1. Material accounting policies information
1.1. Basis of preparation
The Financial Statements comply in all material aspects with
Indian Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (the Act) [Companies (Indian
Accounting Standards) Rules, 2016] and other relevant
provisions of the Act.
1.2. Basis of measurement
The financial statements have been prepared on a going
concern basis using historical cost convention and on an
accrual method of accounting, except for the following:
(i) Certain financial assets and financial liabilities that are
measured at fair value,
(ii) Defined Benefit Plans - Plan assets are measured at
fair value; and
(iii) Derivative financial instruments- measured at fair value
Figures in the financial statements have been rounded off to
rupees in lakhs.
1.3. 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 realized 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 realized 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. Deferred tax
assets and liabilities are classified as non-current only.
1.4 Revenue recognition
Revenue from operations
Revenue from contracts with customers is recognized
on transfer of control of promised goods or services to a
customer at an amount that reflects the consideration to
which the Company is expected to be entitled to in exchange
for those goods or services. When there is uncertainty on
ultimate collectability, revenue recognition is postponed until
such uncertainty is resolved.
Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The
transaction price of goods sold, and services rendered is net
of variable consideration on account of various discounts and
schemes offered by the Company as part of the contract.
Transaction price excludes taxes and duties collected on
behalf of the government.
This variable consideration is estimated based on the expected
value of outflow. Revenue (net of variable consideration) is
recognized only to the extent that it is highly probable that
the amount will not be subject to significant reversal when
uncertainty relating to its recognition is resolved.
The Company's revenue from contracts with customers
is mainly from the sale of pellets, pig iron, iron ore fines,
manufacturing service under job work and auxiliary services.
Sale of products
Revenue from sale of products is recognized when control
of the goods or services is transferred to the customer. The
performance obligation in case of sale of product is satisfied
at a point in time i.e., when the material is dispatched to the
customer or on delivery to the customer, as may be specified
in the contract.
Rendering of services
Revenue from services is recognized over time by measuring
progress towards satisfaction of performance obligation for
the services rendered and control transferred to the customer.
Contract revenue is recognized at allocable transaction
price which represents the cost of work performed on the
contract plus proportionate margin, using the percentage
of completion method. Percentage of completion is the
proportion of cost of work performed to-date, to the total
estimated contract costs.
Revenue towards rendering of sale and marketing services
for third party sales is recognised at point in time upon
satisfactory completion of delivery to end customer.
Expenses incurred on transportation, logistics including
shipping and freight on third party sales are reimbursed
at cost by the third party and offset against the
corresponding expense.
Unbilled revenue represents value of services performed in
accordance with the contract terms but not billed.
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 recognized for the earned
consideration when that right is conditional on Company's
future performance.
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 recognized when the payment is made, or
the payment is due (whichever is earlier). Contract liabilities
are recognized as revenue when the Company performs
under the contract.
The Company does not adjust the transaction prices for any
time value of money in case of contracts where the period
between the transfer of the promised goods or services
to the customer and payment by the customer does not
exceeds one year.
Other operating income
Revenue arising from incidental and ancillary activities of the
Company are recognized under other operating income.
Despatch money is recognized as and when services are
rendered and no significant uncertainty exists regarding
the amount of consideration that will be derived from
rendering the services.
Liabilities provided against operations and subsequent
reversal thereon (if any) in excess of respective expenditure is
considered as other operating income.
Other income
• 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, with 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.
• Refunds of statutory duties and taxes, Export Duty
and cess, are accounted for upon determination
by the appropriate authority of the department
concerned provided reasonable certainty exist for its
ultimate realization.
• Insurance and Railway claims are accounted for on receipt
1.5. Property, plant and equipment
Freehold land is carried at historical cost. All other items of
Property, Plant and Equipment are stated at historical cost less
any accumulated depreciation and accumulated impairment
losses (if any). Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the assets' carrying amount
or recognized as a separate asset, as appropriate, only when
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 any component
accounted for as a separate asset is de-recognized when
replaced. All other repairs and maintenance are charged to Profit
or Loss during the reporting period in which they are incurred.
