NMDC Steel Ltd. कंपली की लेखा नीति

Mar 31, 2025

1.3 Summary of Material Accounting Policy
Information:

i. Foreign currency transactions and balances

Transactions in foreign currency are recorded/
translated into the respective functional
currencies using the exchange rates prevailing
at the dates of the respective transactions.

At the end of each reporting period, monetary
items denominated in foreign currencies are
re-translated at the rates prevailing at the end of
reporting period.

Foreign exchange gains and losses resulting
from the settlement of such transactions and
from the translation at the exchange rates

prevailing at reporting date of monetary assets
and liabilities denominated in foreign currencies
are recognized in the statement of profit and
loss and reported within foreign exchange
gains/ (losses).

Non-monetary assets and liabilities denominated
in a foreign currency and measured at historical
cost are translated at the exchange rate
prevalent at the date of transaction.

ii. Fair Value Measurement

The Company measures financial instruments,
such as, derivatives at fair value at each balance
sheet date. 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.

Assets that are held for collection of contractual
cash flows and for selling the financial assets,
where the assets'' cash flows represent solely
payments of principal and interest, are measured
at fair value through other comprehensive
income (FVOCI). On derecognition of the asset,
cumulative gain or loss previously recognised in
OCI is reclassified from the equity to profit and
loss. Interest income from these financial assets
is included in finance income using the effective
interest rate method.

Assets that do not meet the criteria for
amortised cost or FVOCI are measured at fair
value through profit or loss. Interest income
and net gain or loss on a debt instrument
that is subsequently measured at FVPL are
recognised in statement of profit and loss and
presented within other income in the period in
which it arises.

iii. Financial instruments

All financial instruments are recognized
initially at fair value. Transaction costs that are
attributable to the acquisition of the financial
asset (other than financial assets recorded at
fair value through profit or loss) are included in
the fair value of the financial assets. Purchase
or sales of financial assets that require delivery
of assets within a time frame established by
regulation or convention in the market place
(regular way trade) are recognized on trade
date. While, loans and borrowings and payable
are recognized net of directly attributable
transactions costs.

Trade Payables, Trade receivables and Other
payable, receivables will be offset since the
entity gets right, intends to settle on a net basis
at reporting date/year end date.

For the purpose of subsequent measurement,
financial instruments of the Company are classified
in the following categories: non-derivative financial
assets comprising amortized cost; non derivative
financial liabilities at amortized cost.

The classification of financial instruments
depends on the objective of the business model
for which it is held. Management determines
the classification of its financial instruments at
initial recognition.

Financial instrument is derecognized only
when the company has transferred its right to
receive/extinguish its obligation to pay cash flow
from such financial instruments. The company
has transferred substantially all the risks and
rewards of the asset (or) the company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset. The difference
between the carrying amount and the amount of
consideration received/receivable is recognised
in the Statement of Profit and Loss.

The Company determines classification
of financial assets and liabilities on initial
recognition. After initial recognition, no
reclassification is made for financial assets
which are equity instruments and financial
liabilities. For financial assets which are debt
instruments, reclassification is made only if there
is a change in the business model for managing
those assets. Changes to the business model
are expected to be infrequent. The Company''s
senior management determines change in the
business model as a result of external or internal
changes which are significant to the Company''s
operations. Such changes are evident to
external parties. A change in the business model
occurs when the Company either begins or
ceases to perform an activity that is significant
to its operations. If the Company reclassifies
financial assets, it applies the reclassification
prospectively from the reclassification date
which is the first day of the immediately next
reporting year following the change in business
model. The Company does not restate any
previously recognised gains, losses (including
impairment gains or losses) or interest.

a) Non-derivative financial assets
Financial assets at amortized cost

A financial asset shall be measured at
amortized cost if both of the following
conditions are met:

• the financial asset is held within a
business model whose objective is to
hold financial 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 on the principal
amount outstanding.

They are presented as current assets,
except for those maturing later than 12
months after the reporting date which are
presented as non-current assets. Financial
assets are measured initially at fair value
plus transaction costs and subsequently
carried at amortized cost using the effective
interest method, less any impairment loss.

Amortized cost is represented by security
deposits, cash and cash equivalents,
employee and other advances and eligible
current and non-current assets.

