Accounting Policies of NLC India Ltd. Company

Mar 31, 2025

Note 1: Material Accounting Policies

for the Year Ended March 31, 2025
(Expressed ? in crore, unless otherwise stated)

Reporting entity

NLC India Limited (“NLCIL” or “the Company”), is a
Government Company (CIN L93090TN1956GOI003507)
registered under the erstwhile Companies Act, 1956 with its
registered office located at No. 135, E.V.R. Periyar High Road,
Kilpauk, Chennai - 600010 and is listed with the Bombay Stock
Exchange Ltd. and the National Stock Exchange of India Ltd.
NLCIL is engaged in the business of mining of Lignite, Coal
and generation of power by using lignite as well as Renewable
Energy Sources and consultancy.

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance
with Indian Accounting Standards (‘Ind AS’) notified
under the Companies (Indian Accounting Standards)
Rules, 2015, the relevant provisions of the Companies
Act,2013 and the Electricity Act,2003.

The financial statements have been prepared on a historical
cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees
(?) which is also the Company’s functional currency.
All amounts are rounded to the nearest crore (upto two
decimals), except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates
and assumptions to be made that affect the reported
amount of assets and liabilities on the date of the financial
statements and the reported amount of revenues and
expenses during the reporting period. Although these
estimates are based on the management’s best knowledge
of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes,
requiring a material adjustment in the carrying amounts
of assets or liabilities in the future periods. Difference
between the actual results and estimates are recognized
in the financial year in which the results are known
or materialized.

c. Current and Non-Current classification

The Company presents assets and liabilities in the Balance
Sheet based on current/non-current classification. An asset
is current when it is:

• Expected to be realized or intended to be sold or
consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the
reporting period; or

• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least twelve
months after the reporting period.

All other assets are classified as non-current:

A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the
reporting period; or

• There is no unconditional right to defer settlement
of the liability for at least twelve months after the
reporting period.

All other liabilities are classified as non-current.

The Company Classifies its assets & liabilities as current
/ non-current in the balance sheet considering 12 months
period as normal operating cycle.

Deferred tax assets/liabilities are classified as non-current.

I. Property, Plant and Equipment

Recognition and measurement

Items of Property, Plant and Equipment (PPE) are initially
measured at cost. Subsequently it is measured at cost less
accumulated depreciation and accumulated impairment
losses, if any. Cost of acquisition is inclusive of taxes,
duties, freight, installation and allocated incidental
expenditure during construction/acquisition and necessary
adjustments in the year of final settlement. The cost of
Property, Plant and Equipment also includes the present
value of obligations arising, if any, from decommissioning,
restoration and similar liabilities related to the same.
The present value of those costs (decommission and/or
restoration costs) is capitalized as an asset and depreciated
over the useful life of the asset.

The cost of an item of property, plant and equipment shall
be recognized as an asset if, and only if,

(a) it is probable that future economic benefits associated
with the item will flow to the entity; and

(b) the cost of the item can be measured reliably.

In accordance with Ind AS101, the Company has availed
the exemption where in the carrying value of the PPE and
intangible assets as previous GAAP has been treated as
the deemed cost on the date of transition to Ind AS.

If significant parts of an item of Property, Plant and
Equipment have different useful lives, they are accounted
for as separate items (major components) of Property,
Plant and Equipment. Items costing more than 25% of the
original cost of the whole of the asset(s) are only considered
as significant part.

Cost of a self-constructed item of Property, Plant and
Equipment includes the cost of materials, direct labor and
any other costs including borrowing cost and overhead
expenses directly attributable to bringing the assets to the
location and condition necessary for it to be capable of
operating in the manner intended by the Management.
Other direct expenses relating to construction of Property,
Plant and Equipment incurred till they are ready for their
intended use are identified and allocated on a systematic
basis to the cost of related assets.

Subsequent Cost of Capitalization Subsequent
expenditure incurred on the existing assets are recognized
as an increase in the carrying amount of the asset when it
is probable that future economic benefits deriving from the
cost incurred will flow to the enterprise and the cost of the
item can be measured reliably.

Expenditure on major inspection and overhauls of
generating unit is capitalized, when it meets the asset
recognition criteria as per Ind AS 16.

The cost of replacing part of an item of Property, Plant
and Equipment is recognized in the carrying amount of
the item if it is probable that the future economic benefits
embodied within the part will flow to the Company and its
cost can be measured reliably. The carrying amount of the
replaced part is derecognized. The costs of the day-to-day
servicing of Property, Plant and Equipment are recognized
as expenses in the statement of profit and loss as and when
it is incurred.

In the case of assets ready to use, where final settlement of
bills with contractors is yet to be effected, capitalization is
done on provisional basis subject to necessary adjustment
in the year of final settlement.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of
Thermal Power Stations resulting in increased life and/
or efficiency of an existing asset is added to the carrying
cost of related asset and depreciated over the estimated
extended life of the Unit from the completion of original
life/from the date of synchronization of the Unit as the case
may be.

Spares and Equipment

Initial spares: Purchased along with Property, Plant and
Equipment are capitalized and depreciated along with the
main asset.

Spares purchased subsequent to commissioning of

the asset: Item of spare parts, stand-by equipment and
servicing equipment which meet the definition of Property,
Plant and Equipment as per Ind AS 16 and are having value
of more than ? 10 Lakh are capitalized. Other spare parts
are carried as inventory and recognized in the Statement
of Profit or Loss on consumption.

Capitalization of Land

a. Freehold Land: Land acquired for mining, thermal
plants, wind mills, solar plants and other related
purposes including for establishing townships is in
accordance with and subject to the provisions of the
Land Acquisition Act, 1894 / Tamil Nadu Acquisition
of Land for Industrial Purpose Act, 1997, Right to
Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act,
2013 and amendments/changes made by respective
State Govt. from period to period. The cost of the
said land is capitalized on the date of taking over
the possession/ issuance of government order (GO)/
transfer of title deed in favour of the Company.

b. Lease hold Land: Land is taken on lease as per the
provisions under Coal Bearing Area (Acquisition and
Development) Act, 1957. The said leasehold land is
capitalized when the entire land/substantial portion
of land is ready for development and mining activity.

c. Coal / Lignite Mines: The date of commercial
operation in case of integrated mines (commissioned
after 31^st March, 2019) shall mean the earliest of:-

a. The first date of the year succeeding the financial
year in which 25% of the Peak Rated Capacity
as per the Mining Plan is achieved; or.

b. The first date of the year succeeding the financial
year in which the value of production estimated
in accordance with CERC Regulation 2024-29,
exceeds total expenditure in that financial
year; or

c. The date of two years (i.e., Financial Year) from
the date of commencement of production.

Subsequent capitalisation:

Subsequent material expenditure incurred for bringing
land into minable conditions are also capitalised as
additional expenditure to land.

Capitalization

a. Specialized Mining Equipment

Successful completion of eight effective working
hours on load test excluding minor stoppage is the
criteria followed in respect of the assets covering

On transition to Schedule II of the Companies Act,
2013, assets partially depreciated has been migrated as
per the Companies Act, 2013 by considering the balance
depreciable value of asset with the balance life as
prescribed in the Schedule II of the Companies Act, 2013
which has been considered for computation of depreciation
and the said derived rate / remaining useful life period is
treated as “Technically Estimated” rate for the purpose of
depreciation of those migrated Assets.

Amortization of Mine Development cost

Overburden removal and related initial development costs
are classified as Mine development cost under Capital
Work-In- Progress till achievement of CoD of respective
Mines. On achievement of CoD, the mine development
cost are capitalized as a ‘Mine Development Cost’ and the
same is amortized over a period of 20 years from the date
of CoD of respective mines or life of the mines whichever
is lower.

Specialized Mining Equipment System viz., Bucket
Wheel Excavator, Conveyor, Tripper, Transfer Feeder
and Spreader for capitalization and commencement
of depreciation charge and revenue recognition.
The entire test shall be completed within twelve
hours from the time of starting of the test including
minor stoppages.

b. Thermal Power Generation Unit

Te st and trial production for Thermal Power Generation
unit commences from the date of synchronization and
goes up to the date of commercial commissioning.
The date of receipt of certificate from the statutory
authorities pursuant to seventy-two hours full load
operation is deemed as the date of Commercial
Operation Date (COD) for commissioning of the
units. Depreciation charge commences from the
month of commercial operations. Direct expenses
and interest charges incurred during the test and
trial run are capitalized and the revenue from Sale of
Power, if any, earned during that period is abated to
the capital cost of the project.

c. Wind Turbine Generators (WTG)

Each WTG is capitalized on the date on which it is
connected to grid based on the commissioning and
acceptance certificate issued by DISCOM’s.

d. Solar Power Plant

Solar Power Plants are capitalized on the date on
which it is connected to Grid or the date of CoD if any
specified in the agreement after complying necessary
technical parameters. In case the date of CoD is later

than the date of connection to Grid, revenue if any
arises from sale of infirm Power off sets to the Capital
Cost of the project.

e. Other Assets

Other assets are capitalized when they are available
for the use as intended by the Management.

Depreciation / Amortization

Depreciation is provided on cost of the Property, Plant
and Equipment net of estimated residual values over their
estimated useful lives and is recognized in the Statement
of Profit and Loss. Freehold land is not depreciated.
Depreciation of assets covered under CERC/SERC are
depreciated as per rates and methodologies provided in
the respective regulation as applicable.

The cost of the land taken on lease is amortized from the
date of commencement of commercial operation over
the estimated useful life of the Mine or life of the linked
Thermal Power Plant originally estimated whichever
is less and in all other cases over the lease period,
wherever applicable.

However, the cost of land which is not expected to be used
after the linked asset has completed its effective life is
amortized over the effective life of linked asset.

The cost of mining land capitalized in the Books of
Accounts is amortized on the basis of minerals extracted
during the year to the total estimated minable reserves of
the said quantum of land used for mining in the year under
review as certified by Technical Experts.

Based on CERC regulation, further ongoing development
costs as specified in mining plan is classified as ongoing
mine development cost and shall be capitalized till
achievement of peak rated capacity of respective mines.
Amortization in such cases is over a period of 20 years
from the date of capitalization or life of mines whichever
is earlier.

Derecognition

Property, Plant and Equipment is derecognized when no
future economic benefits are expected from their use or
upon their disposal. Gains and losses on de-recognition of
an item of Property, Plant and Equipment are determined
by comparing the proceeds from disposal, if any, with the
carrying amount of Property, Plant and Equipment, and
are recognized in the Statement of Profit and Loss.

II. Intangible Assets Recognition and measurement

The Company recognizes an intangible asset and measures
that at cost if, and only if:

a. It is probable that the expected future economic
benefits that are attributable to the asset will flow to
the entity; and

b. the cost of the asset can be measured reliably.

Research and development Cost - Research costs are
expensed as and when incurred. Development cost,
if reliably measurable, on an individual project are
recognized as an intangible asset when the Company can
demonstrate the requirements as specified in Ind AS 38
are met.

Other intangible assets - Other Intangible Assets
including Computer software that are acquired by the
Company for an amount more than ? 10 lakh and have
finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the
specific asset to which it relates.

Net realizable value is the estimated selling price in
the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make
the sale.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable,
surplus and non-moving items of Stores and Spares
(excluding insurance/ Mandatory/Critical spares) are
ascertained on review and provided for.

IV. Mine closure expenditure

Concurrent Mine closure expenses are accounted as
and when incurred. The annual cost of Mine closure is
calculated and accounted on the basis of guidelines for
preparation of mine closure plan issued by Ministry
of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only
where the initial amounts exceed ? 1 crore in each case.

VI. Financial Instruments

Non-derivative Financial Assets
Initial recognition and Measurement

All financial assets are recognized initially at fair value,
plus in the case of financial assets not recorded at fair
value through profit or loss (FVTPL), transaction costs
that are attributable to the acquisition of the financial asset.
However, trade receivables that do not contain a significant
financing component are measured at transaction price.

Subsequent measurement

Financial assets measured at amortized cost:

A financial asset is subsequently measured at amortized
cost, using the effective interest rate method and net of any
impairment loss, if:

• the asset is held within the business model whose
objective is to hold assets in order to collect contractual
cash flows; and

• the contractual terms of the financial asset give rise, on
specified dates, to cash flows that are solely payments
of principal and interest.

The Company’s financial assets consist of staff advances,
trade receivables, etc.

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company.
Control exists when the Company has power over the
entity, is exposed, or has rights to variable returns from
its involvement with the entity and has the ability to affect
those returns by using its power over the entity.

Power is demonstrated through existing rights that give
the ability to direct relevant activities, those which
significantly affect the entity’s returns.

Investments in subsidiaries are carried at cost. The cost
comprises price paid to acquire investment and directly
attributable cost, if any.

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement whereby
the parties that have joint control of the agreement have
rights to the net assets of the joint ventures. Joint control
is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the
relevant activities require unanimous consent of the parties
sharing control.

Investments in Joint Ventures and associates are carried at
cost. The cost comprises price paid to acquire investment
and directly attributable cost.

Derecognition

Financial assets are derecognized when and only when:

• the contractual rights to the cash flows from the
financial asset has expired, or

• the right to receive cash flows from the asset has been
transferred; or

• the contractual right to receive the cash flow is retained
and also an obligation to pay the received cash flows
in full without material delay to a third party under an
arrangement is assumed, due to transfer of either ‘risk
& rewards’ or ‘control’ of such financial asset.

Non-derivative financial liabilities
Initial recognition and measurement

Financial liabilities are recognized initially on the trade date
at which the Company becomes a party to the contractual
provisions of the instrument. All financial liabilities are
recognized initially at fair value and in the case of loans
and borrowings and payables, net of directly attributable
transaction costs. The Company’s financial liabilities
include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortized cost

After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortized cost
using the Effective Interest Rate (‘EIR’) method. Gains
and losses are recognized in Statement of Profit or Loss
Account when the liabilities are derecognized as well as
through the EIR amortization process. Amortized cost is
calculated by taking into account any discount or premium
on acquisition and fees or costs that are an integral part of
the EIR. The EIR amortization is included as finance costs
in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognized upon extinguishment
of such liability, i.e., through discharge or cancellation
or expiration of the obligation under the liability. An
exchange of debt instruments with substantially different
terms or a substantial modification of the terms of the
existing financial liability or part of it shall be accounted
for as extinguishment of original financial liability and
recognition of new financial liability. Any differences
arising between the respective carrying amount is
recognized in the Statement of Profit and Loss.

Offsetting of Financial Instruments

Financial asset and financial liability are offset and the net
amount is presented in the balance sheet when and only
when the Company:

• currently has a legally enforceable right to set off the
recognized amounts; and

• Intends either to settle on a net basis or to realize the
asset and settle the liability simultaneously.

VII. Impairment

Financial Assets (including receivables)

Impairment of financial assets in accordance with
Ind AS 109- ‘Financial instruments’, the Company applies
Expected Credit Loss (ECL) model for measurement and
recognition of impairment loss on the following financial
assets and credit risk exposure:

a. Financial assets that are debt instruments and
are measured at amortized cost e.g., loans, debt
securities, deposits and bank balance.

b. Financial assets that are debt instruments and are
measured as at Fair Value Through OCI.

c. Lease receivables under Ind AS 116.

d. Trade receivables, unbilled revenue and contract
assets under Ind AS 115.

e. Loan commitments which are not measured as at Fair
Value Through P&L.

f. Financial guarantee contracts which are not measured
as at Fair Value Through P&L.

For trade receivables and contract assets/unbilled revenue,
the Company applies the simplified approach required by
Ind AS 109 Financial Instruments, which requires lifetime
expected losses to be recognized from initial recognition.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since
initial recognition, then the entity reverts to recognizing
impairment loss allowance based on 12-month ECL.

Non-financial assets

The carrying amounts of the Company’s non-financial
assets, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such

indication exists, then the asset’s recoverable amount
is estimated.

Impairment losses are provided for Cash Generating
Units (CGU) and also for individual assets, when the
carrying amount of an asset or CGU exceeds its estimated
recoverable amount.

Impairment losses recognized in respect of CGUs are
allocated first to reduce the carrying amount of any
goodwill allocated to the units and then to reduce the
carrying amounts of the other assets in the unit (Company
of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the
carrying amount over its recoverable amount is recognized
in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting
period any decrease in or non-existence of impairment loss
are recognized accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
Fair value measurement is the use of fair value at the
measurement date in measuring the assets and liabilities
of an entity. The Company opts not to follow fair value
measurement except where it is required to follow as
per Ind AS 113 viz., in respect of financial assets and
financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes
expenditure on feasibility and other studies, development
expenditure, expenditure on exploration works, technical
know-how etc. The cost of the project is transferred to
capital as and when implemented. In case such projects
are identified for transfer of business by Govt. of India,
the expenditure incurred will be recovered from the
prospective buyer. If the projects are abandoned with
reference to Government orders or otherwise, such
expenditure are charged to the Statement of Profit and Loss
in the respective years.

X. Assets held for sale

The Company classifies non-current assets and disposal
groups as held for sale if their carrying amounts will be
recovered principally through a sale transaction rather
than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured
at the lower of their carrying amount and fair value less
costs to sell. Costs to sell are the incremental costs directly
attributable to the disposal of an asset (disposal group),
excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as
met only when the sale is highly probable, and the asset
or disposal group is available for immediate sale in its
present condition. Actions required to complete the sale
should indicate that it is unlikely that significant changes
to the sale will be made or that the decision to sell will
be withdrawn.

XI. Government / Other Grants
Related to assets

Grants related to assets are presented in the balance sheet
by setting up the grant as deferred income when there
is reasonable assurance that, it will be received and the
Company will comply with the conditions associated
with the grant. The deferred income is recognized in the
Statement of Profit and Loss on a systematic basis over the
useful life of the asset.

Related to income

Grants related to income are recognized in the Statement
of Profit and Loss on a systematic basis over the periods in
which the entity recognizes as expenses the related costs
for which the grants are intended to compensate or when
the conditions related to the grant is fulfilled.

XII. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related
service is provided. A liability is recognized for the amount
expected to be paid if the Company has a present, legal or
constructive obligation to pay this amount as a result of
past service provided by the employee and the obligation
can be estimated reliably. Short term employee benefits
comprise of wages, salaries, incentives, short term leave
salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits
are expensed as and when the related services are provided.

The Company’s liability towards Gratuity, Post-Retirement
Medical Facilities, Transport Allowance for settlement at
home town, Earned Leave, Half-Pay Leave and Provident
Fund are considered as Defined Benefit Plan and provided
for in accordance with the Guidelines issued by Department
of Public Enterprises.

Contribution towards Provident Fund and Gratuity is
recognized as per the valuation made by an Independent
Actuary and these amounts are funded to the respective
Trust/Institution.

Contribution towards Post-Retirement Medical Benefit
Scheme comprising of fixed amount of annual assistance
(PRMA) in respect of employees retired prior to

1^st January, 2007 and premium towards Post-Retirement
Medical Insurance (PRMI) are treated as Defined
Contribution Plans.

The Company’s net obligation in respect of defined benefit
plans is calculated separately for each plan by estimating
the amount of future benefit that employees have earned
in the current and prior periods, discounting that amount
and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed
quarterly and annually by an independent actuary using the
projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which
comprise actuarial gains and losses, the return on plan
assets (excluding interest) and the effect of the asset ceiling
(if any, excluding interest), are recognized immediately in
Other Comprehensive Income (OCI). Net interest expense/
income, service cost and other expenses related to defined
benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan
is curtailed, the resulting change in benefit that relates to
past service or the gain/loss on curtailment is recognized
immediately in the Statement of Profit and Loss. The
Company recognizes gains and losses on the settlement
of a defined benefit plan when the settlement occurs.

Terminal benefits

Terminal benefits like Voluntary Retirement Service are
expensed when the Company can no longer withdraw the
offer of those benefits. If benefits are not expected to be
settled wholly within 12 months of the reporting date, then
they are discounted. Liability towards VRS is booked in
the year of exercise of option by the employee upto the
date of closure of each offer in accordance with terms and
conditions of each offer.

XIII. Allocation of common charges/social overhead
expenses/interest on working capital

These are allocated to production units based on salaries
and wages of the respective units.

XIV. Prior period items, accounting estimates and
effect of change in Accounting Policy

Prior period items/errors of material nature are corrected
retrospectively by restating the comparative amounts for
the prior period(s) presented in which the error occurred.
If the prior period error found material occurred before the
earliest period presented, the opening balances of assets,
liabilities and equity for the earliest period presented,
are restated.

The effect of change in accounting estimate is recognized
prospectively in the Statement of Profit and Loss except

where they relate to assets and liabilities, the same is
recognized by adjusting the carrying amount of related
assets/liability/ equity in the period of change.

Changes in accounting policy due to initial application
of Ind AS are dealt with in accordance with specific
transitional provisions, if any in the respective Ind AS.
In other cases, the changes in accounting policy are done
retrospectively; the application of such change is limited
to the earliest period practicable.

XV. Events occurring after the reporting date

Events of material nature occurring after the reporting
date are those events that occur between the end of the
reporting period and the date when the financial statements
are approved by the Board of Directors. Such events are
disclosed or given effect to in the financial statements as
provided for in Ind AS 10.

