Financial Reporting and Analysis

Accounting Policies of Indian IT companies

Submitted To

Prof. Neelam Rani

Submitted By
Group-4I

Name Registration No.

Ansh Mittal 2022PGP195

Harshal Thakur 2022PGP207

Kartikey Luthra 2022PGP215

Satish Ranjan Pradhan 2022PGP236

Smit Bhagat 2022PGP240

Taniya Sangitani 2022PGP243

JSW Steel – Annual Report (2021 – 2022)

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 - Ansh Mittal (2022PGP195)
1. Statement of Compliance
The Company has prepared these Standalone Financial Statements which comprise the Balance Sheet as of 31 st
March 2022, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement of Changes in
Equity for the year ended as on that date, and accounting policies and other explanatory information

2. Basis of Preparation and Presentation

Fair value for measurement and disclosure purposes in these financial statements is determined on such a basis,
except for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that
are within the scope of Ind AS 116, fair value of plan assets within scope the of Ind AS 19 and measurements
that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value
in use in Ind AS 36.

An asset is classified as current when it satisfies any of the following criteria:

· It is expected to be realized within 12 months after the reporting date.

· It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for
at least 12 months after the reporting date.

All other assets are classified as non-current.

A liability is classified as current when it satisfies any of the following criteria:

· It is expected to be settled in the Company’s normal operating cycle.

· It is due to be settled within 12 months after the reporting date; or the Company does not have an
unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

All other liabilities are classified as non-current.

3. Revenue Recognition
The Company recognizes revenue when control over the promised goods or services is transferred to the
customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange
for those goods or services.

Dividend income from investments is recognized when the shareholder’s right to receive payment has been
established. Interest income from a financial asset is recognized when it is probable that the economic benefits
will flow to the Company and the amount of income can be measured reliably.

4. Property, Plant and Equipment

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits
are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement
of an item of property, plant and equipment is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognized in Statement of Profit and Loss.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated
residual value. Depreciation is recognized so as to write off the cost of assets (other than freehold land and
properties under construction) less their residual values over their useful lives, using straight-line method as per
the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of following categories of
assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into
account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past
history of replacement, anticipated technological changes, manufacturers warranties and maintenance support
etc.

Freehold land and leasehold land where the lease is convertible to freehold land under lease agreements at future
dates at no additional cost, are not depreciated.

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 Major overhaul costs are depreciated over the estimated life of the economic benefit derived from the overhaul.
The carrying amount of the remaining previous overhaul cost is charged to the Statement of Profit and Loss if
the next overhaul is undertaken earlier than the previously estimated life of the economic benefit.

5. Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,
intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated
amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their
estimated useful lives. Intangible assets with indefinite useful lives that are acquired separately are carried at
cost less accumulated impairment losses.

6. Inventories
Inventories are stated at the lower of cost and net realizable value. Cost of iron ore inventory includes cost of
mining, bid premium, royalties and other manufacturing overheads. Cost of traded goods include purchase cost
and inward freight. Costs of inventories are determined on weighted average basis. Net realizable value
represents the estimated selling price for inventories less all estimated costs of completion and costs necessary
to make the sale.

7. Provisions
Present obligations arising under onerous contracts are recognized and measured as provisions. However, before
a separate provision for an onerous contract is established, the Company recognizes any write down that has
occurred on assets dedicated to that contract.

8. Investment in Subsidiaries, Associates and Joint Ventures

Investment in subsidiaries, associates and joint ventures are shown at cost in accordance with the option
available in Ind AS 27, ‘Separate Financial Statements’. Where the carrying amount of an investment in greater
than its estimated recoverable amount, it is written down immediately to its recoverable amount and the
difference is transferred to the Statement of Profit and Loss.

9. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker.

10. Cash and Cash Equivalents

Cash and cash equivalent in the Balance Sheet comprise cash at banks and on hand and short-term deposits with
an original maturity of three months or less, which are subject to insignificant risk of changes in value.

11. Earnings Per Share

Basic earnings per share is computed by dividing the profit and loss after tax by the weighted average number of
equity shares outstanding during the year. The weighted average number of equity shares outstanding during the
year is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share
split and reverse share split (consolidation of shares).

12. Business Combination

Acquisition of business has been accounted for using the acquisition method. The consideration transferred in
business combination is measured at the aggregate of the acquisition date fair values of assets given, liabilities
incurred by the Company to the former owners of the acquiree and consideration paid by the Company in
exchange for control of the acquiree. Acquisition related costs are recognized in the statement of profit and loss.

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 Kalyani Steels - Annual Report (2021 - 2022)
- Harshal Dipak Thakur (2022PGP207)
Basis of Preparation
These financial statements have been prepared in accordance with the generally accepted accounting principles
in India under the historical cost convention on accrual basis. These financial statements have been prepared to
comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies
(Accounting Standards) Rules, 2006, as amended] of the Companies Act, 1956 and the other relevant provisions
of the Companies Act, 2013.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating
cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products
and the time between the acquisition of assets for processing and their realization in cash and cash equivalents,
the Company has ascertained its operating cycle as 12 months for the purpose of current - noncurrent
classification of assets and liabilities.

01. System Of Accounting:

A) The Company generally follows the mercantile system of accounting and recognizes income and expenditure
on an accrual basis except those with significant uncertainties.