Carrying amount of an item of property, plant and equipment
shall be reduced by government grants in accordance
with Ind AS 20.
Derecognition of property, plant and equipment
Property, plant and equipment are derecognised upon
disposal or when no future economic benefits are expected
to arise from the continued use of the asset.
Any gains and losses on disposal or retirement of an item of
property, plant and equipment computed as the difference
between the net disposal proceeds and the carrying amount
of the asset is included in the statement of profit and loss
when the asset is derecognized.
Capital Work in progress consists of costs incurred on projects
and other capital works under feasibility/ commission stage.
Cost includes related incidental expenses.
Impairment is recognized for projects for which there is no
further improvement and are considered as doubtful.
Depreciation methods, estimated useful lives and residual
value: Depreciation is calculated using the Straight-Line
Method to allocate their cost, net of their residual values,
over their estimated useful lives.
The useful lives have been determined based on technical
evaluation done by the management's expert which are
higher than those specified by Schedule II to the Companies
Act, 2013, in order to reflect the actual usage of the assets.
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
The life of property, plant & equipment in Captive Power
Plant has been estimated for 15 years from 1st April 2014
and for Blast Furnace Unit has been estimated for 10 years
from 1st April 2016 by expert committee constituted by the
Management during the current year.
Other assets are depreciated in accordance with useful
life of the assets as indicated in Part C of Schedule II of
Companies Act, 2013.
1.6. Intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. Subsequently, all intangible assets
with finite useful life are measured at cost less accumulated
amortization and accumulated impairment losses, if any.
Intangible assets are amortised over their estimated useful
life on a straight-line basis.
Recognition of intangible assets:
An Intangible Asset shall be recognized if it demonstrates all
of the following criteria:
i. It is probable that the expected future economic benefits
that are attributable to the asset will flow to the entity
ii. The cost of the asset can be measured reliably
Intangible assets are amortized over their respective
estimated useful lives on a straight line basis, from the date
that they are available for use. The estimated useful life of an
identifiable intangible asset is based on a number of factors
including the effects of obsolescence, demand, competition
and other economic factors (such as the stability of the
industry and known technological advances) and the level of
maintenance expenditures required to obtain the expected
future cash flows from the asset.
The estimated useful lives of intangible assets for the current
and comparative period for computer software ranges
from 3-10 years.
Expenditure on research activities is recognised as an
expense in the period in which it is incurred.
Subsequent costs are included in the assets carrying amount
only when 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.
Derecognition of intangible asset
Intangible Assets are derecognised upon disposal or when
no future economic benefits are expected to arise from
the continued use of the asset. Any gains or losses arising
from derecognition of an intangible asset are measured
as the difference between the net disposal proceeds and
the carrying amount of the asset and are recognized in the
statement of profit and loss when the asset is derecognized.
Recognition of intangible asset under development:
An Intangible asset under development phase shall be
recognized if it demonstrates all of the following criteria:
i. Technical feasibility of completing the intangible asset
so that it will be available for use or sale.
ii. Intention to complete the intangible asset and
use or sell it.
iii. Ability to use or sell the intangible asset.
iv. Entity can demonstrate the existence of a market for the
output of the intangible asset or the intangible asset
itself or, if it is to be used internally, the usefulness.
v. Availability of adequate technical, financial and other
resources to complete the development and to use.
vi. Measure reliably the expenditure attributable to the
intangible asset
Recognition of costs as an asset is ceased when the project is
complete and available for its intended use, or if these criteria
are no longer applicable. Where development activities do
not meet the conditions for recognition as an asset, any
associated expenditure is treated as an expense in the period
in which it is incurred
1.7. Leases
As a lessee
The company's lease assets satisfying the criteria of the right
to control the use of an identified asset for a period of time
in exchange for consideration providing substantially all of
the economic benefits through the period of the lease are
recognized as a lease liability with a corresponding 'right-of
use' (ROU) asset at inception of contract except for leases
with a term of twelve months or less (short-term leases) and
low value leases.