XVI. Revenue Recognition

Revenue from Operation includes (i) sale of Power
generated by Thermal Power Stations (ii) sale of power
generated from renewable energy sources such as wind and
solar (iii) sale of lignite/coal (iv) sale of by products & joint
products (v) consultancy & management services relating
to mining and power generation and (vi) commission on
trading of power.

Revenue is recognized as per Ind AS-115 when the
following criteria are met:

a. the parties to the contract have approved the contract
(in writing, orally or in accordance with other
customary business practices) and are committed to
perform their respective obligations;

b. the entity can identify each party’s rights regarding
the goods or services to be transferred;

c. the entity can identify the payment terms for the
goods or services to be transferred;

d. the contract has commercial substance (i.e., the risk,
timing or amount of the entity’s future cash flows is
expected to change as a result of the contract); and

e. it is probable that the entity will collect the
consideration to which it will be entitled in exchange
for the goods or services that will be transferred to
the customer. In evaluating whether collectability of
an amount of consideration is probable, an entity shall
consider only the customer’s ability and intention
to pay that amount of consideration when it is due.
The amount of consideration to which the entity will
be entitled may be less than the price stated in the
contract if the consideration is variable because the
entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the
provisions of the Electricity Act, 2003, wherein the tariff
rates are approved by the Central Electricity Regulatory
Commission (CERC) / State Electricity Regulatory
Commission (SERC).

The Company adopts the tariff rates as approved by CERC
for the sale of power. Such Tariff rates includes lignite
transfer price which is subject to revision as calculated
by the company from time to time in accordance with
guidelines issued by CERC/ Ministry of Coal (MoC) or
as delegated by MoC.

In case where the tariff rates are yet to be approved,
provisional tariff rates, calculated on the basis of CERC/
Ministry of Coal guidelines or as delegated by MoC on
lignite transfer price for energy charges and other relevant
CERC’s Regulations / guidelines, for capacity charges
are adopted.

Exchange differences arising from settlement of monetary
items denominated in foreign currency to the extent
recoverable from or payable to beneficiaries for the current
accounting period as per the CERC Tariff Regulations are
accounted for as Revenue/ Expenditure, respectively.

Rebates/discounts allowed to beneficiaries/customers for
early payment incentives are netted off with the amount of
revenue from operations.

Sale of Un-Requisitioned Surplus Power

Sale of surplus power (if any) which is traded through
power exchange on consent from the beneficiaries,
wherever required is accounted net off sharing of any gain
arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are
recognized in accordance with the price agreed under
the Power Purchase Agreement (PPA) and in accordance
with the orders passed by the respective State Electricity
Regulatory Commission (SERC).

Sale of Lignite/Coal and others

Sale of Lignite/Coal, by e-auction sales has been reckoned
to the extent of amount received/ as per sale terms. Sale
of Lignite /Coal other than by e-auction is recognized
in accordance with the agreement entered into with the
respective parties.

Sale of Coal for end use power plant is accounted in
accordance with the provisions of tariff regulations issued
by Central Electricity Regulatory Commission (CERC) for
integrated mines. Sale of byproducts/ Fly ash etc. has been
reckoned as per sale terms.

Unbilled Revenue

As at each reporting date, revenue from operations
includes an accrual for sales made to beneficiaries/
Customers but not billed i.e. “Unbilled Revenue” and the
same is categorized under Other Financial Assets in the
Balance Sheet.

Consultancy, Technical and Management Services

Revenue from consultancy, technical and management
services is recognized in proportion to the stage of
completion of the transaction at the reporting date. The
stage of completion is assessed based on the agreement
with service recipient.

Commission on trading of power

Commission on trading of power for third party recognized
on receipt of payment.

Other Income

Other income includes interest income, insurance claims,
surcharge, dividend income and income from sale of scrap.

Interest income

Interest income with respect to advances provided to
employees is recognized using the effective interest
method. The ‘effective interest rate’ is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument to
the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is
applied to the gross carrying amount of the asset (when the
asset is not credit-impaired). However, for financial assets
that have become credit-impaired subsequent to initial
recognition, interest income is calculated by applying the
effective interest rate to the amortized cost of the financial
asset. If the asset is no longer credit-impaired, then the
calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is
recognized in the year of acceptance of the claim.

Insurance claims

Insurance claims are recognized in the period in which
there is an acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry
debtors on thermal power is recognized based on
agreement with beneficiaries. On renewable power
the same is recognized based on realization / certainty
of realization.

Dividend Income

Dividend income is recognized when the shareholder’s
right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVII. Foreign currency transactions

Initial recognition and measurement

Foreign currency transaction is recorded in the functional
currency, by applying to the foreign currency exchange
rate between the functional currency and the foreign
currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the
closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of
monetary items or on translating monetary items at rates
different from those at which they were recorded on initial
recognition during the period or translated in previous
financial statements are recognized in the Statement of
Profit and Loss in the period in which they arise.

The Company has availed the exemption provided under
Ind AS from recognizing in the Statement of Profit and
Loss the exchange difference arising on translation of long
term foreign currency monetary items recognized in the
financial statements prior to 31^st March 2016 as per the
previous GAAP and continues to capitalize the same.

XVIII. Income taxes

Income tax expense comprises current and deferred tax.
It is recognized in the Statement of Profit and Loss except
to the extent that it relates to a business combination, or
items recognized directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or
receivable on the taxable income or loss for the year and
any adjustment to the tax payable in respect of previous
years. The amount of current tax payable is the best
estimate of the tax amount expected to be paid or received
that reflects uncertainty related to income taxes, if any. It is
measured using tax rates enacted or substantively enacted
at the reporting date. Current tax assets and liabilities are
offset only if certain criteria are met.

Deferred tax

Deferred tax is recognized in respect of temporary
differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the
amounts used for taxation purposes. Deferred tax is not
recognized for:

• Temporary differences on the initial recognition of
assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor
taxable profit and loss;

• Temporary differences related to investments in
subsidiaries to the extent that the Company is able
to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse
in the foreseeable future; and

Deferred tax assets are recognized for unused tax losses,
unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits
will be available against which they can be used. Deferred
tax assets are reviewed at each reporting date and are
adjusted accordingly.

Unrecognized deferred tax assets are reassessed at
each reporting date and recognized to the extent that it
has become probable that future taxable profits will be
available against which they can be used.

Deferred tax is measured at the tax rates that are expected
to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the
reporting date.

Deferred tax assets and liabilities are offset only if certain
criteria set out in Ind AS 12 are met.

XIX. Borrowing cost

Borrowing costs consist of interest and other costs that
an entity incurs in connection with the borrowing of
funds. Borrowing cost also includes exchange differences
in respect of long-term foreign currency liabilities of the
respective asset to the extent regarded as an adjustment to
the borrowing costs.

Borrowing costs (net of interest earned on temporary
investments) directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its
intended use or sale are capitalized as part of the cost
of the asset. Interest is computed on weighted average
cost of funds deployed. When Company borrows funds
generally and uses them for the purpose of obtaining a
qualifying asset, the capitalization of the borrowing costs
is computed based on the weighted average cost of general
borrowing that are outstanding during the period and used
for qualifying asset.

All other borrowing costs are expensed in the year in
which they occur.

XX. Leases

The Company has applied Ind AS 116 using the modified
retrospective approach and therefore the comparative
information has not been restated.

At inception of a contract, the Company assesses whether
a contract is, or contains, a lease as per the requirements
under Ind AS 116. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
This policy is applied to contracts entered into on or after
1^st April 2019.

At inception or on reassessment of a contract that contains a
lease component, the Company allocates the consideration
in the contract to each lease component on the basis of
their relative stand-alone prices and aggregate standalone
prices of non-lease components. However, for the leases of
land and buildings and vehicles in which it is a lessee, the
Company has elected not to separate non-lease components
and account for lease and non-lease components as a single
lease component.

i. As a Lessee

The Company recognizes a right-of-use asset and a
lease liability at the lease commencement date.

The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease
liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less
any lease incentives received. The right-of-use asset
is subsequently depreciated using the straight-line
method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset
or end of the lease term. The estimated useful lives
of right-of-use assets are determined on the same
basis as those of property, plant and equipment. In
addition, the right-of-use asset is periodically reduced
by impairment losses, if any and adjusted for certain
re-measurements of the lease liability.

The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted using
the interest rate implicit in the lease or, if that rate
cannot be readily determined, using the Company’s
incremental borrowing rate. Generally, the Company
uses its incremental borrowing rate as the discount
rate. The lease payments included in the lease
liability comprises of fixed payments (including in¬
substance fixed payments), residual value guarantees
and where the Company is reasonably certain to

exercise purchase, renewal and termination options
includes exercise price under a purchase option, lease
payments in an optional renewal period and penalties
for early termination of a lease.

The lease liability is measured at amortized cost using
the effective interest method. It is re-measured when
there are any reassessments or lease modifications or
revised in-substance fixed payments. When the lease
liability is re-measured in this way, a corresponding
adjustment is made to the carrying amount of the
right-of- use asset, or is recorded in Profit or Loss if
the carrying amount of the right-of-use asset has been
reduced to zero.

The Company presents right-to-use assets that do
not meet the definition of investment property in
‘Property, Plant and Equipment’ and lease liabilities
as Financial Liabilities in the balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognize
right-of-use assets and lease liabilities for all
short-term leases that have lease term of 12 months
or less and leases of low-value assets. The Company
recognizes the lease payments associated with these
leases as an expense on a straight-line basis or any
other systematic basis over the lease term.

ii. As a lessor

When the Company acts as a lessor, it determines at
lease commencement whether each lease is a finance
lease or an operating lease as per requirements under
Ind AS 116.

To classify each lease, the Company makes an
overall assessment of whether the lease transfers to
the lessee substantially all of the risk and rewards of
ownership incidental to ownership of the underlying
asset. If this is the case, then the lease is a finance
lease, if not, then it is an operating lease. As part
of this assessment, the Company considers certain
indicators such as whether the lease is for the major
part of the economic life of the asset.

If an arrangement contains lease and non-lease
components, the Company applies Ind AS 115
to allocate the consideration in the contract. The
Company recognizes lease payments received under
operating leases as income on a straight-line basis
over lease term as part of ‘other income’.

---

Mar 31, 2024

NOTE 1: Material Accounting Policies

for the Year Ended March 31, 2024 (Expressed ^ in crore, unless otherwise stated)

Reporting entity

NLC India Limited ("NLCIL" or "the Company"), is a Government Company (CIN L93090TN1956GOI003507) registered under the erstwhile Companies Act, 1956 with its registered office located at No. 135, E.V.R. Periyar High Road, Kilpauk, Chennai - 600010 and is listed with the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. NLCIL is engaged in the business of mining of Lignite, Coal and generation of power by using lignite as well as Renewable Energy Sources and consultancy.

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act,2013 and the Electricity Act,2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (^) which is also the Company''s functional currency. All amounts are rounded to the nearest crore (upto two decimals), except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognized in the financial year in which the results are known or materialized.

c. Current and Non-Current classification

The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.:

A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

The Company Classifies its assets & liabilities as current / non current in the balance sheet considering 12 months period as normal operating cycle.

Deferred tax assets/liabilities are classified as non-current.

I. Property, Plant and Equipment Recognition and measurement

Items of Property, Plant and Equipment (PPE) are initially measured at cost. Subsequently it is measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalized as an asset and depreciated over the useful life of the asset.

The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if,

(a) it is probable that future economic benefits associated with the item will flow to the entity; and

(b) the cost of the item can be measured reliably.

In accordance with Ind AS101, the Company has availed the exemption where in the carrying value of the PPE and intangible assets as previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of Property, Plant and Equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Cost of a self-constructed item of Property, Plant and Equipment includes the cost of materials, direct labor and any other costs including borrowing cost and overhead expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Management. Other direct expenses relating to construction of Property, Plant and Equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Subsequent Cost of Capitalization Subsequent expenditure incurred on the existing assets are recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.

Expenditure on major inspection and overhauls of generating unit is capitalized, when it meets the asset recognition criteria as per Ind AS 16.

The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of Property, Plant and Equipment are recognized as expenses in the statement of profit and loss as and when it is incurred.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Thermal Power Stations resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated extended life of the Unit from the completion of original life/from the date of synchronization of the Unit as the case may be.

Spares and Equipment

Initial spares: Purchased along with Property, Plant and Equipment are capitalized and depreciated along with the main asset.

Spares purchased subsequent to commissioning of the asset: Item of spare parts, stand-by equipment and servicing equipment which meet the definition of Property, Plant and Equipment as per Ind AS16 and are having value of more than ^ 5 lakhs are capitalized. Other spare parts are carried as inventory and recognized in the Statement of Profit or Loss on consumption.

Capitalization of Land

a. Freehold Land: Land acquired for mining, thermal plants, wind mills, solar plants and other related purposes including for establishing townships is in accordance with and subject to the provisions of the Land Acquisition Act, 1894 / Tamil Nadu Acquisition of Land for Industrial Purpose Act, 1997, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and amendments/changes made by respective State Govt. from period to period. The cost of the said land is capitalized on the date of taking over the possession/ transfer of title deed in favour of the Company.

b. Lease hold Land: Land is taken on lease as per the provisions under Coal Bearing Area (Acquisition and Development) Act, 1957. The said leasehold land is capitalized when the entire land/substantial portion of land is ready for development and mining activity.

c. Coal / Lignite Mines: The date of commercial operation in case of integrated mines (commissioned after 31^st March, 2019) shall mean the earliest of: -

a. The first date of the year succeeding the financial year in which 25% of the Peak Rated Capacity as per the Mining Plan is achieved; or.

b. The first date of the year succeeding the financial year in which the value of production estimated in accordance with CERC Regulation 2019-24, exceeds total expenditure in that financial year; or

c. The date of two years (i.e., Financial Year) from the date of commencement of production.

Subsequent capitalisation:

Subsequent material expenditure incurred for bringing land into minable conditions are also capitalised as additional expenditure to land.

Capitalization

a. Specialized Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialized Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalization and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b. Thermal Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronization and goes up to the date of commercial commissioning. The date of receipt of certificate from the statutory authorities pursuant to seventy-two hours full load operation is deemed as the date of Commercial Operation Date (COD) for commissioning of the units. Depreciation charge commences from the month of commercial operations. Direct expenses and interest charges incurred during the test and trial run are capitalized and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c. Wind Turbine Generators (WTG)

Each WTG is capitalized on the date on which it is connected to grid based on the commissioning and acceptance certificate issued by DISCOM''s.

d. Solar Power Plant

Solar Power Plants are capitalized on the date on which it is connected to Grid or the date of CoD if any specified in the agreement after complying necessary technical parameters. In case the date of CoD is later than the date of connection to Grid, revenue if any arises from sale of infirm Power off sets to the Capital Cost of the project.

e. Other Assets

Other assets are capitalized when they are available for the use as intended by the Management.

Depreciation / Amortization

Depreciation is provided on cost of the Property, Plant and Equipment net of estimated residual values over their estimated useful lives and is recognized in the Statement of Profit and Loss. Freehold land is not depreciated.

The cost of the land taken on lease is amortized from the date of commencement of commercial operation over the estimated useful life of the Mine or life of the linked Thermal Power Plant originally estimated whichever is less and in all other cases over the lease period, wherever applicable.

However, the cost of land which is not expected to be used after the linked asset has completed its effective life is amortized over the effective life of linked asset.

The cost of mining land capitalized in the Books of Accounts is amortized on the basis of minerals extracted during the year to the total estimated minable reserves of the said quantum of land used for mining in the year under review as certified by Technical Experts.

On transition to Schedule II of the Companies Act, 2013, assets partially depreciated has been migrated as per the Companies Act, 2013 by considering the balance depreciable value of asset with the balance life as prescribed in the Schedule II of the Companies Act, 2013 which has been considered for computation of depreciation and the said derived rate / remaining useful life period is treated as "Technically Estimated" rate for the purpose of depreciation of those migrated Assets.

Amortization of Mine Development cost

Overburden removal and related development costs are classified as Mine development cost under Capital Work-In- Progress till achievement of CoD of respective Mines. On achievement of CoD, the mine development cost are capitalized as a ''Mine Development Cost'' and the same is amortized over a period of 20 years from the date of CoD of respective mines or life of the mines whichever is lower.

Derecognition

Property, Plant and Equipment is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on de-recognition of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of Property, Plant and Equipment, and are recognized in the Statement of Profit and Loss.

II. Intangible Assets Recognition and measurement

The Company recognizes an intangible asset and measures that at cost if, and only if:

a. It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

b. the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognized as an intangible asset when the Company can demonstrate the requirements as specified in Ind AS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than ^10 lakh and have finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable, surplus and non-moving items of Stores and Spares (excluding insurance/ Mandatory/Critical spares) are ascertained on review and provided for.

IV. Mine closure expenditure

Concurrent Mine closure expenses are accounted as and when incurred. The annual cost of Mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the initial amounts exceed ^ 1 crore in each case.

VI. Financial Instruments Non-derivative Financial Assets Initial recognition and Measurement

All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.

Subsequent measurement

Financial assets measured at amortized cost:

A financial asset is subsequently measured at amortized cost, using the effective interest rate method and net of any impairment loss, if:

• the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company''s financial assets consist of staff advances, trade receivables, etc.

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity.

Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns.

Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost, if any.

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement whereby the parties that have joint control of the agreement have rights to the net assets of the joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Investments in Joint Ventures and associates are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Derecognition

Financial assets are derecognized when and only when:

• the contractual rights to the cash flows from the financial asset has expired, or

• the right to receive cash flows from the asset has been transferred; or

• the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed, due to transfer of either ''risk & rewards'' or ''control'' of such financial asset.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortized cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (''EIR'') method. Gains and losses are recognized in Statement of Profit or Loss Account when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognized upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognized in the Statement of Profit and Loss.

Offsetting of Financial Instruments

Financial asset and financial liability are offset and the net amount is presented in the balance sheet when and only when the Company:

• currently has a legally enforceable right to set off the recognized amounts; and

• Intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

VII. Impairment

Financial Assets (including receivables)

Impairment of financial assets in accordance with Ind AS 109- ''Financial instruments'', the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a. Financial assets that are debt instruments and are measured at amortized cost e.g., loans, debt securities, deposits and bank balance.

b. Financial assets that are debt instruments and are measured as at Fair Value Through OCI.

c. Lease receivables under Ind AS 116.

d. Trade receivables, unbilled revenue and contract assets under Ind AS 115.

e. Loan commitments which are not measured as at Fair Value Through P&L.

f. Financial guarantee contracts which are not measured as at Fair Value Through P&L.

For trade receivables and contract assets/unbilled revenue, the Company applies the simplified approach required by Ind AS 109 Financial Instruments, which requires lifetime expected losses to be recognized from initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.

Non-financial assets

The carrying amounts of the Company''s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets, when the carrying amount of an asset or CGU exceeds its estimated recoverable amount

Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognized in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognized accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz., in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility and other studies, development expenditure, expenditure on exploration works, technical know-how etc. The cost of the project is transferred to capital as and when implemented. In case such projects are identified for transfer of business by Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Assets held for sale

The Company classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn.

XI. Government / Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income when there is reasonable assurance that, it will be received and the Company will comply with the conditions associated with the grant. The deferred income is recognized in the Statement of Profit and Loss on a systematic basis over the useful life of the asset.

Related to income

Grants related to income are recognized in the Statement of Profit and Loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate or when the conditions related to the grant is fulfilled.

XII. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprise of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as and when the related services are provided.

The Company''s liability towards Gratuity, Post-Retirement Medical Facilities, Transport Allowance for settlement at home town, Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises.

Contribution towards Provident Fund and Gratuity is recognized as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January, 2007 and premium towards Post-Retirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain/loss on curtailment is recognized immediately in the Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Terminal benefits

Terminal benefits like Voluntary Retirement Service are expensed when the Company can no longer withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Liability towards VRS is booked in the year of exercise of option by the employee upto the date of closure of each offer in accordance with terms and conditions of each offer.

XIII. Allocation of common charges/social overhead expenses/interest on working capital

These are allocated to production units based on salaries and wages of the respective units.

XIV. Prior period items, accounting estimates and effect of change in Accounting Policy

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognized prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognized by adjusting the carrying amount of related assets/liability/ equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in the respective Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XV. Events occurring after the reporting date

Events of material nature occurring after the reporting date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.

XVI. Revenue Recognition

Revenue from Operation includes (i) sale of Power generated by Thermal Power Stations (ii) sale of power generated from renewable energy sources such as wind and solar (iii) sale of lignite/coal (iv) sale of by products & joint products (v) consultancy & management services relating to mining and power generation and (vi) commission on trading of power.

Revenue is recognized as per Ind AS-115 when the following criteria are met:

a. the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

b. the entity can identify each party''s rights regarding the goods or services to be transferred;

c. the entity can identify the payment terms for the goods or services to be transferred;

d. the contract has commercial substance (i.e., the risk, timing or amount of the entity''s future cash flows is expected to change as a result of the contract); and

e. it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer''s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the provisions of the Electricity Act, 2003, wherein the tariff rates are approved by the Central Electricity Regulatory Commission (CERC) / State Electricity Regulatory Commission (SERC).

