A. Accounting Convention
These financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (GAAP) under the historical
cost convention on an accrual basis. GAAP comprises mandatory
accounting standards as prescribed under Section 133 of the Companies
Act, 2013 (''Act''), read with Rule 7 of the Companies (Accounts) Rules,
2014, the provisions of the Act (to the extent notified) and guidelines
issued by the Securities and Exchange Board of India (SEBI). All the
assets and liabilities are classified as current or non-current as per
the criteria set out in Schedule III to the Companies Act, 2013.
B. Use of Estimates
The preparation of financial statements require estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known/materialized.
C. Fixed Assets
(a) Tangible Assets are stated at cost less accumulated depreciation
and impairment loss, if any. Cost comprises of purchase price and any
directly attributable cost of bringing the assets to its working
condition and any obligatory decommissioning costs for its intended
(b) Intangible Assets are stated at cost less accumulated amortization
and impairment loss, if any. Cost includes any directly attributable
expenditure on making the asset ready for its intended use.
(c) Machinery spares, which can be used only in connection with an item
of Tangible Asset and whose use is not of regular nature, are written
off over the estimated useful life of the relevant asset.
(d) Certain directly attributable pre-operative expenses during
construction period are included under Capital Work-in-Progress. These
expenses are allocated to the cost of Fixed Assets when the same are
ready for intended use.
D. Depreciation and Amortization
(a) Depreciation on Tangible Assets, except leasehold land, has been
provided using Straight-Line Method over the estimated useful life of
the assets in a manner prescribed in Part C of Schedule II of the
Companies Act, 2013, which is also in line with management estimated
useful life. Leasehold lands are amortized over the period of lease on
(b) Intangible Assets, except Mining Rights, are amortized over their
estimated useful lives on straight- line basis. Mining Rights are
amortized over the period of lease on straight line basis or on the
basis of production, proportional to mineral resources expected to be
ultimately economically recoverable, whichever is higher.
An asset is treated as impaired when the carrying cost of the asset
exceeds its recoverable value being higher of value in use and net
selling price. Value in use is computed at net present value of cash
flow expected over the balance useful life of the assets. An impairment
loss is recognized as an expense in the Statement of Profit and Loss in
the year in which an asset is identified as impaired. The impairment
loss recognized in the prior accounting period is reversed if there has
been an improvement in recoverable amount.
Lease payments under an operating lease are recognized as expense in
the Statement of Profit and Loss as per the terms of lease agreement.
(a) Long-term investments are carried at cost after deducting
provision, if any, for diminution in value considered to be other than
temporary in nature.
(b) Current investments are stated at lower of cost and fair value.
(a) Inventories of stores and spare parts are valued at or below cost
after providing for cost of obsolescence and other anticipated losses,
wherever considered necessary. Inventory of other items are valued ''at
Cost or Net Realizable Value, whichever is lower''. Cost is generally
determined on weighted-average cost basis and wherever required,
appropriate overheads are taken into account. Net Realizable Value is
the estimated selling price in the ordinary course of business less the
estimated cost of completion and the estimated costs necessary to make
the sale. However, materials and other supplies held for use in the
production of inventories are not written down below cost if the
finished products in which they will be used are expected to be sold at
or above cost.
(b) Fair value hedges are mainly used to hedge the exposure to change
in fair value of commodity price risks. The fair value adjustment
remains part of the carrying value of inventory and enters into the
determination of earnings when the inventory is sold.
I. Foreign Currency Transactions
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Year end balance of foreign
currency monetary item is translated at the year end rates. Exchange
differences arising on settlement of monetary items or on reporting of
monetary items at rates different from those at which they were
initially recorded during the period or reported in previous financial
statements are recognized as income or expense in the period in which
they arise. Foreign currency monetary items, which are used as hedge
instruments or hedged items, are accounted as per accounting policy on
derivative financial instruments.
J. Employee Benefits
Employee benefits of short-term nature are recognized as expense, as
and when these accrue. Long-term employee benefits and post-employment
benefits, whether funded or otherwise, are recognized as expense based
on actuarial valuation at year end using the projected unit credit
method. For discounting purpose, market yield of Government Bonds at
the Balance Sheet date is used. Actuarial gains or losses are
recognized immediately in the Statement of Profit and Loss.
K. Employee Share Based Payments
Equity settled stock options granted to employees pursuant to the
Company''s stock option schemes are accounted for as per the intrinsic
value method prescribed by Employee Stock Option Scheme and permitted
by the SEBI guidelines and the Guidance Note on Share Based Payment
issued by the Institute of Chartered Accountants of India (ICAI). The
intrinsic value of the option, being excess of market value of the
underlying share at the date of grant of option, over its exercise
price is recognized as deferred employee compensation with a credit to
Employee Stock Options Outstanding Account. The deferred employee
compensation is amortized to Statement of Profit and Loss on
straight-line basis over the vesting period of the option. In case of
forfeiture of option, which is not vested, amortised portion is
reversed by credit to employee compensation expense. In a situation
where the stock option expires unexercised, the related balance
standing to the credit of the Employees Stock Options Outstanding
Account are transferred to the General Reserve.