B) Financial statements are based on historical cost. These costs are not adjusted to reflect the impact of the
changing value in the purchasing power of money.

C) The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumption that affect the reported amounts of assets, liabilities, revenue
and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the
accompanying financial statements are based upon managements’ evaluation of the relevant facts and
circumstances as of the date of the financial statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements. Any reservations to accounting estimates
are recognized prospectively in current and future periods.

02. Fixed Assets and Depreciation:

A) Fixed Assets

a) Fixed Assets are stated at their original cost of acquisition including incidental expenses related to
acquisition and installation of the concerned assets. The fixed assets manufactured by the Company are
stated at manufacturing cost. Fixed Assets are shown net of accumulated depreciation (except free hold
land) and amortization.

b) Expenditure on New Projects and Expenditure during Construction etc.

In case of new projects and in case of substantial modernization or expansion at the existing
units of the Company, expenditure incurred including interest on borrowings and financial
costs of specific loans, prior to commencement of commercial production is capitalized to the
cost of assets. Trial Run expenditure is also capitalized.

c) As per insertion of Paragraph 46 (A) to ''Accounting Standard (AS) 11'' relating to ''The Effects of
Changes in Foreign Exchange Rates'', exchange differences relating to the acquisition of a depreciable
Fixed Assets, are added to or deducted from the cost of the Fixed Assets and shall be depreciated over
the balance life of the assets instead of recognizing the same as income or expenditure in the Statement
of Profit and Loss.

B) Depreciation

a) Leasehold Land and Power Line

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 Cost of leasehold land is amortized over the period of lease and expenditures on power line is
amortized over a period of ten years.

b) Other Fixed Assets

Depreciation on Buildings, Plant & Machinery, Electrical Installations, Office Equipment,

Furniture & Fittings, Computers and Vehicles is being provided on ''Straight Line Method''
basis in accordance with the Schedule II of the Companies Act, 2013, except:

1) In the case of Blast Furnaces & Sinter Plant along with their associated equipment,
the life on three shift basis is taken at 20 years instead of 10 years as prescribed in
Schedule II.

2) In the case of Relining of Blast Furnaces, the life is taken at 18 months.

3) Useful Life of Guest House Furniture - 02 Years.

4) Dust Collecting System on Wheels - 05 Years. These are based on technical

justification obtained by the management.

c) Depreciation on Sale / Deduction from Fixed Assets is provided for up to the month of sale,
deduction, discernment as the case may be.

03. Foreign Currency Transactions

Foreign Currency transactions are initially recorded at exchange rates prevailing on transaction dates. All
foreign currency loans, current assets and current liabilities outstanding on the date of Balance Sheet are
converted at the appropriate rates of exchange prevailing on the date of the Balance Sheet except those covered
by forward contracts if any, which are accounted for at the contracted rate representing the amount required to
meet the liability. Exchange difference arising from foreign currency fluctuations, except on loan taken to
acquire Fixed Assets, are dealt with in the Statement of Profit and Loss.

Derivative instrument to hedge foreign exchange exposures are simulated for maturity / closure at the close of
the year. Losses arising on such simulation on account of fluctuations in exchange rates during the reporting
period are recognized in the Statement of Profit and Loss. Gains, if any, are postponed for a recognition on final
determination.

04. Technical Know-How

Expenditure on technical know-how in connection with production facilities is capitalized to the cost of the
plant whereas process know-how is amortized over a period of six years in equal instalments.

05. Investments
Investments are valued at cost of acquisition less diminution in the value, if determined to be of a permanent
nature in respect of long-term investments. Current investments are valued at cost of acquisition less diminution
in the value at the close of the year, if realizable value is lower than carrying cost.

06. Inventory Valuation

Costs of Inventories have been computed to include all costs of purchase, costs of conversion and other costs
incurred in bringing the inventories to their present location and condition.

A.) Finished Goods and Work in Progress

a) Finished goods and work in progress are stated at their cost or market / realizable value, whichever
is lower.

b) Cost of finished goods & work in progress (including trial run product) includes all allocable
overheads and in case of finished goods also excise duties, but does not include interest.

B.) Raw Materials

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 Raw materials are stated at their historical costs computed at the weighted average price.

C.) Stores & Spares

Stores & spares are valued at their weighted average prices.

D.) Scrap is valued at estimated realizable value.

E.) Raw Material in transit is stated at actual cost up to the date of Balance Sheet.

07. Debenture / Share Issue Expenses

a) Debenture Issue Expenses

Debenture issue expenses incurred in respect of debentures raised by the Company will be written off
against the balance in the ''Securities Premium Account'' in accordance with Section 52 of the
Companies Act, 2013 and in the event of inadequacy of balance in ''Securities Premium Account'' the
same will be written off against the profits of the Company in equal annual instalments over period of
ten years or over the tenure of the Debenture whichever is less, from the date of commencement of
commercial production of the concerned project for which they have been raised.

b) Share Issue Expenses

Share Issue Expenses incurred in respect of shares raised by the Company will be written off from the
date of allotment against the balance in the ''Securities Premium Account'' in accordance with Section
52 of the Companies Act, 2013 and in the event of inadequacy of balance in ''Securities Premium
Account'' the same will be written off in ten equal annual instalments against the profits of the
respective years.

