Emphasis of Matter

We draw attention to the following matter in the notes to the Standalone Financial
Statements:

^(a)

The Company has revised its accounting treatment of Input GST on capital
goods with effect from 2025-26. Earlier from FY 2020-21 to FY 2024-25
input GST on capital goods was capitalized instead of being recognized
separately as current assets. With effect from 01.04.2025 the practice of
capitalizing GST on capital expenditure has been discontinued. The company
has now started availing Input Tax Credit (ITC) on eligible capital expenditure
and recognising the same as current assets (Refer Note No. 6.2 of the
Standalone Financial Statements).

(a) I’ursuant to Notification No. 09/2025
- Central Tax (Rate), the Goods and
Services Tax (GST) rate on coal has
been increased from 5% to 18% with
effect from September 22, 2025.
Consequently, the inverted duty
structure no longer exists, and
accumulated Input Tax Credit (ITC) is
being utilized against output tax
liability. Accordingly, with effect from
April 01, 2025, the Company has
revised its accounting treatment by
commencing to avail eligible GST
ITC on capital items and discontinuing
the capitalization of such GST except
on Laptops and Mobile Phones.

(b)

During the year the company has taken steps to conduct a hundred percent
physical verification of all store items of entire BCCL. Accordingly, the
verification audit was conducted by several audit firms to ascertain the present
status of the store items in various stores of the company for the financial year
2024-25. The company has not yet come up with the actual financial impact on
the basis of such reports received till the date of this audit. Accordingly, no
consequential financial impact, if any, is considered by the management in the
standalone financial statements as on 31st March 2026 (Refer Note No. 5.1 of
the Standalone Financial Statements).

b)The consequential financial implication,
if any, shall be accounted for upon
receipt of the reports of the physical
verification.

(c)

Certain debit/credit balances including trade receivables, other current and
non-current assets, trade payables, other financial liabilities and other current
and non-current liabilities as on the Balance Sheet date have been partially
confirmed, and reconciliation with the respective ledger balances remains in
progress. Hence the financial impact thereof, if any, on such pending
reconciliation on the financial statement cannot be fully determined at this stage.

c) Reconciliation of Trade Receivables
takes place continuously. Efforts have
been taken to expedite the pending
reconciliation. Moreover, confirmation
in respect of some of the trade payables
were obtained and efforts will be made
to collect the same against all the trade
payables

(d)

Up to the previous year 2024-25, the company treated levies on coal production
and sales imposed by Central, State and Local Authorities as amounts collected
in an agency capacity. In the current year 2025-26, the company reassessed the
accounting treatment of such levies based on their underlying nature, relevant
accounting standards, legal provisions and opinions obtained from accounting
experts. Based on this assessment, the company concluded that for certain
levies it acts as a principal and accordingly, the Revenue from Operations as
disclosed in Note 12.1 is inclusive of such levies on sales.

In the state of West Bengal, cess on coal is computed based on average
production of preceding years and notified prices, whereas recoveries from
customers are based on actual dispatches, resulting in timing differences. Such
differences were historically adjusted through an “Equalization Fund” as

d)Historically, the company treated levies
on coal production and sales imposed
by Central, State and Local Authorities
as amounts collected in an agency
capacity. Pursuant to observations of the
C&AG, the company reassessed the
accounting treatment of such levies
based on their underlying nature,
relevant accounting standards, legal
provisions and opinions obtained from
accounting experts. Based on this
assessment, the company concluded
that for certain levies it acts as a

Liability in Balance Sheet, which in the current year has been assessed by the
management to be no longer required and hence written back. The same has
been disclosed in Note 16(6)(ac).

(e) With effect from 07.10.2024, the Government of Jharkhand started levying
Jharkhand Mineral Bearing Land (JMBL) Cess. During the year, the company
has decided to recover the JMBL cess on the coal dispatched by the Washeries
amounting to ?168.67 crores and account for the same as revenue. Such amount
has already been deposited by the company to the Government exchequer in
respective periods.

Our opinion is not modified in respect of the above matters.

principal. Accordingly, the Revenue
from operations is disclosed in Note
12.1 is inclusive of such levies on sales.