Cash and cash equivalents comprise cash
on hand, in banks and short-term demand
deposits with banks with original maturity
period of 3 month or less which can be
withdrawn at any time without prior notice
or penalty on the principal.

b) Non-derivative financial liabilities

Financial liabilities at amortized cost

Financial liabilities at amortized cost
represented by trade and other payables
are initially recognized at fair value, and
subsequently carried at amortized cost
using the effective interest method.

iv. Property plant and equipment:

a) Recognition and measurement: Property,
plant and equipment is measured at
cost less accumulated depreciation and
impairment losses, if any. Cost of an item of
property, plant and equipment comprises
its purchase price, including import duties
and non-refundable purchase taxes, after
deducting trade discounts and rebates and
any directly attributable cost of bringing the
item to its working condition for its intended

use. The Company had elected to apply
the optional exemption to use the previous
GAAP value as deemed cost at 1 April 2015,
the date of transition.

In the case of commissioned assets, where
final settlement of bills with contractor/
supplier is yet to be effected, capitalisation
is done on provisional basis subject to
necessary adjustments in the year of
final settlement.

Spare parts, stand by equipment and
service equipment meeting the definition of
PPE and having value of more than Rs. 20
lakhs in each case, are capitalized as and
when available for use.

Depreciation: Company depreciates
property, plant and equipment over the
estimated useful life of the assets as
prescribed in Schedule II of the Companies
Act 2013 on a straight-line basis.
Depreciation is charged on pro-rata basis
on additions / disposals of assets during the
year. Wherever the useful life is determined
by technical assessment for certain assets,
such assets are depreciated as per their
assessed life. The useful Life estimated by
the technical assessment is as under:

Assets acquired under finance lease and
leasehold improvements are amortized
over the lower of estimated useful life and
related term. Depreciation methods, useful
lives and residual values are reviewed at
each reporting date.

When 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. Subsequent expenditure
relating to property, plant and equipment
is capitalized only when it is probable
that future economic benefits associated
with these will flow to the Company and
the cost of the item can be measured
reliably. Repairs and maintenance costs are
recognized in the statement of profit and
loss when incurred.

An item of property, plant and equipment
and any significant part is derecognised
upon disposal or when no future
economic benefits are expected from
its use or disposal. The cost and related
accumulated depreciation are eliminated
from the financial statements upon sale or
disposition or write-off of the asset and the
resultant gains or losses are recognized in
the statement of profit and loss.

Depreciation on property, plant and
equipment is calculated on a straight-line
basis using the rates arrived at based on
the useful lives and residual values of all its
property, plant and equipment estimated
by the management. The management
believes that depreciation rates currently
used fairly reflect its estimate of the useful
lives and residual values of property,
plant and equipment, though these rates
in certain cases are different from lives
prescribed under Schedule II of the
Companies Act, 2013.

Fixed Assets costing Rs. 5,000 or less are
fully depreciated in the year of purchase.

b) Capital Work-in-Progress:

Assets in the course of construction are
included under capital work in progress
and are carried at cost less any recognized
impairment loss. Such capital work in
progress, on completion, is transferred
to the appropriate category of property,
plant and equipment.

Expenses for assessment of new
potential projects incurred till investment
decisions are charged to revenue.
Expenditure incurred for projects after
investment decisions are accounted
for under capital work in progress and
capitalized subsequently.

Any costs directly attributable to
acquisition/ construction of property,
plant and equipment till it is brought to the
location and condition necessary for it to
be capable of operating in the manner as
intended by the management form part of
capital work-in-progress.

c) Treatment of Expenditure Incurred on
Assets not owned by the Company:

"Expenditure incurred on any facility, the
ownership of which is not vested with the

company, but the incurrence of which is
essential in bringing an asset/project of
NMDC Steel Limited to the location and
condition necessary to be capable of
operating in the manner intended by the
management, shall be capitalized as a part
of the overall cost of the said asset/project.
Else the same shall be charged to revenue.”

v. Intangible assets:

Intangible assets are stated at cost less
accumulated amortization and impairment.
Intangible assets are amortized over their
respective estimated useful lives on a
straight-line basis, from the date that they are
available for use. The estimated useful life of
an identifiable intangible asset is based on
a number of factors including the effects of
obsolescence, demand, competition and other
economic factors (such as the stability of the
industry and known technological advances)
and the level of maintenance expenditures
required to obtain the expected future cash
flows from the asset. Amortisation method
and Useful life are reviewed at each financial
year end and are accounted for as change in
accounting estimates in accordance with Ind AS
8 "Accounting Policies, Changes in Accounting
Estimates and Errors, for the changes, if any.