08. Premium On Redemption of Debentures

From the year ended 31st March, 1992 onwards, premium payable on redemption of debentures will be
provided for against balance lying in the ''Securities Premium Account'' on the date of redemption in accordance
with Section 52 of the Companies Act, 2013. In the event of inadequacy of balance in the ''Securities Premium
Account'', the same will be provided for against the profits equally over the tenure of the debentures.

09. (A) Sales

a) Domestic sales are accounted for when dispatched from the point of sale, consequent to property in goods
being transferred.

b) Export sales for exports are accounted on the basis of date of Bill of Lading.

09. (B) Export Incentives

Export incentives are accounted for on export of goods if the entitlements can be estimated with reasonable
accuracy and conditions precedent to claim are fulfilled.

09. (C) Interest is accrued over the period of loan / investment.

09. (D) Dividend is accrued in the year in which it is declared, whereby right to receive is established.
09. (E) Profit / Loss on sale of investment is recognized on contract date.
10. Employee Benefits
a) Provident Fund

Benefits in the form of Provident Fund and Pension Schemes whether in pursuance of law or otherwise
which are defined contributions is accounted on accrual basis and charged to Statement of Profit and
Loss of the year. Provident Fund Contributions are made to the Compamia’s Provident Fund Trust and
Government Provident Fund as per the eligibility of the employees. Deficits, if any, of the fund as

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 compared to actuarial liability is to be additionally contributed by the Company and hence recognized
as a liability.

b) Gratuity

Payment for present liability of future payment of gratuity is being made to approved gratuity funds
which fully covers the same under Cash Accumulation Policy of the Life Insurance Corporation of
India. The employer’s gratuity is a defined benefit plan is determined based on the actuarial valuation
using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fair
value of the plan assets is recognized as obligation.

c) Superannuation

Defined contributions to Life Insurance Corporation of India for employees covered under
superannuation scheme are accounted at the rate of 15% of such employer’s annual basic salary.

d) Privilege Leave Benefits

Privilege leave benefits or compensated absences are considered as short-term unfunded benefit and is
recognized on the basis of an actuarial valuation using the Projected Unit Credit Method determined by
an appointed Actuary.

e) Termination Benefits

Termination benefits such as compensation under voluntary retirement scheme are recognized as a
liability in the year of termination.

11. Research and Development Expenditure

Research and Development expenditure is charged to revenue under the natural heads of account in the year in
which it is incurred. However, expenditure incurred at development phase, where it is reasonably certain that
outcome of research will be commercially exploited to yield economic benefits to the company, is considered as
an intangible asset.

12. Strategic Alliance at Ginigera

The expenses incurred by the Joint Venture Company viz. Hosket Steels Limited, formed with the specific
purpose of managing and operating the composite Steel manufacturing facility at Ginger, in the course of
carrying out its objectives are, as agreed upon, to be shared by the alliance components in the pre-determined
mutually agreed ''''sharing ratio''''. Such expenses billed for reimbursement by Hosket Steels Limited have been
booked into their natural heads of accounts and presented as such in the accounts.

13. Borrowing Cost

Borrowing costs are recognized in the Statement of Profit and Loss except interest incurred on borrowings,
specifically raised for projects are capitalized to the cost of the asset until such time that the asset is ready to be
put to use for its intended purpose.

14. Taxation
Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in
accordance with the Income Tax Act, 1961. Deferred tax resulting from timing difference between book profits
and tax profits is accounted for at the applicable rate of tax to the extent the timing differences are expected to
crystallize, in case of deferred tax liabilities with reasonable certainty and in case of deferred tax assets with
virtual certainty that there would be adequate future taxable income against which deferred tax assets can be
realized.

15. Impairment of Assets

The Company tests for impairments at the close of the accounting period if and only if there are indicators that
suggest a possible reduction in the recoverable value of an asset. If the recoverable value of asset, i.e., the net

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 realizable value or the economic value in use of a cash generating unit is lower than the carrying amount of the
asset, the difference is provided for as impairment. However, if subsequently the position reverses and the
recoverable amount becomes higher than the then carrying value, the provision to the extent of the then
difference is reversed, but not higher than the amount provided for.

16. Provisions
Necessary provisions are made for present obligations that arise out of past events prior to the Balance Sheet
date entailing future outflow of economic resources. Such provisions reflect best estimates based on available
information.

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 Nalco – Annual Report (2021 - 2022)
- Kartikey Luthra (2022PGP215)
Basis of Preparation
The financial statements of the Company have been prepared in accordance with Ind AS and relevant provisions
of the Companies Act, 2013. The financial statements have been prepared on a historical cost basis, except for
certain financial instruments that are measured at fair values at the end of each reporting period. The Company
has ascertained a 12-month operating cycle for the purpose of current or non-current classification of assets and
liabilities.

Use of Estimates
The financial statements have been prepared using estimates and assumptions, wherever necessary, in
conformity with the recognition and measurement principles of Ind AS.

Investments in Associates and Joint Ventures

Investments in Associates and Joint Ventures are measured at cost in accordance with Ind AS 109– Financial
Instruments.

Property, Plant and Equipment

Property, plant and equipment, other than freehold lands, held for use in the production and/or supply of goods
or services, or for administrative purposes, are stated at cost, less accumulated depreciation and accumulated
impairment losses. Freehold lands, unless impaired, are stated at cost.

