1.1. Material Accounting Policies
(i) Statement of Compliance
These Standalone Financial Statements have been
prepared in accordance with the Indian Accounting
Standards (referred to as "Ind AS”) notified under the
Companies (Indian Accounting Standards) Rules,
2015 as amended and read with section 133 of the
Companies Act, 2013 (referred to as "Act") and other
relevant provisions of the Act.
(ii) Basis of Preparation of the Standalone Financial
Statements
These Standalone Financial Statements have been
prepared on an accrual, going concern basis and
in accordance with the historical cost convention,
except for certain financial instruments which are
measured at fair value or amortised cost at the end of
each reporting period, as explained in the accounting
policies below. The Standalone Financial Statements
comply in all material aspects of Indian Accounting
Standards (referred to as "Ind AS”) notified under the
Companies (Indian Accounting Standards) Rules, 2015
as amended read with Section 133 of the Companies
Act, 2013. All assets and liabilities are classified into
current and non-current based on the operating cycle
of less than twelve months or based on the criteria of
realisation/ settlement within twelve month period from
the balance sheet date.
Accounting policies have been consistently applied
except where a new accounting standard is initially
adopted or revision to an existing accounting standard,
requires a change in the accounting policy hitherto in
use.
1.2 Use of estimates and judgements
The preparation of these Standalone Financial
Statements in conformity with the recognition and
measurement principles of Ind AS requires the
management of the Company to make judgements,
estimates and assumptions that affect the application
of accounting policies and the reported amount
of assets and liabilities, revenues and expenses and
disclosure of contingent liabilities. Such estimates and
assumptions are based on management's evaluation
of relevant facts and circumstances as on the date
of Standalone Financial Statements. The actual
outcome may diverge from these estimates. Estimates
and assumptions are reviewed on a periodic basis.
Appropriate changes in estimates are made when
the management of the Company becomes aware
of the changes in the circumstances surrounding the
estimates. Changes in estimates are reflected in the
Standalone Financial Statements in the period in which
the changes are made and, if material, their effects
are disclosed in the notes to the Standalone Financial
Statements.
Litigation and contingencies:
The Company has ongoing litigations with various
regulatory authorities. Where an outflow of funds is
believed to be probable and a reliable estimate of
the outcome of the dispute can be made based on
management's assessment of specific circumstances
of each dispute and relevant external advice,
management provides for its best estimate of the
liability.
Useful lives of Property, Plant and Equipment and
Intangible Assets:
The Company uses its technical expertise along with
historical and industry trends for determining the
economic life of an asset/component of an asset.
The useful lives are reviewed by the management
periodically and revised, if appropriate. In case of
a revision, the unamortised depreciable amount is
charged over the remaining useful life of the assets.
Measurement of Defined Benefit Obligation (DBO):
The cost of the defined benefit gratuity plan, the
present value of the gratuity obligation and present
value of pension obligation are determined using
actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from
actual developments in the future. These include
the determination of the discount rate, future salary
increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a
defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at
each reporting date.
Measurement of Restoration Liabilities (Mine
Closure Plans):
The financial obligation towards restoration liabilities
(mine closure plans) under relevant Acts and Rules
are technically estimated, based on total available
ore reserves of all the mining leases. The amount so
determined is provided in the books of account on the
basis of run of mine ore production of the mines of all
the mining leases.
1.3 Revenue recognition
1.3.1 Sale of Products:
Revenue is measured at amount of transaction price
(net of variable consideration) received or receivable
when control of the goods is transferred to the customer
and there are no unfulfilled performance obligations as
per the contract with the customers. Revenue is reduced
for estimated customer returns, rebates and other
similar allowances. Revenue excludes taxes collected
from customer which have to be subsequently remitted
to the Government authorities.
Ores:
Revenue from sale of ores is recognised on completion
of e-auction, receipt of money from the customer and
payment of duties/ levies collected from customer. In
case of export sales, revenue is recognized when the
Company satisfies a performance obligation based on
approved contracts regarding the transfer of goods
or services to a customer. In case of sale of sub-grade
ores, the revenue from sale of ores is recognised on
despatch of goods to customers from mines or stock
points as applicable when control of the goods is
transferred to the customer and there are no unfulfilled
performance obligations as per the contract with the
customers and realisation is reasonably assured.