The Company adopts the tariff rates as approved by CERC for the sale of power. Such Tariff rates includes lignite transfer price which is subject to revision as calculated by the company from time to time in accordance with guidelines issued by Ministry of Coal (MoC) or as delegated by MoC.

In case where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines or as delegated by MoC on lignite transfer price for energy charges and other relevant CERC''s Regulations / guidelines, for capacity charges are adopted.

Exchange differences arising from settlement of monetary items denominated in foreign currency to the extent recoverable from or payable to beneficiaries for the current accounting period as per the CERC Tariff Regulations are accounted for as Revenue/ Expenditure, respectively.

Rebates/discounts allowed to beneficiaries/customers for early payment incentives are netted off with the amount of revenue from operations.

Sale of Un-Requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries, wherever required is accounted net off sharing of any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognized in accordance with the price agreed under the Power Purchase Agreement (PPA) and in accordance with the orders passed by the respective State Electricity Regulatory Commission (SERC).

Sale of Lignite/Coal and others

Sale of Lignite/Coal, by e-auction sales has been reckoned to the extent of amount received/ as per sale terms. Sale of Lignite /Coal other than by e-auction is recognized in accordance with the agreement entered into with the respective parties.

Sale of Coal for end use power plant is accounted in accordance with the provisions of tariff regulations issued by Central Electricity Regulatory Commission (CERC) for integrated mines. Sale of byproducts/ Fly ash etc. has been reckoned as per sale terms

Unbilled Revenue

As at each reporting date, revenue from operations includes an accrual for sales made to beneficiaries/Customers but not billed i.e. "Unbilled Revenue" and the same is categorized under Other Financial Assets in the Balance Sheet.

Consultancy, Technical and Management Services

Revenue from consultancy, technical and management services is recognized in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Commission on trading of power

Commission on trading of power for third party recognized on receipt of payment.

Other Income

Other income includes interest income, insurance claims, surcharge, dividend income and income from sale of scrap.

Interest income

Interest income with respect to advances provided to employees is recognized using the effective interest method. The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognized in the year of acceptance of the claim.

Insurance claims

Insurance claims are recognized in the period in which there is an acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognized based on agreement with beneficiaries. On renewable power the same is recognized based on realization / certainty of realization.

Dividend Income

Dividend income is recognized when the shareholder''s right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVII. Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognized in the Statement of Profit and Loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognizing in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognized in the financial statements prior to 31^st March 2016 as per the previous GAAP and continues to capitalize the same.

XVIII. Income taxes

Income tax expense comprises current and deferred tax. It is recognized in the Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

• Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria set out in Ind AS 12 are met.

XIX. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long-term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for qualifying asset.

All other borrowing costs are expensed in the year in which they occur.

XX. Leases

The Company has applied Ind AS 116 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under Ind AS 17.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease as per the requirements under Ind AS 116. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts entered into on or after 1^st April 2019.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices and aggregate standalone prices of non-lease components. However, for the leases of land and buildings and vehicles in which it is a lessee, the Company has elected not to separate non-lease components and account for lease and non-lease components as a single lease component.

i. As a Lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and

remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any and adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease payments included in the lease liability comprises of fixed payments (including in-substance fixed payments), residual value guarantees and where the Company is reasonably certain to exercise purchase, renewal and termination options includes exercise price under a purchase option, lease payments in an optional renewal period and penalties for early termination of a lease.

The lease liability is measured at amortized cost using the effective interest method. It is re-measured when there are any reassessments or lease modifications or revised in-substance fixed payments. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of- use asset, or is recorded in Profit or Loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-to-use assets that do not meet the definition of investment property in ''Property, Plant and Equipment'' and lease liabilities as Financial Liabilities in the balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognize right-of-use assets and lease liabilities for all short-term leases that have lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis or any other systematic basis over the lease term.

ii. As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease as per requirements under Ind AS 116.

To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risk and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract. The Company recognizes lease payments received under operating leases as income on a straight-line basis over lease term as part of ''other income''.

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Mar 31, 2023

Note 1- Significant Accounting Policies

For the year ended 31^st March, 2023

(Expressed ^ in Crore, unless otherwise stated)

Reporting entity

NLC India Limited ("NLCIL" or "the Company"), is a Government Company (CIN L93090TN1956GOI003507) registered under the erstwhile Companies Act, 1956 with its registered office located at No. 135, E.V.R. Periyar High Road, Kilpauk, Chennai - 600 010 and is listed with the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. NLCIL is engaged in the business of mining of Lignite, Coal and generation of power by using lignite as well as Renewable Energy Sources and consultancy .

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act,2013 and the Electricity Act,2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (^) which is also the Company''s functional currency. All amounts are rounded to the nearest Crore (upto two decimals), except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognized in the financial year in which the results are known or materialized.

c. Current and Non-Current classification

The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

I. Property, Plant and Equipment Recognition and measurement

Items of Property, Plant and Equipment (PPE) are initially measured at cost. Subsequently it is measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalized as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS 101, the Company has availed the exemption where in the carrying value of the PPE and intangible assets as previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of Property, Plant and Equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Cost of a self-constructed item of Property, Plant and Equipment includes the cost of materials, direct labor and any other costs including borrowing cost and overhead expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Management. Other direct expenses relating to construction of Property, Plant and Equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Subsequent Cost of Capitalization

Subsequent expenditure incurred on the existing assets are recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.

Expenditure on major inspection and overhauls of generating unit is capitalized, when it meets the asset recognition criteria as per Ind AS 16.

The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of Property, Plant and Equipment are recognized as expenses in the statement of profit and loss as and when it is incurred.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Thermal Power Stations resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated extended life of the Unit from the completion of original life/from the date of synchronization of the Unit as the case may be.

Spares and Equipment

Initial spares: Purchased along with Property, Plant and Equipment are capitalized and depreciated along with the main asset.

Spares purchased subsequent to commissioning of the asset: Item of spare parts, stand-by equipment and servicing equipment which meet the definition of Property, Plant and Equipment as per Ind AS 16 are capitalized. Other spare parts are carried as inventory and recognized in the Statement of Profit or Loss on consumption.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement.

a. Freehold Land: Land acquired for mining, thermal plants, wind mills, solar plants and other related purposes including for establishing townships is in accordance with and subject to the provisions of the Land Acquisition Act, 1894 / Tamil Nadu Acquisition of Land for Industrial Purpose Act, 1997, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and amendments/changes made by respective State Govt. from period to period. The cost of the said land is capitalized on the date of taking over the possession/ transfer of title deed in favour of the Company.

b. Lease hold Land: Land is taken on lease as per the provisions under Coal Bearing Area (Acquisition and Development) Act, 1957. The said leasehold land is capitalized when the entire land/substantial portion of land is ready for development and mining activity.

c. Coal / Lignite Mines: The date of commercial operation in case of integrated mines (commissioned after 31^st March, 2019) shall mean the earliest of: -

a. The first date of the year succeeding the financial year in which 25% of the Peak Rated Capacity as per the Mining Plan is achieved; or

b. The first date of the year succeeding the financial year in which the value of production estimated in accordance with CERC Regulation 2019-24, exceeds total expenditure in that financial year; or

c. The date of two years (i.e., Financial Year) from the date of commencement of production.

Capitalization

a. Specialized Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialized Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalization and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b. Thermal Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronization and goes up to the date of commercial commissioning. The date of receipt of certificate from the statutory authorities pursuant to seventy-two hours full load operation is deemed as the date of Commercial Operation Date (COD) for commissioning of the units. Depreciation charge commences from the month of commercial operations. Direct expenses and interest charges incurred during the test and trial run are capitalized and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c. Wind Turbine Generators (WTG)

Each WTG is capitalized on the date on which it is connected to grid based on the commissioning and acceptance certificate issued by DISCOM''s.

d. Solar Power Plant

Solar Power Plants are capitalized on the date on which it is connected to Grid or the date of COD, if any, specified in the agreement after complying necessary technical parameters. In case the date of COD is later than the date of connection to Grid, revenue if any, arises from sale of infirm Power off sets to the Capital Cost of the project.

e. Other Assets

Other assets are capitalized when they are available for the use as intended by the Management.

Depreciation is provided on cost of the Property, Plant and Equipment net of estimated residual values over their estimated useful lives and is recognized in the Statement of Profit and Loss. Freehold land is not depreciated.

The cost of the land taken on lease is amortized from the date of commencement of commercial operation over the estimated useful life of the Mine or life of the linked Thermal Power Plant originally estimated whichever is less and in all other cases over the lease period, wherever applicable.

The cost of mining land capitalized in the Books of Accounts is amortized on the basis of minerals extracted during the year to the total estimated minable reserves of the said quantum of land used for mining in the year under review as certified by Technical Experts.

Depreciation is provided under straight line method as indicated below: -

	Description of Assets covered	Basis
i.	a. Assets of Thermal Power Stations excluding vehicles other than Ash Tippers b. Wind Turbine Generator (WTG) and Solar Power Plants. c. Life Extension Programme (''LEP'') Assets.	The Company follows the provisions of the Electricity Act 2003. Depreciation is as per the rates / guidelines prescribed by Central Electricity Regulatory Commission (CERC) pursuant to provisions of Electricity Act, 2003. As per the estimated life of the plant in line with guidelines issued by Ministry of New and Renewable Energy (''MNRE'')/CERC/SERC as applicable. Life assessed as per technical estimate / life approved by CERC/SERC.
ii.	Residential Buildings	At useful life prescribed in Schedule II to the Companies Act, 2013.
iii.	Buildings: Non-residential Buildings Plant & Machinery: CME other than dozers and pipe layers, Workshop machinery, pumps GWC &SWC pipes and Civil construction machinery.	At technically assessed life or useful life prescribed in Schedule II to the Companies Act, 2013.
iv.	Specialized Mining Equipment	At technically assessed life.
v.	Other Assets	At useful life prescribed in Schedule II of the Companies Act, 2013.
vi.	Decommissioning cost capitalized with Property, Plant and Equipment	Depreciated similar to that of the Parent Asset.
vii.	Spares treated as PPE	At technically assessed life.
viii.	Asset costing less than ^ 5,000	Fully depreciated in the year the asset is available for use.

In the case of Assets of Integrated Mines, declared Commercial Operation on or after 1^st April, 2019, depreciation is computed as per rates / guidelines prescribed by Central Electricity Regulatory Commission (CERC).

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis recognized from the month of capitalization.

Depreciation on the following major assets is provided on the technically estimated useful life:
Asset	Useful Life of Asset in years
Specialized Mining Equipment	15
Furniture- Others	5 to 10
Fire Fighting Equipments	10
Photo copier	10
Air Conditioner and Refrigerator	10 to 14
Telecommunication Equipment	10

On transition to Schedule II of Companies Act, 2013, assets partially depreciated has been migrated as per Companies Act, 2013 by considering the balance depreciable value of asset with the balance life as prescribed in the Schedule II of Companies Act, 2013 which has been considered for computation of depreciation and the said derived rate / remaining useful life/period is treated as "Technically Estimated" rate for the purpose of depreciation of those migrated Assets.

Amortization of Mine Development Cost

Overburden removal and related development costs are classified as Mine development cost under Capital Work-InProgress till achievement of CoD of respective Mines. On achievement of CoD, the mine development cost are capitalized as a ''Mine Development Cost'' and the same is amortized over a period of 20 years from the date of CoD of respective mines or life of the mines whichever is lower.

Derecognition

Property, Plant and Equipment is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on de-recognition of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of Property, Plant and Equipment and are recognized in the Statement of Profit and Loss.

II. Intangible Assets

Recognition and measurement

The Company recognizes an intangible asset and measures that at cost if and only if:

a. It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

b. the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognized as an intangible asset when the Company can demonstrate the requirements as specified in Ind AS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than ^10 lakh and have finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

The estimated useful lives of intangible assets are as follows:
Development Cost (Internally generated projects)	Over the estimated useful life.
Expenditure during projects and subsequent expenditure	Over the residual life of the parent asset
Software costing more than ^10 lakh	5 years
Mining Rights	20 Years

Gains or losses arising from de-recognition of an intangible asset are recognized in the Statement of Profit and Loss IN. Inventories

Inventories are valued at the lower of Cost or Net Realizable Value.

Stock Items	Basis
Lignite / Coal	At absorption cost excluding allocated administration charges and social overhead
Stores and Spares including light diesel oil, heavy furnace oil	At weighted average acquisition cost
Fly ash brick	At absorption cost
Waste product, used belt reconditioned, Stores and Spares discarded for disposal, medicines and canteen Stores	Nil
Goods in Transit including goods received but pending inspection/acceptance	At Cost

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable, surplus and non-moving items of Stores and Spares (excluding insurance/Mandatory/Critical spares) are ascertained on review and provided for.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable, surplus and non-moving items of Stores and Spares (excluding insurance/Mandatory/Critical spares) are ascertained on review and provided for.

IV. Mine closure expenditure

Concurrent Mine closure expenses are accounted as and when incurred. The annual cost of Mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the initial amounts exceed ^ 1 Crore in each case.

VI. Financial Instruments

Non-derivative Financial Assets Initial recognition and Measurement

All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. However, trade receivables that do not contain a significant financing component are measured at transaction price.

Subsequent measurement

Financial assets measured at amortized cost:

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss, if:

• The asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company''s financial assets consist of staff advances, trade receivables, etc.

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity.

Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns.

Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost, if any.

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement whereby the parties that have joint control of the agreement have rights to the net assets of the joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Investments in Joint Ventures and associates are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Derecognition

Financial assets are derecognized when and only when:

• the contractual rights to the cash flows from the financial asset expire, or

• the right to receive cash flows from the asset has been transferred; or

• the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortized cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (''EIR'') method. Gains and losses are recognized in Statement of Profit or Loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognized upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognized in the Statement of Profit and Loss.

Offsetting of Financial Instruments

Financial asset and financial liability are offset and the net amount is presented in the balance sheet when and only when the Company:

• currently has a legally enforceable right to set off the recognized amounts; and

• Intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

VII. Impairment

Financial Assets (including receivables)

Impairment of financial assets in accordance with Ind AS 109- ''Financial instruments'', the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a. Financial assets that are debt instruments and are measured at amortized cost e.g., loans, debt securities, deposits and bank balance.

b. Financial assets that are debt instruments and are measured as at Fair Value Through OCI.

c. Lease receivables under Ind AS 116.

d. Trade receivables, unbilled revenue and contract assets under Ind AS 115.

e. Loan commitments which are not measured as at Fair Value Through P&L.

f. Financial guarantee contracts which are not measured as at Fair Value Through P&L.

For trade receivables and contract assets/unbilled revenue, the Company applies the simplified approach required by Ind AS 109 Financial Instruments, which requires lifetime expected losses to be recognized from initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.

Non-financial assets

The carrying amounts of the Company''s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets, when the carrying amount of an asset or CGU exceeds its estimated recoverable amount.

Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognized in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognized accordingly.

VMI.Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz., in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility and other studies, development expenditure, expenditure on exploration works, technical know-how etc. The cost of the project is transferred to Capital WIP as and when implemented. In case such projects are identified for transfer of business by Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government / Other Grants

Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income when there is reasonable assurance that, it will be received and the Company will comply with the conditions associated with the grant. The deferred income is recognized in the Statement of Profit and Loss on a systematic basis over the useful life of the asset.

Related to income

Grants related to income are recognized in the Statement of Profit and Loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate or when the conditions related to the grant is fulfilled.

XI. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprise of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as and when the related services are provided.

The Company''s liability towards Gratuity, Post-Retirement Medical Facilities, Transport Allowance for settlement at home town, Earned Leave, Half-Pay Leave and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises.

Contribution towards Provident Fund and Gratuity is recognized as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January, 2007 and premium towards Post-Retirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain/loss on curtailment is recognized immediately in the Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Terminal benefits

Terminal benefits like Voluntary Retirement Service are expensed when the Company can no longer withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Liability towards VRS is booked in the year of exercise of option by the employee upto the date of closure of each offer in accordance with terms and conditions of each offer.

XII. Allocation of common charges/social overhead expenses/interest on working capital

These are allocated to production units based on salaries and wages of the respective units.

XIII. Prior period items, accounting estimates and effect of change in Accounting Policy

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognized prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognized by adjusting the carrying amount of related assets/liability/ equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any, in the respective Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the reporting date

Events of material nature occurring after the reporting date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.

XV. Revenue Recognition

Revenue from Operation includes (i) sale of Power generated by Thermal Power Stations (ii) sale of power generated from renewable energy sources such as wind and solar (iii) sale of lignite/coal (iv) sale of by products & joint products (v) consultancy & management services relating to mining and power generation and (vi) commission on trading of power.

Revenue is recognized as per Ind AS-115 when the following criteria are met:

a. the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

b. the entity can identify each party''s rights regarding the goods or services to be transferred;

c. the entity can identify the payment terms for the goods or services to be transferred;

d. the contract has commercial substance (i.e., the risk, timing or amount of the entity''s future cash flows is expected to change as a result of the contract); and

e. it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer''s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the provisions of the Electricity Act, 2003, wherein the tariff rates are approved by the Central Electricity Regulatory Commission (CERC) / State Electricity Regulatory Commission (SERC).

The Company adopts the tariff rates as approved by CERC for the sale of power. Such Tariff rates include lignite transfer price which is subject to revision as calculated by the Company from time to time in accordance with guidelines issued by Ministry of Coal (MoC) or as delegated by MoC.

In case where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines or as delegated by MoC on lignite transfer price for energy charges and other relevant CERC''s guidelines, for capacity charges are adopted.

Exchange differences arising from settlement of monetary items denominated in foreign currency to the extent recoverable from or payable to beneficiaries for the current accounting period as per the CERC Tariff Regulations are accounted for as Revenue/Expenditure, respectively.

Rebates/discounts allowed to beneficiaries/customers for early payment incentives are netted off with the amount of revenue from operations.

Sale of Un-Requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries, wherever required is accounted net off sharing of any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognized in accordance with the price agreed under the Power Purchase Agreement (PPA) and in accordance with the orders passed by the respective State Electricity Regulatory Commission (SERC).

Sale of Lignite/Coal and others

Sale of Lignite/Coal, by e-auction sales has been reckoned to the extent of amount received/ as per sale terms. Sale of Lignite /Coal other than by e-auction is recognized in accordance with the agreement entered into with the respective parties.

Sale of Coal for end use power plant is accounted in accordance with the provisions of tariff regulations issued by Central Electricity Regulatory Commission (CERC) for integrated mines.

Sale of byproducts/ Fly ash etc. has been reckoned as per sale terms.

Unbilled Revenue

As at each reporting date, revenue from sale of energy includes an accrual for sales made to beneficiaries/Customers but not billed i.e., "Unbilled Revenue" and the same is categorized under Other Financial Assets in the Balance Sheet.

Consultancy, Technical and Management Services

Revenue from consultancy, technical and management services is recognized in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Commission on trading of power

Commission on trading of power for third party recognized on receipt of payment.

Other Income

Other income includes interest income, insurance claims, surcharge, dividend income and income from sale of scrap. Interest income

Interest income with respect to advances provided to employees is recognized using the effective interest method. The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognized in the year of acceptance of the claim.

Insurance claims

Insurance claims are recognized in the period in which there is an acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognized based on agreement with beneficiaries. On renewable power the same is recognized based on realization / certainty of realization.

Dividend Income

Dividend income is recognized when the shareholder''s right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVI. Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognized in the Statement of Profit and Loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognizing in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognized in the financial statements prior to 31^st March, 2016 as per the previous GAAP and continues to capitalize the same.

XVII. Income taxes

Income tax expense comprises current and deferred tax. It is recognized in the Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

• Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria set out in Ind AS 12 are met.

XVIII. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long-term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for qualifying asset.

All other borrowing costs are expensed in the year in which they occur.

XIX. Leases

The Company has applied Ind AS 116 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under Ind AS 17.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease as per the requirements under Ind AS 116. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts entered into on or after 1st April 2019.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices and aggregate standalone prices of non-lease components. However, for the leases of land and buildings and vehicles in which it is a lessee, the Company has elected not to separate non-lease components and account for lease and non-lease components as a single lease component.

i. As a Lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any and adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease payments included in the lease liability comprises of fixed payments (including in-substance fixed payments), residual value guarantees and where the Company is reasonably certain to exercise purchase, renewal and termination options includes exercise price under a purchase option, lease payments in an optional renewal period and penalties for early termination of a lease.

The lease liability is measured at amortized cost using the effective interest method. It is re-measured when there are any reassessments or lease modifications or revised in-substance fixed payments. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of- use asset, or is recorded in Profit or Loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-to-use assets that do not meet the definition of investment property in ''Property, Plant and Equipment'' and lease liabilities as Financial Liabilities in the balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognize right-of-use assets and lease liabilities for all short-term leases that have lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis or any other systematic basis over the lease term.

ii. As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease as per requirements under Ind AS 116.

