1 : Significant Accounting Policies A.BASIS OF ACCOUNTING The Company brpares its financial statements as a going concern, under historical cost convention and on accrual basis, in accordance with the generally accepted accounting principles. B.BALANCE SHEET 1.FIXED ASSETS: 1.1Fixed Assets are stated at historical cost. 1.2Assets acquired / constructed by the Company with the subsidy sanctioned by Iron Ore Mines Labour Welfare Cess Fund are capitalised to the extent of cost to the company. However, the work-in-progress and the subsidy thereon are shown separately till capitalisation. 1.3The fixed assets acquired against Govt. Grants are shown in the Balance Sheet after deducting the grant received. However, where the grant received is equal to the cost of the asset, such asset is shown at a nominal value of Re.1/- per asset. 1.4The Insurance Spares which can only be used in connection with an item of Fixed Asset and whose use is expected to be irregular are capitalised and debrciated from the date of acquisition over the balance useful life of the respective assets. 2.DEbrCIATION: 2.1 Debrciation is charged on straight-line method based on the useful life of the assets as brscribed in Schedule II of the Companies Act 2013. Where ever there is no suitable life in Schedule II, the same shall be determined by technical assessment. 2.2Residual value of all the assets is considered as Nil, except vehicles, which is considered at 5% of the original cost. 2.3Fixed Assets costing Rs. 5,000 or less are fully debrciated in the year of purchase. 2.4Debrciation is charged on pro-rata monthly basis on additions / disposals of assets during the year taking the first day of the month for acquisition / commissioning and the last day of the month for disposals. 2.5In respect of additions forming an integral part of an existing asset, debrciation is charged over the remaining useful life of the asset. In case the asset is already fully debrciated, such additions are debrciated in full. 2.6Cost of leasehold land is amortized over the period of lease. 2.7The life of the assets constructed on leasehold land is restricted to the lease period except in case of mining projects. 3.DEVELOPMENT EXPENSES: Development expenses (br-construction period expenses) and Expenses on removal of overburden and brparation of mining benches are amortized in ten annual installments from the date of commencement of production. 4.INVESTMENTS: Long-term investments are stated at cost. A provision for diminution is made to recognise the decline in value, other than temporary, on an individual investment basis. 2. EMPLOYEES BENEFITS: 2.1Payments under Employees' Family Benefit Scheme: Under the NMDC Employees' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate Trust. 2.2Gratuity & Provident fund: 2.2.1Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation. 2.2.2 The company's contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees' salary. Further, the company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuarial valuation basis. 2.3Pension Fund: Defined contributions to NMDC Employees' Contributory Pension Scheme are made on accrual basis at a rate as approved from time to time to a fund which is administered by a separate Trust. 2.4Accrued Leave Salary: Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust. 2.5 Other Benefits: Liability towards Long service award, Settlement Allowance and Post Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post retirement medical benefits are administered by a separate trust. 3. GENERAL: 3.1.Research & Development Expenditure: The expenditure on Fixed Assets relating to Research & Development is capitalized and debrciated in the same method as any other assets of the Company. Other Research & Development expenditure of revenue nature incurred during the year is charged off to Statement of Profit and Loss. 3.2.Mine Closure Obligation: The liability to meet the obligation of mine closure and restoration of environment as per Mines & Minerals (Development and Regulation) Act 1957 (MMDR 1957) at the time of closure of the mine has been estimated on the basis of technical assessment and charged to Statement of Profit and Loss on the basis of Run of Mine ore production of the mine. The liability is remitted to a Fund maintained by LIC. 3.3Pre-paid Expenses: Expenses are accounted under brpaid expenses only where the amounts relating to unexpired period exceed Rs.10,00,000/- in each case. 3.4Prior period adjustments: Income/expenditure relating to prior period of over Rs 10,00,000/- in each case arising out of errors and omission are accounted as prior period adjustment. 3.5. Insurance Claims: Insurance claims are accounted as under : In case of transit insurance-on the basis of claim lodged with the Insurance Company. In case of other Insurance - on the basis of Survey reports received. Differences between insurance claims accounted for and actual receipt are accounted as Miscellaneous Expenditure / Income in the year of settlement. Subject to our Report of even date For and on behalf of the Board For Venugopal & Chenoy Chartered Accountants (P.V. SRI HARI) Partner Membership No: 21961 FRN No: 004671S (NARENDRA KOTHARI) Director (Finance) (A.S. PARDHA SARADHI) Company Secretary Place : Hyderabad Date : 28-May-2015 |