vi. Inventory

a) Raw materials, Stores and spares (including
loose tools and implements), work in
process and finished products are valued
at lower of cost and net realizable value

of the respective units. Cost includes cost
of purchase and other costs incurred in
bringing the inventories to their present
location and condition.

b) Spares which do not meet the recognition
criteria as Property, Plant and Equipment
are recorded as inventories.

c) The basis of determining the cost is

d) Production related Iron Scraps are valued
at cost of production of Hot metal or Net
Realisable Value whichever is lower.

e) Production related steel scraps are valued
at cost of production of Liquid Steel or Net
Realisable Value/equivalent purchase cost
of steel scrap whichever is lower.

f) Other By-products, Residue products and
other scraps are valued at estimated net
realisable value.

g) In case of identified Obsolete/Surplus/Non-
moving items necessary provision is made
and charged to revenue.

vii. Impairment

a) Financial assets

In accordance with Ind AS 109, the
Company applies expected credit loss (ECL)
model for measurement and recognition of
impairment loss.

The Company follows ''simplified approach''
for recognition of impairment loss allowance
on trade receivables.

The application of simplified approach
does not require the Company to track
changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime
ECLs at each reporting date, right from its
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
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.

Lifetime ECLs are the expected credit
losses resulting from all possible default
events over the expected life of a financial
instrument. The 12-month ECL is a portion
of the lifetime ECL which results from
default events that are possible within 12
months after the reporting date.

ECL is the difference between all
contractual cash flows that are due to
the Company in accordance with the
contract and all the cash flows that the
entity expects to receive (i.e. all shortfalls),
discounted at the original EIR. When
estimating the cash flows, an entity is
required to consider:

i) All contractual terms of the financial
instrument (including prepayment,
extension etc.) over the expected life
of the financial instrument. However,
in rare cases when the expected

life of the financial instrument
cannot be estimated reliably, then
the entity is required to use the
remaining contractual term of the
financial instrument.

ii) Cash flows from the sale of collateral
held or other credit enhancements that
are integral to the contractual terms.

As a practical expedient, the Company
uses a provision matrix to determine
impairment loss allowance on portfolio of
its trade receivables. The provision matrix
is based on its historically observed default
rates over the expected life of the trade
receivables and is adjusted for forward¬
looking estimates. At every reporting date,
the historical observed default rates are
updated and changes in the forward¬
looking estimates are analysed.

ECL impairment loss allowance (or
reversal) recognised during the period
is recognised as income/expense in the
statement of profit and loss. The balance
sheet presentation for various financial
instruments is described below:

Financial assets measured at amortised
cost, contractual revenue receivable: ECL
is presented as an allowance, i.e. as an
integral part of the measurement of those
assets in the balance sheet. The allowance
reduces the net carrying amount. Until the
asset meets write off criteria, the Company
does not reduce impairment allowance from
the gross carrying amount.

b) Non-financial assets

The Company assesses at each reporting
date whether there is any objective
evidence that a non-financial asset or a
group of non-financial assets is impaired.

If any such indication exists, the Company
estimates the amount of impairment loss.

An impairment loss is calculated as the
difference between an asset''s carrying
amount and recoverable amount. Losses
are recognised in profit or loss and
reflected in an allowance account. When
the Company considers that there are no
realistic prospects of recovery of the asset,
the relevant amounts are written off. If the
amount of impairment loss subsequently
decreases and the decrease can be related
objectively to an event occurring after
the impairment was recognised, then the
previously recognised impairment loss is
reversed through profit or loss.

The recoverable amount of an asset or
cash-generating unit (as defined below)
is the greater of its value in use and its
fair value less costs to sell. In assessing
value in use, the estimated future cash
flows are discounted to their present value
using a pre-tax discount rate that reflects
current market assessments of the time
value of money and the risks specific to
the asset. For the purpose of impairment
testing, assets are grouped together into
the smallest group of assets that generates
cash inflows from continuing use that are
largely independent of the cash inflows of
other assets or groups of assets (the "cash¬
generating unit”).

viii. Employee benefits

a) Payments under Employees'' Family Benefit
Scheme:

Under the Employees'' family benefit
scheme, monthly payments are made till
the normal date of retirement to the family
members of those employees who are
discharged from service due to medical
reasons or death, on deposit of the amount
envisaged in the scheme and liability for the
payments are accounted for on the basis
of actuarial valuation and the amount is
administered by a separate Trust.

b) Gratuity & Provident fund:

Gratuity payable to eligible employees is
administered by a separate Trust. Payments
to the trust towards contributions and
other demands are made on the basis of
actuarial valuation.