L. Revenue Recognition
Sales revenue is recognized on transfer of significant risk and rewards
of the ownership of the goods to the buyer and stated at net of trade
discount and rebates. Dividend income on investments is accounted for
when the right to receive the payment is established. Export incentive,
certain insurance, railway and other claims, where quantum of accruals
cannot be ascertained with reasonable certainty, are accounted on
M. Borrowing Costs
Borrowing costs, directly attributable to the acquisition or
construction of qualifying assets, are capitalized. Other borrowing
costs are recognized as expenses in the period in which they are
incurred. In determining the amount of borrowing costs eligible for
capitalization during a period, any income earned on temporary
investment of those borrowings is deducted from the borrowing costs
(a) Provision for current income tax is made in accordance with the
Income-tax Act, 1961. Deferred tax assets and deferred tax liabilities
are recognized 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 periods.
(b) Minimum Alternative Tax (MAT) is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal Income Tax during the specifi ed period. In the year in
which the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the ICAI, the said asset is created by way of credit to Statement of
Profit and Loss and shown as MAT credit entitlement. The Company
reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT entitlement to the extent there is no longer
convincing evidence to the effect that Company will pay normal Income
Tax during the specified period.
O. Derivative Financial Instruments
(a) The Company uses derivative financial instruments such as Forwards,
Swaps, Options, futures, etc., to hedge its risks associated with
foreign exchange fluctuations. Risks associated with fluctuations in
the price of the products (e.g., Copper, Alumina, Aluminium, Coal and
precious metals) are minimized by undertaking hedging using appropriate
derivative instruments. Derivatives embedded in other financial
instruments or other host contracts are treated as separate derivatives
when their risks and characteristics are not closely related to their
host contracts. In some cases, the embedded derivatives may be
designated in a hedge relationship. The fair values of all such
derivative financial instruments are recognized as assets or
liabilities at the Balance Sheet date. All such derivative financial
instruments are used as risk management tools only and not for
(b) For derivative financial instruments and foreign currency monetary
items designated as Cash Flow hedges, the effective portion of the fair
value of the hedge instruments are recognized in Hedging Reserve and
reclassified to ''Revenue from Operations'', ''Cost of Materials Consumed''
or ''Other Expenses'' in the period in which the Statement of Profit and
Loss is impacted by the hedged items or in the period when the hedge
relationship no longer qualifies as cash flow hedge. In cases where the
exposure gives rise to a non-financial asset, the effective portion is
reclassified from Hedging Reserve to the initial carrying amount of the
non-financial asset as a ''basis adjustment'' and recycled to the
Statement of Profit and Loss when and the manner in which the
respective non-financial asset affects the Statement of Profit and Loss
in future periods. The ineffective portion of the change in fair value
of such instruments is recognized in the Statement of Profit and Loss
in the period in which they arise. If the hedging relationship ceases
to be effective or it becomes probable that the expected forecast
transaction will no longer occur, hedge accounting is discontinued and
the fair value changes arising from the derivative financial
instruments are recognized in ''Other Expenses'' in the Statement of
Profit and Loss.
(c) For derivative financial instruments designated as Fair Value
hedges, the fair value of both the derivative financial instrument and
the hedged item, are recognized in ''Revenue from Operations'', ''Cost of
Materials Consumed'' or ''Other Expenses'' in the Statement of Profit and
Loss till the period the relationship is found to be effective. If the
hedging relationship ceases to be effective or it becomes probable that
the expected transaction will no longer occur, future gains or losses
on the derivative financial instruments are recognized in ''Other
Expenses'' in the Statement of Profit and Loss.
(d) If no hedging relationship is designated, the fair value of the
derivative financial instruments is marked-to- market through the
Statement of Profit and Loss and included in ''Other Expenses''.
P. Research and Development
Expenditure incurred during research and development phase is charged
to revenue when no intangible asset arises from such research. Assets
procured for research and development activities are generally
Q. Government Grants
Government Grants are recognized when there is a reasonable assurance
that the same will be received. Revenue grants are recognized in the
Statement of Profit and Loss. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to Capital Reserve.
R. Provisions, Contingent Liabilities and Contingent Assets
Provision is recognized when there is a present obligation as a result
of a past event that probably requires an outfl ow of resources, and a
reliable estimate can be made of the amount of the obligation.
Disclosure for contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. No provision is recognized, or
disclosure for contingent liability is made, when there is a possible
obligation or a present obligation and the likelihood of outflow of
resources is remote. Contingent Asset is neither recognized nor
disclosed in the financial statements.