To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risk and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract. The Company recognizes lease payments received under operating leases as income on a straight-line basis over lease term as part of ''other income''.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed by way of notes.

XXI. Cash and cash equivalents

Cash and cash equivalents 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 an insignificant risk of changes in value.

XXII. Earnings per share

The Company presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXIII. Operating segments

Segment reports are prepared in accordance with Ind AS 108. The operating segments used to present segment information are identified on the basis of internal reports used by the Company''s Management to allocate resources to the segments and assess their performance. The Board of Directors is collectively the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108.

The operating segments have been identified on the basis of the nature of products/services.

Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and Overheads allocated on a reasonable basis are considered as segment expenses.

XXIV. Dividend

Dividends and interim dividends paid to Company''s shareholders are recognized as changes in equity in the period in which they are approved by the shareholders meeting and the Board of Directors respectively.

XXV. Cash Flow Statement

Cash Flow Statement is prepared as per indirect method prescribed in the Ind AS 7 ''Statement of Cash Flow''.

XXVI. Regulatory Deferral Accounts

Income/Expense recognized in the Statement of Profit or Loss to the extent recoverable from/payable to the beneficiaries in the subsequent periods as per CERC tariff regulations are recognized as Regulatory Deferral Account Balances. Regulatory Deferral Account Balances are adjusted from the year in which the same become recoverable from/payable to the beneficiaries.

Pending the disposal of review/ appeal petitions filed by the Company against adverse orders before CERC/SERC/ Other Appellate Authorities, the impact of the said orders are considered under Regulatory Deferral Account in the Profit or Loss of the respective financial year. In case of appeal by the beneficiary against the CERC/SERC orders, the impact on the same is not considered as Regulatory Deferral Liability and disclosed under Contingent Liability.

Regulatory Deferral Account Balances are reviewed and evaluated at each balance sheet date to ensure the underlying activities meet the recognition criteria and it is probable that future economic benefits associated with such balances will flow to the entity. If this criteria are not met this regulatory deferral account balances are derecognized.

Regulatory Deferral Account Balances are presented as separate line item in the Balance Sheet. The movement in the Regulatory Deferral Account Balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2022

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

For the year ended March 31, 2022

(Expressed ? in crore, unless otherwise stated)

Reporting entity

NLC India Limited ("NLCIL" or "the Company"), is a Government Company registered under the erstwhile Companies Act, 1956 with its registered office located at No. 135, E.V.R. Periyar High Road, Kilpauk, Chennai - 600 010 and is listed with the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. NLCIL is engaged in the business of mining of Lignite, Coal and generation of power by using lignite as well as Renewable Energy Sources.

Basis of preparationa. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act,2013 and the Electricity Act,2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (?) which is also the Company''s functional currency. All amounts are rounded to the nearest crore, except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognized in the financial year in which the results are known or materialized.

c. Current and Non-Current classification

The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification. An asset is current when it is:

• Expected to be realized or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.:

A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

Recognition and measurement

Items of Property, Plant and Equipment (PPE) are initially measured at cost. Subsequently it is measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalized as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS101, the Company has availed the exemption where in the carrying value of the PPE as per previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of Property, Plant and Equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Cost of a self-constructed item of Property, Plant and Equipment includes the cost of materials, direct labor and any other costs including borrowing cost and overhead expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the Management. Other direct expenses relating to construction of Property, Plant and Equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Subsequent Cost of Capitalization

Subsequent expenditure incurred on the existing assets are recognized as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.

Expenditure on major inspection and overhauls of generating unit is capitalized, when it meets the asset recognition criteria as per Ind AS 16.

The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of Property, Plant and Equipment are recognized as expenses in the statement of profit and loss as and when it is incurred.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Thermal Power Stations resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated extended life of the Unit from the completion of original life/from the date of synchronization of the Unit as the case may be.

Spares and Equipment

Initial spares: Purchased along with Property, Plant and Equipment are capitalized and depreciated along with the main asset.

Spares purchased subsequent to commissioning of the asset: Item of spare parts, stand-by equipment and servicing equipment which meet the definition of Property, Plant and Equipment as per Ind AS16 are capitalized. Other spare parts are carried as inventory and recognized in the Statement of Profit or Loss on consumption.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalization is done on provisional basis subject to necessary adjustment in the year of final settlement.

a. Freehold Land: Land acquired for mining, thermal plants, wind mills, solar plants and other related purposes including for establishing townships is in accordance with and subject to the provisions of the Land Acquisition Act, 1894 / Tamil Nadu Acquisition of Land for Industrial Purpose Act, 1997, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and amendments/changes made by respective State Govt. from period to period. The cost of the said land is capitalized on the date of taking over the possession/ transfer of title deed in favour of the Company.

b. Lease hold Land: Land is taken on lease as per the provisions under Coal Bearing Area (Acquisition and Development) Act; 1957.The said leasehold land is capitalized when the entire land/substantial portion of land is ready for development and mining activity.

c. Coal / Lignite Mines: The date of commercial operation in case of integrated mines (commissioned after 31^st March, 2019) shall mean the earliest of: -

a. The first date of the year succeeding the financial year in which 25% of the Peak Rated Capacity as per the Mining Plan is achieved; or.

b. The first date of the year succeeding the financial year in which the value of production estimated in accordance with CERC Regulation 2019-24, exceeds total expenditure in that financial year; or

c. The date of two years (i.e., Financial Year) from the date of commencement of production.

Capitalizationa. Specialized Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialized Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalization and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b. Thermal Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronization and goes up to the date of commercial commissioning. The date of receipt of certificate from the statutory authorities pursuant to seventy-two hours full load operation is deemed as the date of Commercial Operation Date (COD) for commissioning of the units. Depreciation charge commences from the month of commercial operations. Direct expenses and interest charges incurred during the test and trial run are capitalized and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c. Wind Turbine Generators (WTG)

Each WTG is capitalized on the date on which it is connected to grid based on the commissioning and acceptance certificate issued by DISCOM''s.

d. Solar Power Plant

Solar Power Plants are capitalized on the date on which it is connected to Grid or the date of CoD if any specified in the agreement after complying necessary technical parameters. In case the date of CoD is later than the date of connection to Grid, revenue if any arises from sale of infirm Power off sets to the Capital Cost of the project.

e. Other Assets

Other assets are capitalized when they are available for the use as intended by the Management.

Depreciation / Amortization

Depreciation is provided on cost of the Property, Plant and Equipment net of estimated residual values over their estimated useful lives and is recognized in the Statement of Profit and Loss. Freehold land is not depreciated.

The cost of the land taken on lease is amortized from the date of commencement of commercial operation over the estimated useful life of the Mine or life of the linked Thermal Power Plant originally estimated whichever is less.

The cost of mining land capitalized in the Books of Accounts is amortized on the basis of minerals extracted during the year to the total estimated minable reserves of the said quantum of land used for mining in the year under review as certified by Technical Experts.

Description of Assets covered	Basis
i. a. Assets of Thermal Power Stations excluding vehicles other than Ash Tippers	The Company follows the provisions of the Electricity Act 2003. Depreciation is as per the rates / guidelines prescribed by Central Electricity Regulatory Commission (CERC) pursuant to provisions of Electricity Act, 2003.
b. Wind Turbine Generator (WTG) and Solar Power Plants.	As per the estimated life of the plant in line with guidelines issued by Ministry of New and Renewable Energy (''MNRE'')/CERC/SERC as applicable.
c. Life Extension Programme (''LEP'') Assets.	Life assessed as per technical estimate / life approved by CERC/SERC.
ii. Residential Buildings	At useful life prescribed in Schedule II to the Companies Act, 2013.
iii. Buildings: Non-residential Buildings Plant & Machinery:	At technically assessed life or useful life prescribed in Schedule II to the Companies Act, 2013.
CME other than dozers and pipe layers, Workshop machinery, pumps GWC &SWC pipes and Civil construction machinery.
iv. Specialized Mining Equipment	At technically assessed life.
v. Other Assets	At useful life prescribed in Schedule II of the Companies Act, 2013.
vi. Decommissioning cost capitalized with Property, Plant and Equipment	Depreciated similar to that of the Parent Asset.
vii. Spares treated as PPE	At technically assessed life.
viii. Asset costing less than ?5,000	Fully depreciated in the year the asset is available for use.

In the case of Assets of Integrated Mines, declared Commercial Operation on or after 1^st April 2019, depreciation is computed as per rates / guidelines prescribed by Central Electricity Regulatory Commission (CERC).

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis recognized from the month of capitalization.

Depreciation on the following major assets is provided on the technically estimated useful life:

Asset	Useful Life of Asset in years
Specialized Mining Equipment	15
Furniture- Others	5 to 10
Fire Fighting Equipments	10
Photo copier	10
Air Conditioner and Refrigerator	10 to 14
Telecommunication Equipment	10

On transition to Schedule II of Companies Act''2013, assets partially depreciated has been migrated as per Companies Act 2013 by considering the balance depreciable value of asset with the balance life as prescribed in the Schedule II of Companies Act''2013 which has been considered for computation of depreciation and the said derived rate / remaining useful life period is treated as "Technically Estimated" rate for the purpose of depreciation of those migrated Assets.

Amortization of Mine Development Cost

Overburden removal and related development costs are classified as Mine development cost under Capital Work-InProgress till achievement of CoD of respective Mines. On achievement of CoD, the mine development cost are capitalized as a ''Mine Development Cost'' and the same is amortized over a period of 20 years from the date of CoD of respective mines or life of the mines whichever is lower.

Derecognition

Property, Plant and Equipment is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on de-recognition of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of Property, Plant and Equipment, and are recognized in the Statement of Profit and Loss.

II. Intangible Assets Recognition and measurement

The Company recognizes an intangible asset and measures that at cost if, and only if:

a. It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

b. the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognized as an intangible asset when the Company can demonstrate the requirements as specified in Ind AS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than ?10 lakh and have finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

The estimated useful lives of intangible assets are as follows:

Development Cost (Internally generated projects)	Over the estimated useful life.
Expenditure during projects and subsequent expenditure	Over the residual life of the parent asset
Software costing more than ?10 lakh	5 years
Mining Rights	20 Years

Gains or losses arising from de-recognition of an intangible asset are recognized in the Statement of Profit and Loss

III. Inventories

Inventories are valued at the lower of Cost or Net Realizable Value.

Stock Items	Basis
Lignite / Coal	At absorption cost excluding allocated administration charges and social overhead.
Stores and Spares including light diesel oil, heavy furnace oil	At weighted average acquisition cost
Fly ash brick	At absorption cost
Waste product, used belt reconditioned, Stores and Spares discarded for disposal, medicines and canteen Stores	Nil
Goods in Transit including goods received but pending inspection/acceptance	Cost

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable, surplus and non-moving items of Stores and Spares (excluding insurance/Mandatory/Critical spares) are ascertained on review and provided for.

IV. Mine closure expenditure

Concurrent Mine closure expenses are accounted as and when incurred. The annual cost of Mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed ? 1 crore in each case.

Non-derivative Financial Assets Initial recognition and Measurement

Financial assets are recognized at its fair value plus or minus, in the case of a financial asset not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement

Financial assets measured at amortized cost:

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss, if:

• the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company''s financial assets consist of staff advances, trade receivables, etc.

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company. Control exists when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity.

Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns.

Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost, if any.

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement whereby the parties that have joint control of the agreement have rights to the net assets of the joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Investments in Joint Ventures and associates are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Derecognition

Financial assets are derecognized when and only when:

• the contractual rights to the cash flows from the financial asset expire, or

• the right to receive cash flows from the asset has been transferred; or

• the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognized initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortized cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (''EIR'') method. Gains and losses are recognized in Statement of Profit or Loss Account when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognized upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognized in the Statement of Profit and Loss.

Offsetting of Financial Instruments

Financial asset and financial liability are offset and the net amount is presented in the balance sheet when and only when the Company:

• currently has a legally enforceable right to set off the recognized amounts; and

• Intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

VII. ImpairmentFinancial Assets (including receivables)

Impairment of financial assets in accordance with Ind AS 109- ''Financial instruments'', the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

a. Financial assets that are debt instruments and are measured at amortized cost e.g., loans, debt securities, deposits and bank balance.

b. Financial assets that are debt instruments and are measured as at Fair Value Through OCI.

c. Lease receivables under Ind AS 116.

d. Trade receivables, unbilled revenue and contract assets under Ind AS 115.

e. Loan commitments which are not measured as at Fair Value Through P&L.

f. Financial guarantee contracts which are not measured as at Fair Value Through P&L.

For trade receivables and contract assets/unbilled revenue, the Company applies the simplified approach required by Ind AS 109 Financial Instruments, which requires lifetime expected losses to be recognized from initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.

Non-financial assets

The carrying amounts of the Company''s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets.

Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognized in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognized accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz., in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility and other studies, development expenditure, expenditure on exploration works, technical know-how etc. The cost of the project is transferred to capital as and when implemented. In case such projects are identified for transfer of business by Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government / Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income when there is reasonable assurance that, it will be received and the Company will comply with the conditions associated with the grant. The deferred income is recognized in the Statement of Profit and Loss on a systematic basis over the useful life of the asset.

Related to income

Grants related to income are recognized in the Statement of Profit and Loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate or when the conditions related to the grant is fulfilled.

XI. Employee benefitsShort term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprise of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as and when the related services are provided.

The Company''s liability towards Gratuity, Post-Retirement Medical Facilities, Transport Allowance for settlement at home town, Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises.

Contribution towards Provident Fund and Gratuity is recognized as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January 2007 and premium towards Post-Retirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain/loss on curtailment is recognized immediately in the Statement of Profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Terminal benefits

Terminal benefits like Voluntary Retirement Service are expensed when the Company can no longer withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Liability towards VRS is booked in the year of exercise of option by the employee upto the date of closure of each offer in accordance with terms and conditions of each offer.

XII. Allocation of common charges/social overhead expenses/interest on working capital

These are allocated to production units based on salaries and wages of the respective units.

XIII. Prior period items, accounting estimates and effect of change in Accounting Policy

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognized prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognized by adjusting the carrying amount of related assets/liability/ equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in the respective Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the reporting date

Events of material nature occurring after the reporting date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.

XV. Revenue Recognition

Revenue from Operation includes (i) sale of Power generated by Thermal Power Stations (ii) sale of power generated from renewable energy sources such as wind and solar (iii) sale of lignite/coal (iv) sale of by products & joint products (v) consultancy & management services relating to mining and power generation and (vi) commission on trading of power.

Revenue is recognized as per Ind AS-115 when the following criteria are met:

a. the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

b. the entity can identify each party''s rights regarding the goods or services to be transferred;

c. the entity can identify the payment terms for the goods or services to be transferred;

d. the contract has commercial substance (i.e., the risk, timing or amount of the entity''s future cash flows is expected to change as a result of the contract); and

e. it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer''s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the provisions of the Electricity Act, 2003, wherein the tariff rates are approved by the Central Electricity Regulatory Commission (CERC) / State Electricity Regulatory Commission (SERC).

The Company adopts the tariff rates as approved by CERC for the sale of power. Such Tariff rates include lignite transfer price which is subject to revision as calculated by the company from time to time in accordance with guidelines issued by Ministry of Coal (MoC) or as delegated by MoC.

In case where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines or as delegated by MoC on lignite transfer price for energy charges and other relevant CERC''s guidelines, for capacity charges are adopted.

Exchange differences arising from settlement of monetary items denominated in foreign currency to the extent recoverable from or payable to beneficiaries for the current accounting period as per the CERC Tariff Regulations are accounted for as Revenue/Expenditure, respectively.

Rebates/discounts allowed to beneficiaries/customers for early payment incentives are netted off with the amount of revenue from operations.

Sale of Un-Requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries is accounted net off sharing of any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognized in accordance with the price agreed under the Power Purchase Agreement (PPA) and in accordance with the orders passed by the respective State Electricity Regulatory Commission (SERC).

Sale of Lignite/Coal

Sale of Lignite/Coal, by e-auction sales has been reckoned to the extent of amount received. Sale of Lignite /Coal other than by e-auction is recognized in accordance with the agreement entered into with the respective parties.

Sale of Coal for end use power plant is accounted in accordance with the provisions of tariff regulations issued by Central Electricity Regulatory Commission (CERC) for integrated mines.

Unbilled Revenue

As at each reporting date, revenue from sale of energy includes an accrual for sales made to beneficiaries but not billed i.e. "Unbilled Revenue" and the same is categorized under Other Current Assets in the Balance Sheet.

Consultancy, Technical and Management Services

Revenue from consultancy, technical and management services is recognized in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Commission on trading of power

Commission on trading of power for third party recognized on receipt of payment.

Other Income

Other income includes interest income, insurance claims, surcharge, dividend income and income from sale of scrap. Interest income

Interest income with respect to advances provided to employees is recognized using the effective interest method. The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognized in the year of acceptance of the claim.

Insurance claims

Insurance claims are recognized in the period in which there is an acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognized based on agreement with beneficiaries. On renewable power the same is recognized based on realization / certainty of realization.

Dividend Income

Dividend income is recognized when the shareholder''s right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVI.Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognized in the Statement of Profit and Loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognizing in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognized in the financial statements prior to 31^st March 2016 as per the previous GAAP and continues to capitalize the same.

XVIUncome taxes

Income tax expense comprises current and deferred tax. It is recognized in the Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

• Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria set out in Ind AS 12 are met.

XVIUBorrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long-term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalization of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for qualifying asset.

All other borrowing costs are expensed in the year in which they occur.

XIX.Leases

The Company has applied Ind AS 116 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under Ind AS 17.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease as per the requirements under Ind AS 116. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts entered into on or after 1^st April 2019.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices and aggregate standalone prices of non-lease components. However, for the leases of land and buildings and vehicles in which it is a lessee, the Company has elected not to separate non-lease components and account for lease and non-lease components as a single lease component.

i. As a Lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any and adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease payments included in the lease liability comprises of fixed payments (including in-substance fixed payments), residual value guarantees and where the Company is reasonably certain to exercise purchase, renewal and termination options includes exercise price under a purchase option, lease payments in an optional renewal period and penalties for early termination of a lease.

The lease liability is measured at amortized cost using the effective interest method. It is re-measured when there are any reassessments or lease modifications or revised in-substance fixed payments. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of- use asset, or is recorded in Profit or Loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-to-use assets that do not meet the definition of investment property in ''Property, Plant and Equipment'' and lease liabilities as Financial Liabilities in the balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognize right-of-use assets and lease liabilities for all short-term leases that have lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis or any other systematic basis over the lease term.

ii. As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease as per requirements under Ind AS 116.

To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risk and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract. The Company recognizes lease payments received under operating leases as income on a straight-line basis over lease term as part of ''other income''.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed by way of notes.

XXI. Cash and cash equivalents

Cash and cash equivalents 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 an insignificant risk of changes in value.

XXH Earnings per share

The Company presents basic and diluted Earnings Per Share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the Profit or Loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXDIL Operating segments

Segment reports are prepared in accordance with Ind AS 108. The operating segments used to present segment information are identified on the basis of internal reports used by the Company''s Management to allocate resources to the segments and assess their performance. The Board of Directors is collectively the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108.

The operating segments have been identified on the basis of the nature of products/services.

Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and Overheads allocated on a reasonable basis are considered as segment expenses.

XXV. Dividend

Dividends and interim dividends paid to Company''s shareholders are recognized as changes in equity in the period in which they are approved by the shareholders meeting and the Board of Directors respectively.

XXV. Cash Flow Statement

Cash Flow Statement is prepared as per indirect method prescribed in the Ind AS 7 ''Statement of Cash Flow''. XXVLRegulatory Deferral Accounts

Income/Expense recognized in the Statement of Profit or Loss to the extent recoverable from/payable to the beneficiaries in the subsequent periods as per CERC tariff regulations are recognized as Regulatory Deferral Account Balances. Regulatory Deferral Account Balances are adjusted from the year in which the same become recoverable from/payable to the beneficiaries.

Pending the disposal of review/ appeal petitions filed by the Company against adverse orders before CERC/SERC/ Other Appellate Authorities, the impact of the said orders are considered under Regulatory Deferral Account in the Profit or Loss of the respective financial year. In case of appeal by the beneficiary against the CERC/SERC orders, the impact on the same is not considered as Regulatory Deferral Liability and disclosed under Contingent Liability.

Regulatory Deferral Account Balances are reviewed and evaluated at each balance sheet date to ensure the underlying activities meet the recognition criteria and it is probable that future economic benefits associated with such balances will flow to the entity. If this criteria are not met this regulatory deferral account balances are derecognized.

Regulatory Deferral Account Balances are presented as separate line item in the Balance Sheet. The movement in the Regulatory Deferral Account Balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2021

Reporting entity

NLC India Limited (formerly “Neyveli Lignite Corporation Limited”) (“NLCIL” or “the Company”), is a Government Company registered under the erstwhile Companies Act, 1956 with its registered office located at No. 135, E.V.R. Periyar High Road, Kilpauk, Chennai - 600 010 and is listed with the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. NLC is engaged in the business of mining of Lignite, Coal and generation of power by using lignite as well as Renewable Energy Sources.