Initial Measurement
Expenditure incurred on development of freehold land is capitalized as part of the cost of the land. In case of
self-constructed assets, cost includes the costs of all materials used in construction, direct labour, allocation of
overheads and directly attributable borrowing costs, if any. Spare parts having unit value of more than R 5 lakh,
held for use in the production and/or supply of goods or services and are expected to be used during more than
one period are recognised as Property, Plant and Equipment. Spares of critical nature and irregular in use, which
can be identified to a particular equipment and having unit value more than R1 lakh is also recognised as
Property, Plant and Equipment.

Subsequent Expenditure
Expenditure on major inspection or repairs including the cost of replacing the parts of assets and overhaul costs
where it probable that future economic benefits associated with the expenditure will be available to Company
over period of more than one year, are capitalised and carrying amount of identifying parts replaced is
derecognised.

Capital Work-In-Progress:
Assets in the course of construction are included under capital work in progress and are carried at cost, less any
recognised impairment loss. Such capital work in progress, on completion, is transferred to the appropriate
category of property, plant and equipment. Expenses for assessment of new potential projects incurred till
investment decisions are charged to revenue. Expenditure incurred for projects after investment decisions are
accounted for under capital work in progress and capitalized subsequently. Any costs directly attributable to
acquisition/ construction of property, plant and equipment till it is brought to the location and condition
necessary for it to be capable of operating in the manner as intended by the management form part of capital
work-in-progress

Depreciation and Amortisation

Depreciation on assets is provided on a straight-line basis over their useful life, either as prescribed under
Schedule II of the Companies Act, 2013 or, wherever considered necessary, determined on the basis of technical
estimations carried out by the Management not exceeding the prescribed useful life as per Schedule II to the
Companies Act, 2013. Component of an item of property, Plant and Equipment with a cost that is significant in
relation to the total cost of that item, is depreciated separately if its useful life differs from that of the asset. The

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 Company has chosen a benchmark of R 1 crore as significant value for identification of a separate component
except ‘Pot Relining’ which is considered as a component of each ‘Electrolytic Pot’ due to its inherent nature
and useful life. The residual value of plant and machinery, vehicles, mobile equipment, and earth moving
equipment, railway facilities, rolling stock, and residential quarters are maintained at 5% of the original cost and
for all other assets, the residual value is considered as nil.

The estimated useful lives are reviewed at each year-end and the effect of change, if any, is accounted for
prospectively. Individual Assets costing R 10,000/- or less are depreciated fully in the year in which they are put
to use.

De-Recognition of Assets
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
are expected to arise from the use of the asset. Any gain or loss arising on the disposal/de-recognition is
recognised in the statement of profit and loss.

Stripping Costs
Stripping cost of surface mining is recognised as an asset when they represent significantly improved access to
ore, provided all the following conditions are met:
- It is probable that the future economic benefit associated with the stripping activity will be
realised;
- The component of the ore body for which access has been improved can be identified;
- The costs relating to the stripping activity associated with the improved access can be reliably
measured.
- The stripping cost incurred during the production phase is added to the existing “stripping cost
asset” to the extent the current period stripping ratio exceeds the planned stripping ratio.
- The “stripping cost asset” is subsequently depreciated on a unit of production basis over life of the
identified component of the ore body that become more accessible as a result of the stripping
activity and is then stated at cost less accumulated depreciation and impairment loss, if any

Intangible Assets
1. Intangible Assets acquired separately
2. Internally Generated Intangible Assets (R&D Expenditure)
3. Mines Development Expenses
4. User Rights
5. Software
6. License and Franchise

De-Recognition of Intangible Assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use.
Gains or losses arising from disposal/ de-recognition are recognised in the statement of profit and loss

Amortisation
Licenses in the nature of technical know-how for processing plants which are available for the useful life of the
respective processing plants are amortised over a period of ten years. Software classified as intangible assets
carries a useful life of 3 years and are amortised over that period. Mining Rights and Mines Development
Expenses are amortised over the period of availability of reserves. User Right for cluster projects is amortised
over the useful life of the asset from the date of commissioning.

Impairment of Tangible and Intangible Assets

At the end of each reporting period the carrying amounts of tangible and intangible assets are reviewed to
determine whether there is any indication that the assets have suffered an impairment loss. If any such indication
exists, the recoverable amount (i.e., higher of the fair value less cost to sell and the value-in-use) of the asset is
estimated to determine the extent of impairment loss. When it is not possible to estimate the recoverable amount
of an individual asset, the recoverable amount of the cash-generating unit (CGU) to which the asset belongs is
estimated.
Foreign Currency Transaction and Translation

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 In preparing the financial statements, transactions in foreign currencies i.e., currencies other than the entity’s
functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end
of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing
at that date. Exchange differences on monetary items are recognised in the statement of profit and loss in the
period in which they arise.

Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event and
it is probable (“more likely than not”) that it is required to settle the obligation, and a reliable estimate can be
made of the amount of the obligation. The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the balance sheet date, taking into account the risks and
uncertainties surrounding the obligation. The following provisions are maintained:
 Restoration, rehabilitation and decommissioning
 Environmental liabilities
 Legal Obligations
 Contingent Liabilities
 Contingent Assets

Inventories
Inventory of raw material, including bulk material such as coal and fuel oil are valued at the lower of cost net of
tax credit wherever applicable and net realisable value. Inventories of finished goods, semi-finished goods,
intermediary products and work in process including process scrap are valued at lower of cost and net realisable
value. Cost is generally determined at moving weighted average price of materials, appropriate share of labour
and related overheads. Net realisable value is the estimated selling price in the ordinary course of business
available on the reporting date less estimated cost necessary to make the sale.

