COAL INDIA LIMITED
ANNUAL REPORT 2002-2003
NOTES ON ACCOUNTS
A. SIGNIFICANT ACCOUNTING POLICIES
1.0 Accounting Convention
Financial statements are prepared on the basis of historical cost and on
accrual basis following going concern concept, accounting standards and
generally accepted accounting principles except otherwise stated elsewhere.
2.0 Basis of Accounting
All expenses and incomes are booked initially in the natural heads of
accounts and then transferred to functional heads wherever required.
3.0 Subsidies/Grants from Government
3.1 Subsidies/Grants on Capital Account are deducted from the cost of
respective assets to which they relate. The unspent amount at the year end,
if any, is shown as Current Liabilities.
3.2 Subsidies/Grants on Revenue Account are credited to Profit & Loss
Account under the head Other Receipts and the expenses are debited to the
4. Fixed Assets
4.1 LAND: Land includes cost of acquisition, compensation and
rehabilitation expenses incurred for concerned displaced persons. Other
expenditure incurred on acquisition of Land viz Resettlement cost etc are,
however, treated as assets not belonging to company and amortised over 5
4.2 PLANT & MACHINERY: Plant & Machinery include cost and expenses incurred
for erection/ installation and other attributable costs of bringing those
assets to working conditions for their intended use.
4.3 RAILWAY SIDING : Pending commissioning payments made to the railway
authorities for construction of railway siding are shown under Capital Work
4.4 Development: Expenses net of income of the projects/mines under
development are booked to Development account and grouped under Capital
Work-in-Progress till the projects/ mines are brought to revenue account.
Projects/mines under development are brought to revenue
(a) From the beginning of the financial year immediately after the year in
which the project achieves physical coal output of 25% of rated capacity as
per approved project report, or
(b) 2 years of touching of coal, or
(c) From the beginning of the financial year in which the value of
production is more than total expenses.
- Whichever event occurs first.
4.5 Prospecting & Boring and other Development Expenditure
The cost of exploration and other development expenditure incurred in one 5
year plan period will be kept in Capital work-in-progress till the end of
subsequent two 5 year plan periods for formulation of projects except in
the case of the Blocks indentified for sale or proposed to be sold to
Investments are stated at cost.
6.1 Book stock of coal/coke is considered in the Accounts where the
variance between book stock and measured stock is upto 15% and in cases
where the variance is beyond 15% the measured stock is considered. Such
stock are valued at Net Realisable Value or cost whichever is lower.
6.1.1 Provision at the rate of 10% on the value of Closing Stock of Coal is
made to take care of deterioration of stock due to fire and longer period
of stocking etc.
6.1.2 Slurry, middlings of washaries are valued at net realisable value.
6.2 Stock of stores & Spare parts at Central & Area Stores are valued at
cost calculated on the basis of weighted average method. The year end
inventory of stores & spare parts lying at collieries/sub-stores/consuming
centres, initially charged off, at issue price of Area Stores,
Cost/estimated cost. Workshop jobs including work-in-progress are valued at
6.2.1 Stores & spare parts include loose tools.
6.2.2. Provision are made at the rate of 100% for unserviceable, damaged
and obsolete stores and 50% for stores & Spares not moved for 5 years
excepting insurance items.
6.3 Stock of stationery (other than lying at printing press), sand,
medicine (except at Central Hospitals), bricks, aircraft spares and scraps
are not considered in inventory.
7.1 Depreciation on Fixed Assets is provided on straight line method at the
rates specified in Schedule XIV of the Companies Act, 1956 (as amended)
except for telecommunication equipments. Depreciation on such equipments is
charged over the technically estimated life, at higher rates, viz : @15.83%
and @ 10.55%. Depreciation on the assets added/ disposed off during the
year is provided on pro-rata basis with reference to the month of
7.2 Value of land acquired under Coal Bearing Area (Acquisition &
Development) Act 1957 is amortised on the basis of balance life of the
project. Value of the lease hold land is amortised on the basis of lease
period or balance life of the project whichever is earlier.
7.3 Development expenditure are amortised in 20 years or life of the
Project whichever is less, on the Project being brought to Revenue Account.
7.4 Capital Expenditure on Assets not belonging to the Company are
amortised in 5 years and the same are taken out from the Accounts following
the year in which the Assets are fully depreciated.
7.5 Assets attracting 100% depreciation, other than items costing Rs.
5,000/- are taken out from the Accounts after expiry of 2 years following
the year in which these are fully depreciated.
8.0 Overburden Removal (OBR) Expenses
8.1 In Open cast mines with rated capacity of 1 million tonnes and above,
the cost of OBR is charged on average ratio (Coal :OB) at each mine with
due adjustment for advance stripping and ratio variance account after the
mines are brought to revenue. Net of balance of advance stripping and ratio
variance at the end of the year is shown as Deferred Revenue Expenditure or
Current Liabilities as the case may be.