For these short-term and low value leases, the Company
recognizes the lease payments as an operating expense on a
straight-line basis over the term of the lease.
Payment made towards short term leases (leases for which
non-cancel lable term is 12 months or less) and low value assets
(lease of assets worth less than H 5 Lakhs) are recognized in
the statement of Profit and Loss as rental expenses over the
tenor of such leases.
Certain lease arrangements include the options to extend or
terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it is
reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or prior to the commencement
date of the lease plus any initial direct costs less any lease
incentives. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term
and useful life of the underlying asset.
Right of use assets are evaluated for recoverability whenever
events or changes in circumstances indicate that their
carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the
higher of the fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the asset does
not generate cash flows that are largely independent of those
from other assets. In such cases, the recoverable amount is
determined for the Cash Generating Unit (CGU) to which
the asset belongs.
The lease liability is initially measured at amortized cost at
the present value of the future lease payments that are not
paid. The lease payments are discounted using the interest
rate implicit in the lease or, if not readily determinable, using
the incremental borrowing rates in the country of domicile
of these leases. Lease liabilities are remeasured 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 or when there
is a change in future lease payments arising from a change in
an index or rate.
Lease payments included in the measurement of the lease
liability comprise:
• Fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
• The amount expected to be payable by the lessee
under residual value guarantees;
• The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease.
Lease liability and ROU asset have been separately presented
in the Balance Sheet and lease payments have been classified
as financing cash flows.
As a lessor
Leases for which the Company is a lessor is classified as a
finance or operating lease. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All
other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for
its interests in the head lease and the sublease separately.
The sublease is classified as a finance or operating lease by
reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a
straight-line basis over the term of the relevant lease.
1.8 Mining rights
Mining rights are treated as Intangible Assets and all related
costs thereof are amortized on the basis of annual production
to the total estimated mineable reserves or mining lease
tenure whichever is earlier. In circumstances where a mining
property is abandoned, the cumulative capitalized costs
relating to the property are written off in the period in which
it occurs i.e. when the Company determines that the mining
property will not provide sufficient and sustainable returns
relative to the risks and the Company decides not to proceed
with the mine development.
All expenditure associated with the acquisition of mining
rights including related professional fee, payment towards
statutory forest clearance before execution of Mining Lease
Deed and before technical feasibility and commercial viability
of extracting mineral resources are demonstrable, treated as
"Mining rights under acquisition" and are disclosed under
the head "Intangible assets under development".
When the technical feasibility and commercial viability of
extracting minerals resources are demonstrable, and the
development of the deposit is intended by the management,
the cumulative capitalized cost is re-classified as Mining
Rights. No amortisation is charged on the Mining Rights
before the start of commercial production.
Subsequent expenditure is capitalized only when it increases
the future economic benefits embodied in the specific asset
to which it relates. All other expenditure is recognized in the
Statement of Profit and Loss.
1.9. Impairment of non-financial assets
Non-financial assets are tested for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs of
disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are
largely independent of the cash inflows from other assets or
groups of assets (cash generating units). Non-financial assets
other than goodwill that suffered impairment are reviewed
for possible reversal of the impairment at the end of each
reporting period. Intangible assets acquired free of charge or
for a nominal amount, by way of government grant, shall be
recognized at a nominal amount
Intangible assets which are not yet available for use are
tested for impairment at least annually and whenever there is
an indication at the end of a reporting period that the asset
may be impaired.
Fair value less costs of disposal is the price that would be
received to sell the asset in an orderly transaction between
market participants and does not reflect the effects of factors
that may be specific to the Company and not applicable to
entities in general.
Value in use is determined as the present value of the
estimated future cash flows expected to arise from the
continued use of the asset in its present form and its eventual
disposal. The cash flows are discounted 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 estimates of future cash flows have not been adjusted.
Any reversal of the previously recognised impairment loss is
limited to the extent that the asset's carrying amount does not
exceed the carrying amount that would have been determined
if no impairment loss had previously been recognised.