In the state of West Bengal, cess on
coal is computed based on average
production of preceding years and
notified prices, whereas recoveries
from customers are based on actual
dispatches, resulting in timing
differences. Such differences were
historically adjusted through an
“Equalisation Fund” as Liability in
Balance Sheet, which is no longer
required as per the above assessment

e) JMBL Cess on the coal dispatched by the
Washeries has been treated as revenue and
corresponding trade receivables have
been accounted for.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the Standalone Financial Statements of the current year.
These matters have been addressed in the context of our audit of the Standalone
Financial Statements as a whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters. Each matter below, description of how
out audit addressed the matter is provided in that context. We have determined the
matters described below to be the key audit matters in our report.

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No.

Key Audit Matter

Auditor's Response

1.

Stripping Activity:

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

Our Audit Procedures:

We performed the following substantive

procedures:

• Obtained working data of Stripping
Adjustment and test checked that
the total expenses incurred during
the year is allocated between coal
production and overburden. Ensured
about accuracy and completeness
of expenses considered in
calculation of cost of overburden.

• Performed analytical procedures and
test of details for reasonableness of
expenses considered stripping
activity adjustment calculation.

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No.

Key Audit Matter

Auditor's Response

Stripping costs during the Development

• Checked the stripping ratio to be

phase.

charged under amortisation for mine

These are initial overburden removal

development expenditure for balance

costs incurred to obtain access to coal to

period of mines.

be extracted. These costs are capitalised
when it is probable that future economic

• Checked that the accounting policy

benefits will flow to the company and

applied and management's judgments

costs can be measured reliably. Once the

used for Stripping Activity Adjustment

production phase begins, capitalised

are appropriate.

development stripping costs are
amortised over the mine life.

• Reliance has been placed on the

judgements, technical estimations of

Stripping costs during the production

internal / external technical and other

phase:

experts for the purpose of technical/

These are overburden removal costs

commercial evaluation of the

incurred after the mine has been brought

stripping ratios, proved/ probable

to revenue as per the policy of the

reserves in mines, current and

company. Stripping costs during the

expected volume of production, life

production phase can give rise to two

of the mines etc. and submissions

benefits, the extraction of coal in the

made to the authorities in this respect.

current period and improved access to

• Reviewed the requirements of

coal which will be extracted in future

Appendix B- Stripping Costs in the

periods. Stripping costs during the

Production Phase of a surface mine

production phase are allocated between
the inventory produced and the stripping
activity asset using a standard strip ratio
(overburden-to-coal). The standard strip

of Ind AS- 16 “Property, Plant and
Equipment” and assessed the
compliances and appropriateness of

ratio is the total volume of Overburden

the policy being followed, disclosures

expected to be removed over the life of

etc. made in the financial statements

the mine against the total coal to be

in this respect and those as required

extracted over the life of the mine. When

in terms of Ind AS.

the actual volume of overburden

Based on the procedures performed,

removed is greater than the expected
volume of overburden removal, the

we have satisfied ourselves regarding

stripping cost for excess overburden
removed over the expected overburden
removal is capitalised to the stripping
activity asset. The stripping activity
asset is amortised over the expected
useful life of the mine. Changes in geo¬
mining conditions may have an impact
on the standard strip ratio. Changes to
the ratio are accounted for prospectively.
Stripping activity asset are included
separately under Property, plant, and
equipment.

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

stripping activity accounting.

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No.

Key Audit Matter

Auditor's Response

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

Stripping activity provision (Ratio
Variance)

Stripping activity provision was
recognized or reversed based on the
current ratio of Overburden to Coal as
compared to the average Stripping ratio
(Standard ratio) of the mine as per the
policy followed in earlier years since
inception consistently by the company.
This accounting method being
substantiated and validated by a multitude
of authoritative bodies and forums,

including income tax authorities, the
provision created in earlier years have
been continued.

The amount of the provision so carried
forward is reversed periodically in
systematic manner on extraction of actual
volume of overburden being in excess of
the expected volume in terms of the mine
specific plan as approved on mine to mine
basis and disclosed as reversal of
stripping activity provision under other
operating revenue. Such reversal is
specific to the mines at the rate the said
provision was originally recognised.

(Refer Note No. 2.19 & 2.23 to the
Standalone Financial Statements.)

2.

Ind AS 115 “Revenue from Contracts
with Customers”:

Revenue recognition and adjustments for
coal quality variance involve critical
estimates.

