
Indian National Rupee (INR).
The transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised
at the rates of exchange prevailing at the dates of the
transactions. At the end of each reporting year, monetary
items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign
currencies are retranslated at the rates prevailing at the
date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences on monetary items are recognised
in Statement of Profit and Loss in the year in which they
arise except for:
• exchange differences on foreign currency borrowings
relating to assets under construction for future
productive use, which are included in the cost of those
assets when they are regarded as an adjustment to
interest costs on those foreign currency borrowings;
• exchange differences on transactions entered into
in order to hedge certain foreign currency risks (see
below the policy on hedge accounting in 2 (XIX) (C) (c));
VI. Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which
are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added
to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the Statement
of Profit and Loss in the year in which they are incurred.
The Company determines the amount of borrowing
costs eligible for capitalisation as the actual borrowing
costs incurred on that borrowing during the year less
any interest income earned on temporary investment
of specific borrowings pending their expenditure on
qualifying assets, to the extent that an entity borrows
funds specifically for the purpose of obtaining a qualifying
asset. In case if the Company borrows generally and uses
the funds for obtaining a qualifying asset, borrowing costs
eligible for capitalisation are determined by applying a
capitalisation rate to the expenditures on that asset.
Borrowing Cost includes exchange differences arising
from foreign currency borrowings to the extent they are
regarded as an adjustment to the finance cost.
VII. Government grants
Government grants are not recognised until there is
reasonable assurance that the Company will comply with
the conditions attached 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 years in
which the Company recognises as expenses the related
costs for which the grants are intended to compensate or
when performance obligations are met.
The benefit of a government loan at a below-market rate
of interest and effect of this favorable interest is treated
as a government grant. The Loan or assistance is initially
recognised at fair value and the government grant is
measured as the difference between proceeds received
and the fair value of the loan based on prevailing market
interest rates and recognised to the Statement of profit
and loss immediately on fulfillment of the performance
obligations. The loan is subsequently measured as per
the accounting policy applicable to financial liabilities.
Government incentives includes grants on account
of duty saved on import of capital goods and spares
(property, plant and equipment) under the EPCG (Export
Promotion Capital Goods) scheme. Under such scheme,
the Company is committed to export prescribed times of
the duty saved on import of capital goods over a specified
period of time. In case such commitments are not met,
the Company would be required to pay the duty saved
along with interest to the regulatory authorities.
VIII. Employee benefits
Retirement benefit costs and termination benefits
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 benefit 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 year. Re¬
measurement, 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 immediately in the Balance sheet with a charge
or credit recognised in other comprehensive income in the
year in which they occur. Re-measurement recognised in
other comprehensive income is reflected immediately
in retained earnings and will not be reclassified to
Statement of profit and loss. Past service cost is
recognised in Statement of profit and loss in the year
of a plan amendment or when the company recognises
corresponding restructuring cost whichever is earlier.
Net interest is calculated by applying the discount rate 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
• re-measurement
The Company presents the first two components of
defined benefit costs in Statement of profit and loss in
the line item 'Employee benefits expenses'. 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 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.
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.
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/
contingency leave in the year 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.
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.
IX. Share-based payment arrangements
Equity-settled share-based payments to employees and
others providing similar services are measured at the fair
value of the equity instruments at the grant date. Details
regarding the determination of the fair value of equity-
settled share-based transactions are set out in note 38.
The fair value determined at the grant date of the equity-
settled share-based payments is expensed on a straight¬
line basis over the vesting period, based on the Company's
estimate of equity instruments that will eventually vest,
with a corresponding increase in equity. At the end of
each reporting year, the Company revises its estimate of
the number of equity instruments expected to vest. The
impact of the revision of the original estimates, if any,
is recognised in Statement of profit and loss such that
the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled
employee benefits reserve.
The Company has created an Employee Benefit Trust
for providing share-based payment to its employees.
The Company uses the Trust as a vehicle for distributing
shares to employees under the employee remuneration
schemes. The Trust buys shares of the Company from
the market, for giving shares to employees. The Company
treats Trust as its extension and shared held by the Trust
are treated as treasury shares.
Own equity instruments that are reacquired (treasury
shares) are recognised at cost and deducted from Equity.
No gain or loss is recognised in profit and loss on the
purchase, sale, issue or cancellation of the Company's own
equity instruments. Any difference between the carrying
amount and the consideration, if reissued, is recognised
in capital reserve. Share options exercised during the
reporting year are satisfied with treasury shares.
X. Taxes
Income tax expense represents the sum of the tax
currently payable and deferred tax.
Current tax
Current tax is the amount of expected tax payable
based on the taxable profit for the year as determined
in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961.
Deferred tax
Deferred tax is recognised using the balance sheet
approach on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
recognised for all taxable temporary differences. Deferred
tax assets are recognised for all deductible temporary
differences to the extent that it is probable that taxable
profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary
difference arises from the initial recognition (other than
in a business combination) of assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit. Further, deferred tax is not recognized
on the items that does not give rise to equal taxable
and deductible temporary differences. In addition,
deferred tax liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised on taxable
temporary differences arising on investments in
subsidiaries, joint ventures 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.
