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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 533278ISIN: INE522F01014INDUSTRY: Mining/Minerals

BSE   ` 263.40   Open: 265.10   Today's Range 262.80
265.90
-0.05 ( -0.02 %) Prev Close: 263.45 52 Week Range 256.00
316.55
Year End :2017-03 

Note: 1 CORPORATE INFORMATION

Coal India Limited (CIL) is a Maharatna Company with having registered office at Kolkata, West Bengal and listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

The Company is mainly engaged in mining and production of Coal and also operates Coal washeries. The major consumers of the company are power and steel sectors. Consumers from other sectors include cement, fertilisers, brick kilns etc.

CIL is an apex body with 8 wholly-owned subsidiaries in India out of which 7 subsidiaries are coal producing and 1 subsidiary is engaged in mine planning, designing and related consultancy services. The operations of the Company are spread across 8 states in India. CIL also has a fully owned mining company in Mozambique known as ‘Coal India Africana Limitada’ which is yet to commence operations. Further some of the subsidiaries of CIL, are also having another layer of subsidiaries. There are also Joint Ventures/Associates of CIL and some of its subsidiaries.

NOTE - 2 : INVESTMENTS

1 Investment in Eastern Coalfields Limited (ECL) and Bharat Coking Coal Limited (BCCL)

The investment in Equity Shares of BCCL, a wholly owned subsidiary, is long term and strategic in nature. The Book Value of investment in BCCL as on 31.03.2017 is Rs.2118.00 crore against which the accumulated loss as on 31.03.2017 is Rs.1262.09 crore (Rs.1113.61 crore). The accumulated losses as on 31.03.2017 has come down to Rs.1262.09 crore from Rs.4106.03 crore as on 31.03.2013 (i.e. the end of the year in which it came out of BIFR).

Similarly, the investment in Equity Shares of ECL, a wholly owned subsidiary, is also long term and strategic in nature. The Book Value of investment in ECL as on 31.03.2017 is Rs.2218.45 crore against which the accumulated loss as on 31.03.2017 is Rs.1907.76 crore (Rs.1928.53 crore). The accumulated losses as on 31.03.2017 has come down to Rs.1907.76 crore from Rs.2716.00 crore as on 31.03.2015 (i.e. the end of the year in which it came out of BIFR).

In view of these companies turning around and the investments in these companies being long term and strategic in nature, book value of investment has been considered.

2 Investment in Coal India Africana Limitada (100% owned subsidiary -Overseas )

Coal India Ltd., has formed a 100% owned Subsidiary in Republic of Mozambique, named “Coal India Africana Limitada” to explore non-coking coal properties in Mozambique. The initial paid up capital on such formation (known as “Quota Capital”) is Rs.0.01 crore. The investment by CIL in CIAL is strategic and long term in nature. The advance given by CIL to CIAL has been fully provided for because the expenses incurred till date are for the coal blocks which could not be turned into feasible projects.Pursuant to the directives of CIL Board, a request was made through Govt. of India for allocation of a new prospective coal block, the response for which from Mozambique government is awaited. In view of above, the investment does not have any indication for impairment and as such the same are valued at cost.

3 Investment in International Coal Ventures Pvt. Ltd.

CIL has entered into a Memorandum of Understanding (vide approval from its Board in 237th meeting held on 24th November, 2007) regarding formation of Special Purpose Vehicle (SPV) through joint venture involving CIL/SAIL/RINL/NTPC & NMDC for acquisition of coking coal properties abroad. The formation of the SPV had been approved by the Government of India, vide its approval dated 8th November, 2007.

The aforesaid SPV viz. International Coal Ventures Pvt. Ltd. was incorporated under Companies Act, 1956 on 20th May,2009 initially with an authorised capital of Rs.1.00 crore and paid up capital of Rs.0.70 crore. The authorised Capital and paid up Capital as on 31.03.2017 stood at Rs.3500.00 Crore and Rs.1270.67 Crore respectively. Out of above paid up capital, Coal India Ltd. is owning 0.22% share i.e. Rs.2.80 crore face value of equity shares.