The company''s contribution to the provident
fund is remitted to a separate trust based
on a fixed percentage of the eligible
employees'' salary. Further, the company
makes good the shortfall, if any, between
the return from investments of trust and
the notified rate of interest on actuarial
valuation basis.

c) Pension Fund

Defined contributions to Employees''
Contributory Pension Scheme are made on
accrual basis at a rate as approved from
time to time to a fund which is administered
by a separate Trust

d) Accrued Leave Salary:

Liability towards Accrued Leave Salary, as
at the end of the year is recognized on the
basis of actuarial valuation and the amount
is administered by a separate trust.

e) Other Benefits:

Liability towards Long Service Award,
Settlement Allowance and Post-Retirement
Medical Facilities to employees as at
the end of the year is recognized on
the basis of actuarial valuation. Such
amounts towards Settlement Allowance
and Post-Retirement Medical Benefits are
administered by a separate trust.

Actuarial gains or losses are recognized in
other comprehensive income. Further, the
profit or loss does not include an expected
return on plan assets. Instead, net interest
recognized in profit or loss is calculated by
applying the discount rate used to measure
the defined benefit obligation to the net
defined benefit liability or asset. The actual
return on the plan assets above or below
the discount rate is recognized as part of
re-measurement of net defined liability or
asset through other comprehensive income.

Re-measurements comprising actuarial
gains or losses and return on plan assets
(excluding amounts included in net
interest on the net defined benefit liability)
are not reclassified to profit or loss in
subsequent periods.

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Mar 31, 2024

1.3 Summary of Material Accounting Policy Information:

i. Foreign currency transactions and balances

Transactions in foreign currency are translated into the respective functional currencies using the exchange rates prevailing at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the exchange rates prevailing at reporting date of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss and reported within foreign exchange gains/ (losses).

Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.

ii. Investment in Subsidiaries, Joint Venture and Associates.

Investment in Subsidiaries, Joint Ventures and Associates are measured at cost. Dividend income is recognised when its right to receive the dividend is established".

iii. Financial instruments

All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognized on trade date. While, loans and borrowings and payable are recognized net of directly attributable transactions costs.

For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets comprising amortized cost; non derivative financial liabilities at amortized cost.

The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.

Financial instrument is derecognized only when the company has transferred its right to receive/ extinguish its obligation to pay cash flow from such financial instruments.

a) Non-derivative financial assets

Financial assets at amortized cost

A financial asset shall be measured at amortized cost if both of the following conditions are met:

• the financial asset is held within a business model whose objective is to hold financial 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 on the principal amount outstanding.

They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.

Amortized cost is represented by security deposits, cash and cash equivalents, employee and other advances and eligible current and noncurrent assets.

Cash and cash equivalents comprise cash on hand, in banks and short-term demand deposits with banks with original maturity period of 3 month or less which can be withdrawn at any time without prior notice or penalty on the principal.

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company''s cash management system.

b) Non-derivative financial liabilities

Financial liabilities at amortized cost

Financial liabilities at amortized cost represented by trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method.

iv. Property plant and equipment:

a) Recognition and measurement:

Normally Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset. The Company has elected to apply the optional exemption to use the previous GAAP value as deemed cost at 1 April 2015, the date of transition.

Spare parts, stand by equipment and service equipment meeting the definition of PPE and having value of more than Rs. 20 lakhs in each case, are capitalized as and when available for use.

Depreciation: Normally the Company depreciates property, plant and equipment over the estimated useful life of the assets as prescribed in Schedule II of the Companies Act 2013 on a straight-line basis. Depreciation is charged on pro-rata basis on additions / disposals of assets during the year. Wherever the useful life is determined by technical assessment for certain assets, such assets are depreciated as per their assessed life. Assets acquired under finance lease and leasehold improvements are amortized over the lower of estimated useful life and related term. Depreciation methods, useful lives and residual values are reviewed at each reporting date.