The carrying amount of deferred tax assets is reviewed
at the end of each reporting year 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 re¬
assessed at each reporting date and are recognised to
the extent that it has become probable that future taxable
profits will allow 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 year in which the
liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively
enacted by the end of the reporting year.
Deferred tax assets and deferred tax liabilities are offset
if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred
taxes relate to the same taxable entity and the same
taxation authority.
Current and deferred tax for the year
Current and deferred tax are recognised in profit and
loss, except when they are relating 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 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.
XI. Property, plant and equipment
Property, plant and equipment is stated at cost or deemed
cost applied on transition to Ind AS, less accumulated
depreciation and impairment. The cost of property, plant
and equipment comprises its purchase price net of any
trade discounts and rebates, any import duties and other
taxes (other than those subsequently recoverable from
the tax authorities), any directly attributable expenditure
on making the asset ready for its intended use, including
relevant borrowing costs for qualifying assets and
any expected costs of decommissioning. Expenditure
incurred after the property, plant and equipment have
been put into operation, such as repairs and maintenance,
are charged to the Statement of Profit and Loss in the
year in which the costs are incurred. Major shut-down
and overhaul expenditure is capitalised as the activities
undertaken improves the economic benefits expected to
arise from the asset.
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 the sales proceeds and
the carrying amount of the asset and is recognised in
Statement of Profit and Loss.
Assets in the course of construction are capitalised in
the assets under Capital work in progress. At the point
when an asset is operating at management's intended
use, the cost of construction is transferred to the
appropriate category of property, plant and equipment
and depreciation commences. Costs associated with
the commissioning of an asset and any obligatory
decommissioning costs are capitalised where the asset
is available for use but incapable of operating at normal
levels, revenue (net of cost) generated from production
during the trial period is capitalised.
Property, plant and equipment held for use in the
production, supply or administrative purposes, are
stated in the balance sheet at cost less accumulated
depreciation and accumulated impairment losses, if any.
Depreciable amount for assets is the cost of an asset,
or other amount substituted for cost, less its estimated
residual value. Depreciation is recognised so as to write
off the cost of assets (other than freehold land and
properties under construction) less their residual values
over their useful lives, using straight-line method as per
the useful life prescribed in Schedule II to the Companies
Act, 2013 except in respect of following categories of
assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking
into account the nature of the asset, the estimated
usage of the asset, the operating conditions of the asset,
past history of replacement, anticipated technological
changes, manufacturers warranties and maintenance
support etc.
When significant parts of plant and equipment are
required to be replaced at intervals, the Company
depreciates them separately based on their specific
useful lives.
Freehold land and leasehold land where the lease is
convertible to freehold land under lease agreements at
future dates at no additional cost, are not depreciated.
Major overhaul costs are depreciated over the estimated
life of the economic benefit derived from the overhaul.
The carrying amount of the remaining previous overhaul
cost is charged to the Statement of Profit and Loss if the
next overhaul is undertaken earlier than the previously
estimated life of the economic benefit.
The Company reviews the residual value, useful lives and
depreciation method annually and, if expectations differ
from previous estimates, the change is accounted for as
a change in accounting estimate on a prospective basis.
XII. Goodwill
Goodwill arising on an acquisition of a business is carried
at cost as established at the date of acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is
allocated to each of the cash-generating units (or groups
of cash-generating units) that is expected to benefit from
the synergies of the combination.
A cash-generating unit to which goodwill has been
allocated is tested for impairment annually, or more
frequently when there is indication that the unit may be
impaired. If the recoverable amount of the cash-generating
unit is less than its carrying amount, the impairment loss
is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets
of the unit pro rata based on the carrying amount of each
asset in the unit. Any impairment loss for goodwill is
recognized directly in the standalone Statement of Profit
and Loss. An impairment loss recognized for goodwill is
not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
XIII. Intangible assets
I ntangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value
at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated
amortisation and accumulated impairment losses.
Intangible assets with finite useful lives that are acquired
separately are carried at cost or deemed cost applied
on transition to Ind AS less accumulated amortisation
and accumulated impairment losses. Amortisation is
recognised on a straight-line basis over their estimated
useful lives. The estimated useful life and amortisation
method are reviewed at the end of each reporting
year, with the effect of any changes in estimate being
accounted for on a prospective basis. Intangible assets
with indefinite useful lives that are acquired separately
are carried at cost less accumulated impairment losses.
Useful lives of intangible assets
Estimated useful lives of the intangible assets are
as follows:
The Company has elected to continue with carrying value
of all its intangible assets recognised as on transition
date, measured as per the previous GAAP and use that
carrying value as its deemed cost as of transition date.