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act,2013 and the Electricity Act,2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (?) which is also the Company''s functional currency. All amounts are rounded to the nearest crore, except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognised in the financial year in which the results are known or materialised.

c. Current and Non-Current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realized within twelve months after the reporting period; or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating cycle;

• It is held primarily for the purpose of trading;

• It is due to be settled within twelve months after the reporting period; or

• There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

I. Property, Plant and Equipment Recognition and measurement

Items of Property, Plant and Equipment (PPE) are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalised as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS101, the Company has availed the exemption where in the carrying value of the PPE as per Previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Cost of a self-constructed item of property, plant and equipment includes the cost of materials, direct labor, and any other costs including borrowing cost and overhead expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the management. Indirect expenses relating to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Subsequent Cost of Capitalisation

Subsequent expenditure incurred on the existing assets are recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.

Expenditure on major inspection and overhauls of generating unit is capitalised, when it meets the asset recognition criteria as per Ind AS 16.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss account as incurred.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalisation is done on provisional basis subject to necessary adjustment in the year of final settlement.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Thermal Power Stations resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated extended life of the Unit from the completion of original life/from the date of synchronization of the Unit as the case may be.

Spares and Equipment

Initial spares: Purchased along with property, plant and equipment are capitalised and depreciated along with the main asset.

Spares purchased subsequent to commissioning of the asset: Item of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and equipment as per Ind AS16 are capitalised. Other spare parts are carried as inventory and recognised in the statement of profit and loss on consumption.

In the case of assets ready to use, where final settlement of bills with contractors is yet to be effected, capitalisation is done on provisional basis subject to necessary adjustment in the year of final settlement.

(a) Freehold Land: Land acquired for mining, thermal plants, wind mills, solar plants and other related purposes including for establishing townships is in accordance with and subject to the provisions of the Land Acquisition Act, 1894 / Tamilnadu Acquisition of Land for Industrial Purpose Act, 1997, Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and amendments/changes made by respective State Govt. from period to period. The cost of the said land is capitalised on the date of taking over the possession/ transfer of title deed in favour of the Company.

(b) Lease hold Land: Land is taken on lease as per the provisions under Coal Bearing Area (Acquisition and Development) Act; 1957.The said leasehold land is capitalised when the entire land/substantial portion of land is ready for development and mining activity.

(c) Coal / Lignite Mines: The date of commercial operation in case of integrated mines (commissioned after 31^st March, 2019) shall mean the earliest of:-

a. The first date of the year succeeding the financial year in which 25% of the Peak Rated Capacity as per the Mining Plan is achieved; or.

b. The first date of the year succeeding the financial year in which the value of production estimated in accordance with CERC Regulation 2019-24, exceeds total expenditure in that financial year; or

c. The date of two years (i.e., Financial Year) from the date of commencement of production.

Capitalisation

a) Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b) Thermal Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronization and goes up to the date of commercial commissioning. The date of receipt of certificate from the statutory authorities pursuant to seventy-two hours full load operation is deemed as the date of commercial operation date (COD) for commissioning of the units. Depreciation charge commences from the month of commercial operations. Direct expenses and interest charges incurred during the test and trial run are capitalised and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c) Wind turbine Generators (WTG)

Each WTG is capitalised on the date on which it is connected to grid based on the commissioning and acceptance certificate issued by DISCOM''s.

d) Solar Power Plant

Solar Power Plants are capitalised on the date on which it is connected to Grid or the date of CoD if any specified in the agreement after complying necessary technical parameters. In case the date of CoD is latter than the date of connection to Grid, revenue if any arises from sale of infirm Power off sets to the Capital Cost of the project.

e) Other Assets

Other assets are capitalised when they are available for the use as intended by the management.

Depreciation is provided on cost of the property, plant and equipment net of estimated residual values over their estimated useful lives and is recognised in the Statement of Profit and Loss. Freehold land is not depreciated.

The cost of the land taken on lease is amortised from the date of commencement of commercial operation over the estimated useful life of the mine or life of the linked thermal power plant originally estimated whichever is less.

Depreciation is provided for under straight line method as indicated below:-

Description of Assets covered	Basis
i. (a) Assets of Thermal Power Stations excluding vehicles other than Ash Tippers (b) Wind Turbine Generator (WTG) and Solar Power Plants. (c) Life Extension Programme (''LEP'') Assets.	The Company follows the provisions of the Electricity Act 2003. Depreciation is as per the rates / guidelines prescribed by Central Electricity Regulatory Commission (CERC) pursuant to provisions of Electricity Act, 2003. As per the estimated life of the plant in line with guidelines issued by Ministry of New and Renewable Energy (''MNRE'')/CERC/SERC as applicable. Life assessed as per technical estimate / life approved by CERC/SERC.
ii. Residential Buildings	At useful life prescribed in Schedule II to the Companies Act, 2013.
iii. Buildings: Non-residential Buildings Plant & Machinery : CME other than dozers and pipe layers, Workshop machinery, pumps GWC &SWC pipes and Civil construction machinery.	At technically assessed life or useful life prescribed in Schedule II to the Companies Act, 2013.
iv. Specialised Mining Equipment :	At technically assessed life
v. Other Assets	At useful life prescribed in Schedule II of the Companies Act, 2013.
vi. Decommissioning cost capitalised with Property, Plant and Equipment	Depreciated similar to that of the Parent Asset
vii. Spares treated as PPE	At technically assessed life
viii. Asset costing less than '' 5,000	Fully depreciated in the year the asset is available for use

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis recognised from the month of capitalisation.

Depreciation on the following major assets is provided on the technically estimated useful life:

Asset	Useful Life of Asset in years
Specialised Mining Equipment	15
Furniture- Others	5 to 10
Fire Fighting Equipments	10
Photo copier	10
Air Conditioner and Refrigerator	10 to 14
Telecommunication Equipment	10

Amortisation of Mine Development Cost

Overburden removal and related costs are classified as mine development cost under Capital Work-In-Progress till achievement of quantity parameters as laid down for each project. On achievement of such quantity parameters, the mine development cost are capitalised as a ''Mining Development Cost''.

For the mines which are directly linked to feeding Thermal Power Plants, Such "Mine Development Cost" are amortised over the estimated life of the mine or the life originally/initially approved for the linked thermal power plant whichever is lesser. For the mines which are not directly linked to any specific feeding Thermal Power Plants, Such "Mine Development Cost" are amortised over the life estimated by the Management from the declaration of commercial operation.

Derecognition

Property, Plant and Equipment is derecognized when no future economic benefits are expected from their use or upon their disposal. Gains and losses on de-recognition of an item of property, plant and equipment are determined by comparing the proceeds from disposal, if any, with the carrying amount of property, plant and equipment, and are recognised in the Statement of Profit and Loss.

II. Intangible Assets

Recognition and measurement

The Company recognises an intangible asset and measures that at cost if, and only if:

(a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

(b) the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognised as an intangible asset when the Company can demonstrate the requirements as specified in Ind AS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than ''10 lakh and have finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

The estimated useful lives of intangible assets are as follows:

Development Cost (Internally generated projects)	Over the estimated useful life.
Expenditure during projects and subsequent expenditure	Over the residual life of the parent asset
Software costing more than ''10 lakh	5 years

Gains or losses arising from derecognition of an intangible asset are recognised in the Statement of Profit and Loss

III. Inventories

Inventories are valued at the lower of cost or Net Realizable Value.

Stock Items	Basis
Lignite / Coal	At absorption cost excluding allocated administration charges and social overhead.
Stores and Spares including light diesel oil, heavy furnace oil	At weighted average acquisition cost
Fly ash brick	At absorption cost
Waste product, used belt reconditioned, Stores and Spares discarded for disposal, medicines and canteen Stores	Nil
Goods in Transit including goods received but pending inspection/acceptance	Cost

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Non - Moving Stores and Spares.

The diminution in the value of obsolete, unserviceable, surplus and non-moving items of stores and spares (excluding insurance/Mandatory/Critical spares) are ascertained on review and provided for.

IV. Mine closure expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed '' 1 crore in each case.

VI. Financial Instruments Non-derivative Financial Assets Initial recognition and measurement

Financial assets are recognised at its fair value plus or minus, in the case of a financial asset not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement

Financial assets measured at amortised cost:

A financial asset is subsequently measured at amortised cost, using the effective interest method and net of any impairment loss, if:

• the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company''s financial assets consist of staff advances, trade receivables, etc.

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company. Control exist when the Company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity.

Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity''s returns.

Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost, if any

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement where by the parties that have joint control of the agreement have rights to the net assets of the joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Investments in joint ventures and associates are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Derecognition

Financial assets are derecognised when and only when:

• the contractual rights to the cash flows from the financial asset expire, or

• the right to receive cash flows from the asset has been transferred; or

• the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (''EIR'') method.Gains and losses are recognized in profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognised upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognised in the Statement of Profit and Loss.

Offsetting of Financial Instruments

Financial asset and financial liability are offset and the net amount is presented in the balance sheet when, and only when the Company:

• currently has a legally enforceable right to set off the recognised amounts; and

• Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

VII. Impairment

Financial Assets (including receivables)

Impairment of financial assets in accordance with Ind AS 109- ''Financial instruments'', the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits and bank balance.

(b) Financial assets that are debt instruments and are measured as at Fair Value Through OCI.

(c) Lease receivables under Ind AS 116.

(d) Trade receivables, unbilled revenue and contract assets under Ind AS 115.

(e) Loan commitments which are not measured as at Fair Value Through P&L.

(f ) Financial guarantee contracts which are not measured as at Fair Value Through P&L.

For trade receivables and contract assets/unbilled revenue, the Company applies the simplified approach required by Ind AS 109 Financial Instruments, which requires lifetime expected losses to be recognised from initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12 month ECL.

Non-financial assets

The carrying amounts of the Company''s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets.

Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognised in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognised accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz., in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility and other studies, development expenditure, expenditure on exploration works, technical know-how etc. The cost of the project is transferred to capital as and when implemented. In case such projects are identified for transfer of business by Govt. of India the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government / Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income when there is reasonable assurance that, it will be received and the Company will comply with the conditions associated with the grant. The deferred income is recognised in the Statement of Profit and Loss on a systematic basis over the useful life of the asset.

Related to income

Grants related to income are recognised in the Statement of Profit and Loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate or when the conditions related to the grant is fulfilled.

XI. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprises of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as and when the related service are provided.

The Company''s liability towards Gratuity, Post-Retirement Medical Facilities, Transport Allowance for settlement at home town, Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises.

Contribution towards Provident Fund and Gratuity is recognised as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January 2007 and Premium towards Post-Retirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest),are recognised immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognised in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain/loss on curtailment is recognised immediately in the Statement of Profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. Terminal benefits

Terminal benefits like Voluntary Retirement Service are expensed when the Company can no longer withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Liability towards VRS are booked in the year of exercise of option by the employee upto the date of closure of each offer in accordance with terms and conditions of each offer.

XII. Allocation of common charges/social overhead expenses/interest on working capital

These are allocated to production units based on salaries and wages of the respective units.

XIII. Prior period items, Accounting estimates and effect of change in Accounting Policy

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognised prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognised by adjusting the carrying amount of related assets/liability/equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in the respective Ind AS. In other cases, the changes in accounting policy are done retrospectively ; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the balance sheet date

Events of material nature occurring after the balance sheet date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.

XV. Revenue Recognition

Revenue from Operation includes (i) sale of Power generated by Thermal Power Stations, (ii) sale of power generated from renewable energy sources such as wind and solar,(iii) sale of lignite,(iv) sale of by products & joint products, (v) consultancy & management services relating to mining and power generation and (vi) commission on trading of power.

Revenue is recognised as per Ind AS-115 when the following criteria are met

(a) the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

(b) the entity can identify each party''s rights regarding the goods or services to be transferred;

(c) the entity can identify the payment terms for the goods or services to be transferred;

(d) the contract has commercial substance (i.e.,the risk, timing or amount of the entity''s future cash flows is expected to change as a result of the contract); and

(e) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer''s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the provisions of the Electricity Act, 2003, wherein the tariff rates are approved by the Central Electricity Regulatory Commission (CERC) / State Electricity Regulatory Commission (SERC).

The Company adopts the tariff rates as approved by CERC for the sale of power. Such Tariff rates include lignite transfer price which is subject to revision as calculated by the company from time to time in accordance with guidelines issued by Ministry of Coal (MoC) or as delegated by MoC.

In case where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines or as delegated by MoC on lignite transfer price for energy charges and other relevant CERC''s guidelines, for capacity charges are adopted.

Exchange differences arising from settlement of monetary items denominated in foreign currency to the extent recoverable from or payable to beneficiaries for the current accounting period as per the CERC Tariff Regulations are accounted for as Revenue/Expenditure, respectively.

Rebates/discounts allowed to beneficiaries/customers for early payment incentives are netted off with the amount of revenue from operations.

Sale of Un-Requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries is accounted net off sharing of any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognised in accordance with the price agreed under the Power Purchase Agreement (PPA) and in accordance with the orders passed by the respective State Electricity Regulatory Commission (SERC).

Sale of Lignite

Sale of Lignite, by e-auction sales has been reckoned to the extent of amount received. Sale of Lignite other than by e-auction is recognised in accordance with the agreement entered into with the respective parties. Consultancy, Technical and Management Services

Revenue from consultancy, technical and management services is recognised in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Commission on trading of power

Commission on trading of power for third party recognised on receipt of payment.

Other Income

Other income includes interest income, insurance claims, surcharge, dividend income, and income from sale of Scrap.

Interest income

Interest income with respect to advances provided to employees is recognised using the effective interest method. The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognised in the year of acceptance of the claim.

Insurance claims

Insurance claims are recognised in the period in which there is acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognised based on agreement with beneficiaries. On renewable power the same is recognised based on realisation / certainty of realisation.

Dividend Income

Dividend income is recognised when the shareholder''s right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVI. Foreign currency transactions

Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognised in the Statement of Profit and Loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognising in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognised in the financial statements prior to 31^st March 2016 as per the previous GAAP and continues to capitalise the same.

XVII. Income taxes

Income tax expense comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

• Temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria(s) set out in Ind AS 12 are met.

XVIII. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalisation of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for qualifying asset.

All other borrowing costs are expensed in the year in which they occur.

XIX. Leases

The Company has applied Ind AS 116 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under Ind AS 17.

At inception of a contract, the Company assesses whether a contract is, or contains, a lease as per the requirements under Ind AS 116. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This policy is applied to contracts entered into on or after 1^st April 2019.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices and aggregate standalone prices of non-lease components. However, for the leases of land and buildings and vehicles in which it is a lessee, the Company has elected not to separate non-lease components and account for lease and non-lease components as a single lease component.

i. As a Lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease payments included in the lease liability comprises of fixed payments (including in-substance fixed payments), residual value guarantees, and where the Company is reasonably certain to exercise purchase, renewal and termination options includes exercise price under a purchase option, lease payments in an optional renewal period, and penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is re-measured when there are any reassessments or lease modifications or revised in-substance fixed payments. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-to-use assets that do not meet the definition of investment property in ''property, plant and equipment'' and lease liabilities in ''loans and borrowings'' in the balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-use assets and lease liabilities for all short-term leases that have lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis or any other systematic basis over the lease term.

ii. As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease as per requirements under Ind AS 116.

To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risk and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease, if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 to allocate the consideration in the contract. The Company recognises lease payments received under operating leases as income on a straight-line basis over lease term as part of ''other income''.

Transition to Ind AS 116

The Company applied Ind AS 116 with a date of initial application of 1^st April 2019, using the modified retrospective approach, under which the cumulative effect of initial application is recognised in opening retained earnings at 1^st April 2019 and accordingly, the comparative information has not been restated and continues to be reported under Ind AS 17.

On transition, the Company elected to apply the practical expedient and grandfathered the assessment of which transactions are leases. Accordingly, it applied Ind AS 116 only on those contracts that were previously assessed and identified as leases under Ind AS 17 without any further assessment under Ind AS 116. Therefore, the definition of a lease under Ind AS 116 was applied only to contracts entered into on or after 1^st April 2019.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed by way of notes.

XXI. Cash and cash equivalents

Cash and cash equivalents 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 an insignificant risk of changes in value.

XXII. Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXIII. Operating segments

Segment reports are prepared in accordance with Ind AS 108. The operating segments used to present segment information are identified on the basis of internal reports used by the Company''s Management to allocate resources to the segments and assess their performance. The Board of Directors is collectively the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108.

The operating segments have been identified on the basis of the nature of products/services.

Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

XXIV. Dividend

Dividends and interim dividends payable to Company''s shareholders are recognised as changes in equity in the period in which they are approved by the shareholders meeting and the Board of Directors respectively.

XXV. Cash Flow Statement

Cash Flow Statement is prepared as per indirect method prescribed in the Ind AS 7 ''Statement of Cash Flow''.

XXVI. Regulatory Deferral Accounts

Income/Expense recognised in the statement of profit and loss to the extent recoverable from/payable to the beneficiaries in the subsequent periods as per CERC tariff regulations are recognised as Regulatory Deferral Account balances. Regulatory Deferral Account balances are adjusted from the year in which the same become recoverable from/payable to the beneficiaries.

Pending the disposal of review/ appeal petitions filed by the Company against adverse orders before CERC/SERC/Other Appellate Authorities, the impact of the said orders are considered under Regulatory Deferral Account in the statement of profit and loss of the respective financial year. In case of appeal by the beneficiary against the CERC/SERC orders, the impact on the same is not considered as Regulatory Deferral Liability and disclosed under Contingent Liability.

Regulatory deferral account balances are reviewed and evaluated at each balance sheet date to ensure the underlying activities meet the recognition criteria and it is probable that future economic benefits associated with such balances will flow to the entity. If this criteria are not met this regulatory deferral account balances are derecognised.

Regulatory Deferral Account Balances are presented as separate line item in the Balance Sheet. The movement in the regulatory deferral account balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2019

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act, 2013 and the Electricity Act, 2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (‘INR’) which is also the Company’s functional currency. All amounts are rounded to the nearest crore, except otherwise indicated.

b. Use of Estimates and Judgements

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognised in the financial year in which the results are known or materialised.

c. Current and Non-Current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is current when it is:

- Expected to be realised or intended to be sold or consumed in normal operating cycle;

- Held primarily for the purpose of trading;

- Expected to be realised within twelve months after the reporting period; or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle;

- It is held primarily for the purpose of trading;

- It is due to be settled within twelve months after the reporting period; or

- There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets/liabilities are classified as non-current.

Significant Accounting Policies

I. Property, Plant and Equipment Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalised as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS 101, the Company has availed the exemption where in the carrying value of the PPE as per Previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Cost of a self-constructed item of property, plant and equipment includes the cost of materials, direct labor, and any other costs including borrowing cost and overhead expenses directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by the management. Indirect expenses relating to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Thermal Power Stations resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated extended life of the unit from the completion of original life/from the date of synchronisation of the unit as the case maybe.

Machinery Spares

Initial spares purchased along with property, plant and equipment are capitalised and depreciated along with the main asset.

Spares purchased subsequent to commissioning of the asset which meets the requirements set out in IndAS 16 and costing INR 0.50 crore and above are treated as Property, Plant & Equipment.

Capitalisation of Land

(a) Freehold Land: Land acquired for mining, thermal plants, wind mills, solar plants and other related purposes including for establishing townships is in accordance with and subject to the provisions of the Land Acquisition Act, 1894 and Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The cost of the said land is capitalised on the date of taking over the possession/ transfer of title deed in favour of the company

(b) Lease hold Land: Land is taken on lease as per the provisions under Coal Bearing Area (Acquisition and Development) Act, 1957. The said leasehold land is capitalised when the entire land / substantial portion of land is ready for development and mining activity.

Capitalisation

a) Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b) Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to seventy two hours full load operation is deemed as the date of commercial operation date (COD) for commissioning of the units. Depreciation charge commences from the date of COD. Direct expenses and interest charges incurred during the test and trial run are capitalised and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c) Wind turbine Generators (WTG)

Each WTG is capitalised on the date on which it is connected to grid based on the commissioning and acceptance certificate issued by DISCOM’s. Depreciation charge commences from the date of capitalisation.

d) Solar Power Plant

Solar Power Plants are capitalised on the date on which it is connected to grid. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

e) Other Assets

Other assets are capitalized when they are available for the use as intended by the management. Depreciation / Amortisation

Depreciation is provided on cost of the property, plant and equipment net of estimated residual values over their estimated useful lives and is recognised in the Statement of Profit and Loss. Freehold land is not depreciated.

The cost of the land taken on lease is amortized from the date of commencement of commercial operation over the estimated useful life of the mine or life of the linked thermal power plant originally estimated whichever is less.

Depreciation is provided for under straight line method as indicated below:-

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis recognized from the month of capitalisation.