The revenue recognized by the company
in a particular contract is dependent on the
sale agreement / allotment in e-auction for
the respective customer.

Revenue from sale of coal is recognized
at declared grade of coal. Subsequent
adjustments are made to the transaction
price due to grade mismatch/slippage of
the transferred coal. The variation in the
contract price if not settled mutually

Our Audit Procedures:

Our Audit procedures based on which
we arrived at the conclusion regarding
reasonableness of Revenue recognition
includes the following:

• Assessment of the application of the
provisions of Ind AS 115 in respect
of the Company’s revenue recognition
and appropriateness of the estimated
adjustments in the process.

• Obtained and evaluated trend of past
results prepared based on the
outcome of test from mutually
agreed quality testing laboratory or
Referee quality testing laboratory.

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No.

Key Audit Matter

Auditor's Response

between the parties to the contract is
referred to third party testing and the
Company estimates the adjustments
required for revenue recognition pending
settlement of such dispute. Such
adjustments in revenue are made on
estimated basis following historical trend.

The revenue recognition being a
significant matter involving material
adjustment for Grade Slippage requiring
judgements and estimates for past trend,
etc., has been considered to be a key audit
matter.

(Refer Additional Note 16 (6)(n)-Other
Matters to the Standalone Financial
Statements.)

• Obtained and evaluated calculation
and working of grade slippage
provision.

• Evaluated the controls in place for
estimation, recognition and
disclosure in the standalone financial
statements.

• Checking of selected transactions on
sample basis and tested for
identification of contracts involving
disputes relating to grade mismatch/
slippage with respect to the terms of
the contract, evaluation of the
satisfaction of performance obligation
checking the adjustment to the
revenue due to variation in transaction
price.

• Reviewed the agreement with the
customers and invoices raised
considering the terms and conditions
thereof.

• We have performed tests to establish
the basis of estimation of the
consideration and whether such
estimates are commensurate with
the accounting policy of the
Company.

• Reviewed the Adequacy of the dis¬
closure as per Ind AS 115.

• Quality parameters and assessment
require technical knowledge and
therefore reliance have been placed
on technical findings and reports in
this respect.

• Evaluated the design, the processes
and internal controls relating to
revenue accounting standard.

• Evaluated the detailed analysis
performed by management on
revenue streams by selecting samples
for the existing contracts with
customers and considered revenue
recognition policy in the current
year in respect of those revenue
streams.

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No.

Key Audit Matter

Auditor's Response

• Evaluated the appropriateness of the
disclosures provided under the
revenue standard and assessed the
completeness and mathematical
accuracy of the relevant disclosures.

3.

Evaluation of uncertain tax positions

The Company has material uncertain tax
positions, including matters under dispute
which involves significant judgment to
determine the possible outcome of these
disputes.

(Refer Additional Note No. 16(1) to the
Standalone Financial Statements.)

Our audit procedures include the
following:

• Evaluated the design and implement¬
ation of controls in respect of
provision for current tax and the
recognition and recoverability of
deferred tax assets.

• Considered management's assessment
of the validity and adequacy of
provisions for uncertain tax positions,
evaluating the basis of assessments
and reviewing relevant correspond¬
ence and legal advice where available
including any information regarding
similar cases with the relevant tax
authority.

• Assessed the appropriateness of
management's assumptions and
estimates including the likelihood
of generating sufficient future
taxable income to support deferred
tax assets.

Based on the procedure performed
above, we observed that the manage¬
ment estimates regarding current
and deferred tax balances and
provision for uncertain tax positions
is sufficient.

4.

Valuation of defined benefits obligation
for employees:

Accounting for defined benefit plans is
based on actuarial assumptions which
require measuring the obligation,
evaluating the plan assets and calculating
the corresponding actuarial gain or loss,
all future cash flows discounted to present
value for arriving at the obligation.

Our audit procedures include the
following:

• Evaluated the key assumptions
applied (discount rates, inflation
rate, mortality rate) as per the
Guidance Note applicable.

• Assessed the competence, indepe¬
ndence, and integrity of the
Company’s actuarial expert.

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No.