4 Investment in CIL NTPC Urja Private Ltd.

CIL NTPC Urja Pvt.Ltd., a 50:50 joint venture company was formed on 27th April’2010 between CIL & NTpC for setting up of joint integrated power plants along with mining of coal. Coal India Ltd. is presently holding 50% equity shares of face value of Rs.0.08 crore in the joint venture Company.

5 Investment in Talcher Fertilizers Limited

A Joint venture company named Talcher Fertilizers Limited (formerly known as Rashtriya Coal Gas Fertilizers Limited) was incorporated on 13th November, 2015 under the Companies Act, 2013 under a joint venture agreement dated 27th October,2015, among Coal India Limited (CIL), Rashtriya Chemicals and Fertilizers Limited, GAIL (India) Limited and Fertilizer Corporation of India Limited with an authorised share capital of Rs.50 Crore, out of which CIL shall hold 29.67% share capital. However, presently Coal India Limited has invested Rs.1.50 lakhs (i.e. 30%) in the joint venture company upto 31.03.2017.

6 Investment in Hindustan Urvarak and Rasayan Limited

By virtue of agreement dated 16th May, 2016 made between CIL and NTPC Ltd., a joint venture company named Hindustan Urvarak and Rasayan Limited (HURL) was formed. Subsequently, joint venture agreement has been revised on 31st October, 2016 to include IOCL, FCIL and HFCL as joint venture partners. The authorised share capital of the company is Rs.100.00 Crore, out of which CIL shall hold 29.67% share capital. However, presently Coal India Limited has invested Rs.5.03 crore (i.e. 33.28%) in the joint venture company upto 31.03.2017.

1. Deposit with bank under Mine Closure Plan

Following the guidelines from Ministry of Coal, Government of India for preparation of Mine Closure Plan, an Escrow Account has been opened. The interest earned/accrued during the year on such Escrow Account for Rs.2.38 crore (Rs.2.29 crore) is included in interest income from deposit with banks disclosed in Note-25. (Refer Note 21 for Provision for Site Restoration/Mine Closure)

2. Receivable for Exploratory Drilling Work

In view of critically weak financial position of ECL, which was under BIFR till 31st Dec 2014, expenditure incurred by CMPDIL on exploratory drilling works, falling under the command area of ECL was paid by CIL and shown as advance. Amount of advance, lying unadjusted for more than five years is being written off. Therefore, as an abundant precaution, advance made on this account upto 31st Dec 2014 was fully provided for.

* Refer Note 22 - Shifting & Rehabilitation Fund

1. Current account with Subsidiaries- The balances of the current account with the Subsidiaries are reconciled at regular intervals, and the same as on 31.03.2017 has also been reconciled. Adjustments arising out of reconcilation are carried out continuously.

2. Other receivables of Rs.30.50 crore includes Rs.24.47 crore (Rs.25.19 crore as on 31.03.2016 & Rs.21.92 crore as on 01.04.2015) for interest receivable on deposits made on account of Shifting & rehabilitation fund.

Refer note 38 (2) for classification

1 Shares in the company held by each shareholder holding more than 5% Shares

2 During the year, the company has not issued any shares. However, pursuant to Public Announcement (‘PA’) published on August 30, 2016 and letter of offer dated September 23, 2016, the Company has bought back its 10,89,55,223 number of Equity shares of face value of Rs.10 each fully paid up through tender offer route under Stock Exchange mechanism and extinguished these shares on October 28, 2016. Post such buy-back, the number of fully paid equity shares as on 31.03.2017 stands at 6,20,74,09,177.

3 Listing of shares of Coal India Ltd. in Stock Exchange.

The shares of Coal India Ltd. is listed in two major stock exchanges of India, viz. Bombay Stock Exchange and National Stock Exchange on and from 4th November,2010.

The details of disinvestment/Buyback of shares by Govt of India is furnished below:

4 The Company has only one class of equity shares having a face value Rs.10/- per share. The holders of the equity shares are entitled to receive dividends as declared from time to time and are entitled to voting rights proportionate to their share holding at the meeting of shareholders.