When 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. Subsequent expenditure relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or disposition of the asset and the resultant gains or losses are recognized in the statement of profit and loss.

Fixed Assets costing Rs. 5,000 or less are fully depreciated in the year of purchase.

b) Capital Work-in-Progress:

Assets in the course of construction are included under capital work in progress and are carried at cost less any recognized impairment loss.

Such capital work in progress, on completion, is transferred to the appropriate category of property, plant and equipment.

Expenses for assessment of new potential projects incurred till investment decisions are charged to revenue. Expenditure incurred for projects after investment decisions are accounted for under capital work in progress and capitalized subsequently.

Any costs directly attributable to acquisition/ construction of property, plant and equipment till il is brought to the location and condition necessary for it to be capable of operating in the manner as intended by the management form part of capital work-in-progress.

c) Treatment of Expenditure Incurred on Assets not owned by the Company:

"Expenditure incurred on any facility, the ownership of which is not vested with the company, but the incurrence of which is essential in bringing an asset/project of NMDC Steel Limited to the location and condition necessary to be capable of operating in the manner intended by the management, shall be capitalized as a part of the overall cost of the said asset/project. Else the same shall be charged to revenue."

v. Intangible assets:

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their respective estimated useful lives on a straightline basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.

Mining rights are accounted as Intangible assets and amortised over the period of life of the mining lease.

vi. Inventory

a) Raw materials, Stores and spares (including

loose tools and implements), work in process and finished products are valued at lower of cost and net realizable value of the respective units.

c) In case of identified Obsolete/Surplus/Non-moving items necessary provision is made and charged to revenue.

d) Stationery, Medical, Canteen, School Stores,

Cotton Waste, Hospital Stores and Lab stores (excluding for R & D Lab) charged off to Revenue on procurement.

e) No credit is taken in respect of stock of run of mine ore, embedded ore, Iron ore slimes.

vii. Impairment

a) Financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss.

The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its 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 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.

Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

i) All contractual terms of the financial instrument (including prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

ii) Cash flows from the sale of collateral held or

other credit enhancements that are integral to the contractual terms.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:

Financial assets measured at amortised cost, contractual revenue receivable: ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

b) Non-financial assets

The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.

An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

The recoverable amount of an asset or cashgenerating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").

viii. Employee benefits

a) Payments under Employees'' Family Benefit Scheme:

Under the Employees'' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those

employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate Trust.

b) Gratuity & Provident fund:

Gratuity payable to eligible employees is administered by a separate Trust. Payments to the trust towards contributions and other demands are made on the basis of actuarial valuation.

The company''s contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees'' salary. Further, the company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuarial valuation basis.

c) Pension Fund

Defined contributions to Employees'' Contributory Pension Scheme are made on accrual basis at a rate as approved from time to time to a fund which is administered by a separate Trust.

d) Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

e) Other Benefits:

Liability towards Long Service Award, Settlement Allowance and Post-Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation.

Such amounts towards Settlement Allowance and Post-Retirement Medical Benefits are administered by a separate trust.

Actuarial gains or losses are recognized in other comprehensive income. Further, the profit or loss does not include an expected return on plan assets. Instead, net interest recognized in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognized as part of remeasurement of net defined liability or asset through other comprehensive income.

Re-measurements comprising actuarial gains or losses and return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are not reclassified to profit or loss in subsequent periods.

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Mar 31, 2023

1. Significant accounting policies

1.1 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 llndian Accounting Standards) Rules, 201 Sand Companies llndian Accounting Standards) Amendment Rules, 2020 and other relevant provisions of the Act. lb) Basis of measurement

The financial statements have been prepared on a historical cost convention and on an accrual basis, except for the following material items that have been measured at fairvalue as required by relevant Ind AS:

i) Certain financial assets and liabilities measured at fair value (refer accounting policy on financial instruments);

n) Defined benefit and other long-term employee benefits.

|c) Functional and presentation currency

The financial statements are presented in Indian rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the entity operates. All financial information presented in Indian rupees has been rounded to the nearest crore except share and per share data.

