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Treatment of enabling assets Expenditure incurred on any facility, the ownership of which is not vested
with the company, but the incurrence of which is essential in bringing an asset / projects of NMDC to the
location and condition necessary to be capable of operating in the manner intended by the
management, shall be capitalized as a part of the overall cost of the said asset / project . Else the same
shall be charged to revenue.
first para
how ever in case of spot auction under electronic mode the sale is recognized on conclusion of the
auction and receipt of money
231
b) ` 359.24 crore in respect of the Kumar Swamy Iron Ore Mines at Donimalai in Karnataka. Total
Capitalisation upto the year `425.88 Crore.
6. During the year major capitalization of `639.61 crore towards accusation of land at Karnataka for
proposed steel plant at Karnataka under Karnataka Vijayanagar Steel Limited.
7. During the year 2017-18 a review of residual and usefullife of PPE was done and as per the review
there is no change recommended. The Useful life of all the PPE is as per schedule II except for the
following PPE whose life as given under is determined as per technical assessment adopted.
As against the total FDT demand of `487.27 Crore ( From Aug. 2008 to Sep-2011), ), the Company has
deposited an amount of ` 121.84 Crore (25%) in cash which has been shown as amount recoverable and
submitted a bank guarantee for similar amount. An amount of `365.43 Crore (balance 50% amount of
`243.69 Crore plus `121.84 Crore paid and accounted as amount recoverable) is included under disputed
claims at 1.1.A. The amount of `121.84 Crore for
which BG was given is included under contingent liability on BGs’ at 1.2.
The addition of the said policy has resulted in increase in the current year expenses by `8.16
crores with a corresponding decrease in profit.
d. Restatement of earliest prior period financialson material error/omissions 1.2 (xx)
The value of error and omissions is construed to be material for restating the opening balances of assets
and liabilities and equity for the earliest prior period presented if the amount in each case of earlier
period income/expenses exceeds 1.0% of the previous year turnover of the company. This policy is
introduced for more clarity on recognising material prior period Errors. During the current year there is
nil impact in the financials as there are no material prior period errors and omissions recognised.
II. Ind AS Issued but not yet effective: The Companies(Indian Accounting Standards)
Amendment Rules, 2018 has been notified containing the following:
a. Ind AS 115- Revenue from Contracts with Customers :The Ministry of Corporate Affairs has
notified this standard to be effective from 1st April 2018. The objective of this standard is to give
enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows
arising from contracts with customers. The core principle of this Standard is that an entity shall
recognise revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The Company intends to adopt this standard w.e.f 1st April 2018. The effect on adoption of
this standard is expected to be insignificant.
b. Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
The Ministry of Corporate Affairs has notified this standard to be effective from 1st April 2018. This
standard clarifies the date of the transaction for the purpose of determining the exchange rate to use on
initial recognition of the related asset, expense or income, when an entity has received or paid advance
consideration in a foreign currency. The Company intends to adopt this standard w.e.f 1st April 2018.
The effect of this on financial statements is expected to be insignificant.
252
ii) In line with the report of the 3rd Pay Revision Committee,the ceiling of gratuity enhanced from `10
lakhs to `20 lakhs for
provision of gratuity.
253 new
254
The weighted average duration of the defined benefit obligation is 13.39 years for Leave encahement
benefit , 10.70 years for
gratuity scheme as on 31 March 2018 .The expected maturity analysis of gratuity and compensated
absenses is as under
254 table new
258
The Chattisgarh High Court has permitted NMDC to withdraw the case with liberty to pursue the matter
before the concerned authority by filing a reply. The Madhya Pradesh High court has granted stay. The
Karnataka High Court, initially granted stay but subsequently vacated the stay and dismissed the
petition.
Considering the stay given by Supreme court in one of the cases on similar matter, the company has
filed fresh ‘Writs’ in the High Courts of Chattisgarh & Karnataka. The company has also filed transfer
petitions before Hon’ Supreme Court seeking transfer of the cases with Chattisgarh High Court &
Madhya Pradesh High Court. Hon’ble Supreme Court has not admitted the transfer petition with respect
to the case with Chattisgarh High Court. However with regard to case with Madhya Pradesh High Court,
Hon’ble Supreme Court has granted permission to withdraw the transfer petition with liberty to draw
the attention of the High Court to the pendency of similar matter(s) before the Hon Supreme Court.