Ferroalloys and Coke:
Revenue from sale of goods is recognised on dispatch
of ferroalloys and coke to customers from plant, when
control of the goods is transferred to the customer and
there are no unfulfilled performance obligations as
per the contract with the customers and realisation is
reasonably assured.
1.3.2 Rendering of services:
Revenue from sale of services is recognised over the
period of time as per the terms of the contract with
customers.
1.4 Dividend and interest income
Dividend income from investments is recognised when
the Company's right to receive payment has been
established.
Interest income from a financial asset is recognised
when it is probable that the economic benefits will flow
to the Company and the amount of income can be
measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that
asset's net carrying amount on initial recognition.
1.5 Leases
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.
The Company as lessor
Rental income from operating leases is generally
recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the
carrying amount of the leased asset and recognised
on a straight-line basis over the lease term.
1.6 Foreign currency transactions and balances
Functional currency of an entity is the currency of the
primary economic environment in which the entity
operates. The Standalone Financial Statements are
presented in Indian rupees, the national currency of
India, which is the functional currency of the Company.
Transactions in foreign currency are recorded at
exchange rates prevailing on the date of the respective
transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation at the exchange rates prevailing
at reporting date of monetary assets and liabilities
denominated in foreign currencies are recognized
in the Standalone Statement of Profit and Loss and
reported within foreign exchange gains/ (losses).
Non-monetary assets and liabilities denominated in a
foreign currency and measured at historical cost are
translated at the exchange rate prevalent at the date
of transaction.
1.7 Employee benefits
1.7.1 Retirement benefit costs and termination
benefits
Employee benefits include provident fund,
employee state insurance scheme, pension, gratuity,
superannuation and compensated absences.
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 period. Remeasurement, comprising
actuarial gains and losses, the effect of the changes to
the asset ceiling (if applicable) and the return on plan
assets (excluding net interest), is reflected immediately
in the Standalone Balance Sheet with a charge or
credit recognised in other comprehensive income
in the period in which they occur. Remeasurement
recognised in other comprehensive income is reflected
immediately in retained earnings and is not reclassified
to the Standalone Statement of Profit and Loss. Past
service cost is recognised in the Standalone Statement
of Profit and Loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate
at the beginning of the period to the net defined benefit
liability or asset. Defined benefit costs are categorised
as follows:
- service cost (including current service cost,
past service cost, as well as gains and losses on
curtailments and settlements);
- net interest expense or income; and
- re-measurement.
Expense/ Income from these components are grouped
under 'Employee benefit expense' and 'Other income'
respectively in the Standalone Statement of Profit and
Loss. Curtailment gains and losses are accounted for
as past service costs. The retirement benefit obligation
recognised in the Standalone 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 the following dates: (a) when the entity
can no longer withdraw the offer of the termination
benefit; and (b) when the entity recognises costs
for restructuring that is within the scope of Ind AS 37
Provisions, Contingent Liabilities and Contingent Assets
and involves the payment of termination benefits.
1.7.2 Short-term and other long-term employee
benefits
A liability is recognised for benefits accruing to
employees in respect of wages and salaries, annual
leave and sick leave in the period the related service is
rendered at the undiscounted amount of the benefits
expected to be paid in exchange for that service.
Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount
of the benefits expected to be paid in exchange for
the related service. 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.
1.8 Taxation
Income tax expense comprises of current tax and
deferred tax in accordance with the provisions of
Income-tax Act, 1961.
1.8.1 Current tax
The tax currently payable is based on taxable profit
for the year. Taxable profit differs from 'profit before
tax' as reported in the Standalone Statement of Profit
and Loss because of items of income or expense that
are taxable or deductible in other years and items
that are never taxable or deductible. The Company's
current tax is calculated using tax rates that have been
enacted or substantively enacted by the end of the
reporting period. Current tax assets and current tax
liabilities are offset when there is legally enforceable
right to offset the recognised amounts and there is an
intimation to settle the asset and liability on a net basis.