Trade Receivable
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. If the outstanding is due for payment within a period 12 months or less from the reporting date, they
are classified as current assets otherwise as non-current assets

Financial Instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions
of the instrument. Except for trade receivables and payables, financial assets and liabilities are initially measured
at fair value. Transaction cost that are directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value measured on initial recognition of financial asset or financial liabilities.

Financial Assets
a. Cash or Cash Equivalent - The Company considers all short-term bank deposits having a maturity period of
three months or less as cash & cash equivalent. Term deposits in Bank with a maturity period of more than 3
months are considered as other Bank Balance.
b. Financial Assets at Amortised Cost - Financial assets, including trade receivables where it contains
significant financing component, are classified as subsequently measured at amortised costs and are measured
accordingly using effective interest method if the financial assets are held within a business model whose
objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the
financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
c. Financial Assets at Fair Value through Other Comprehensive Income (OCI) - Financial assets are
classified as subsequently measured at fair value through other comprehensive income if these financial assets
are held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
d. Financial Assets at Fair Value through Profit or Loss - Financial assets are classified as subsequently
measured at fair value through profit or loss unless it is classified as subsequently measured at amortised cost or
at fair value through other comprehensive income. Transaction costs directly attributable to the acquisition of

11
 financial assets and liabilities at fair value through profit or loss are immediately recognised in the statement of
profit or loss.

Financial Liabilities
Trade payables are measured at their transaction price unless it contains a significant financing component or
pricing adjustments embedded in the contract.

De-Recognition of Financial Assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expires, or
when substantially all the risks and rewards of ownership of the assets are transferred to another entity.

De-Recognition of Financial Liability

Financial liabilities are derecognised when, and only when, the obligations are discharged, cancelled or expired.
In the case of retention for liquidated damages, if on finalization/closure of contract, liquidated damage is
leviable, the amount retained is written back and recognized as income except capital contracts where liquidated
damage is directly attributable to escalation/increase in the cost of the asset. In such case, the retention amount
is adjusted against cost of the asset.

Derivatives
Derivative instruments such as forward foreign exchange contracts are recognised at fair value at the date the
derivative contracts are entered into and are re-measured at the end of each reporting period. The resulting gain
or loss is recognised in statement of profit or loss immediately.

Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added
to the cost of those assets, until such time as the assets is substantially ready for their intended use. All other
borrowing cost is recognised in profit or loss in the period in which they are incurred.

Accounting for Government Grants

Government grants are recognised when there is reasonable assurance that the conditions attached to them will
be complied and that the grants will be received.

Revenue
The company earns revenue primarily from sale of product like alumina, aluminium and sale of power. Revenue
is recognised when the company satisfies a performance obligation by transferring promised good to a customer.
A. Sale of Goods
B. Sale of Energy

Income from Dividend and Interest

Dividend: Dividend income from investments is recognised when the right to receive the dividend is
established.
Interest: Interest income from a financial asset is recognised when it is probable that the economic benefits will
flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time
proportion basis, by reference to the principal outstanding and effective interest rate.

Income from Incentives from Government Agencies

Incentives from government agencies in the nature of duty draw back and Merchandise Export Incentive
Scheme (MEIS) on exports and incentives on generation of renewable sources of energy are recognised as per
the relevant statute on compliance of the conditions provided thereunder.

Income Taxes
Current Taxes: Current tax expense is based on taxable profit for the year as per the Income Tax Act,1961.
Current tax liabilities (assets) for the current and prior period are measured at amounts expected to be paid (or
recovered) using the tax rates and tax laws that have been enacted or substantively enacted by the end of
reporting period and includes any adjustment to tax payable in respect of previous years.

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 Deferred Taxes: Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted
or substantively enacted by the end of the reporting period. Tax relating to items recognised directly in other
comprehensive income forms part of the statement of comprehensive income.

Exceptional Items
Exceptional items are items of income and expenses within profit or loss from ordinary activities but of such
size, nature or incidence whose disclosure is felt necessary for better explanation of the financial performance
achieved by the Company.

Cash Flow Statement

Cash flow statement is prepared in accordance with indirect method prescribed in Ind AS 7 ‘Statement of Cash
Flows’.

Restatement of Material Error/Omissions

Errors and Omissions are construed to be material for restating the opening balances of assets and liabilities and
equity if the sum total effect of earlier period income / expenses exceeds R 50 crore.

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 TATA Steel – Annual Report (2021 – 2022)
- By Satish Ranjan Pradhan (2022PGP236)
General Principles

 The financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as
“Ind AS”) prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting
Standards) Rules, as amended from time to time and other relevant provisions of the Act.
 The financial statements have been prepared under the historical cost convention, with the exception of certain
assets and liabilities that are required to be carried at fair value by Ind AS
 The Company’s retirement benefit obligations are subject to number of assumptions including discount rates,
inflation, and salary growth. Significant assumptions are required when setting these criteria and a change in
these assumptions would have a significant impact on the amount recorded in the Company’s balance sheet and
the statement of profit and loss. The Company sets these assumptions based on previous experience and third-
party actuarial advice.