Key Audit Matter

Auditor's Response

Significant estimates including the
discount rates, the inflation rates and
expected escalation of salary, awards and
revisions made from time to time, and the
mortality rate are made in valuing the
company’s defined benefits obligations.
The company engages external actuarial
specialists to assist in selecting appropriate
assumptions and calculate the obligations.

Valuation of the defined benefit obliga¬
tions requires a high degree of estimation
based on vital assumptions and as such
adequate attention is required to be given
in this respect during the audit.

Refer Additional Note No. 16(5) to the
Standalone Financial Statements.

• The controls over the review and
approval of actuarial assumptions,
the completeness and accuracy of
data provided to external actuary,
and the reconciliation to data used
in expert's calculation were tested.

• Discussed with the Management
about the liability accrued due to
defined benefit plan and to under¬
stand the business and assessed if
there was any inconsistency in the
assumptions.

• Adequacy of the Company’s
disclosure as per Ind AS 19 in the
notes is verified.

• Placing reliance on the actuarial
assumptions including discount
rates, the inflation rates, escalation
of salary and the mortality rate, etc.

Based on the audit procedures
involved, we observed that the
assumptions made by the manage¬
ment in relation to the valuation were
supported by available evidences.

5.

Evaluation of provisions and Contingent
Liabilities:

There are several litigations including
direct and indirect taxes, various claims,
etc. pending before various forums against
the Company and the management’s
judgement is required for estimating the
amount to be provided and/or disclosed as
contingent liability.

We identified this as a key audit matter
because the estimates and assessment with
respect to these involve a significant
degree of management’s judgement,
interpretations, and may therefore require
adequate attention to arrive at the required
conclusion.

(Refer Note 16.1 to the Standalone
Financial Statements, read with the
Material Accounting Policy Information
No. 2.21)

Our Audit procedures based on
which we arrived at the conclusion
regarding reasonableness of
disclosure of contingent liability
and recognition of provisions
includes the following

• We have obtained an understanding
of the Company’s internal
instructions and procedures in
respect of estimation, assessment
and disclosure of contingent
liabilities.

• Understood and tested the design
and operating effectiveness of
controls as established by the
management for obtaining all
relevant information for pending
litigation cases.

• Discussed with the management
regarding any material develop
ments and status of matters
pending as on 31.03.2026.

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No.

Key Audit Matter

Auditor's Response

• Read various correspondences
and related documents pertaining
to litigations involved and
relevant external legal opinions
obtained by the management and
performed substantive procedures
on estimation supporting the
disclosure of contingent liabilities.

• Examined management’s judge¬
ments and assessments with
respect to the provisions if any
required for any such matter.

• Reviewed the management’s
assessments of those matters
which have not been provided
for or disclosed as contingent
liability since the probability of
material outflow has been
considered to be remote.

• Reviewed the adequacy and
completeness of disclosures.

Based on the above procedures
performed, the estimation of provision
and disclosures for contingent
liabilities have been considered to be
adequate and reasonable.

Evaluation of accuracy of Inventory

We have conducted the following

6.

Movement and Valuation -Ind AS 2 -

checks to verify the matter:

Inventories :
Inventories are assets :

• We verified the movement of
stock with reference to the Annual

_a. Held for sale in the ordinary

Coal Stock Measurement as

course of business;

reported in Form- H.

b. In the process of production for

• Raw coal has been measured at

such sale;

the lower of cost and net realizable

c. In the form of materials or

value, in accordance with Ind

supplies to be consumed in the

AS 2.

production process or in the

• The valuation of raw coal is

rendering of services.

performed on a weighted average

Measurement of Inventories:

Inventories shall be measured at the
lower of cost and net realizable value.

cost basis, which we have verified.

• The valuation of washed coal is
valued at cost and net realisable

Cost of inventories

value whichever lower and washed

The cost of inventories shall

power coal and rejects being by-

comprise all costs of purchase, cost

products are valued at net

of conversion, and other costs

realisable value basis.

incurred in bringing the inventories

• Hand-picked rejects has no realisable

to their present location and
condition.

value.

• We noted that difference between
“Saleable Book Stock” and
Measured Saleable Book Stock”
does not exceed /- 5%; accordingly,
no provision has been considered
necessary.

• We performed checks to ensure
that no other costs have been
included in inventory valuation
that are required to be excluded
under Ind AS 2.