XIV. Mining Assets
Acquisition costs
The cost of Mining Assets capitalised includes costs
associated with acquisition of licenses and rights
to explore, stamp duty, registration fees and other
such costs.
Bid premium and royalties payable with respect to mining
operations is contractual obligation. The said obligations
are variable and linked to market prices. The Company has
accounted for the same as expenditure on accrual basis
as and when related liability arises as per respective
agreements/ statute.
Exploration and evaluation
Exploration and evaluation expenditure incurred after
obtaining the mining right or the legal right to explore
are capitalised as exploration and evaluation assets
(intangible assets) and stated at cost less impairment.
Exploration and evaluation assets are assessed for
impairment when facts and circumstances suggest that
the carrying amount of an exploration and evaluation
asset may exceed its recoverable amount.
The Company measures its exploration and evaluation
assets at cost and classifies as Property, plant and
equipment or intangible assets according to the nature
of the assets acquired and applies the classification
consistently. To the extent that tangible asset is
consumed in developing an intangible asset, the amount
reflecting that consumption is capitalised as a part of the
cost of the intangible asset.
Exploration expenditure includes all direct and allocated
indirect expenditure associated with finding specific
mineral resources which includes depreciation and
applicable operating costs of related support equipment
and facilities and other costs of exploration activities:
General exploration costs - costs of surveys and studies,
rights of access to properties to conduct those studies
(e.g., costs incurred for environment clearance, defense
clearance, etc.), and salaries and other expenses of
geologists, geophysical crews and other personnel
conducting those studies.
Costs of exploration drilling and equipping exploration
- Expenditure incurred on the acquisition of a license
interest is initially capitalised on a license-by-license
basis. Costs are held, undepleted, within exploration
and evaluation assets until such time as the exploration
phase on the license area is complete or commercial
reserves have been discovered.
Stripping cost
Developmental stripping costs in order to obtain access
to quantities of mineral reserves that will be mined
in future periods are capitalised as part of mining
assets. Capitalisation of developmental stripping costs
ends when the commercial production of the mineral
reserves begins.
Production stripping costs are incurred to extract the ore
in the form of inventories and/or to improve access to an
additional component of an ore body or deeper levels of
material. Production stripping costs are accounted for
as inventories to the extent the benefit from production
stripping activity is realised in the form of inventories.
Other production stripping cost incurred are charged in
the statement of profit and loss.
Developmental stripping costs are presented within
mining assets. After initial recognition, stripping activity
assets are carried at cost less accumulated amortisation
and impairment. The expected useful life of the identified
component of the ore body is used to depreciate or
amortise the stripping asset.
Site restoration, rehabilitation and environmental costs
Provision is made 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 mine. 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
capitalised. The provision for decommissioning assets is
based on the current estimates of the costs for removing
and decommissioning production facilities, the forecast
timing of settlement of decommissioning liabilities and
the appropriate discount rate. A corresponding provision
is created on the liability side. The capitalised asset
is charged to profit and loss over the life of the asset
through amortisation over the life of the operation and
the provision is increased each period via unwinding the
discount on the provision. Management estimates are
based on local legislation and/or other agreements are
reviewed periodically.
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. Details of such provisions are
set out in note 22.
XV. Impairment of Non-financial assets
At the end of each reporting year, the Company reviews
the carrying amounts of its property, plant and equipment
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.
Where a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to
individual cash-generating units, or otherwise they are
allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis
can be identified.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an
indication that the asset may be impaired.
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.
The carrying amounts of the Company's non-financial
assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount
is estimated in order to determine the extent of the
impairment loss, if any.
Where an impairment loss subsequently reverses, the
carrying value of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable
amount so that the increased carrying value does
not exceed the carrying value that would have been
determined had no impairment loss been recognised
for the asset (or cash generating unit) in prior years.
A reversal of an impairment loss is recognised in the
statement of profit and loss immediately.
XVI. Inventories
Inventories are stated at the lower of cost and net
realisable value.
Cost of raw materials include cost of purchase and other
costs incurred in bringing the inventories to their present
location and condition. Cost of semi-finished /finished
goods and work in progress include cost of direct
materials and labor and a proportion of manufacturing
overheads based on the normal operating capacity but
excluding borrowing costs. Cost of semi-finished iron
ore inventory at mines includes a proportion of cost of
mining and other manufacturing overheads depending on
stage of completion of related activities. Cost of finished
iron ore inventory includes cost of mining, bid premium,
royalty, other statutory levies and other manufacturing
expenses. Cost of traded goods include purchase cost
and inward freight. Costs of inventories are determined
on weighted average basis.
Net realisable value represents the estimated selling price
for inventories less all estimated costs of completion and
costs necessary to make the sale. In case of finished iron
ore inventory at mines, estimated cost includes any bid
premium, royalties and other statutory levies payable to
the authorities.
Provisions are made to cover slow moving and obsolete
items (stores & spares) based on its periodically revisited
historical trend of utilization at each manufacturing unit.
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