Property, Plant, and Equipment Principles

 An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits
associated with the item will flow to the Company and its cost can be measured reliably. This recognition
principle is applied to costs incurred initially to acquire an item of property, plant, and equipment and also to
costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs,
including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement
occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment
comprises major components having different useful lives, these components are accounted for as separate
items.
 Property, plant, and equipment is stated at cost or deemed cost applied on transition to Ind AS, less accumulated
depreciation and impairment. Cost includes all direct costs and expenditures incurred to bring the asset to its
working condition and location for its intended use. Trial run expenses are capitalised. Borrowing costs incurred
during the period of construction is capitalised as part of cost of qualifying asset.

Exploration and Mining Principles

 Expenditures associated with search for specific mineral resources are recognised as exploration and evaluation
assets. Administration and other overhead costs are charged to the cost of exploration and evaluation assets only
if directly related to an exploration and evaluation project. If a project does not prove viable, all irrecoverable
exploration and evaluation expenditure associated with the project net of any related impairment allowances is
written off to the statement of profit and loss.
 The Company measures its exploration and evaluation assets at cost and classifies as property, plant and
equipment or intangible assets according to the nature of the assets acquired and applies the classification
consistently. To the extent that a tangible asset is consumed in developing an intangible asset, the amount
reflecting that consumption is capitalised as a part of the cost of the intangible asset.

14
  The Company has liabilities related to restoration of soil and other related works, which are due upon the
closure of certain of its mining sites. Such liabilities are estimated case-by-case based on available information,
taking into account applicable local legal requirements. The estimation is made using existing technology, at
current prices, and discounted using an appropriate discount rate where the effect of time value of money is
material. Future restoration and environmental costs, discounted to net present value, are capitalised and the
corresponding restoration liability is raised as soon as the obligation to incur such costs arises. Future restoration
and environmental costs are capitalised in property, plant and equipment or mining assets as appropriate and are
depreciated over the life of the related asset. The effect of time value of money on the restoration and
environmental costs liability is recognised in the statement of profit and loss.

Intangibles, Depreciation and Amortisation Principles

 Patents, trademarks, and software costs are included in the balance sheet as intangible assets when it is probable
that associated future economic benefits would flow to the Company. In this case they are measured initially at
purchase cost and then amortised on a straight-line basis over their estimated useful lives. All other costs on
patents, trademarks and software are expensed in the statement of profit and loss as and when incurred.
 Expenditure on research activities is recognised as an expense in the period in which it is incurred.
 Depreciation or amortisation is provided, so as to write off, on a straight-line basis, the cost/deemed cost of
property, plant and equipment and intangible assets, including right-of-use assets to their residual value.

 The estimated useful lives for main categories of property, plant and equipment and intangible assets are:
 Assets value up to ₹25,000 are fully depreciated in the year of acquisition.
 An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset
exceeds its recoverable amount. A reversal of an impairment loss is recognised in the statement of profit and
loss immediately.

Stripping Costs Principles

 Developmental stripping costs which are incurred in order to obtain access to quantities of mineral reserves that
will be mined in future periods are capitalised as part of mining assets.
 Production stripping costs are incurred to extract the ore in the form of inventories and/or to improve access to
an additional component of an ore body or deeper levels of material. Production stripping costs are accounted
for as inventories to the extent the benefit from production stripping activity is realised in the form of
inventories.

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Investing Activities Principles

 Investments in subsidiaries, associates and joint ventures are carried at cost/deemed cost applied on transition to
Ind AS, less accumulated impairment losses, if any.
 Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or
deducted from the fair value measured on initial recognition of financial asset or financial liability. The
transaction costs directly attributable to the acquisition of financial assets and financial liabilities at fair value
through profit and loss are immediately recognised in the statement of profit and loss.
 Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently
measured at amortised cost, using the effective interest rate method where the time value of money is
significant.

Inventories and Revenue Principles

 Inventories are stated at the lower of cost and net realisable value.
 Revenue from sale of products is recognised when control of the products has transferred, being when the
products are delivered to the customer.

16
 Hindalco – Annual Report (2020 – 2021)
- Smit Bhagat (2022PGP240)
Principles of Consolidation
· Subsidiaries
The Group combines the financial statements of the parent and its subsidiaries line by line adding together like
items of assets, liabilities, equity, income and expenses. Intragroup transactions, balances and unrealised profits
on transactions between group companies are eliminated in full. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the transferred assets. Appropriate adjustments for deferred
taxes are made for temporary differences that arise from the elimination of unrealised profits and losses from
intragroup transactions or undistributed earnings of Group’s entity included in consolidated profit and loss, if
any.

· Business Combination
Business combinations are accounted for using the acquisition method. The consideration transferred in a
business combination comprises the fair values of the assets transferred, liabilities incurred to the former owners
of the acquired business, equity interests issued by the Group and fair value of any assets or liability resulting
from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.

· Property, Plant and Equipment

The initial cost at cash price equivalent of property, plant and equipment acquired comprises its purchase price,
including import duties and non-refundable purchase taxes, any directly attributable costs of bringing the assets
to its working condition and location and present value of any obligatory decommissioning costs for its intended
use. Cost may also include effective portion on qualifying cash flow hedges of foreign currency purchases of
property, plant and equipment recycled from hedge reserve as basis adjustment.