Amortisation of Mine Development Cost

Overburden removal and related costs are classified as mine development cost under Capital Work In Progress till achievement of quantity parameters as laid down for each project. On achievement of such quantity parameters, the mine development cost are capitalized as a ‘Mining Development Cost’.

For the mines which are directly linked to feeding Thermal Power Plants, such “Mine Development Cost” are amortised over the estimated life of the mine or the life originally /initially approved for the linked thermal power plant whichever is lesser. For the mines which are not directly linked to any specific feeding Thermal Power Plants, Such “Mine Development Cost” are amortised over the life estimated by the Management from the declaration of commercial operation. The Management undertakes a review of implementation of the mining projects from time to time. On such a review, a project which is under implementation is integrated with an existing mine in operation, if so warranted as per the technical assessment. The mine development expenditure, up to the date of such integration with an existing mine, is charged off to the statement of profit and loss in the year of such integration.

Derecognition

The gain or loss arising from the derecognition of an item of property, plant and equipment is be included in the Statement of Profit and Loss.

II. Intangible Assets

Recognition and measurement

The Company recognises an intangible asset and measures that at cost if, and only if:

(a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

(b) the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognised as an intangible asset when the Company can demonstrate the requirements as specified in IndAS38are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than Rs.10 lakh and have finite useful lives are measured at cost.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

The estimated useful lives of intangible assets are as follows:

Gains or losses arising from derecognition of an intangible asset are recognised in the Statement of Profit and Loss.

III. Inventories

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

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

IV. Mine closure expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed INR1 crore in each case.

VI. Financial Instruments Non-derivative financial assets Initial recognition and measurement

Financial assets are recognised at its fair value plus or minus, in the case of a financial asset not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement

Financial assets measured at amortised cost:

A financial asset is subsequently measured at amortised cost, using the effective interest method and net of any impairment loss, if:

- the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company’s financial assets consist of staff advances, investment in bonds, trade receivables, etc

Investment in Subsidiaries

A Subsidiary is an entity controlled by the Company. Control exist when the company has power over the entity, is exposed, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity.

Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity’s returns.

Investments in subsidiaries are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Investment in Joint Ventures and Associates

A joint venture is a type of joint agreement whereby the parties that have joint control of the agreement have rights to the net assets of the joint ventures. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Investments in joint ventures and associates are carried at cost. The cost comprises price paid to acquire investment and directly attributable cost.

Derecognition

Financial assets are derecognised when and only when:

- the contractual rights to the cash flows from the financial asset expire, or

- the right to receive cash flows from the asset has been transferred; or

- the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities

Initial recognition and measurement

Financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (‘EIR’) method. Gains and losses are recognised in profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognised upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognised in the Statement of Profit and Loss.

Offsetting of financial instruments

Financial asset and financial liability are offset and the net amount presented in the balance sheet when, and only when the Company:

- currently has a legally enforceable right to set off the recognised amounts; and

- Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

VII. Impairment

Financial assets (including receivables)

Expected loss are measured and provided either at an amount equal to (a) 12 month expected losses; or (b) lifetime expected losses. If the credit risk of the financial instrument has not increased significantly since inception, then an amount equal to 12 month expected loss is provided. In other cases, lifetime credit losses shall be provided.

Non-financial assets

The carrying amounts of the Company’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets.

Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognised in the Statement of Profit & Loss.

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognised accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz, in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility and other studies, development expenditure, expenditure on exploration works, technical knowhow etc. The cost of the project is transferred to capital as and when implemented. In case such projects are identified for transfer of business by Govt. of India the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government/Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income when there is reasonable assurance that they will be received and the company will comply with the conditions associated with the grant. The deferred income is recognised in statement of profit and loss on a systematic basis over the useful life of the asset.

Related to income

Grants related to income are those which are not related to assets are recognised in profit and loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate or when the conditions related to the grant is fulfilled.

XI. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprises of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as and when the related service are provided.

The Company’s liability towards Gratuity, Post Retirement Medical Facilities, Transport Allowance for settlement at home town ,Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises.

Contribution towards Provident Fund and Gratuity is recognised as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1st January 2007 and Premium towards Post Retirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method and accounted accordingly.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognised in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain / loss on curtailment is recognised immediately in profit and loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Termination benefits

Terminal benefits like Voluntary Retirement Service are expensed when the Company can no longer withdraw the offer of those benefits. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted. Liability towards VRS are booked in the year of exercise of option by the employee upto the date of closure of each offer in accordance with terms and conditions of each offer.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIII. Prior period items, Accounting estimates and effect of change in Accounting Policy.

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognised prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognised by adjusting the carrying amount of related assets/liability/equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the balance sheet date

Events of material nature occurring after the balance sheet date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10.

XV. Revenue Recognition

Revenue from Operation includes (i) sale of Power generated by Thermal Power Stations, ii) sale of power generated from renewable energy sources such as wind and solar, iii) sale of lignite and iv) sale of by products & joint products and v) consultancy & management services relating to mining and power generation.

Revenue is recognised as per IndAS-115 when the following criteria are met

(a) the parties to the contract have approved the contract (in writing, orally or in accordance with other customary business practices) and are committed to perform their respective obligations;

(b) the entity can identify each party’s rights regarding the goods or services to be transferred;

(c) the entity can identify the payment terms for the goods or services to be transferred;

(d) the contract has commercial substance (i.e., the risk, timing or amount of the entity’s future cash flows is expected to change as a result of the contract); and

(e) it is probable that the entity will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer. In evaluating whether collectability of an amount of consideration is probable, an entity shall consider only the customer’s ability and intention to pay that amount of consideration when it is due. The amount of consideration to which the entity will be entitled may be less than the price stated in the contract if the consideration is variable because the entity may offer the customer a price concession.

Sale of power generated by Thermal Power Stations

Sale of power is accounted in accordance with the provisions of the Electricity Act, 2003, wherein the tariff rates are approved by the Central Electricity Regulatory Commission (CERC)/ State Electricity Regulatory Commission (SERC).

The Company adopts the tariff rates as approved by CERC for the sale of power. Such Tariff rates includes lignite transfer price which is subject to revision as calculated by the company from time to time in accordance with guidelines issued by Ministry of Coal.

In case where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC’s guidelines, for capacity charges are adopted.

Exchange differences arising from settlement of monetary items denominated in foreign currency to the extent recoverable from or payable to beneficiaries for the current accounting period as per the CERC Tariff Regulations are accounted for as Revenue / Expenditure, respectively.

Rebates / discounts allowed to beneficiaries / customers for early payment incentives are netted off with the amount of revenue from operations.

Sale of Un-requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries is accounted net off sharing of any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognized in accordance with the price agreed under the Power Purchase Agreement (PPA) and in accordance with the orders passed by the respective State Electricity Regulatory Commission (SERC).

Sale of Lignite

Sale of Lignite, by e-auction sales has been reckoned to the extent of amount received. Sale of Lignite other than by e-auction is recognised in accordance with the agreement entered into with the respective parties.

Consultancy, Technical and Management Services

Revenue from consultancy, technical and management services is recognised in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Other Income

Other income includes interest income, insurance claims, surcharge, dividend income and income from sale of Scrap.

Interest income

Interest income with respect to advances provided to employees is recognised using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognised in the year of acceptance of the claim. Insurance claims

Insurance claims are recognized in the period in which there is acceptance of the claim.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognised based on agreement with beneficiaries. On renewable power the same is recognised based on realisation/certainty of realization.

Dividend Income

Dividend income is recognised when the shareholder’s right to receive payment is established.

Scrap Sale

Scrap is accounted for as and when sold.

XVI. Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period. Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognised in profit and loss in the period in which they arise.

The Company has availed the exemption provided under IndAS from recognising in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognised in the financial statements prior to 31st March 2016 as per the previous GAAP and continues to capitalise the same.

XVII. Income taxes

Income tax expense comprises current and deferred tax. It is recognised in profit and loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognised deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria(s) set out in Ind AS 12 are met.

XVIII. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed. When Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the capitalisation of the borrowing costs is computed based on the weighted average cost of general borrowing that are outstanding during the period and used for qualifying asset.

All other borrowing costs are expensed in the year in which they occur.

XIX. Leases Finance lease

Leases of property, plant and equipment that transfer to the Company substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and the lease rentals are recognized as expenses in the Statement of Profit and Loss on a straight line basis.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed by way of notes.

XXI. Cash and cash equivalents

Cash and cash equivalents 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 an insignificant risk of changes in value.

XXII. Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXIII. Operating segments

Segment reports are prepared in accordance with Ind AS 108. The operating segments used to present segment information are identified on the basis of internal reports used by the Company’s Management to allocate resources to the segments and assess their performance. The Board of Directors is collectively the Company’s’ Chief Operating Decision Maker’ or’ CODM’ within the meaning of Ind AS 108.

The operating segments have been identified on the basis of the nature of products / services.

Revenue directly attributable to the segments is considered as segment revenue. Expenses directly attributable to the segments and common expenses allocated on a reasonable basis are considered as segment expenses.

XXIV. Dividend

Dividends and interim dividends payable to Company’s shareholders are recognised as changes in equity in the period in which they are approved by the shareholders’ meeting and the Board of Directors respectively.

XXV. Cash Flow Statement

Cash flow statement is prepared as per indirect method prescribed in the Ind AS 7 ‘Statement of Cash Flow’.

XXVI. Regulatory Deferral Accounts

Income/Expense recognised in the statement of profit and loss to the extent recoverable from/payable to the beneficiaries in the subsequent periods as per CERC tariff regulations are recognised as Regulatory Deferral Account balances. Regulatory Deferral Account balances are adjusted from the year in which the same become recoverable from / payable to the beneficiaries.

Pending the disposal of review/ appeal petitions filed by the Company against adverse orders before CERC/SERC/Other Appellate Authorities, the impact of the said orders are considered under Regulatory Deferral Account in the statement of profit and loss of the respective financial year. In case of appeal by the beneficiary against the CERC/SERC orders, the impact on the same is not considered as Regulatory Deferral liability and disclosed under Contingent Liability.

Regulatory Deferral Account Balances are reviewed and evaluated at each balance sheet date to ensure the underlying activities meet the recognition criteria and it is probable that future economic benefits associated with such balances will flow to the entity. If this criterion are not met this Regulatory Deferral Account Balances are derecognised.

Regulatory Deferral Account Balances are presented as separate line item in the Balance Sheet. The movement in the Regulatory Deferral Account Balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2018

Reporting entity

NLC India Limited (formerly “Neyveli Lignite Corporation Limited”) (“NLC” or “the Company”), is a Government Company registered under the erstwhile Companies Act, 1956 with its Registered Office located at First Floor, No. 8, Mayor Sathyamurthy Road, FSD, Egmore Complex of FCI, Chetpet, Chennai - 600031 and is listed with the Bombay Stock Exchange Ltd and the National Stock Exchange of India Ltd. NLC is engaged in the business of mining of lignite and generation of power by using lignite as well as Renewable Energy Sources.

Basis of preparation

a. Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (‘Ind AS’) notified under the Companies (Indian Accounting Standards) Rules, 2015, the relevant provisions of the Companies Act, 2013 and the Electricity Act, 2003.

The financial statements have been prepared on a historical cost basis, except otherwise stated.

The financial statements are presented in Indian Rupees (‘INR’) which is also the Company’s functional currency. All amounts are rounded to the nearest crore, except otherwise indicated.

b. Use of Estimates and Judgments

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes, requiring a material adjustment in the carrying amounts of assets or liabilities in the future periods. Difference between the actual results and estimates are recognized in the financial year in which the results are known or materialized.

Significant Accounting Policies

I. Property, Plant and Equipment Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalized as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS 101, the Company has availed the exemption where in the carrying value of the PPE as per Previous GAAP has been treated as the deemed cost on the date of transition to IndAS.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Administration and general overhead expenses attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of property, plant and equipment resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated life of the unit from the date of synchronization.

Machinery Spares

Initial spares purchased along with property, plant and equipment are capitalized and depreciated along with the asset.

Spares purchased subsequent to commissioning of the asset which meets the requirements set out in IndAS 16 and costing Rs, 0.50 crore and above are treated as Property, Plant & Equipment.

Land

Land for mining in Tamil Nadu is acquired in accordance with and subject to the provisions of Land Acquisition Act 1894 and Tamil Nadu Acquisition of Land for Industrial purpose Act 1997 read with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Land is capitalized with reference to the date of taking over the physical possession of land at the value of consideration paid.

Construction projects

Capitalization and Depreciation

a) Specialized Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialized Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalization and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b) Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronization and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalized and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c) Wind turbine Generators (WTG)

Each WTG are capitalized on the date on which it is connected to grid based on the commissioning certificate issued by TANGEDCO. Depreciation charge commence from the date of capitalization.

d) Solar Power

Solar Power Plants are capitalized on the date on which it is connected to grid.

Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets. Other assets are capitalized when they are available for use.

Depreciation / Amortization

Depreciation is provided on cost of the property, plant and equipment less their estimated residual values over their estimated useful lives, and is recognized in the Statement of Profit and Loss. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land taken on lease is amortized over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

The Company depreciates Property, Plant and Equipment based on rates provided under Schedule-II of the Companies Act, 2013 or based on management estimate of useful lives which it deems fit to represent the useful life of each Property, Plant and Equipment.

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, for the period the asset is available for use.

Amortization of Mine Development Account

Overburden removal costs are classified undermine development cost till achievement of quantity parameters as approved for each project. Such expenditure are to be amortized over the estimated life of the mine from the period of commencement of production or the life originally /initially approved for the linked power plant i.e. 25 years, whichever is lesser.

Derecognition

The gain or loss arising from the derecognition of an item of property, plant and equipment is be included in the Statement of Profit and Loss.

II. Intangible Assets

Recognition and measurement

The Company recognizes an intangible asset and measures at cost if, and only if:

(a) It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

(b) the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognized as an intangible asset when the Company can demonstrate the requirements as specified in IndAS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than Rs,10 lakh and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates.

Gains or losses arising from derecognition of an intangible asset are recognized in the Statement of Profit and Loss.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

IV. Mine closure expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs, 1 crore in each case.

VI. Financial Instruments Non-derivative financial assets Initial recognition and measurement

Financial assets are recognized at its fair value plus or minus, in the case of a financial asset not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement

Financial assets measured at amortized cost:

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment loss, if:

- the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company’s financial assets consist of staff advances, investment in bonds, trade receivables, etc.

Derecognition

Financial assets are derecognized when and only when:

- the contractual rights to the cash flows from the financial asset expire, or

- the right to receive cash flows from the asset has been transferred; or

- the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortized cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (‘EIR’) method. Gains and losses are recognized in profit and loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognized upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognized in the Statement of Profit and Loss.

Offsetting of financial instruments

Financial asset and financial liability are offset and the net amount presented in the balance sheet when, and only when the Company:

- currently has a legally enforceable right to set off the recognized amounts; and

- Intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

VII. Impairment

Financial assets (including receivables)

Expected loss are measured and provided either at an amount equal to (a) 12 month expected losses; or (b) lifetime expected losses. If the credit risk of the financial instrument has not increased significantly since inception, then an amount equal to 12 month expected loss is provided. In other cases, lifetime credit losses shall be provided.

Non-financial assets

The carrying amounts of the Company’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets.

Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognized in the Statement of Profit & Loss

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognized accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fairdale measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz, in respect of financial assets and financial liabilities.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility studies, documentation of data, other development expenditure, expenditure on exploration works, technical knowhow etc. to be added to the capital cost of the project as and when implemented. In case such projects are identified for transfer of business by Govt. of India the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government/Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income. Related to income

Grants related to income are those which are not related to assets.

Grants are recognized in profit and loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate or over the period during which the conditions related to the grant is fulfilled.

XI. Employee benefits Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprises of wages, salaries, incentives, short-term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as the related service are provided.

Contributions towards Gratuity, Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises. Contribution towards Provident Fund and Gratuity is recognized as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January 2007 and Premium towards Postretirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fairvalue of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain / loss on curtailment is recognized immediately in profit and loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Termination benefits

Terminal benefits like Voluntary Retirement Service are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of the se units.

XIII. Prior period items, Accounting estimates and effect of change in Accounting Policy.

Prior period items/errors of material nature are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred. If the prior period error found material occurred before the earliest period presented, the opening balances of assets, liabilities and equity for the earliest period presented, are restated.

The effect of change in accounting estimate is recognized prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognized by adjusting the carrying amount of related assets/liability/equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the balance sheet date

Events of material nature occurring after the balance sheet date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in IndAS 10

XV. Revenue Recognition

Sale of power generated by Thermal Power Stations

Sale of power is accounted for by following the Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. However the orders of CERC when contested sale of power continued to be accounted as per petition filed based on the guidelines issued by CERC/Ministry of Coal pending disposal of appeal by APTEL. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC norms and parameters for capacity charges are adopted.

Sale of Un-requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries is net off any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognized in accordance with the price agreed under the Power Purchase Agreement and in accordance with orders passed by the Tamil Nadu Electricity Regulatory Commission. Revenue is recognized based on the units actual units of power transmitted.

Sale of Lignite

Sale of Lignite, by e-auction sales has been reckoned to the extent of amount received. Sale of Lignite other than by e-auction is recognized in accordance with the agreement entered into with the respective parties.

Consultancy and management services

Revenue from consultancy / management services is recognized in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed based on the agreement with service recipient.

Other Income Interest income

Interest income with respect to advances provided to employees is recognized using the effective interest method. The ‘effective interest rate’ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

In calculating interest income, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired). However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Interest income due on income tax recoverable is recognized in the year of acceptance of the claim. Insurance claims

Insurance claims are recognized in the period in which there is acceptance of the claim/certainty of realization, as the case may be.

Surcharge

The interest/surcharge on late payment/overdue sundry debtors on thermal power is recognized based on agreement with beneficiaries. On renewable power the same is recognized based on realization/certainty of realization.

Dividends

Dividend income is recognized when the shareholder’s right to receive payment is established.

Others

Claims due from beneficiaries which do not fall within the tariff rate fixation norms are recognized as income in the year incurring of the expenditure and final adjustments, if any, will be accounted on receipt of order from CERC.

Cash discounts for prompt payments are accounted as and when the related dues are settled and presented net of revenue.

XVI. Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period. Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognized in profit and loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognizing in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognized in the financial statements prior to 31st March 2016 as per the previous GAAP and continues to capitalize the same.

XVII. Income taxes

Income tax expense comprises current and deferred tax. It is recognized in profit and loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria(s) set out in IndAS 12 are met.

XVIII. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed.

All other borrowing costs are expensed in the year in which they occur.

XIX. Leases Finance lease

Leases of property, plant and equipment that transfer to the Company substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and the lease rentals are recognized as expenses in the Statement of Profit and Loss on a straight line basis.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognized when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed byway of notes.

XXI. Cash and cash equivalents

Cash and cash equivalents 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 an insignificant risk of changes in value.

XXII. Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXIII. Regulatory Deferral Accounts

The tariffs for the sale of power are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. However the orders of CERC when contested, sale of power continued to be accounted as per petition filed based on the guidelines issued by CERC / Ministry of Coal pending disposal of appeal by APTEL. In case where the rates are not yet approved, the Company recognizes revenue based on provisional tariff rates.

The expense / income that will be recovered / refunded from / to the beneficiaries are recognized as ‘Regulatory Deferral Account Balances’ (i.e. consisting of regulatory deferral debit balances and regulatory deferral credit balances). Relevant income / expenses are recognized in the statement of profit and loss to the extent recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations / other Guidelines. Regulatory Deferral Account Balances are also recognized in respect of items within the tariff fixation norms, which are subject to approval by CERC at the end of Tariff Period. Regulatory Deferral Account Balances are presented as separate line items in the Balance Sheet. The movement in the regulatory deferral account balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2017

I. Property, Plant and Equipment Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of acquisition is inclusive of taxes, duties, freight, installation allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement. The cost of Property, Plant and Equipment also includes the present value of obligations arising, if any, from decommissioning, restoration and similar liabilities related to the same. The present value of those costs (decommission and/or restoration costs) is capitalised as an asset and depreciated over the useful life of the asset.

In accordance with Ind AS 101, the company has availed the exemption where in the carrying value of the PPE as per Previous GAAP has been treated as the deemed cost on the date of transition to Ind AS.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Items costing more than 25% of the original cost of the whole of the asset(s) are only considered as significant part.

Administration and general overhead expenses attributable to construction of property, plant and equipment incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related assets.

Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of property, plant and equipment resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated life of the unit from the date of synchronisation.

Machinery Spares

Initial spares purchased along with property, plant and equipment are capitalised and depreciated along with the asset.

Spares purchased subsequent to commissioning of the asset which meets the requirements set out in Ind AS 16 and costing INR 0.50 crore and above are treated as Property, Plant & Equipment.

Land for mining

Land for mining in Tamil Nadu is acquired in accordance with and subject to the provisions of Land Acquisition Act 1894 and Tamil Nadu Acquisition of Land for Industrial purpose Act 1997 read with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Land is capitalised with reference to the date of taking over the physical possession of land at the value of consideration paid.