5 Reconciliation of number of shares 6 Refer Note 38 (6) (d) also for Authorised Share capital of the company

1. Interim Dividend- During the year the company has paid first interim dividend of Rs.18.75 and second interim dividend of Rs.1.15 totalling to Rs.19.90 (Rs.27.40) per equity share of face value of Rs.10/- each for the year 2016-17 amounting to Rs.12,352.76 crore (Rs.17,306.84 crore). The Board of Directors of the company decided to recommend such interim dividend already paid as final dividend and no additional dividend has been recommended for the year 2016-17.

2. Corporate Dividend Tax - The above represents the Dividend Distribution Tax pertaining to the Dividend paid over and above the utilization of Dividend received from Subsidiaries, as per provisions of Income Tax Act,1961.

Cash Credit

The bank borrowings of Coal India Ltd. has been secured by creating charge against stock of coal, stores and spare parts and book debts of CIL and its Subsidiary Companies within consortium of banks. The total working capital credit limit available to CIL is Rs.550.00 Crore, of which fund based limit is Rs.250.00 Crore and non-fund based limit is Rs.300.00 crore. Further, Rs.2000.00 crore was set up as non-fund based limit outside consortium in order to facilitate import of HEMM. Coal India Limited is contingently liable to the extent such facility is actually utilised by the Subsidiary Companies.

1. Current Account of Subsidiaries

The current account balances of the Subsidiary Companies are reconciled on regular intervals, and the same as on 31.03.2017 has been reconciled. Adjustment arising out of reconcilation are carried out continuously.

2. Current Account of Indian Institute of Coal Management (IICM)

Current account balance of IICM represents the fund accumulated by receiving Rs.0.50 per tonne of productions of NEC and the Subsidiaries, net of expenditure made / fund remitted on behalf of IICM.

During this year total contribution received from NEC and the Subsidiaries on this account amounted to Rs.27.71 Crore. Further Rs.15.46 Crore (net) were remitted to IICM during the period; and hire charges/ lease rent recovered from IICM amounted to Rs.1.80 Crore (excluding service tax applicable thereon).

3. Unpaid dividend includes interim dividend of Rs.68.77 crore (Rs.24.82 crore as on 31.03.2016 & ‘Nil’ as on 01.04.2015) declared but 30 days have not been lapsed so as to transfer in Unpaid Dividend account.

Refer note 38 (2) for classification

1. Provision for Site Restoration/Mine Closure

The company’s obligation for land reclamation and decommissioning of structures consists of spending at both surface and underground mines in accordance with the guidelines from Ministry of Coal, Government of India. The estimate of obligation for Mine Closure, Site Restoration and Decommissioning based upon detailed calculation and technical assessment of the amount and timing of the future cash spending to perform the required work. Mine Closure expenditure is provided as per approved Mine Closure Plan. The estimates of expenses are escalated for inflation, and then discounted at a discount rate (@8%) that reflects current market assessment of the time value of money and the risks, such that the amount of provision reflects the present value of the expenditures expected to be required to settle the obligation. The value of the provision is progressively increased over time as the effect of discounting unwinds; creating an expense recognised as financial expenses. In reference to the above guidelines for preparation of mine closure plan, an escrow account has been opened. (Refer Note 9 for deposit with banks under Mine Closure Plan) No mining activity has been undertaken in Lekhapani and Tikak Extension mines as stage II forest clearance approval is pending. In view of this, no provision for mine closure has been considered for Lekhapani and Tikak Extension Mines in 2016-17 accounts. For existing MCP and Escrow Fund, in respect of these mines necessary approval from the Competent Authority is being sought for withdrawal and necessary accounting for this will be carried out after getting such approval.

