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 notifi ed) and
guidelines issued by the Securities and Exchange Board of India (SEBI).
All the assets and liabilities are classifi ed 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 fi nancial statements require estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the fi nancial 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 for its intended use.
(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. Leasehold lands are amortized over the period of
lease on straight line basis.
(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 fl
ow 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 identifi ed as impaired. The impairment
loss recognized in 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 Profi t and Loss as per 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 fi
nished 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 fi nancial
statements are recognized as income or expense in the period in which
they arise. Foreign currency monetary items those are used as hedge
instruments or hedged items are accounted as per accounting policy on
derivative fi nancial instruments.
J. Employee benefi ts
Employee benefi ts of short term nature are recognized as expense as
and when these accrue. Long term employee benefi ts and post employment
benefi ts, 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 Profi t 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, 1999 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 recognised as deferred employee compensation with a
credit to Employees Stock Options Outstanding Account. The deferred
employee compensation is amortized to Statement of Profi t 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 signifi cant 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 acceptance basis.
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 the 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
Profi t 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 specifi ed period.
O. Derivative Financial Instruments
(a) The Company uses derivative fi nancial instruments such as
Forwards, Swaps, Options, futures etc. to hedge its risks associated
with foreign exchange fl uctuations. Risks associated with fl
uctuations 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 fi nancial 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 fi nancial instruments are recognized as assets
or liabilities at the balance sheet date. All such derivative fi
nancial instruments are used as risk management tools only and not for
(b) For derivative fi nancial 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
reclassifi ed to ''Revenue from Operations'', ''Cost of Materials
Consumed'' or ''Other Expenses'' in the period in which the Statement of
Profi t and Loss is impacted by the hedged items or in the period when
the hedge relationship no longer qualifi es as cash fl ow hedge. In
cases where the exposure gives rise to a non-fi nancial asset, the
effective portion is reclassifi ed from Hedging Reserve to the initial
carrying amount of the non-fi nancial asset as a ''basis adjustment'' and
recycled to the Statement of Profi t and Loss when and the manner in
which the respective non- fi nancial asset affects the Statement of
Profi t and Loss in future periods. The ineffective portion of the
change in fair value of such instruments is recognized in the Statement
of Profi t 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 fi
nancial instruments are recognized in ''Other Expenses'' in the Statement
of Profi t and Loss.
(c) For derivative fi nancial instruments designated as Fair Value
hedges, the fair value of both the derivative fi nancial instrument and
the hedged item are recognized in ''Revenue from Operations'', ''Cost of
Materials Consumed'' or ''Other Expenses'' in the Statement of Profi t 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 fi nancial instruments are recognized in ''Other
Expenses'' in the Statement of Profi t and Loss.
(d) If no hedging relationship is designated, the fair value of the
derivative fi nancial instruments is marked to market through Statement
of Profi t 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 Profi t and Loss. Capital grants relating to specifi c fi
xed assets are reduced from the gross value of the respective fi xed
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 outfl ow 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 outfl ow of
resources is remote. Contingent Asset is neither recognized nor
disclosed in the fi nancial statements.