1.8.2 Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amounts of assets and liabilities
in the Standalone Financial Statements and the
corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences.
Deferred tax assets are generally 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.
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. Deferred tax liabilities and
assets are measured at the tax rates that are expected
to apply in the period 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 period.
1.8.3 Current and deferred tax for the year
Current and deferred tax are recognised in the
Standalone Statement of Profit and 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.
1.9 Property, plant and equipment (PPE)
Land and buildings held for use in the production
or supply of goods or services, or for administrative
purposes, are stated in the Standalone Balance
Sheet at cost less accumulated depreciation and
accumulated impairment losses. Freehold land is not
depreciated.
Properties in the course of construction for production,
supply or administrative purposes are carried at cost,
less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing
costs capitalised in accordance with the Company's
accounting policy. Such properties are classified to
the appropriate categories of property, plant and
equipment when completed and ready for intended
use. Depreciation of these assets, on the same basis as
other property assets, commences when the assets are
ready for their intended use.
Depreciation for the assets at head office and mines
(including assets transferred from these locations to
any other location) is provided on a written down value
method over the prescribed useful lives as per Schedule
II to the Companies Act, 2013 after adjustment of the
applicable residual values. Depreciation for the assets
at plant (including assets transferred from this location
to any other location) is provided on a straight line
basis over the prescribed useful lives as per Schedule
II to the Companies Act, 2013 after adjustment of
the applicable residual values. The estimated useful
lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a
prospective basis.
Assets held under finance leases are depreciated over
their expected useful lives on the same basis as owned
assets. However, when there is no reasonable certainty
that ownership will be obtained by the end of the lease
term, assets are depreciated over the shorter of the
lease term and their useful lives.
Items such as spare parts, stand-by equipment and
servicing equipment are recognised as property, plant
and equipment when they meet the definition of
property, plant and equipment under Ind AS 16. i.e.,
Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods
or services, for rental to others, or for administrative
purposes; and
(b) are expected to be used during more than one
period.
If the above said definition is not met, they are classified
as inventories in accordance with Ind AS 2 Inventories.
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 profit or loss.
When an item of property, plant and equipment is
acquired in exchange for a non-monetary asset or
assets, or a combination of monetary and nonmonetary
assets, the cost of that item is measured at fair value
(even if the entity cannot immediately derecognise
the asset given up) unless the exchange transaction
lacks commercial substance or the fair value of neither
the asset received nor the asset given up is reliably
measurable. If the acquired item is not measured at
fair value, its cost is measured at the carrying amount
of the asset given up.
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 of 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).
1.10 Investment property
Investment properties are properties held to earn rentals
and/ or for capital appreciation (including property
under construction for such purposes). Investment
properties are measured initially at cost, including
transaction costs. Subsequent to initial recognition,
investment properties are measured in accordance
with Ind AS 16's requirements for cost model.
Depreciation is recognised using the straight line method
so as to amortise the cost of investment properties
over their useful lives as specified in Schedule II of the
Companies Act, 2013. Freehold land and properties
under construction are not depreciated. Transfers to, or
from, investment properties are made at the carrying
amount when and only when there is a change in use.
An investment property is derecognised upon disposal
or when the investment property is permanently
withdrawn from use and no future economic benefits
are expected from the disposal. Any gain or loss arising
on derecognition of the property (calculated as the
difference between the net disposal proceeds and
the carrying amount of the asset) is included in the
Standalone Statement of Profit and Loss in the period in
which the property is derecognised.
1.11 Intangible assets
1.11.1 Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired
separately are carried at cost 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 period, 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.
1.11.2 Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an
intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of
the asset, are recognised in the Standalone Statement
of Profit and Loss when the asset is derecognised.
1.11.3 Useful lives of intangible assets
Intangible assets are amortised over their estimated
useful life on straight line method as follows:
Software Licenses: Lower of 5 years or license period
1.12 Inventories
Inventories are valued at the lower of cost and the
net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost
includes all charges in bringing the goods to the
point of sale, including all levies, transit insurance and
receiving charges. Semi-finished goods and finished
goods include appropriate proportion of overheads.
Cost is determined as follows:
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