· Depreciation
Depreciation is charged so as to write off the cost or value of assets, over their estimated useful lives.
Depreciation is recorded using the straight-line basis. The estimated useful lives and residual values are
reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Each
component of an item of property, plant and equipment with a cost that is significant in relation to the total cost
of that item is depreciated separately if its useful life differs from the others components of the asset.

· Investment Property
Depreciation is charged on a straight-line basis over their estimated useful lives. Any gain or loss on disposal of
investment property is determined as the difference between net disposal proceeds and the carrying amount of

17
 the property and is recognised in the consolidated statement of profit and loss. Transfer to, or from, investment
property is at the carrying amount of the property.

· Stripping Cost
The stripping ratio, as approved by the regulatory authority, for the life of the mine is obtained by dividing the
estimated quantity of overburden by the estimated quantity of mineable coal / bauxite reserve to be extracted
over the life of the mine. This ratio is periodically reviewed and changes, if any, are accounted for
prospectively.

· Inventories
The Inventories are measured at Fair Value only in those cases where the Inventories are designated into a fair
value hedge relationship. Cost is determined using the weighted average cost basis. However, the same cost
basis is applied to all inventories of a particular class. Inventories of stores and spare parts are valued at
weighted average cost basis after providing for cost of obsolescence and other anticipated losses, wherever
considered necessary.

· Fair Value Hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the
Consolidated statement of profit and loss, together with any changes in the fair value of the hedged item that are
attributable to the hedged risk.

· Cash and Cash Equivalents

For the purposes of the consolidated statement of cash flow, cash and cash equivalents is as defined above, net
of outstanding bank overdrafts which are integral part of Cash management activities. In the consolidated
balance sheet, bank overdrafts are shown within borrowings in current liabilities.

· Borrowing Cost
Transaction cost in respect of long-term borrowings is amortised over the tenure of respective loans using
effective interest method. All other borrowing costs are expensed in the period in which they are incurred.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalization.

Measurement of Fair Value

1. Financial Instruments
The estimated fair value of the Group’s financial instruments is based on market prices and valuation
techniques. Valuations are made with the objective to include relevant factors that market participants would
consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of
financial instruments. References for less active markets are carefully reviewed to establish relevant and
comparable data.

2. Marketable and Non-Marketable Equity Securities

Fair value for listed shares is based on quoted market prices as of the reporting date. Fair value for unlisted
shares is calculated based on commonly accepted valuation techniques utilizing significant unobservable data,
primarily cash flow-based models.

3. Derivatives
Fair value of financial derivatives is estimated as the present value of future cash flows, calculated by reference
to quoted price curves and exchange rates as of the balance sheet date. Options are valued using appropriate
option pricing models and credit spreads are applied where deemed to be significant.

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 4. Embedded Derivatives
Embedded derivatives that are separated from the host contract are valued by comparing the forward curve at
contract inception to the forward curve as of the balance sheet date. Changes in the present value of the cash
flows related to the embedded derivative are recognized in the Consolidated Balance Sheet and in the
Consolidated Statement of Profit and Loss.

Critical accounting judgment and key sources of estimation uncertainty in preparing the financial statements in
conformity with accounting principles generally accepted in India, management is required to make estimates
and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent liabilities
as at the date of the financial statements and the amounts of revenue and expenses during the reported period.
Actual results could differ from those estimates. Any revision to such estimates is recognised in the period in
which the same is determined.

Vedanta – Annual Report (2021 -2022)

- Tanya Sangtiani (2022PGP243)
Investments in Subsidiaries
Investments in subsidiaries represent equity holdings in subsidiaries except preference shares, valued at cost less
any provision for impairment. Investments are reviewed for impairment if events or changes in circumstances
indicate that the carrying amount may not be recoverable.

Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank, short-term bank deposits and cash in
hand.

Currency Translation
Transactions in currencies other than the functional currency of the Company, being US dollars, are translated
into US dollars at the spot exchange rates ruling at the date of transaction. Monetary assets and liabilities
denominated in other currencies at the balance sheet date are translated into US dollars at year end exchange
rates, or at a contractual rate if applicable.

Tangible Fixed Assets

Tangible fixed assets are stated at cost less accumulated depreciation and provision for impairment.

Deferred Taxation
Deferred taxation is provided in full on all timing differences that result in an obligation at the balance sheet
date to pay more tax, or a right to pay less tax, at a future date, subject to the recoverability of deferred tax
assets. Deferred tax assets and liabilities are not discounted.

Share-Based Payments
The cost of equity-settled transactions with employees is measured at fair value at the date at which they are
granted. The fair value of share awards is determined with the assistance of an external valuer and the fair value
at the grant date is expensed on a straight-line basis over the vesting period based on the Company’s estimate of
shares that will eventually vest. The estimate of the number of awards likely to vest is reviewed at each balance
sheet date up to the vesting date at which point the estimate is adjusted to reflect the current expectations. No
adjustment is made to the fair value after the vesting date even if the awards are forfeited or not exercised.
Amounts recharged by subsidiaries in respect of awards granted to employees of the Company are recognised as
intercompany creditors until paid. The resultant increase in equity is recorded in share-based payment reserve.
In case of cash-settled transactions, a liability is recognised for the fair value of cash-settled transactions. The
fair value is measured initially and at each reporting date up to and including the settlement date, with changes
in fair value recognised in employee benefits expense. The fair value is expensed over the period until the
vesting date with recognition of a corresponding liability. The fair value is determined with the assistance of an
external valuer.

