SENSEX NIFTY India | Accounting Policy > Mining & Minerals > Accounting Policy followed by Coal India - BSE: 533278, NSE: COALINDIA

Coal India

BSE: 533278|NSE: COALINDIA|ISIN: INE522F01014|SECTOR: Mining & Minerals
Dec 05, 16:00
-0.3 (-0.1%)
VOLUME 137,234
Dec 05, 15:59
-0.5 (-0.16%)
VOLUME 2,694,582
« Mar 14
Accounting Policy Year : Mar '15
1.0 Accounting Convention:
 Financial statements are prepared under the historical cost convention
 and on accrual basis of accounting and going concern concept, in
 accordance with the generally accepted accounting principles in India
 and the relevant provisions of the Companies Act, 2013, including
 accounting standards notified therein, except otherwise stated.
 1.1 Use of estimate
 In preparing the financial statements in conformity with Accounting
 Principles generally accepted in India, management is sometimes
 required to make estimates and assumptions that affect the reported
 amounts of assets and liabilities and the disclosures of contingent
 liability as at the date of financial statements and the amount of
 revenue and expenses during the reported period. Actual results may
 differ from those estimates. Any revision to such estimate is
 recognized in the period in which the same is determined.
 2.0 Subsidies / Grants from Government:
 2.1 Subsidies / Grants on capital account are deducted from the cost of
 respective assets to which they relate. The unspent amount at the
 Balance Sheet date, if any, is shown as current liabilities.
 2.2 Subsidies / Grants on revenue account are credited to Statement of
 Profit & Loss as income and the relevant expenses are debited to the
 respective heads of expenses. The unspent amount at the Balance Sheet
 date, if any, is shown as current liabilities.
 2.3 Subsidies / Grants from Government received as an implementing
 2.3.1 Certain Grant / Funds received under S&T, PRE, EMSC, CCDA etc. as
 an implementing agency and used for creation of assets are treated as
 Capital Reserve and depreciation thereon is debited to Capital Reserve
 Account. The ownership of the asset created through grants lies with
 the authority from whom the grant is received.
 2.3.2 Grant / Funds received as Nodal/Implementing Agency are accounted
 for on the basis of receipts and disbursement.
 3.0 Fixed Assets:
 3.1 Land:
 Value of land includes cost of acquisition, cash rehabilitation
 expenses, resettlement cost and compensation in lieu of employment
 incurred for concerned displaced persons.
 3.2 Plant & Machinery:
 Plant & Machinery includes cost and expenses incurred for erection /
 installation and other attributable costs of bringing those assets to
 working conditions for their intended use.
 3.3 Railway Siding:
 Pending commissioning, payments made to the railway authorities for
 construction of railway sidings are shown in Note 12 - Long Term
 Loans & Advances under Advances for Capital.
 3.4 Development:
 Expenses net of income of the projects / mines under development are
 booked to Development Account and grouped under Capital
 Work-in-Progress till the projects / mines are brought to revenue
 account. Except otherwise specifically stated in the project report to
 determine the commercial readiness of the project to yield production
 on a sustainable basis and completion of required development activity
 during the period of constructions, projects and mines under
 development are brought to revenue considering the following criteria:
 (a) From beginning of the financial year immediately after the year in
 which the project achieves physical output of 25% of rated capacity as
 per approved project report, or
 (b) 2 years of touching of coal, or
 (c) From the beginning of the financial year in which the value of
 production is more than total, expenses.
 - Whichever event occurs first.
 4.0 Prospecting & Boring and other Development Expenditure:
 The cost of exploration and other development expenditure incurred in
 one Five year plan period will be kept in Capital work-
 in-progress till the end of subsequent two Five year plan periods
 for formulation of projects, before it is written-off, except in the
 case of Blocks identified for sale or proposed to be sold to outside
 agency which will be kept in inventory till finalisation of sale.
 5.0 Investments:
 Current investments are valued at the lower of cost and fair value as
 at the Balance Sheet date.
 Investments in mutual fund are considered as current investments.
 Non-Current investments are carried at cost. However, when there is a
 decline, other than temporary, in the value of the long term
 investment, the carrying amount is reduced to recognize the decline
 6.0 Inventories:
 6.1 Book stock of coal / coke is considered in the accounts where the
 variance between book stock and measured stock is upto  /- 5% and in
 cases where the variance is beyond  /- 5% the measured stock is
 considered. Such stock are valued at net realisable value or cost
 whichever is lower.