Construction projects

Capitalisation and Depreciation

a. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

b. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the revenue from Sale of Power, if any, earned during that period is abated to the capital cost of the project.

c. Wind turbine Generators (WTG)

Each WTG are capitalised on the date on which it is connected to grid based on the commissioning certificate issued by TANGEDCO. Depreciation charge commence from the date of capitalisation.

d. Solar Power

Solar Power Plants are capitalised on the date on which it is connected to grid.

Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

Other assets are capitalised when they are available for use.

Depreciation

Depreciation is provided on cost of the property, plant and equipment less their estimated residual values over their estimated useful lives, and is recognised in the Statement of Profit and Loss. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land taken on lease is amortised over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.

Depreciation is provided for under straight line method as indicated below:-

The Company depreciates Property, Plant and Equipment based on rates provided under Schedule-II of the Companies Act, 2013 or based on management estimate of useful lives which it deems fit to represent the useful life of each Property, Plant and Equipment.

Property, plant and equipment relating to Research and Development are depreciated in a like manner as any other asset of the Company.

In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, for the period the asset is available for use.

Amortisation of Mine Development Account

Overburden removal costs are classified under mine development account till achievement of quantity parameters as approved for each Project. Such amounts are amortized as depreciation on the basis of annual Lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced.

Derecognition

The gain or loss arising from the derecognition of an item of property, plant and equipment is be included in the Statement of Profit and Loss.

II. Intangible Assets

Recognition and measurement

The Company recognises an intangible asset and measures at cost if, and only if:

(a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

(b) the cost of the asset can be measured reliably.

Research and development Cost - Research costs are expensed as and when incurred. Development cost, if reliably measurable, on an individual project are recognised as an intangible asset when the Company can demonstrate the requirements as specified in Ind AS 38 are met.

Other intangible assets - Other Intangible Assets including Computer software that are acquired by the Company for an amount more than Rs.10 lakh and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

The estimated useful lives of intangible assets are as follows:

Gains or losses arising from derecognition of an intangible asset are recognised in the Statement of Profit and Loss.

III. Inventories

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

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

IV. Mine closure expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed INR 1 crore in each case.

VI. Financial Instruments Non-derivative financial assets Initial recognition and measurement

Financial assets are recognised at its fair value plus or minus, in the case of a financial asset not at fair value through profit and loss, transaction costs that are directly attributable to the acquisition of the financial asset.

Subsequent measurement

Financial assets measured at amortised cost:

A financial asset is subsequently measured at amortised cost, using the effective interest method and net of any impairment loss, if:

- the asset is held within the business model whose objective is to hold assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

The Company’s financial assets consist of staff advances, investment in bonds, trade receivables, etc.

Derecognition

Financial assets are derecognised when and only when:

- the contractual rights to the cash flows from the financial asset expire, or

- the right to receive cash flows from the asset has been transferred; or

- the contractual right to receive the cash flow is retained and also an obligation to pay the received cash flows in full without material delay to a third party under an arrangement is assumed.

Non-derivative financial liabilities Initial recognition and measurement

Financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, borrowings, etc.

Subsequent measurement

Financial liabilities measured at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (‘EIR’) method. Gains and losses are recognised in profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.

Derecognition

A financial liability is derecognised upon extinguishment of such liability, i.e., through discharge or cancellation or expiration of the obligation under the liability. An exchange of debt instruments with substantially different terms or a substantial modification of the terms of the existing financial liability or part of it shall be accounted for as extinguishment of original financial liability and recognition of new financial liability. Any differences arising between the respective carrying amount is recognised in the Statement of Profit and Loss.

Offsetting of financial instruments

Financial asset and financial liability are offset and the net amount presented in the balance sheet when, and only when the Company:

- currently has a legally enforceable right to set off the recognised amounts; and

- intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

VII. Impairment

Financial assets (including receivables)

Expected loss are measured and provided either at an amount equal to (a) 12 month expected losses; or (b) lifetime expected losses. If the credit risk of the financial instrument has not increased significantly since inception, then an amount equal to 12 month expected loss is provided. In other cases, lifetime credit losses shall be provided.

Non-financial assets

The carrying amounts of the Company’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

Impairment losses are provided for Cash Generating Units (CGU) and also for individual assets.

Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (Company of units) on a pro rata basis.

Impairment loss of individual assets being the excess of the carrying amount over its recoverable amount is recognised in the Statement of Profit & Loss

On review of impairment loss at the end of each reporting period any decrease in or non-existence of impairment loss are recognised accordingly.

VIII. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is the use of fair value at the measurement date in measuring the assets and liabilities of an entity. The Company opts not to follow fair value measurement except where it is required to follow as per Ind AS 113 viz, in respect of financial assets and financial liabilities as stated in note (v) or (vi) above.

IX. Preliminary project development expenditure

Preliminary project development expenditure includes expenditure on feasibility studies, documentation of data, other development expenditure, expenditure on exploration works, technical knowhow etc. to be added to the capital cost of the project as and when implemented. In case such projects are identified for transfer of business by Govt. of India the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or otherwise, such expenditure are charged to the Statement of Profit and Loss in the respective years.

X. Government/Other Grants Related to assets

Grants related to assets are presented in the balance sheet by setting up the grant as deferred income.

Related to income

Grants related to income are those which are not related to assets.

Grants are recognised in profit and loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate or over the period during which the conditions related to the grant is fulfilled.

XI. Employee benefits

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present, legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Short term employee benefits comprises of wages, salaries, incentives, short term leave salary etc.

Post-employment benefits

Obligations for contributions to post-employment benefits are expensed as the related service are provided.

Contributions towards Gratuity, Earned Leave, Half-Pay Leave, and Provident Fund are considered as Defined Benefit Plan and provided for in accordance with the Guidelines issued by Department of Public Enterprises. Contribution towards Provident Fund and Gratuity is recognised as per the valuation made by an Independent Actuary and these amounts are funded to the respective Trust/Institution.

Contribution towards Post-Retirement Medical Benefit Scheme comprising of fixed amount of annual assistance (PRMA) in respect of employees retired prior to 1^st January 2007 and Premium towards PostRetirement Medical Insurance (PRMI) are treated as Defined Contribution Plans.

The Company’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of the plan assets.

The amount of defined benefit obligations is computed quarterly and annually by an independent actuary using the projected unit credit method.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in Other Comprehensive Income (OCI). Net interest expense/income, service cost and other expenses related to defined benefit plans are recognized in profit and loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain / loss on curtailment is recognised immediately in profit and loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Termination benefits

Termination benefits like Voluntary Retirement Service are expensed at the earlier of when the Company can no longer withdraw the offer of those benefits and when the Company recognizes costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, then they are discounted.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIII. Prior period items, Accounting estimates and effect of change in Accounting Policy.

Prior period errors of material nature, are corrected retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred or if the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and equity for the earliest prior period presented. Transactions arising out of those specified above exceeding INR 1 crore in each case are considered as material for this purpose.

The effect of change in accounting estimate is recognised prospectively in the Statement of Profit and Loss except where they relate to assets and liabilities, the same is recognised by adjusting the carrying amount of related assets/liability/equity in the period of change.

Changes in accounting policy due to initial application of Ind AS are dealt with in accordance with specific transitional provisions, if any in Ind AS. In other cases, the changes in accounting policy are done retrospectively; the application of such change is limited to the earliest period practicable.

XIV. Events occurring after the balance sheet date

Events occurring after the balance sheet date are those events that occur between the end of the reporting period and the date when the financial statements are approved by the Board of Directors. Such events are disclosed or given effect to in the financial statements as provided for in Ind AS 10. For this purpose, events having an effect of INR 1 crore and above in value in each case is considered as significant and dealt accordingly.

XV. Revenue

Sale of power generated by Thermal Power Stations

Sale of power is accounted for by following the Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC’s norms and parameters for capacity charges, are adopted.

Sale of Un-requisitioned Surplus Power

Sale of surplus power (if any) which is traded through power exchange on consent from the beneficiaries is net off any gain arising from such sale.

Sale of Power through Renewable Energy Sources

Revenue from sale of solar energy and wind energy are recognised in accordance with the price agreed under the Power Purchase Agreement and in accordance with orders passed by the Tamil Nadu Electricity Regulatory Commission. Revenue is recognised based on the units actual units of power transmitted.

Sale of Lignite

Sale of Lignite, by e-auction sales has been reckoned to the extent of amount received. Sale of Lignite other than by e-auction is recognised in accordance with the agreement entered into with the respective parties.

Others

Claim towards insurance, surcharge on belated settlement of power bills and interest including delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/ certainty of realisation as the case may be.

Claims due from beneficiaries which do not fall within the tariff rate fixation norms are recognised as income in the year incurring of the expenditure and final adjustments, if any, will be accounted on receipt of order from CERC.

Cash discounts for prompt payments are accounted as and when the related dues are settled and presented net of revenue.

Dividends

Dividend income is recognised when the shareholder’s right to receive payment is established.

XVI. Foreign currency transactions Initial recognition and measurement

Foreign currency transaction is recorded in the functional currency, by applying to the foreign currency exchange rate between the functional currency and the foreign currency at the date of the transaction.

Subsequent measurement

Foreign currency monetary items are translated at the closing rate at the end of each reporting period.

Recognition of exchange gain/loss

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were recorded on initial recognition during the period or translated in previous financial statements are recognised in profit and loss in the period in which they arise.

The Company has availed the exemption provided under Ind AS from recognising in the Statement of Profit and Loss the exchange difference arising on translation of long term foreign currency monetary items recognised in the financial statements prior to 31^st March 2016 as per the previous GAAP and continues to capitalise the same.

XVII. Income taxes

Income tax expense comprises current and deferred tax. It is recognized in profit and loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable in respect of previous years. The amount of current tax payable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if certain criteria are met.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit and loss;

- temporary differences related to investments in subsidiaries to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are adjusted accordingly.

Unrecognised deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only if certain criteria(s) set out in Ind AS 12 are met.

XVIII. Borrowing cost

Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences in respect of long term foreign currency liabilities of the respective asset to the extent regarded as an adjustment to the borrowing costs.

Borrowing costs (net of interest earned on temporary investments) directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Interest is computed on weighted average cost of funds deployed.

All other borrowing costs are expensed in the year in which they occur.

XIX. Leases Finance lease

Leases of property, plant and equipment that transfer to the Company substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases are classified as operating leases and the lease rentals are recognized as expenses in the Statement of Profit and Loss on a straight line basis.

XX. Provisions and Contingent Liability Recognition and measurement

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Provisions are not discounted to present value.

Contingent Liability is not provided for in the accounts and are disclosed by way of notes.

XXI. Cash and cash equivalents

Cash equivalents are held for the purpose of meeting short-term cash commitments and do not include investments or deposits for other purposes.

XXII. Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is calculated by taking the weighted average number of ordinary shares which is calculated for basic earnings per share and adjusted to the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. Dilutive potential ordinary shares are deemed to have been converted into ordinary shares at the beginning of the period or, if later, the date of the issue of the potential ordinary shares.

XXIII. Regulatory Deferral Accounts

The tariffs for the sale of power are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In cases where the rates are not yet approved, the Company recognises revenue based on provisional tariff rates. The expense/ income that will be recovered/ refunded from/ to the beneficiaries are recognised as ‘Regulatory Deferral Account Balances’. Regulatory Deferral Account Balances are also recognised in respect of items within the tariff fixation norms, which are subject to approval by CERC at the end of Tariff Period. Regulatory Deferral Account Balances are presented as separate line items in the Balance Sheet.

The movement in the regulatory deferral account balances for the reporting period is presented as a separate line item in the Statement of Profit and Loss.

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Mar 31, 2016

I. Basis of Accounting

The financial statements are prepared on accrual basis of accounting under historical cost convention, in accordance with generally accepted accounting principles, accounting standards, the relevant provisions of the Companies Act, 2013 and Electricity Act, 2003 to the extent applicable.

II. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation allocated incidental expenditure during construction / acquisition and necessary adjustments in the year of final settlement.

Administrative overhead expenses attributable to construction of fixed assets incurred till they are ready for their intended use are identified and allocated on a systematic basis to the cost of related asset.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act, 1894 and Tamilnadu Acquisition of Land for Industrial purpose Act, 1997 read with the Right to fair Compensation and transparency in land Acquisition, Rehabilitation and Resettlement Act, 2013. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

2. A part of the asset having original cost more than 25% of the original cost of the whole of the asset is considered as significant part of the asset. Significant parts whose useful life is different from that of the whole of the asset, such significant part is determined separately and accordingly depreciated over its useful life.

3. Fixed assets relating to Research and Development are depreciated in a like manner as any other fixed asset of the Company.

4. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

5. Assets costing up to Rs.5000/- are fully depreciated in the year in which they are put to use.

6. Amortisation of Mine Development Account:

Over burden removal costs are classified under mine development account till achievement of quantity para-meters as approved for each Project. Such amounts are amortised as depreciation on the basis of annual Lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

7. Machinery Spares:

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of Fixed Asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the Fixed Assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilisation.

IV. Intangible Assets

a. Computer Software

Application Software acquired for an amount more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b. Research & Development (Internally generated projects)

i. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Inventory Valuation

Inventories are valued at lower of cost and net realisable value. The basis of cost :- i. Lignite: - At absorption cost, excluding share of common charges and social overhead. ii. Stores and Spares procured: - At weighted average acquisition cost. iii. Fly ash brick – at absorption cost.

iv. Waste product, used belts reconditioned, Stores and spares discarded for disposal, medicine and canteen stores are taken at NIL value.

v. Goods in Transit including goods received but pending inspection/acceptance are valued at cost.

VI. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

VII. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VIII. Investments

Long Term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

IX. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

X. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as ''Deferred income'' and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

XI. Reserves and Surplus Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

XII. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard-15 (Revised) 2005:

i. Short term employee benefits such as wages, salaries, incentives, short term Leave Salary are fully provided for.

ii. Long term employee benefits such as Leave Salary are provided for as per Department of Public Enterprises Guideline and actuarial valuation and also funded to Trust.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to Gratuity Trust.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly in respect of the employees retired prior to 01-01-2007 for which a separate reserve fund is created out of the accumulated reserve profit with corresponding investments

v. Contribution to Provident Fund and Superannuation Fund which includes Post Retirement Medical Assistance are recognised in the Profit & Loss Account on the basis of actual liability and funded to Trust.

XIII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIV. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case are considered as material and accounted under Prior Period Transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior Period/ Extra-ordinary items are not considered for stock valuation purposes.

XV. Significant events occurring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XVI. Revenue Recognition

a) Sale of power is accounted for by following Electricity Act 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC''s norms and parameters for capacity charges, are adopted.

b) Exchange differences on account of translation of foreign currency borrowings recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are accounted as ''Deferred foreign currency fluctuation asset/liability''. The increase or decrease in depreciation/interest for the year due to the accounting of such exchange differences as per accounting policy no.XVII below is adjusted in depreciation/interest.

c) Claims due from beneficiaries which do not fall within the tariff rate fixation norms (other than reimbursement on account of Exchange Rate Variation on repayment of loans) is recognised as income in the year of incurring of the expenditure and final adjustments, if any, will be accounted on receipt of order from CERC.

d) Revenue from sale of solar energy and wind energy is recognised in accordance with the price agreed under the provisions of the power purchase agreement entered into with Beneficiaries. Such revenue is recognised on the basis of actual units generated and transmitted.

e) Sale of Lignite, in respect of e-auction sales has been reckoned to the extent of amount received and for others on accrual basis.

f) Claim towards insurance, surcharge on belated settlement of power bills and interest including delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/ certainty of realisation as the case may be.

g) Cash discounts for prompt payments are accounted as and when the related dues are settled.

XVII. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006, and an option has been exercised to capitalise the exchange difference as per para 46 of Accounting Standard-11.

XVIII. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are reviewed at each Balance Sheet date.

XIX. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specifically attributable to the assets are capitalised along with the cost of such assets and in general weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to Seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

C. Wind Turbine Generators (WTG)

Each WTG will be capitalised on the date on which it is connected to grid based on the commissioning certificate issued by TANGEDCO. Depreciation charges will start from the date of capitalisation.

D. Solar Project

Solar Power Plant will be capitalised on the date on which it is connected to grid. 2. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

XXI. Provisions and Contingent liability

A provision is recognised when the company has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determined based on best estimate required to settle the obligation at the balance sheet date.

Contingent liability is not provided for in the accounts and are disclosed by way of notes.

XXII. Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Fixed Assets resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated life of the unit from the date of synchronisation.

---

Mar 31, 2015

I. Basis of Accounting

The financial statements are prepared on accrual basis of accounting under historical cost convention, in accordance with Generally Accepted Accounting Principles, Accounting Standards, the relevant provisions of the Companies Act, 2013 and Electricity Act, 2003 to the extent applicable.

II. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation allocated incidental expenditure during construction / acquisition and necessary adjustments in the year of final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act 1894 and Tamilnadu Acquisition of Land for Industrial purpose Act 1997 read with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

III. Depreciation

1. Depreciation is provided for under straight-line method as indicated below:

Description of Assets covered Basis

i. a) Assets of Thermal Power The Company follows the Stations and provisions of the Wind Turbine Generators excluding Electricity Act 2003. The vehicles other than Ash Tippers. rates are prescribed by Central Electricity Regulatory Commission (CERC) pursuant to provisions of Electricity Act 2003.

b) LEP assets At residuary life of 15 years

ii. Residential Buildings - III Class At rates prescribed by Department of Public Enterprises.

iii.Buildings :

Non-residential Buildings

Plant & Machinery :

CME other than dozers and pipe layers, Workshop machinery, pumps GWC &SWC At technically assessed pipes and Civil construction machinery. rates.

iv. Specialised Mining Equipment : Commissioned on or after 31.08.2007

v. Other Assets At useful life prescribed in Schedule II of the Companies Act, 2013.

Rates under (ii) and (iii) above are followed so long as they are higher than the useful life covered under base (v).

2. Fixed assets relating to Research and Development are depreciated in a like manner as any other fixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing up to Rs. 5000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account:

Overburden removal costs are classified under mine development account till achievement of quantity parameters as approved for each Project. Such amounts are amortized as depreciation on the basis of annual Lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

6. Machinery Spares:

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs. 50 lakh and above which can be used only in connection with an item of Fixed Asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the Fixed Assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilization.

IV. Intangible Assets

a. Computer Software

i) Application Software acquired for an amount more than Rs. 10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

ii) Computer Application Software acquired for an amount of less than Rs.10 lakh are fully depreciated in the year in which it has been acquired.

b. Research & Development (Internally generated projects)

i) Expenditure incurred during the phase of research is charged to revenue.

ii) Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Inventory Valuation

Inventories are valued at lower of cost and net realisable value.

The basis of cost :-

i. Lignite:- At absorption cost, excluding share of common charges and social overhead.

ii. Stores and Spares procured:- At weighted average acquisition cost.

iii. Fly ash brick:- At absorption cost.

iv. Waste product, used belts reconditioned, Stores and Spares discarded for disposal, medicine and canteen stores are taken at NIL value.

VI. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

VII. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VIII. Investments

Long term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

IX. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know-how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

X. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as ''Deferred income'' and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

XI. Reserves and Surplus Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

XII. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard-15 (Revised) 2005:

i. Short term employee benefits such as wages, salaries, incentives, short term Leave Salary are fully provided for.

ii. Long term employee benefits such as Leave Salary are provided for as per Department of Public Enterprises Guideline and actuarial valuation and also funded to Trust.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to Gratuity Trust.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly in respect of the employees retired prior to 01-01-2007 for which a separate reserve fund is created out of the accumulated reserve profit with corresponding investments

v. Contribution to Provident Fund and Superannuation Fund which includes Post Retirement Medical Assistance are recognised in the Profit & Loss Account on the basis of actual liability and funded to Trust.

XIII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIV. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case are considered as material and accounted under Prior Period Transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior Period/ Extra-ordinary items are not considered for stock valuation purposes.

XV. Significant events occurring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XVI. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC''s norms and parameters for capacity charges, are adopted.

b. Sale of Lignite, in respect of e-auction sales has been reckoned to the extent of amount received and for others on accrual basis.

c. Claim towards insurance, surcharge on belated settlement of power bills and interest including delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/ certainty of realisation as the case may be.

d. Cash discounts for prompt payments are accounted as and when the related dues are settled.

e. Exchange differences on account of translation of foreign currency borrowings recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are accounted as ''Deferred foreign currency fluctuation asset/liability''. The increase or decrease in depreciation/interest for the year due to the accounting of such exchange difference is adjusted in depreciation/interest.

XVII. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006, and an option has been exercised to capitalise the exchange difference as per para 46 of Accounting Standard-11.

XVIII. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are reviewed at each Balance Sheet date.

XIX. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specifically attributable to the assets are capitalised along with the cost of such assets and where the borrowings are not specific, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to Seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

C. Wind turbine Generators (WTG)

Each WTG will be capitalised on the date on which it is connected to grid based on the commissioning certificate issued by TANGEDCO. Depreciation charges will start from the date of capitalisation.

2. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

XXI. Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Fixed Assets resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated life of the unit from the date of synchronisation.

---

Mar 31, 2014

I. Basis of Accounting

The financial statements are prepared on accrual basis of accounting under historical cost convention, in accordance with generally accepted accounting principles, accounting standards, the relevant provisions of the Companies Act, 1956 and Electricity Act, 2003 to the extent applicable.

II. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act, 1894 and Tamilnadu Acquisition of Land for Industrial Purpose Act, 1997. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

2. Fixed assets relating to Research and Development are depreciated in a like manner as any other fixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing up to Rs.5000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account:

Overburden removal costs are classified under mine development account till achievement of quantity para-meters as approved for each Project. Such amounts are amortised as depreciation on the basis of annual lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

6. Machinery Spares :

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of Fixed Asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the Fixed Assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilisation.

IV. Intangible Assets

a. Computer Software:

Application Software acquired for an amount of more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b. Research & Development (Internally generated projects):

i. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Inventory Valuation

Value of Inventory at the lower of cost and net realisable value. The basis of cost :- i. Lignite:- At absorption cost, excluding share of common charges and social overhead. ii. Stores and Spares procured:- At weighted average acquisition cost. iii. Fly ash brick:- At absorption cost.

iv. Waste product, used belts reconditioned, Stores and Spares discarded for disposal, medicine and canteen stores are taken at NIL value.

VI. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

VII. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VIII. Investments

Long term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

IX. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know-how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

X. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as ''Deferred income'' and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

XI. Reserves and Surplus Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

XII. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard-15 (Revised) 2005:

i. Short term employee benefits such as wages, salaries, incentives, short term Leave Salary are fully provided for.

ii. Long term employee benefits such as Leave Salary are provided for as per Department of Public Enterprises Guideline and actuarial valuation and also funded to Trust.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to Gratuity Trust.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly in respect of the employees retired prior to 01.01.2007.

v. Contribution to Provident Fund and Superannuation Fund which includes Post Retirement Medical Assistance are recognised in the Profit & Loss Account on the basis of actual liability and funded to Trust.

XIII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIV. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case are considered as material and accounted under Prior Period Transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior Period/ Extra-ordinary items are not considered for stock valuation purposes.

XV. Significant events occuring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XVI. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC''s norms and parameters for capacity charges, are adopted.

b. Sale of Lignite, in respect of e-auction sales has been reckoned to the extent of amount received and for others on accrual basis.

c. Claim towards insurance, surcharge on belated settlement of power bills and interest including delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/ certainty of realisation as the case may be.

d. Cash discounts for prompt payments are accounted as and when the related dues are settled.

e. Exchange differences on account of translation of foreign currency borrowings recoverable from or payable to the beneficiaries in subsequent periods as per CERC Tariff Regulations are accounted as ''Deferred foreign currency fluctuation asset/liability''. The increase or decrease in depreciation/interest for the year due to the accounting of such exchange differences as per accounting policy no.xvii is adjusted in depreciation/interest.

XVII. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006, and an option has been exercised to capitalise the exchange difference as per para 46 of Accounting Standard-11.

XVIII. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets are reviewed at each Balance Sheet date.

XIX. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specially attributable to the assets are capitalised along with the cost of such assets and in general, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tipper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to Seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

2. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

XXI. Life Extension Programme of Thermal Stations

Expenditure on Life Extension Programme (LEP) of Fixed Assets resulting in increased life and/or efficiency of an existing asset is added to the carrying cost of related asset and depreciated over the estimated life of the unit from the date of synchronisation.

---

Mar 31, 2013

I. Basis of Accounting

The financial statements are prepared on accrual basis of accounting under historical cost convention, in accordance with generally accepted accounting principles, accounting standards, the relevant provisions of the Companies Act, 1956 and Electricity Act, 2003 to the extent applicable.

II. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act, 1894 and Tamilnadu Acquisition of Land for Industrial purpose Act, 1997. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

III. Depreciation

1. Depreciation is provided for under straight-line method as indicated below:

Rates under (ii) and (iii) above are followed so long as they are higher than the rates covered under base (v).

2. Fixed assets relating to Research and Development are depreciated in a like manner as any other fixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing up to Rs.5000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account

Overburden removal costs are classified under mine development account till achievement of quantity para-meters as approved for each Project. Such amounts are amortised as depreciation on the basis of annual lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

6. Machinery Spares

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of fixed asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the fixed assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilisation.

IV. Intangible Assets

a. Computer Software:

Application Software acquired for an amount of more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b. Research & Development (Internally generated projects):

i. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

VI. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VII. Investments

Long term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

VIII. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know-how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt. of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

IX. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as ''Deferred income'' and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

X. Reserves and Surplus Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect, and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

XI. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard 15 (Revised) 2005:

i. Short term employee benefits such as wages, salaries, incentives, short term EL and HPL are fully provided for.

ii. Long term employee benefits such as EL and HPL are provided for as per Department of Public Enterprises Guideline and actuarial valuation and funded in SBI Life Insurance Corporation.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to L.I.C. Group Gratuity Fund.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly.

v. Contribution to Provident Fund Trust and Superannuation Fund Trust are recognised in Profit & Loss Account on the basis of actual liability.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIII. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case considered as material are accounted under Prior Period Transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior Period/ Extra-ordinary items are not considered for stock valuation purposes.

XIV. Significant events occuring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XV. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC''s norms and parameters for capacity charges are adopted.

b. Claim towards insurance, surcharge on belated settlement of power bills and interest on delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/certainty of realisation as the case may be.

c. Cash discounts for prompt payments are accounted as and when the related dues are settled.

XVI. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006, and an option has been exercised to capitalise the exchange difference.

XVII. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets/Liabilities are reviewed at each Balance Sheet date.

XVIII. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specially attributable to the qualifying fixed assets are capitalised along with the cost of such assets and in general, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XIX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tipper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to Seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

2. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

---

Mar 31, 2012

I. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/acquisition and necessary adjustments in the year of final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act, 1894 and Tamilnadu Acquisition of Land for Industrial Purpose Act, 1997. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

II. Depreciation

1. Depreciation is provided for under straight-line method as indicated below:

Rates under (ii) and (iii) above are followed so long as they are higher than the rates covered under base (v).

2. Fixed assets relating to Research and Development are depreciated in a like manner as any other fixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing upto Rs.5,000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account

Overburden removal costs are classified under mine development account till achievement of quantity parameters as approved for each Project. Such amounts are amortised as depreciation on the basis of annual lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

6. Machinery Spares

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of fixed asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the fixed assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilisation.

III. Intangible Assets

a) Computer Software:

Application Software acquired for an amount more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b) Research & Development (Internally generated projects):

i. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

IV. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

V. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VI. Investments

Long term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

VII. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies, documentation of data, other development expenditure, expenditure on exploratory works, technical know-how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt, of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

VIII. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as 'Deferred Income' and recognised in the Profit and Loss Account by allocating to income overthe period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profitand LossAccount.

IX. Reserves and Surplus Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

X. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard 15 (Revised) 2005:

i. Short term employee benefits such as wages, salaries, incentives, short term EL and HPL are fully provided for.

ii. Long term employee benefits such as EL and HPL are provided for as per actuarial valuation and funded in SBI Life Insurance Corporation.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to L.I.C. Group Gratuity Fund.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly.

v. Contribution to Provident Fund Trust is recognised in Profitand LossAccount on the basis of actual liability.

XI. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XII. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case considered as material are accounted under Prior Period Transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior Period/ Extra-ordinary items are not considered for stock valuation purposes.

XIII. Significant events occuring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XIV. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC's norms and parameters for capacity charges, are adopted.

b. Claim towards insurance, surcharge on belated settlement of power bills and interest on delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of the claim/certainty of realisation as the case may be.

c. Cash discounts for prompt payments are accounted as and when the related dues are settled.

XV. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006 and an option has been exercised to capitalise the exchange difference.

XVI. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets /Liabilities are reviewed at each Balance Sheet date.

XVII. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specially attributable to the qualifying fixed assets are capitalised along with the cost of such assets and in general, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XVIII. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System viz., Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the unit pursuant to seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

2. Net pre-commissioning income/expenditure are adjusted directly in the cost of related assets.

c. Neyveli Bonds 6000, 8.83% 10 Years, Secured, Redeemable, Taxable, Non-convertible Bonds in the nature of Debentures of Rs.10 lakh each secured by way of paripassu charge on the present and future fixed assets of Mine-ll Expansion Project, TPS-II Expansion Project, Barsingsar Mine and Thermal Power Station and exclusive charge on an immovable property. Redeemable on 23.01.2019 (without Put or Call Option).

d. The Rupee Term Loan of Rs.3750 crore from Canara Bank consortium is secured by paripassu charge on project fixed assets financed and repayable in twenty equal bi-annual instalment commenced from 23.02.2010.

e. The Rupee Term Loan of Rs.2500 crore from State Bank of India is secured by paripassu charge on project fixed assets financed. The repayment would be made in 42 equated quarterly installments, starting from 30th September, 2016.

f. Bi-annual equal repayment (0.44 Million Euro) of Foreign Currency loan-l from KfW Germany, commenced from 30.12.2001.

g. Bi-annual equal repayment (2.80 Million Euro) of Foreign Currency loan-l I from KfW Germany, commenced from 30.06.2002.

d. Principal amount remaining unpaid to any supplier belonging to Micro, Small and Medium Enterprises as at the end of the yearRs. 7.33 crore (previous yearRs. 2.74 crore).

e. Amount of Interest due and payable for the period of delay in making payment but without adding the interest specified under this ActRs. 0.33 crore.

f. Liability for Mine closure had been discharged by depositing the amount ofRs. 127.81 crore in the Escrowaccount as perthe guidelines issued by the Ministry of Coal.

e. Inventory valuation - Value of Inventory at the lower of cost and net realisable value.

(i) Lignite - At absorption cost excluding share of common charges and social overhead.

(ii) Stores & Spares procured - At weighted average acquisition cost.

(iii) Fly ash bricks - At absorption cost.

(iv) Waste products, used belts reconditioned, Stores & Spares discarded for disposal, medicines and canteen stores are taken at NIL value.

f. Stocks of stores, spares, raw materials and finished goods are under hypothecation for cash credit facilities arranged with State Bankof India.

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Mar 31, 2011

I. Fixed Assets

1. FixedAssets are stated at historical cost less depreciation. Cost of acquisition is inclusiveof taxes, duties, freight, installation and allocated incidental expenditure during construction/ acquisition and necessary adjustments in the year of final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act, 1894 and Tamilnadu Acquisition of Land for Industrial Purpose Act, 1997. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

2. Fixed assets relating to Research and Development are depreciated in a like manner as 'any other fixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing upto Rs.5,000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account

Overburden removal costs are classified under mine development account till achievement of quantity parameters as approved for each Project. Such amounts are amortised as depreciation on the basis of annual lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievement of mine development.

6. Machinery Spares

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of fixed asset and whose usage are expected to be irregular are fully depreciated over the residual useful life of the fixed assets and if the spare is utilised, the carrying cost is fully charged as depreciation in the year of utilisation.

III. Intangible Assets

a) Computer Software:

Application Software acquired for an amount more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b) Research & Development (Internally generated Projects):

I. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The annual cost of final mine closure is calculated and accounted on the basis of guidelines for preparation of mine closure plan issued by Ministry of Coal.

VI. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs. 1 crore in each case.

VII. Investments

Long term Investments are carried at cost. Provision is made for diminution, if any, other than temporary, in the value of such investments.

VIII. Preliminary Project Expenditure

Preliminary Project Expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know how etc., to be added to the capital cost of the project as and when implemented. In case such projects are identified for transfer of business by the Govt, of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit & Loss Account in the respective years.

IX. Accounting for Grants

I. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as 'Deferred income' and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

X. Reserves and Surplus

Interest Differential Reserve

Interest Differential Reserve created as provided in the Loan Agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the Loan Agreement and such utilisation is shown as withdrawal from the Reserve.

XI. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard 15 (Revised) 2005.

I. Short-term employee benefits such as wages, salaries, incentives, short-term EL and HPL are fully provided for.

ii. Long-term employee benefits such as EL and HPL are provided for as per actuarial valuation and funded in SBI Life Insurance Corporation.

iii. Post employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to L.I.C. Group , Gratuity Fund.

iv. Post Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly.

v. Contribution to Provident Fund Trust is recognised in Profit and Loss Account on the basis of actual liability.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIII. Prior period and Extra-ordinary Items

Prior Period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case considered as material are accounted under Prior period transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior period/Extra-ordinary items are not considered for stock valuation purposes.

XIV. Significant events occurring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XV. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates, calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERC's norms and parameters for capacity charges are adopted.

b. Clajm towards insurance, surcharge on belated settlement of power bills and interest on delayed payment of income tax recoverable are accounted in the year of settlement and /or intheyearof acceptance ofthe claim/certainty of realisation as the casemaybe.

c. Cash discounts for prompt payments are accounted as and when the related dues are settled.

XVI. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006 and an option has been exercised to capitalise the exchange difference.

XVII. Accounting for taxes on income

Tax expense comprises of current and deferred tax. Current tax is the amount of tax payable in respect of taxable income for the period measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Deferred tax is recognised on timing difference between accounting income and taxable income that originate in one period and are capable of being reversed in one or more subsequent periods, subject to consideration of prudence. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred Tax Assets/Liabilities are reviewed at each Balance Sheet date.

XVIII. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specially attributable to the qualifying fixed assets are capitalised along with the cost of such assets and in general, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XIX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criteria followed in respect of the assets covering Specialised Mining Equipment System namely Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production for Thermal Power Generation unit commences from the date of synchronisation and goes up to the date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.

---

Mar 31, 2010

I. Fixed Assets

1. Fixed Assets are stated at historical cost less depreciation. Cost of acquisition is inclusive of taxes, duties, freight, installation and allocated incidental expenditure during construction/ acquisition and necessary adjustments in theyearof final settlement.

2. Land for mining in Tamilnadu is acquired in accordance with and subject to the provisions of Land Acquisition Act 1894 and Tamilnadu Acquisition of Land for Industrial purpose Act 1997. Capitalisation of land is done with reference to the date of taking over the physical possession of land.

2. Fixed assets relating to research and development are depreciated in a like manner as any otherfixed asset of the Company.

3. In the year of commissioning/retirement of assets, depreciation is calculated on pro-rata basis, based on the number of months for which asset has been put to use.

4. Assets costing upto Rs.5000/- are fully depreciated in the year in which they are put to use.

5. Amortisation of Mine Development Account

Overburden removal costs are classified under Mine Development account till achievement of quantity parameters as approved for each project. Such amounts are amortised as depreciation on the basis of annual lignite production to the total estimated mineable reserves, reckoning from the year in which regular lignite production is commenced after achievementofminedevelopment.

6. Machinery Spares

Initial spares purchased along with fixed assets are capitalised and depreciated along with the asset. Insurance spares purchased subsequent to the commissioning of the fixed assets costing Rs.50 lakh and above which can be used only in connection with an item of fixed asset and whose usage is expected to be irregular are fully depreciated over the residual useful life of the fixed assets and if the spare is utilised, the carrying cost is fully charged as depreciation in theyearof utilisation.

III. IntangibleAssets

a)Computersoftware:

Application softwares acquired for an amount more than Rs.10 lakh are capitalised as intangible assets and amortised over a period of 5 years.

b) Research & Development (internally generated projects):

i. Expenditure incurred during the phase of research is charged to revenue.

ii. Expenditure incurred during the phase of development is capitalised with respect to each project and amortised over its useful life.

V. Mine Closure Expenditure

Concurrent mine closure expenses are accounted as and when incurred. The cost of final mine closure is estimated and provided for on the basis of annual lignite production to the total estimated mineable reserve as on 1.4.2004. In respect of new mines, the estimated mineable reserve as on the date of commissioning will be reckoned. The estimates are reviewed periodically and accordingly the provision is also revised.

VI. Prepaid Expenses

Expenses are accounted under prepaid expenses only where the amounts relating to unexpired period exceed Rs.1 crore in each case.

VII. Long-term Investments

Long-term Investments are carried at cost. Provision is made for diminution if any, other than temporary, in the value of such investments.

VIM. Preliminary Project Expenditure

Preliminary project expenditure includes expenditure on feasibility studies documentation of data, other development expenditure, expenditure on exploratory works, technical know-how etc., to be added to the capital cost of the project, as and when implemented. In case such projects are identified for transfer of business by the Govt, of India, the expenditure incurred will be recovered from the prospective buyer. If the projects are abandoned with reference to Government orders or cannot be implemented such expenditures are charged to Profit and Loss Account in the respective years.

IX. Accounting for Grants

i. Government and other grants received relating to depreciable fixed assets are taken to capital grants and treated as Deferred Income and recognised in the Profit and Loss Account by allocating to income over the period in which the depreciation is charged.

ii. Grants relating to non-depreciable assets are credited to income over a period in which the cost of meeting the obligations attached to the grants is charged to income.

iii. Revenue grants to the extent utilised are accounted in Profit and Loss Account.

X. Reserves and Surplus

Interest Differential Reserve

Interest Differential Reserve created as provided in the loan agreement entered into with KfW has debt discharging effect and is utilised in accordance with the terms of the loan agreement and such utilisation is shown as withdrawal from the Reserve.

XI. Employee Benefits

Employee benefits are accounted as follows as per Accounting Standard-15 (Revised) 2005.

a. Short-term employee benefits such as wages, salaries, incentives, short-term EL and HPL are fully provided for.

b. Long-term employee benefits such as EL and HPL are provided for as per actuarial valuation.

c. Post-employment benefits such as Gratuity is treated as defined benefit plan and is accounted as per actuarial valuation. Contribution to gratuity is made to LIC Group Gratuity Fund.

d. Post-Retirement Medical Benefit Scheme is treated as defined contribution scheme and accounted accordingly.

e. Contribution to Provident Fund Trust is recognised in Profit and Loss Account on the basis of actual liability.

XII. Allocation of common charges/social overhead expenses

These are allocated to production units based on salaries and wages of these units.

XIII. Prior period and Extra-ordinary Items

Prior period and Extra-ordinary items are accounted in accordance with Accounting Standard-5. Transactions arising out of errors or omissions exceeding Rs.1 crore in each case considered as material, are accounted under prior period transactions. Extra-ordinary items of value exceeding Rs.1 crore in each case are considered as material and accounted for under Extra-ordinary items. Prior period/Extra-ordinary items are not considered for stock valuation purposes.

XIV. Significant events occurring after the Balance Sheet date

Treatment of contingencies and significant events are in accordance with Accounting Standard-4. For this purpose, event having an effect of Rs.1 crore and above in value is considered as significant.

XV. Revenue Recognition

a. Sale of power is accounted for by following Electricity Act, 2003, where the tariff rates are approved by the Central Electricity Regulatory Commission constituted under the Electricity Act, 2003. In case of power stations where the tariff rates are yet to be approved, provisional tariff rates calculated on the basis of Ministry of Coal guidelines on lignite transfer price for energy charges and other relevant CERCs norms and parameters for capacity charges, are adopted.

b. Claim towards insurance, surcharge on belated settlement of power bills and interest on delayed payment of income tax recoverable are accounted in the year of settlement and/or in the year of acceptance of claim/certainty of realisation as the case may be.

c. Cash discounts for prompt payments are accounted as and when the related dues are settled.

XVI. Foreign Exchange transactions

Exchange rate variations in foreign exchange transactions are accounted as per Accounting Standard-11 of Companies (Accounting Standards) Rules, 2006 and an option has been exercised to capitalise the exchange difference.

XVII. Taxation

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that sufficient future taxable income will be available against which these assets can be realised in future, whereas in case of existence of carry forward of losses or unabsorbed depreciation, deferred tax assets are recognised only if there is virtual certainty of realisation backed by convincing evidence. Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

XVIII. Borrowing Cost

Borrowing costs (net of interest earned on temporary investments) specially attributable to the qualifying fixed assets are capitalised along with the cost of such assets and in general, weighted average interest cost is capitalised to the qualifying assets. Other borrowing costs are recognised as expenses in the period in which they are incurred.

XIX. Construction Projects

1. Capitalisation and Depreciation Provision

A. Specialised Mining Equipment

Successful completion of eight effective working hours on load test excluding minor stoppage is the criterion followed in respect of the assets covering Specialised Mining Equipment System namely Bucket Wheel Excavator, Conveyor, Tripper, Transfer Feeder and Spreader for capitalisation and commencement of depreciation charge and revenue recognition. The entire test shall be completed within twelve hours from the time of starting of the test including minor stoppages.

B. Power Generation Unit

Test and trial production forThermal Power Generation unit commences from the date of synchronisation and goes uptothe date of commercial commissioning. Provisional take over date of the Turbo-generator pursuant to seventy two hours full load operation is deemed as the date of commercial commissioning of the units. Depreciation charge commences from the date of commercial commissioning. Direct expenses and interest charges incurred during the test and trial run are capitalised and the power sale revenue earned during that period is abated to the capital cost of the project.