1.10. Financial instruments
Financial assets
The Company classifies its financial assets in the following
measurement categories:
i) Those to be measured subsequently at fair value (either
through Other Comprehensive Income, or through
Profit or Loss), and
ii) Those measured at amortized cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of
the cash flows.
For assets measured at fair value, gains and losses are
recorded either in Profit or Loss or Other Comprehensive
Income. For investments in debt instruments, this will depend
on the business model in which the investment is held. For
investments in equity instruments, this depends on whether
the Company has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair
value through Other Comprehensive Income.
At initial recognition, the Company measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through Profit or Loss, transaction costs that
are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair
value through Profit or Loss are expensed in Profit or Loss.
However, trade receivables that do not contain a significant
financing component are measured at transaction price.
Debt instrument
Subsequent measurement of debt instruments depends on the
Company's business model for managing the asset and the cash
flow characteristics of the asset. There are three measurement
categories when an instrument is classified as debt instrument:
(i) Amortized cost: Assets that are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest, are measured
at amortized cost. A gain or loss on a debt investment
that is subsequently measured at amortized cost and is
not part of a hedging relationship is recognized in Profit
or Loss when the asset is de-recognized or impaired.
(ii) Fair value through other comprehensive income (FVOCI)
: Assets that are held for collection of contractual cash
flows and for selling the financial assets, where the
assets' cash flows represent solely payments of principal
and interest, are measured at Fair Value through Other
Comprehensive Income (FVOCI). Movements in the
carrying amount are taken through OCI except for
the recognition of impairment gains or losses, interest
revenue and foreign exchange gains and losses which
are recognized in Profit and Loss. When the financial
asset is de-recognized, the cumulative gain or loss
previously recognized in OCI is reclassified from equity
to Profit or Loss and recognized in other gains/ (losses).
(iii) Fair value through profit or loss (FVTPL): Assets that do
not meet the criteria for amortized cost or FVOCI are
measured at FVTPL. A gain or loss on a debt investment
that is subsequently measured at Fair Value through
Profit or Loss and is not part of a hedging relationship
is recognized in Profit or Loss and presented net in the
Statement of Profit and Loss within other gains/(losses)
in the period in which it arises.
Changes in the fair value of financial assets at Fair Value
through Profit or Loss are recognized in other gain/ (losses)
in the Statement of Profit and Loss. Impairment losses
(and reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other
changes in fair value.
credit loss (ECL) model for measurement and recognition of
impairment loss on the following financial assets:
a) Financial assets that are debt instruments and are
measured at amortised cost.
b) Financial assets that are debt instruments and are
measured as at FVOCI
c) 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, contract
assets and lease receivables. 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.
At each reporting date, for recognition of impairment loss
on other financial assets and risk exposure, the Company
determines whether there has been a significant increase in
the credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent period,
credit quality of the instrument improves such that there
is no longer a significant increase in credit risk since initial
recognition, then the Company reverts to recognising
impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all
possible default events over the expected life of a financial
instrument. The 12-month ECL is a portion of the lifetime
ECL which results from default events that are possible within
12 months after the reporting date. ECL is the difference
between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash
flows that the entity expects to receive, discounted at the
original effective interest rate.
De-recognition of financial assets
A financial asset is derecognized only when: -
(i) The Company has transferred the rights to receive cash
flows from the financial asset or
(ii) Retains the contractual rights to receive the cash flows of
the financial asset but assumes a contractual obligation
to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company
evaluates whether it has transferred substantially all risks and
rewards of ownership of the financial asset. In such cases,
the financial asset is derecognized. Where the entity has not
transferred substantially all risks and rewards of ownership of
the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset
nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognized if
the Company has not retained control of the financial asset.
Where the Company retains control of the financial asset,
the asset is continued to be recognized to the extent of
continuing involvement in the financial asset.