2. Pending finalisation of National Coal Wage Agreement (NCWA)-X for Non Executives, an estimated adhoc provision @ Rs.8000 /- per employee (Non-Executive) per month, considering total impact of increase in all elements of salary & wages (including the employer’s PF contribution), other employee benefits and all superannuation benefits like Gratuity etc. has been made for the period 01.07.2016 to 31.03.2017 amounting to Rs.15.19 Crore and shown as “ Provision for National Coal Wage Agreement X’ above. (Also refer Note-28)

3. Pending finalization of PSUs’ pay revision for executives, an estimated adhoc provision @Rs.18000/- per employee (Executive) per month, considering total impact of increase in all elements of executive salary (including the employer’s PF contribution), other employee benefits and all superannuation benefits like Gratuity etc. has been made for the period 01.01.2017 to 31.03.2017 amounting to Rs.2.67 crore and shown as “Executive Pay Revision” above. (Also refer Note-28)

4. Provision- Other Employee Benefits-Current includes Rs.45.09 crore (Rs.38.58 crore as on 31.03.2016 & Rs.33.62 crore as on 01.04.2015) provided for Superannuation benefits @9.84%.

Shifting and Rehabilitation Fund

1- Following the direction of the Ministry of Coal, the Company has setup a fund for implementation of action plan for shifting & rehabilitation, dealing with fire & stabilization of unstable areas of Eastern Coal Fields Ltd. & Bharat Coking Coal Ltd. The fund is utilized (by ECL and BCCL) based on implementation of approved projects in this respect.

The subsidiaries of CIL except CMPDIL and Coal India Africana Limitada are making a contribution of Rs.6/- per tonne of their respective coal dispatch per annum to this fund, which remains in the custody of CIL, till they are disbursed/utilised by subsidiaries/agencies implementing the relevant projects. (Refer Note 9 for deposits with bank under Shifting & Rehabilitation Fund scheme)

2- Interest earned (Net of TDS) on bank deposits earmarked for this fund is credited to this fund.

1. Subsidy for Sand Stowing & Protective Works includes Rs.0.08 received from Ministry of Coal, Government of India in terms of Coal Mines (Conservation & Development) Act, 1974 towards reimbursement of expenditure incurred for the Sand Stowing & Protective Works by NEC during the F.Y. 2016-17.

2. Sale of coal includes excise duty of Rs.21.03 Crore (Rs.11.51 crore). Sale of coal net of excise duty is Rs.285.37 crore (Rs.163.15 crore).

3. Loading and additional transportation charges includes excise duty of Rs.0.27 Crore (Rs.0.12 crore). Loading and additional transportation charges net of excise duty is Rs.4.43 crore (Rs.1.95 crore).

1. Interim Dividend of 2016-17 received from CCL (Rs.3634.04 crore) , NCL (Rs.1680.00 crore), SECL (Rs.2133.47 crore) and MCL (Rs.2982.00 crore) has been accounted for during the year.

2. Income of Rs.3914.16 crore (MCL: Rs.1571.88 crore, NCL: Rs.1203.01 crore and SECL: Rs.1139.27 crore) has been accounted for during the year on account of premium received through buyback price of equity shares paid by the subsidiaries over and above the nominal value of shares extinguished through buyback.

3. Interest income from deposits with Banks and dividend income from investment in mutual fund includes interest/dividend income on investments of amount lying in Current Account of IICM. (Refer Note 20) .

4. Miscellaneous income includes incomes like receipt on account of holiday home bookings, RTI fees, application money for recruitments, misc. receipts from banks etc.

NOTE - 3: ADDITIONAL NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2017 (STANDALONE)

1. First time adoption of Ind AS

These financial statements of the Company, for the year ended 31st March 2017, are the first financial statements prepared in accordance with Ind AS. For periods up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (erstwhile - Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2017, together with the comparative period data as at and for the year ended 31st March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1st April 2015, the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2015 and the financial statements as at and for the year ended 31st March 2016. Exemptions applied Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

(i) Fair value measurement of financial assets or finan cial liabilities (Ind AS 101.D20)

First-time adopters may apply Ind AS 109 to day one gain or loss provisions prospectively to transactions occurring on or after the date of transition to Ind AS. Therefore, unless a first-time adopter elects to apply Ind AS 109 retrospectively to day one gain or loss transactions, transactions that occurred prior to the date of transition to Ind AS do not need to be retrospectively restated.

As a first time adopter of Ind AS, the Company has opted to apply Ind AS 109 prospectively.