Pending the outcome of above actions, the company has provided for the liability of ` 249.82 crore
(previous year ` 166.65 crore) towards Service Tax on Royalty and interest.
NOTES
2.34.4 Impairment of Investment in JKMDC Ltd A decision was earlier taken to go ahead with
setting up of 30000TPA dead burnt magnesite plant at Panthal, Jammu. Environment clearance was
granted vide Ministry
of Environment & Forests (MOEF) vide their letter dated 03.05.2011. Major works were awarded during
2015-16. However MOEF vide their letter dated 28.10.2016 had withdrawn the environment clearance
granted earlier and all the works have been suspended. As there appears to be no immediate sign of
resumption of activity, the Equity amount of ` 28.51 crore and Advances to an extent of ` 13.86 crore
(adjusted for free cash & bank balance) has been provided for during the previous year 2016-17. Status
quo is maintained.
2.34.5 Disinvestment of NISP: The Govt of India has accorded ‘in principle’ approval for strategic
disinvestment of Nagarnar Steel Plant of NMDC Limited on 27.10.2016.Transaction Advisor (TA), Legal
Advisor(LA) & Asset Valuer (AV) are appointed. However, the
process of disinvestment has been deferred 2.34.6 Property, Plant & Equipment (PPE) As per Ind
AS 16 items such as spare parts, stand by equipment’s and service equipment’s are to be capitalized
when they meet the definition of PPE and are expected to be used for more than one accounting year.
After review ofthe inventory values and its consumption patterns in the major production Units,
Company based on materiality has fixed a threshold limit of ` 20 Lakhs for such spare parts, stand by
equipment’s and service equipment’s meeting the definition of PPE. On issue of said PPE, the WDV is
charged
to depreciation and the life is restricted to the life of the principal asset.
2.34.9 GST issue on Sales through Monitoring Committee Post GST 1st July 2017, for sales
through Monitoring
Committee (MC), GST invoices were raised by Donimalai unit on MC as per the requirement of the GST
Act. It was expected that MC shall raise GST invoices on the customers and utilize the input tax credit of
the GST billed by NMDC and payback the GST to NMDC. However, for the period from 1st July 2017 to
30th Sept 2017 MC has not acknowledged the invoices raised by NMDC and has paid the GST of `45.73
Crore collected from customers to the Exchequer without utilizing the input tax credit of GST billed by
NMDC. This amount stands receivable in the books of Donimalai. Efforts are on to recover the amount
from MC. Pending clarity on the issue of recovery of this amount, no provision has been made in the
books of accounts of the year 2017-18. However, from 1st October 2017 Donimalai has been raising bill
directly on the customers as per the Hon’ble Supreme Court direction.
2.34.10 Other issues:
On the Judgement of the Hon’ble Supreme Court of India on the illegal mining in Odisha (writ petition
(civil)no.114 dated 2nd August 2017), Companysought a legal opinion, as per which there is no impact
on the Company. However, in case it is found applicable to NMDC at a later date, it may impact the
profits of the company.
2.34.11 CSR Expenditure :
a) Gross amount required to be spent by the company during the year is `121.02 crore (2% of the last
three years average PBT `6,050.93 crore). (Previous Year `160.22 crore (2% of the last three years
average PBT `8,010.77 crore). b) Amount spent during the year on account of CSR activities is `169.37
crore.( Previous Year `174.18 crore)
2.34.12 General:
i. The company owns certain office space at New Delhi. It is not the company’s intention to hold the
property for a long term for capital appreciation nor for rental purpose. Hence the same is not treated
as Investment Property and included under PPE.
ii. Some of the balances appearing under Trade receivables, Trade payables, advances, Security deposits
and other payables are subject to confirmations.
iii. Figures for the previous year have been regrouped/ rearranged wherever considered necessary so as
to confirm to the classification of the current year.