 6.1.1 Coal & coke fines are valued at lower of cost or net realisable
 6.1.2 Slurry (coking/semi-coking), middling of washeries and by
 products are valued at net realisable value.
 6.2 Stores & Spares:
 6.2.1 The closing stock of stores and spare parts has been considered
 in the accounts as per balances appearing in priced stores ledger of
 the Central Stores and as per physically verified stores lying at the
 6.2.2 Stock of stores & spare parts (which also includes loose tools )
 at central & area stores are valued at cost calculated on the basis of
 weighted average method. The year-end inventory of stores & spare parts
 lying at collieries / sub-stores / drilling camps/ consuming centres,
 initially charged off, are valued at issue price of Area Stores, Cost /
 estimated cost. Workshop jobs including work-in-progress are valued at
 cost. Similarly stock of stationary at printing press and medicines at
 central hospital are valued at cost.
 6.2.3 Stock of stationery (other than lying at printing press), bricks,
 sand, medicine (except at Central Hospitals), aircraft spares and
 scraps are not considered in inventory.
 6.2.4 Provisions are made at the rate of 100% for unserviceable,
 damaged and obsolete stores and at the rate of 50% for stores & spares
 not moved for 5 years.
 7.0 Depreciation/amortisation:
 7.1 Depreciation on fixed assets is provided on straight line method on
 the basis of useful life specified in Schedule II of Companies Act 2013
 except for assets mentioned below , for which depreciation is provided
 on the basis of technically estimated useful life which are lower than
 that envisaged as per schedule II of Companies Act, 2013 to depict a
 more true and fair rate of depreciation :-
 Telecommunication equipment : - 6 years and 9 years
 Photocopying machine : - 4 years
 Fax machine : - 3 years
 Mobile phone : - 3 years
 Digitally enhance cordless telephone : - 3 years
 Printer & Scanner : - 3 years
 Earth Science Museum : - 19 years
 High volume respiratory dust samplers : - 3 years
 Certain equipment /HEMM : - 7 years and 6 years as applicable.
 SDL (equipment) : - 5 years
 LHD (equipment) :- 6 years
 7.2 The residual value of all assets for depreciation purpose is
 considered as 5% of the original cost of the asset except those item of
 assets covered under Para 7.3
 7.3 In case of assets namely Coal tub, winding ropes, haulage ropes,
 stowing pipes & safety lamps the technically estimated useful life has
 been determined to be one year with a nil residual value.
 7.4 Depreciation on the assets added / disposed of during the year is
 provided on pro-rata basis with reference to the month of addition /
 disposal, except on those assets with one year useful life and nil
 residual value as mention under Para 7.3, which are fully depreciated
 in the year of their addition. These Assets are taken out from the
 Assets after expiry of two years following the year in which these are
 fully depreciated.
 7.5 Value of land acquired under Coal Bearing Area (Acquisition &
 Development) Act, 1957 is amortised on the basis of the balance life of
 the project. Value of leasehold land is amortised on the basis of lease
 period or balance life of the project whichever is earlier.
 7.6 Prospecting, Boring and Development expenditure are amortised from
 the year when the mine is brought under revenue in 20 years or working
 life of the project whichever is less.
 7.7 Cost of Software recognized as intangible asset, is amortised on
 straight line method over a period of legal right to use or three
 years, whichever is less; with a nil residual value.
 8.0 Impairment of Asset:
 Impairment loss is recognised wherever the carrying amount of an asset
 is in excess of its recoverable amount and the same is recognized as an
 expense in the statement of profit and loss and carrying amount of the
 asset is reduced to its recoverable amount.
 Reversal of impairment losses recognised in prior years is recorded
 when there is an indication that the impairment losses recognised for
 the asset no longer exist or have decreased.
 9.0 Foreign Currency Transactions:
 9.1 Balance of foreign currency transactions is translated at the rates
 prevailing on the Balance Sheet date and the corresponding effect is
 given in the respective accounts. Transactions completed during the
 period are adjusted on actual basis.