(ii) Mine Closure, Site Restoration and Decommissioning Obligation in Property, Plant and Equipment (Ind AS 101.D21)

Appendix ‘A’ to Ind AS 16 Changes in Existing Decommissioning, Restoration and Similar Liabilities requires specified changes in a decommissioning, restoration or similar liability to be added to or deducted from the cost of the asset to which it relates; the adjusted depreciable amount of the asset is then depreciated prospectively over its remaining useful life. A first-time adopter need not comply with these requirements for changes in such liabilities that occurred before the date of transition to Ind AS. In other words, a first-time adopter will not need to estimate what provision would have been calculated at earlier reporting dates. Instead, the decommissioning liability is calculated at the date of transition and it is assumed that the same liability (adjusted only for the time value of money) existed when the asset was first acquired/constructed.

As a first time adopter of Ind AS, the Company has calculated the Mine Closure, Site Restoration and Decommissioning Obligation at the date of transition assuming that the same liability (present value) existed when the asset was first acquired/constructed.

2. Fair Value measurement

(a) Financial Instruments by Category

(b) Fair value hierarchy

The Company uses the judgments and estimates in determining the fair values of the financial instruments that are recognised and measured at fair value. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level is given below:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have quoted price and are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level

3. This is the case for unlisted equity securities, preference shares borrowings, security deposits and other liabilities taken included in level 3.

Mutual Fund Investments are classified as FVTPL have been valued as per Level I of Fair Value Hierarchy.

(c) Valuation technique used in determining fair value Valuation techniques used to value financial instruments include the use of quoted market prices of instruments.

(d) Fair value measurements using significant unobservable inputs

At present there are no fair value measurements using significant unobservable inputs.

(e) Fair values of financial assets and liabilities measured at amortised cost

- The carrying amounts of trade receivables, short term deposits, cash and cash equivalents, trade payables are considered to be the same as their fair values, due to their short-term nature.

- The Company considers that the Security Deposits does not include a significant financing component. The milestone payments (security deposits) coincide with the company’s performance and the contract requires amounts to be retained for reasons other than the provision of finance. The withholding of a specified percentage of each milestone payment is intended to protect the interest of the company, from the contractor failing to adequately complete its obligations under the contract. Accordingly transaction cost of Security deposit is considered as fair value at initial recognition and subsequently measured at amortised cost.

Significant estimates: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Company uses its judgment to select a method and makes suitable assumptions at the end of each reporting period.

3. FINANCIAL RISK MANAGEMENT

Financial risk management objectives and policies

The Company’s principal financial liabilities, comprise trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include loans, trade and other receivables, and cash and cash equivalents that is derived directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by a risk committee that advises, inter alia, on financial risks and the appropriate financial risk governance framework for the Company. The risk committee provides assurance to the Board of Directors that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below.

The Company is exposed to market risk, credit risk and liquidity risk. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

The Company risk management is carried out by the board of directors as per DPE guidelines issued by Government of India. The board provides written principles for overall risk management as well as policies covering investment of excess liquidity.

A. Credit Risk: Credit risk arises from cash and cash equivalents, investments carried at amortised cost and deposits with banks and financial institutions, as well as including outstanding receivables.

Credit risk management:

Receivables arise mainly out of sale of Coal. Sale of Coal is broadly categorized as sale through fuel supply agreements (FSAs) and e-auction.

Macro - economic information (such as regulatory changes) is incorporated as part of the fuel supply agreements (FSAs) and e-auction terms

Fuel Supply Agreements (FSAs)

As contemplated in and in accordance with the terms of the New Coal Distribution Policy (NCDP), the company enters into legally enforceable FSAs with customers or with State Nominated Agencies that in turn enters into appropriate distribution arrangements with end customers. Our FSAs can be broadly categorized into:

- FSAs with customers in the power utilities sector, including State power utilities, private power utilities (“PPUs”) and independent power producers (“IPPs”);

- FSAs with customers in non-power industries (including captive power plants (“CPPs”)); and

- FSAs with State Nominated Agencies.

