1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1.1 BASIS OF brPARATION OF FINANCIAL STATEMENTS The financial statements have been brpared under the historical cost convention except in respect of certain fixed assets which are stated at revalued amount in accordance with the provisions of the Companies Act, 2013 and accounting standards as brscribed under section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014 and other recognized accounting practices. Accounting policies unless specifically stated to be otherwise, are consistent and are in consonance with generally accepted accounting principles. 1.2 USE OF ESTIMATES The brparation of financial statements require management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures relating to contingent liabilities as at the Balance Sheet date and the reported amounts of revenue and expenses during the year. Contingencies are recorded when it is probable that a liability will be incurred and the amounts can reasonably be estimated. Differences between the actual results and estimates are recognized in the year in which the results are known / materialized. 1.3 FIXED ASSETS, DEbrCIATION AND AMORTIZATION OF EXPENSES 1) Tangible Assets (i) Gross Block: Fixed Assets are stated at cost of acquisition and subsequent improvements thereto or at revalued amounts wherever such assets have been revalued. Cost of acquisition includes taxes, duties (net of cenvat availed), inward freight, broperative expenses, installation expenses and adjustment for exchange differences wherever applicable. For major projects, interest and other costs incurred on / related to the borrowings for financing projects / fixed assets during construction period and br-operative period, if appropriate, are capitalized. Expenditure on Blast Furnace/Coke Oven Battery Relining is capitalized. (ii) Debrciation and Amortization of Expenses: (a) Debrciation on tangible fixed assets, except otherwise stated has been provided as per Schedule II of the Companies Act, 2013 on straight line method in respect of Plant & Equipment and office equipment at all location of the Company except Elavur Plant of the Company and on written down value method on all other assets including plant and equipment and office equipment at Elavur Plant. Certain Plant and Equipments have been considered Continuous Process Plant on the basis of technical assessment. Debrciation on upgradation of fixed assets (tangible) is provided over the remaining useful life of the mother plant / fixed assets. (b) Assets costing Rs. five thousand or less are being debrciated fully in the year of addition/acquisition. (c) Pipe Moulds above 350 mm for Ductile Iron Foundry Works are debrciated over a period of 3 years. Pipe Moulds upto 350 mm are charged to consumption in the year of issue. (d) Blast Furnace and Coke Oven Battery relining are debrciated on straight line method over a period of 2 and 5 years respectively (average expected life) as per technical assessment. Wagons acquired under "Wagon Investment Scheme" are debrciated over a period of 10 years and Heavy Earth Moving Machinery used for coal mines are debrciated over a period of 5 years on straight line method. Railway siding constructed on government land is amortised over the period of ten years. (e) Leasehold land is amortised on straight line method over the period of the lease. (f) Machinery Spares which can be used only in connection with an item of tangible Fixed Asset and whose use are expected to be irregular, are amortised over the useful life of the respective tangible fixed assets and the amount amortised is included under stores and spares consumed. (iii) Capital Work-in-progress includes broperative and development expenses, equipments to be installed, construction and erection materials, etc. (iv) Development Expenses including overburden removal expenses net of revenue of the Projects / Mines under development are debited to Development Account and included under Capital Work in progress till the projects/ mines are brought to Revenue Account. Except otherwise specifically stated in the Project Report, upon the commercial readiness of the project to yield production on a sustainable basis and completion of required development activity during the period of construction, projects and mines under development are brought to revenue: (a) From beginning of the financial year immediately after the year in which the project achieves physical output of 50% of rated capacity as per approved project report, or (b) One year of touching of coal, or (c) From the beginning of the financial year in which the value of production is more than total expenses. 2) Intangible Assets Intangible assets are stated at cost of acquisition less accumulated amortization. Computer software packages are amortised on straight line method over a period of 5 years. Mining rights are amortised on straight line method over the available period of mining lease 1.4 INVESTMENTS Non current investments are stated at cost less provision, if any, for diminution in value other than temporary. Current investments are carried at lower of cost or fair value, computed category wise. 1.5 INVENTORIES (i) Inventories are valued at lower of cost or net realisable value. Cost of inventories is ascertained on 'weighted average' basis. Materials and other supplies held for use in the production of inventories are not written down below cost if the related finished products are expected to be sold at or above cost. (ii) Cost in respect of raw materials and stores and spares includes expenses incidental to procurement of the same. Cost in respect of finished goods rebrsents prime cost, and includes appropriate portion of overheads and excise duty. (iii) Cost in respect of process stock rebrsents, cost incurred upto the stage of completion. (iv) Cost in respect of work-in-progress rebrsents cost of materials remaining uncertified / incomplete under the Turnkey Contracts undertaken by the Company. 1.6 IMPAIRMENT Fixed assets are reviewed at each balance sheet date for impairment. In case events and circumstances indicate any impairment, recoverable amount of fixed assets is determined. An impairment loss is recognized, whenever the carrying amount of assets either belonging to Cash Generating Unit (CGU) or otherwise exceeds recoverable amount. The recoverable amount is the greater of assets net selling price or its value in use. In assessing value in use, the estimated future cash flows from the use of the assets are discounted to their brsent value at appropriate rate. An impairment loss is reversed if there has been a change in the recoverable amount and such loss either no longer exists or has decreased. Impairment loss/reversal thereof is adjusted to the carrying value of the respective assets, which in case of CGU, are allocated to its assets on a prorata basis. 