Financial liabilities
The Company classifies its financial liabilities in the following
(i) Those to be measured subsequently at fair value
through Profit or Loss
(ii) Those to be measured at amortized cost.
Measurement
All financial liabilities are recognised initially at fair value and,
in the case of financial liabilities at amortised cost, net of
directly attributable transaction costs.
The measurement of financial liabilities depends on their
classification, as described below:
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.
Gains or losses on liabilities held for trading are recognised in
the statement of profit and loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated as such at
the initial date of recognition, and only if the criteria in Ind
AS 109 are satisfied. For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes in own credit risk
are recognized in OCI.
These gains/losses are not subsequently transferred to
statement of profit and loss. However, the Company may
transfer the cumulative gain or loss within equity. All other
changes in fair value of such liability are recognised in the
statement of profit and loss. The Company has not designated
any financial liability as at fair value through profit or loss.
Financial liabilities at amortised cost
After initial recognition, interest-bearing loans and
borrowings and trade and other payables are subsequently
measured at amortised cost using the EIR method. Gains
and losses are recognised in the statement of profit and loss
when the liabilities are derecognised as well as through the
EIR amortization 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 EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.
Derecognition of financial liabilities
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 in the respective carrying amounts is recognised in
the statement of profit and loss.
Derivative financial instruments
Initial recognition and subsequent measurement
In order to hedge its exposure to foreign exchange, the
Company enters into forward contracts. The Company
does not hold derivative financial instruments for
speculative purposes.
Such derivative financial instruments are initially recognized
at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value
at the end of each reporting period.
Positive balance in derivatives are presented under financial
Assets after Loans and negative balance in derivates are
presented as financial liabilities after trade payables as a
separate line item.
Any gains or losses arising from changes in the fair value of
derivatives are taken directly to Statement of Profit and Loss.
An equity instrument is any contract that evidences residual
interests in the assets of the Company after deducting all of
its liabilities. Equity instruments issued by the Company are
recorded at the proceeds received, net of direct issue costs.
Off-setting financial instruments
Financial assets and liabilities are offset and the net amount
is reported in the Balance Sheet where there is a legally
enforceable right to offset the recognized amounts and there
is an intention to settle on a net basis or realize the asset
and settle the liability simultaneously. The legally enforceable
right must not be contingent on future events and must
be enforceable in the normal course of business and in the
event of default, insolvency or bankruptcy of the Company or
the counterparty.
1.11. Cash and cash equivalents
For the purpose of presentation in the Statement of Cash
Flows, Cash and Cash Equivalents includes cash on hand,
deposits held at call with financial institutions, other short¬
term, highly liquid investments with original maturities of
three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk
of changes in value.
1.12. Inventories
Stock of finished goods namely, Pellets and Pig Iron (including
stock with the Consignment Agents) and semi-finished
goods are valued at lower of cost and net realizable value.
Cost comprises expenditure incurred in the normal course
of business in bringing such inventories to its location and
includes wherever applicable, appropriate overheads based
on normal level of activity and are moved out of inventory
on a weighted average basis. However, when the actual
production is abnormally lower as compared to normal level,
the expenditure of fixed nature is reduced in proportion to
the shortfall. Net realisable value is determined based on
estimated selling price, less further costs expected to be
incurred for completion and disposal.
Raw materials including materials in transit, stores & spares,
consumables and additives are valued at lower of cost and
net realizable value. However, these items are considered
to be realisable at cost if the finished products in which
they will be used, are expected to be sold at or above
cost. The replacement cost of materials at the year end has
been considered as the best available measure of their net
realisable value. The cost is computed on weighted average
basis and the same is charged off to revenue on its issue.
By-products are valued at estimated net realizable value.
Stores, Spares and Consumables with value less than H 1,000
each at the end of the year, are valued at book value. 100%
impairment is recognised for non-moving stores & spares
held for 5 years and above.
The earlier recognised impairment is reversed when
the circumstance that previously caused impairment
recognition no longer exists or when there is clear evidence
of an increase in net realisable value due to changes in
economic circumstances.
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