E-Auction Scheme

The E-Auction scheme of coal has been introduced to provide access to coal for customers who were not able to source their coal requirement through the available institutional mechanisms under the NCDP for various reasons, for example, due to a less than full allocation of their normative requirement under NCDP, seasonality of their coal requirement and limited requirement of coal that does not warrant a long-term linkage. The quantity of coal to be offered under E-Auction is reviewed from time to time by the Ministry of Coal.

Significant estimates and judgments for Impairment of financial assets

Provision for expected credit loss: The Company provides for expected credit risk loss for doubtful/ credit impaired assets, by lifetime expected credit losses (Simplified approach).

Expected Credit losses for trade receivables under simplified approach

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

B. Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at local level in the operating companies of the Company in accordance with practice and limits set by the Company.

C. Market risk

a) Foreign currency risk

The Company is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk in respect of foreign operation is considered to be insignificant. The Company also imports and risk is managed by regular follow up. Company has a policy which is implemented when foreign currency risk becomes significant.

b) Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from bank deposits with change in interest rate exposes the Company to cash flow interest rate risk. Company policy is to maintain most of its deposits at fixed rate.

Company manages the risk using guidelines from Department of public enterprises (DPE), diversification of bank deposits credit limits and other securities.

Capital management

The company being a government entity manages its capital as per the guidelines of Department of investment and public asset management under ministry of finance.

4. Employee Benefits: Recognition and Measurement (Ind AS-19)

i) Provident Fund:

Company pays fixed contribution towards Provident Fund and Pension Fund at pre-determined rates to a separate trust named Coal Mines Provident Fund (CMPF), which invests the fund in permitted securities. The contribution towards the fund during the year is Rs.27.71 Crore (Rs.27.73 Crore) has been recognized in the Statement of Profit & Loss (Note 28).

ii) The Company operates some defined benefit plans as follows which are valued on actuarial basis:

(a) Funded o Gratuity

- Leave Encashment

(b) Unfunded

- Life Cover Scheme

- Settlement Allowance

- Group Personal Accident Insurance

- Leave Travel Concession

- Medical Benefits

- Compensation to dependent on Mine Accident Benefits Total liability as on 31.03.2017 based on valuation made by the Actuary, details of which are mentioned below is Rs.378.30 Crore.

5. Unrecognised items

a) Contingent Liabilities

I. Claims against the company not acknowledged as debt

II. Guarantee

The company has given guarantee on behalf of subsidiaries Eastern Coalfields Limited and Mahanadi Coalfields Limited to the extent of their obligations under loans (principal and interest) made to Export Development Corporation, Canada and Banque Nationale De Paris and Natexis Banque (for purchase of Machinery from Liebherr France). The outstanding balance as on 31.03.2017 stood at Rs.167.20 Crore (Rs.174.14Crore) and Rs.6.64 Crore (Rs.7.77 Crore) respectively. Other bank guarantee issued is Rs.1.01 Crore (Rs.11.40 Crore).

III. Letter of Credit :

As on 31.03.2017 outstanding letters of credit is Nil (Nil).

b) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for: Rs.23.03 Crore (Rs.79.97 Crore).

Other Commitment: Rs.312.24 Crore

6. OTHER INFORMATION

a) Government Assistance

Subsidy for Sand Stowing & Protective Works includes Rs.0.08 Crore received from Ministry of Coal, Government of India in terms of Coal Mines (Conservation & Development) Act, 1974 towards reimbursement of expenditure incurred for the Sand Stowing & Protective Works by NEC during the F.Y. 2016-17.

b) Provisions

The position and movement of various provisions except those relating to employee benefits which are valued actuarially, as on 31.03.2017 are given below:

c) Related Party Disclosures

A. Key Managerial Personnel

Mr. S. Bhattacharya, Chairman-Cum-Managing Director Mr. R. Mohan Das, Director (P&IR)

Mr. C.K. Dey, Director (Finance)

Mr. B. K. Saxena, Director (Marketing) (upto 31.01.2016) Mr. S.N. Prasad, Director (Marketing) (w.e.f. 01.02.2016) Late Mr. N. Kumar. Director (Technical) (upto 17.10.2016) Mr. Shekhar Saran, Director (Technical)- Additional Charge Mr. M Viswanathan, Company Secretary Independent Directors (appointed on 17.11.2015)

Ms. Loretta M. Vas Dr. S.B. Agnihotri Dr. D.C. Panigrahi Dr. Khanindra Pathak Mr. Vinod Jain

B. Related Party Transactions within Group

The Company being a Government related entity is exempt from the general disclosure requirements in relation to related party transactions and outstanding balances with the controlling Government and another entity under same Government.