 9.2 Transactions covered by cross currency swap options contracts to be
 settled on future dates are recognised at the rates prevailing on the
 Balance Sheet date, of the underlying foreign currency. Effects arising
 out of such contracts are taken into accounts on the date of
 10.0 Retirement benefits / other employee benefits:
 a) Defined contributions plans:
 The company has defined contribution plans for payment of Provident
 Fund and Pension Fund benefits to its employees.  Such Provident Fund
 and Pension Fund are maintained and operated by the Coal Mines
 Provident Fund (CMPF) Authorities.  As per the rules of these schemes,
 the company is required to contribute a specified percentage of pay
 roll cost to the CMPF Authorities to fund the benefits.
 b) Defined benefits plans:
 The liability on the Balance Sheet date on account of gratuity and
 leave encashment is provided for on actuarial valuation basis by
 applying projected unit credit method. Further the company has created
 a Trust with respect to establishment of Funded Group Gratuity (cash
 accumulation) Scheme through Life Insurance Corporation of India.
 Contribution is made to the said fund based on the actuarial valuation.
 c) Other employee benefits:
 Further liability on the Balance Sheet date of certain other employee
 benefits viz. benefits on account of LTA/ LTC; Life Cover Scheme, Group
 Personal Accident Insurance Scheme, Settlement Allowance, Post
 Retirement Medical Benefits Scheme and compensation to dependants of
 deceased in mines accidents etc. are also valued on actuarial basis by
 applying projected unit credit method.
 11.0 Recognition of Income and Expenditure:
 Income and Expenditure are generally recognised on accrual basis and
 provision is made for all known liabilities.
 11.1 Sales
 a) Revenue in respect of sales is recognised when the property in the
 goods with the risks and rewards of ownership are transferred to the
 b) Sale of coal are net of statutory dues and accepted deduction made
 by customer on account of quality of coal.
 c) The revenue recognition is done where there is reasonable certainty
 of collection. On the other hand, revenue recognition is postponed in
 case of uncertainty as assessed by management.
 11.2 Dividend
 Dividend income is recognised when right to receive is established.
 12.0 Borrowing Costs:
 Borrowing Cost directly attributable to the acquisition or construction
 of qualifying assets is capitalised. Other borrowing costs are
 recognised as expenses in the period in which they are incurred.
 13.0 Taxation:
 Provision of current income tax is made in accordance with the Income
 Tax Act., 1961. Deferred tax liabilities and assets are recognised at
 substantively enacted tax rates, subject to the consideration of
 prudence, on timing difference, being the difference between taxable
 income and accounting income that originate in one period and are
 capable of reversal in one or more subsequent period.
 14.0 Provision:
 A provision is recognised when an enterprise has a present obligation
 as a result of past event; it is probable that an outflow of resources
 embodying economic benefit will be required to settle the obligation,
 in respect of which a reliable estimate can be made. Provisions are not
 discounted to present value and are determined based on best estimate
 required to settle the obligation at the balance sheet date.
 15.0 Contingent Liability:
 Contingent liability is a possible obligation that arises from past
 events and the existence of which will be confirmed only by the
 occurrence or non-occurrence of one or more uncertain future events not
 wholly within the control of the enterprise or a present obligation
 that arises from past events but is not recognised because it is not
 probable that an outflow of resources embodying economic benefit will
 be required to settle the obligations or reliable estimate of the
 amount of the obligations can not be made.
 Contingent liabilities are not provided for in the accounts and are
 disclosed by way of Notes.
 16.0 Overburden Removal (OBR) Expenses :
 In open cast mines with rated capacity of one million tonnes per annum
 and above, cost of OBR is charged on technically evaluated average
 ratio (COAL:OB) at each mine with due adjustment for advance stripping
 and ratio-variance account after the mines are brought to revenue. Net
 of balances of advance stripping and ratio variance at the Balance
 Sheet date is shown as cost of removal of OB under the head Non -
 Current Assets/ Long Term Provisions as the case may be.
 The reported quantity of overburden as per record is considered in
 calculating the ratio for OBR accounting where the variance between
 reported quantity and measured quantity is within the lower of the two
 alternative permissible limits, as detailed hereunder:-
 17.0 Prior Period Adjustments and Prepaid Expenses:
 Income / expenditures relating to prior period and prepaid expenses,
 which do not exceed Rs 0.10 Crore in each case, are treated as income /
 expenditure of current year.
Source : Dion Global Solutions Limited
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