Id) Use of estimates and judgement The preparation of financial statements in conformity with Ind A5 requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

1.2 Summary of significant accounting policies

i. Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which these entities operate (i.e. the ''functional currency"). The financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of the Company.

ii. Foreign currency transactions and balances

Transactions in foreign currency are translated into the respective functional currencies using the exchange rates prevailing at the dates of the respective transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the exchange rates prevailing at reporting date of

monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss and reported within foreign exchange gains/ llosses).

Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.

iii. Investment in Subsidiaries, Joint Venture and Associates.

Investment in Subsidiaries, Joint Ventures and Associates are measured at cost. Dividend income is recognised when its right to receive the dividend is established".

iv. Financial instruments

All financial instruments are recognized initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place Iregular way trade) are recognized on trade date. While, loans and borrowings and payable are recognized net of directly attributable transactions costs.

For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non-derivative financial assets comprising amortized cost; non derivative financial liabilities at amortized cost.

The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.

Financial instrument is derecognized only when the company has transferred its right to receive/extinguish its obligation to pay cash flow from such financial instruments.

a) Non-derivative financial assets Financial assets at amortized cost

A financial asset shall be measured at amortized cost if both of the following conditions are met:

• the financial asset is held within a business model whose objective is to hold financial 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 on the principal amount outstanding.

They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment loss.

cl In case of identified Obsolete/Surplus/Non-movmg items necessary provision is made and charged to revenue, d) Stationery, Medical, Canteen, School Stores, Cotton Waste, Hospital Stores and Lab stores (excluding for R & D Lab! charged off to Revenue on procurement, ej No credit is taken in respect of stock of run of mine ore. embedded ore. Iron ore slimes.

viii. Impairment a! Financial assets

In accordance with Ind AS 109, the Company applies expected credit loss IECL) model for measurement and recognition of impairment loss.

The Company follows ’simplified approach* for recognition of impairment loss allowance on trade receivables.

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises

Amortized cost is represented by security deposits, cash and cash equivalents, employee and other advances and eligible current and non-current assets.

Cash and cash equivalents comprise cash on hand and in banks and demand deposits with banks which can be withdrawn at any time without prior notice or penalty on the principal.

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company''s cash management system,

b) Non-derivative financial liabilities Financial liabilities at amortized cost Financial liabilities at amortized cost represented by trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method,

v. Property plant and equipment:

a) Recognition and measurement: Normally Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset. The Company has elected to apply the optional exemption to use the previous GAAP value as deemed cost at 1 April 2015. the date of transition.

Spare parts, stand by equipment and service equipment meeting the definition of PPE and having value of more than Rs. 20 lakhs in each case, are capitalized as and when available for use.

Depreciation: Normally the Company depreciates property, plant and equipment over the estimated useful life of the assets as prescribed in Schedule II of the Companies Act 2013 on a straight-line basis. Depreciation is charged on pro-rata basis on additions / disposals of assets during the year. Wherever the useful life is determined by technical assessment for certain assets, such assets are depreciated as per their assessed life. Assets acquired under finance lease and leasehold improvements are amortized over the lower of estimated useful life and related term. Depreciation methods, useful lives and residual values are reviewed at each reporting date.

When 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. Subsequent expenditure relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or disposition of the asset and the resultant gains or losses are recognized in the statement of profit and loss.

Fixed Assets costing Rs. 5,000 or less are fully depreciated in the year of purchase, bl Treatment of Enabling Assets:

"Expenditure incurred on any facility, the ownership of which is not vested with the company, but the incurrence of which is essential in bringing an asset/projects of NMDC Steel Limited to the location and condition necessary to be capable of operating in the manner intended by the management, shall be capitalized as a part of the overall cost of the said asset/project. Else the same shall be charged to revenue.

vi. Intangible assets:

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their respective estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors Isuch as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the assc-t.

Mining rights are accounted as Intangible assets and amortised over the period of life of the mining lease.

vii. Inventory

a) Raw materials, Stores and spares (including loose tools and implements!, work in process and finished products are valued at lower of cost and net realizable value of the respective units.

bj The basis of determining the cost is

Raw materials	Weighted average cost
Stores and spares	Weighted average cost
Stores in Transit	At cost
Work in process and finished goods	Material cost plus appropriate share of labour, related overheads and levies.

impairment loss allowance based on lifetime ECLs at each reporting date, right from its 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 nsk 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 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.

Lifetime ECLs are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12 month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.