Coal India Limited has entered into transactions with its subsidiaries which include Apex charges, Rehabilitation charges, Lease rent, Interest on Funds parked by subsidiaries, IICM charges and other expenditure incurred by or on behalf of other subsidiaries through current account. As per Ind AS 24, following are the disclosures regarding nature and amount of significant transactions.

d) Taxation

An amount of Rs.11.38 Crore (Rs.170 Crore) is provided in the accounts during current year towards income tax.

The Company is having a deferred tax asset (net) on the basis of calculation as per Ind AS-12. Since as per existing provisions of tax laws the dividend received from subsidiaries, which accounts for the income of Coal India Ltd., is tax free w.e.f. financial year 2003-04 and since without considering such dividend there is no virtual certainty of generation of future taxable income, as a prudent practice no deferred tax asset is recognised in the accounts.

e) Goods procured by Coal India Ltd. on behalf of Subsidiaries

- There is no change in applicable tax rate as compared to previous year.

- Applicable tax rate i.e. 34.61% (rounded off) is computes as Tax Rate- 30%, Surcharge 12% on such tax and Education cess and Secondary and Higher Education Cess calculated at the rate of 2% and 1% of such income-tax and surcharge.

f) During the year 2016-17, three subsidiaries of CIL viz. NCL, SECL and MCL have bought back its shares from CIL. The details of such buy back are as follows:

As per existing practice, goods purchased by Coal India Ltd. on behalf of subsidiary companies are accounted for in the books of respective subsidiaries directly.

g) Insurance and escalation claims

Insurance and escalation claims are accounted for on the basis of admission/final settlement.

h) Provisions made in the Accounts

Provisions made in the accounts against slow moving/ non-moving/obsolete stores, claims receivable, advances, doubtful debts etc. are considered adequate to cover possible losses.

i) Current Assets, Loans and Advances etc.

In the opinion of the Management, assets other than fixed assets and non-current investments have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated.

j) Current Liabilities

Estimated liability has been provided where actual liability could not be measured.

k) Balance Confirmations

Balance confirmation/reconciliation is carried out for cash &bank balances, certain loans & advances, long term liabilities and current liabilities. Provision is taken against all doubtful unconfirmed balances.

l) During the financial year 2013-14, a case of misappropriation of Company’s fund for personal gain came to the notice of the management. The matter has been investigated by different agencies and appropriate action for recovery is underway. As per the estimate of the internal audit department of Coal India Limited, the amount involved is Rs.1.17 Crore approximately.

m) Details of Loans given, Investments made and Guarantee given covered u/s 186(4) of the Companies Act, 2013

a) Loans given are shown in Note 8 under the head ‘Loans to related parties’and Investments made are shown in Note 7 under the respective heads.

b) Corporate guarantees given by the company in respect of loans taken by subsidiaries as at 31.03.2017-

n) Significant accounting policy

Significant accounting policy (Note-2) has been suitably modified / re-drafted over previous period, as found necessary to elucidate the accounting policies adopted by the Company in accordance with Indian Accounting Standards (Ind ASs) notified by Ministry of Corporate Affairs (MCA) under the Companies (Indian Accounting Standards) Rules, 2015.

The impact of change in accounting policy and other changes to comply with Ind AS in Net Profit is stated below:

o) Others

i. Previous period’s figures have been restated as per Ind AS and regrouped and rearranged wherever considered necessary.

ii. Previous period’s figures in Note No. 3 to 38 are in brackets.

iii. Note - 1 and 2 represents Corporate information and Significant Accounting Policies respectively, Note 3 to 23 form part of the Balance Sheet as at 31st March, 2017 and 24 to 37 form part of Statement of Profit & Loss for the year ended on that date. Note - 38 represents Additional Notes to the Financial Statements.