1.7 FOREIGN CURRENCY TRANSACTIONS AND DERIVATIVES Transactions in foreign currencies are accounted for at the exchange rate brvailing on the date of the transaction. Foreign currency monetary assets and liabilities at the year end are translated at the year end exchange rates. Non-monetary items other than fixed assets, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of transaction. The loss or gain thereon and also on the exchange differences on settlement of the foreign currency transactions during the year are recognized as revenue or expense and are shown in the statement of profit and loss except in respect of non current liabilities related to fixed asset/capital work in progress in which case, these are adjusted to the cost of respective fixed assets/capital work in progress. Revenue/expenditure earned/incurred by the overseas office is translated at the respective month end rate during which such revenue /expenditure is so earned / incurred. Branch monetary assets and liabilities are restated at the year end rates. Exchange differences arising with respect to forward contracts other than those entered into, to hedge foreign currency risk on unexecuted firm commitments or of highly probable forecast transactions are recognized in the period in which they arise and the difference between the forward rate and exchange rate at the date of transaction is recognized as revenue / expense over the life of the contract. In respect of derivative contracts (other than forward contracts dealt as above) brmium paid, gains /losses on settlement and losses on restatement are recognized in statement of profit and loss except in case they relate to acquisition or construction of fixed assets, in which case they are adjusted to the cost of fixed assets/capital work in progress. 1.8 REVENUE RECOGNITION All expenses and revenue to the extent considered payable and receivable respectively unless specifically stated to be otherwise are accounted for on mercantile basis. 1.9 SALES Sales include excise duty, wherever applicable and rebate, discounts, claims, expenses incurred on consignment sales etc. are excluded there from. Sales on consignment and expenses there against are being accounted for on receipt of sales account from the respective consignee. Revenue against Turnkey Contracts undertaken by the Company is recognized progressively on the basis of percentage of completion method. Stage of completion of contracts in progress is determined by reference to the physical proportion of the contract work completed. 1.10 EMPLOYEEBENEFITS Employee benefits are accrued in the year services are rendered by the employees. Short term employee benefits are recognised as an expense in the statement of profit and loss for the year in which the related service is rendered. Contribution to defined contribution schemes such as Provident Fund, Superannuation Fund etc. are recognized as and when incurred. Long-term employee benefits under defined benefit scheme such as contribution to gratuity, leave etc. are determined at close of the year at brsent value of the amount payable using actuarial valuation techniques. Actuarial gain and losses are recognized in the year when they arise. 1.11 BORROWINGCOSTS Borrowing costs that are attributable to the acquisition or construction of qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to statement of Profit and Loss. 1.12 RESEARCH ANDDEVELOPMENT Research and development cost (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred. 1.13 EXPORTBENEFITS Export benefits arising on account of entitlement for duty free imports are accounted for through import of materials. Other export benefits are accounted for as and when the ultimate realisibility of such benefits are established. 1.14 GOVERNMENT GRANTS Revenue grants including subsidy/rebates are credited to Statement of Profit and Loss under "other operating income" or deducted from the related expenses. Grants relating to fixed assets are credited to Capital Reserve Account or adjusted in the cost of such assets as the case may be, as and when the ultimate reliability of such grants are established. 1.15 INCOMETAX Provision for tax is made for current and deferred taxes. Current tax is provided on the taxable revenue using the applicable tax rates and tax laws. Deferred tax assets and liabilities arising on account of timing differences, which are capable of reversal in subsequent periods are recognized using tax rates and tax laws, which have been enacted or substantively enacted. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets will be realized. In case of carry forward of unabsorbed debrciation and tax losses, deferred tax assets are recognized only if there is "virtual certainty" that such deferred tax assets can be realized against future taxable profits. 1.16 PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent obligation as a result of past events, it is probable that there will be an outflow of resources and a reliable estimate can be made, of the amount of the obligation. Contingent assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are not provided for and are disclosed by way of notes. 2.1 The company has opted for accounting the exchange difference arising on reporting of long term foreign currency monetary items as per Accounting Standard 11, "The Effects of Changes in Foreign Exchange Rates". During the year ended 31st March 2015 the net exchange difference of Rs. 4290.69 lakhs (net debit)(brvious year Rs.12326.02 lakhs) on foreign currency loans have been adjusted in the carrying amount of fixed assets / Capital work in progress. The unamortized balance is Rs. 21854.69 lakhs (brvious year Rs.17769.41 lakhs). 2.2 The Board of Directors of the Company has approued the Scheme of Amalgamation (Scheme) of its wholly owned subsidiary, Menadue Vapor Private Limited with the Company with effect from April1, 2014. No effect of the Scheme has been given in the Financial Statements pending receipt of necessary approvals. 2.3 Preuious year figures have been regrouped / reclassified wherever necessary. As per our report of euen date. For Lodha & Co. Chartered Accountants R. P Singh Partner For and on behalf of the Board Pradip Kumar Khaitan Chairman (DIN : 0004821) Gautam Jhunjhunwala ChiefFinancial Officer Umang Kejriwal Managing Director (DIN : 00065173) Prem Kumar Bafana Company Secretary, Legal & Accounts Place : Kolkata date : May 12, 2015 |