ECL is the difference between all contractual cash flows that arc- due to the Company in accordance with the contract and all the cash flows that the entity expects to receive [i.e. all shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

i] All contractual terms ol the financial instrument lincluding prepayment, extension etc.) over the expected life of the financial instrument. However, in rare cases when the expected life of the financial instrument cannot be estimated reliably, then the entity is required to use the remaining contractual term of the financial instrument.

ii) Cash flows from the sale of collateral held or other credit enhancements that are integralto the contractual terms.

ECL impairment loss allowance [or reversal) recognised during the period is recognised as income/expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:

Financial assets measured at amortised cost, contractual revenue receivable. ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

b) Non-financial assets

The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-fmancial assets is impaired. II any such indication exists, the Company estimates the amount of impairment loss.

An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and

the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

The recoverable amount of an asset or cash-generating unit las defined below! is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to thc-ir present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generatingunit").

ix. Employee benefits

a) Payments under Employees'' Family Benefit Scheme:

Under the Employees'' family benefit scheme, monthly payments are made till the normal date of retirement to the family members of those employees who are discharged from service due to medical reasons or death, on deposit of the amount envisaged in the scheme and liability for the payments are accounted for on the basis of actuarial valuation and the amount is administered by a separate Trust.

b) Gratuity & Provident fund:

Gratuity payable to eligible employees is administered by a separate Trust. Payments tothe trust towards coniributionsand otherdemands are madeon the basis of actuanal valuation.

The company''s contribution to the provident fund is remitted to a separate trust based on a fixed percentage of the eligible employees’ salary. Further, the company makes good the shortfall, if any, between the return from investments of trust and the notified rate of interest on actuanalvatuation basis.

c) Pension Fund

Defined contributions to Employees'' Contributory Pension Scheme are made on accrual basis at a rate as approved from timetotimetoa fund which is administered bya separate Trust

d) Accrued Leave Salary:

Liability towards Accrued Leave Salary, as at the end of the year is recognized on the basis of actuarial valuation and the amount is administered by a separate trust.

el Other Benefits:

Liability towards Long Sen/ice Award, Settlement Allowance and Post-Retirement Medical Facilities to employees as at the end of the year is recognized on the basis of actuarial valuation. Such amounts towards Settlement Allowance and Post-Retirement Medical Benefits are administered by a separate trust,

Actuarial gains or losses are recognized in other comprehensive income. Further, the profit or loss does not

The timing of transfer of control in case of sale of goods varies depending upon individual transfer terms of the contract.

Export sales: In Export sales control passes to the customer on the date of Bill of Lading.

Domestic sales: Control passes to the customer on the date of delivery which is generally the forwarding note (rail dispatches)/ lorry receipt/ delivery challan. However, in case of spot auction under electronic mode, control passes to the customer on conclusion of the auction and receipt of money.

Obsolete stores & scrap: Control passes to the customer on the date of realization.

Contract asset

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due. a contract asset is recognized for the earned consideration that is conditional.

Trade receivables

A receivable represents the Company''s right to an amount of consideration that is unconditional li.e., only the passage of time is required before payment of the consideration isduel.

Contract liability

A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration lor an amount of consideration is duel from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when the Company performs under the contract.

xii) Finance income and expense

Finance income consists of interest income on funds invested, dividend income and gains on the disposal of Fair value through profit and loss account financial assets. Interest income is recognized as it accrues in the statement of profit and loss, using I he effective interest method. Dividend income is recognized in the statement of profit and loss on the date the Company''s right to receive payment is established.

Finance expenses consist of interest expense on loans and borrowings. Borrowing costs are recognized in the statement of profit and loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis. This includes changes in the fair value of foreign exchange derivative instruments, which are accounted at fairvatue through profit or loss.

xiiillncometax

Tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss

include an expected return on plan assets. Instead net interest recognized in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognized as part of re-measurement of net defined liability or asset through other comprehensive income.

Re-measurements comprising actuarial gains or losses and return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are not reclassified to profit or loss in subsequent periods.

x) Provisions

All the provision is recognized as per Ind AS 37. Provisions (including mine closure) are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. Provisions for onerous contracts are measured at the present value of lower of the expected net cost of fulfilling the contract and the expected cost of terminating the contract.

xi| Revenue recognition:

Revenue from contracts with customers is recognized when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

If I he consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will nol occur when the associated uncertainty with the variable consideration is subsequently resolved.