Borrowings

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 Interest bearing loans are recorded at the net proceeds received i.e., net of direct transaction costs. Finance
charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on
accruals basis and charged to the profit and loss account using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Financial Guarantees
Guarantees issued by the Company on behalf of subsidiaries are designated as ‘Insurance Contracts’.
Accordingly, these are shown as contingent liabilities.

Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

(a) Financial Assets – Recognition

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset on the
trade date. For purposes of subsequent measurement, financial assets are classified in the following categories.

Debt Instruments at Amortised Cost

A ‘debt instrument’ is measured at amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding. After initial measurement, such
financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR)
method.

Equity Instruments
All equity investments in scope of IFRS 9 are measured at fair value. For all equity instruments not
held for trading, the Company may make an irrevocable election to present in other comprehensive
income subsequent changes in the fair value.

Dividends
Dividend income is recognised in the consolidated income statement only when the right to receive
payment is established, provided it is probable that the economic benefits associated with the dividend
will flow to the Group, and the amount of the dividend can be measured reliably.

(b) Financial Asset – Derecognition

The Company derecognises a financial asset when the contractual rights to cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred.

(c) Impairment of Financial Assets

In accordance with IFRS 9, the Company applies expected credit loss (“ECL”) model for measurement and
recognition of impairment loss on financial assets. The Company follows ‘simplified approach’ for recognition
of impairment loss allowance on trade receivables. The Company recognises impairment loss allowance based
on lifetime ECLs at each reporting date, right from its initial recognition. At each reporting date, for recognition
of impairment loss on other financial assets and risk exposure, the Company determines whether there has been
a significant increase in the credit risk since initial recognition. If credit risk has increased significantly, lifetime
ECL is used instead of 12-month ECL. ECL is the difference between all contractual cash flows that are due to
the Company in accordance with the contract and all the cash flows that the entity expects to receive, discounted
at the original EIR.

(d) Financial Liabilities – Recognition & Subsequent Measurement

The Company’s financial liabilities include trade and other payables and loans and borrowings. All financial
liabilities are recognised initially at fair value, and in the case of financial liabilities at amortised cost, net of
directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings and trade
and other payables are subsequently measured at amortised cost using the EIR method.

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 (e) Financial Liabilities – Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Industry Analysis

Steel Industry
Industry Overview

The Steel Industry in India is among the most important industries within the country. India surpassed Japan as
the second largest steel producer in January 2019. As per world steel, India's crude steel production in 2018 was
at 106.5 tonnes (MT), 4.9% increase from 101.5 MT in 2017, means that India overtook Japan as the world's
second largest steel production country. Japan produced 104.3 MT in year 2018, decrease of 0.3% compared to
year 2017. Industry produced 82.68 million tons of total finished steel and 9.7 million tons of raw iron. Most of
the iron and steel in India is produced from iron ore.

Companies Chosen

 JSW Steel
 Kalyani Steels
 Nalco
 TATA Steel
 Hindalco
 Vedanta

General Accounting Policies

Currency Translation
Transactions in currencies other than the functional currency of the Company, being US dollars, are
translated into US dollars at the spot exchange rates ruling at the date of transaction. Monetary assets
and liabilities denominated in other currencies at the balance sheet date are translated into US dollars at
year end exchange rates, or at a contractual rate if applicable.

Inventories
Inventories are stated at the lower of cost and net realizable value.

Borrowings
Interest bearing loans are recorded at the net proceeds received i.e., net of direct transaction costs.

Derivatives

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 Fair value of financial derivatives is estimated as the present value of future cash flows, calculated by
reference to quoted price curves and exchange rates as of the balance sheet date.

Cash Flow Statement

Cash Flow Statement is prepared in accordance with indirect method prescribed in Ind AS 7 ‘Statement
of Cash Flows’.

Business Combination
Business combinations are accounted for using the acquisition method. The consideration transferred in
a business combination comprises the fair values of the assets transferred, liabilities incurred to the
former owners of the acquired business, equity interests issued by the Group and fair value of any
assets or liability resulting from a contingent consideration arrangement. Acquisition-related costs are
expensed as incurred.

Trade Receivable
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary
course of business. If the outstanding is due for payment within a period 12 months or less from the
reporting date, they are classified as current assets otherwise as non-current assets

Financial Instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual
provisions of the instrument. Except for trade receivables and payables, financial assets and liabilities
are initially measured at fair value. Transaction cost that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial assets and financial liabilities at
fair value through profit or loss) are added to or deducted from the fair value measured on initial
recognition of financial asset or financial liabilities.

Property, Plant and Equipment

The initial cost at cash price equivalent of property, plant and equipment acquired comprises its
purchase price, including import duties and non-refundable purchase taxes, any directly attributable
costs of bringing the assets to its working condition and location and present value of any obligatory
decommissioning costs for its intended use. Cost may also include effective portion on qualifying cash
flow hedges of foreign currency purchases of property, plant and equipment recycled from hedge
reserve as basis adjustment.

Depreciation
Depreciation is charged so as to write off the cost or value of assets, over their estimated useful lives.
Depreciation is recorded using the straight-line basis. The estimated useful lives and residual values are
reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective
basis. Each component of an item of property, plant and equipment with a cost that is significant in
relation to the total cost of that item is depreciated separately if its useful life differs from the others
components of the asset.

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