All revenue from sate of goods is recognized at a point in time. Revenue from wind power and services is recognized over time.

except to the extent it relates to items directly recognized in equity or in other comprehensive income.

al Current income tax

Current income tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the taxable income for the period. I he tax rates and tax laws used to compute the current tax amount are those that are enacted or substantively enacted by the reporting date and applicable for the period. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the asset and liability simultaneously.

b) Deferred income tax

Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction, Deferred income tax asset is recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred income tax liabilities are recognized tor all taxable temporary differences The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

xiv) Earnings per share

Basic earnings pei share is computed using the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed by dividing the net profit after tax by the weighted average number of equity shares considered for deriving basic EPS and also weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. Dilutive potential equity shares are determined independently for each year presented. The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares, as appropriate.

xv) Borrowing costs:

Borrowings costs directly attributable to acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use or sate are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which it occurs. Borrowing costs consists of interest and other costs that an entity incurs in connection with I he borrowing of funds.

xvi) Government grants:

Grants from the government are recognised when there is reasonable assurance that:|i) the Company will comply with the conditions attached to them; and lii) the grant will be received. Government grants related to revenue are recognised on a systematic basis in the statement of profit and toss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset. Where the Company receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.

Grant related to income are presented as part of profit or loss, as a deduction to the related expenses.

xvii) Lease:

a. Lease liability is initially recognised and measured at an amount equal to the present value of minimum lease payments during the lease term that are not yet paid.

b. Right of use asset is recognised and measured at cost, consisting of initial measurement of lease liability plus any lease payments made to the lessor at or before the commencement date less any lease incentives received, initial estimate of the restoration costs and any initiatdirect costs incurred by the lessee.

c. The lease liability is measured in subsequent periods using the effective interest rate method. The right-of-use asset is depreciated over the lease term.

d. Low Value leases up to Rs.20 lakhs p.a. per lease and 5hoit term leases of 12 months or less are fully charged to expense.

xviii) Exploration and Evaluation:

Exploration and evaluation expenditure comprise costs that are directly attributable to:

- researching and analysing existing exploration data;

- conducting geological studies, exploratory drilling and sampling;

- examining and testing extraction and treatment methods; and/or

- compiling pre-feasibility and feasibility studies. Exploration expenditure relates to the initial search for depositswith economic potential.

Evaluation expenditure relates to a detailed assessment of deposits or other projects that have been identified as having economic potential. All evaluation and exploration expenses till high degree of confidence is achieved are expensed.

Evaluation expenditure are capitalised as Intangible assets when there is a high degree of confidence that the Company will determine that a project is commercially viable, that is the project will provide a satisfactory return relative to its perceived risks, and therefore it is considered probable that future economic benefits will flow to the Company.

The carrying values of capitalized evaluation expenditure are reviewed for impairment every year by management,

xix) Stripping cost:

Development stripping cost:

Overburden and other mine waste material removed during the initial development of a mine in order to access mineral deposit are capitalized as Intangible Asset. Amortization of the same is done based on the life estimated by the management.

Production stripping cost:

During the Production phase, the stripping activity cost is charged to revenue to the extent the benefit from the stripping activity is realized in the form of inventory produced.

To the extent the benefit is improved access to ore. the entity shall recognise these costs as a non-current asset i.e.. Stripping Activity Asset, if and only if all the following conditions are met:

a. It is probable that the future economic benefits associated with the stripping activity will be realized.

b. The component of the ore body for which access has been improved can be identified; and

c. The costs relating to the stripping activity associated with the improved access can be reliably measured.

To the extent the current per iod stripping ratio exceeds the planned stripping ratio as per mine plan, shall be considered as "Stripping Activity Asset''.

The "Stripping Activity Asset" is subsequently depreciated on a unit of production basis over the life of the identified component of the ore body that become more accessible as a result of the stripping activity and is Ihen stated at cost less accumulated depreciation and impairment toss, if any.

xx) Prepaid Expenses:

Expenses are accounted under prepaid expenses only when the amount relating to the unexpired period exceeds rupeesTwo crore in each case.

xxi) Restatement of earliest prior period financials on material error/omissions

The value of error and omissions is construed lo be material for restating the opening balances of assets and liabilities and equity for the earliest prior period presented if the amount in each case of earlier period income/expenses exceeds 1.00% of the previous year turnover of the company.