The reported quantity of overburden is considered in the Accounts where the
variance between reported quantity and measured quantity is within the
permissible limits detailed hereunder
Annual Quantum of OBR Permissible limits of variance
of the Mine (whichever is less)
% Quantum (in Mill Cu. Mtr.)
A Less than 1 Mill CUM +/-5% 0.03
Between 1 and 5 Mill CUM +/-3% 0.2
More than 5 Mill CUM +/-2% NIL
9.0 Deferred Revenue Expenditure
9.1 Expenditure on rehabilitation of HEMM involving Rs. 5.00 lakhs and
above in each case is charged off over the useful life of the assets
subject to maximum 4 years.
9.2 Terminal Benefits over and above related grants received under
voluntary Retirement Scheme is charged off over a period of 5 years.
B. NOTES ON ACCOUNTS
1. Contingent Liabilities /Capital Commitments
1.1 The amount remaining to be executed on Capital Accounts including that
on behalf of Subsidiaries not provided for is Rs. 5140.88 lacs (Rs. 9356.70
1.2 Claims against the Company not acknowledged as debts are Rs. 35304.01
lacs (Rs. 47766.97 lacs.)
1.3 Negative Marked to Market valuation of outstanding position involving
foreign currency transactions as on 31.03.2003 stood at Rs. 1592.36 lacs
(Rs. 2435.00 lacs.).
1.4 Commitments relating to Forward Exchange Contracts as at the end of the
year stood at Rs. nil (3056.89 lacs.).
1.5 As on 31.3.03 outstanding letters of credits amounted to Rs. 4600.89
lacs, (Rs. 8685.98 lacs) and outstanding Deferred payment guarantee issued
by Banks amounted to Rs. 7801.64 lacs (Rs. 9347.34 lacs).
2. Fixed Assets
2.1 Title deeds for land acquired, in some cases, have not been executed in
favour of the company and mutation in certain cases are yet to be executed.
2.2 Dankuni Coal Complex/Indian Institute of Coal Management
A. Fixed Assets comprising Power Plant of Rs. 6064.71 lacs. and related
building and other assets of Rs. 3652.25 lacs, both at book value (WDV) as
on 31.3.95, have been let out to SECL. Additions to these assets from the
day of letting out to 31.03.2003 are Rs. 581.09 lacs on value of plant and
Rs. 155.98 lacs on value of building and other assets. The cumulative
provision for depreciation upto 31.03.2003 stood at Rs. 8794.83 lacs
(including depreciation charged for the current period of Rs. 657.24 lacs).
The net W.D.V of the leased assets as per books as on 31.03.2003 is Rs.
5303.20 lacs including CWIP.
(B) Besides, Fixed Assets comprising of Plant & Machinery of Rs. 218.99
lacs and related building and other assets of Rs. 1625.37 lacs, both at
book value (WDV) as on 31.3.95 have been let out to IICM, a registered
society under Societies Registration Act, 1861. Additions to these assets
from the day of letting out to 31.03.2003 are Rs. 351.08 lacs on value of
plant & machinery and Rs. 293.86 lacs on value of building and other
assets. The cumulative provision for depreciation upto 31.03.2003 stood at
Rs. 722.16 lacs (including depreciation charged for the current period of
Rs. 77.80 lacs). The net W.D.V of the leased assets as per books as
on31.03.2003 is Rs. 1901.09 lacs.
3.1 Investment in Subsidiaries
Investment of the company in share capital of Bharat Coking Coal Ltd.,
Eastern Coalfields Ltd. and Central Coalfields Ltd. as on 31.3.03 amounted
to Rs. 211800.00 lakhs, Rs. 221845.00 lakhs and Rs. 94000.00 Lakhs
respectively. ECL, BCCL and CCL have become sick and are referred to BIFR
under Sick Industrial Companies Act, 1985. Plans for restructuring/revival
of ECL & BCCL are in an advanced stage. Scheme recommending restructuring
of ECL has been formulated by Operating Agency and is under consideration
of BIFR. In case of BCCL the restructuring/revival proposal is under
formulation. CCL has originally been referred to BIER and now under
consideration of Appellate Authority of BIFR. The revival scheme of CCL is
under formulation. Once the revival schemes are finalised and implemented
the financials of these Companies will substantially improve which will
turn them into viable Companies. In view of the above the decline in the
value of investments, if any, are temporary in nature, and hence, are
valued at cost.
On the same analogy i.e. these subsidiaries on the above stated grounds
will turn into viable companies; no provision on the loans outstanding from
these subsidiaries are considered.
3.2 Investment in other Companies
During the year Management & Technology Application (India) Ltd., wherein
Coal India Ltd. had invested in 16334 nos of equity shares of Rs. 10/- each
was wound up in accordance with the provision of the Companies Act., 1956
and Rs. 0.11 lacs has been received towards refund of proportionate share
money @ Re. 0.68 per share as final settlement of the affairs of the
A provision towards the diminution in the value of investment which was
made in previous year's Accounts, has since been adjusted on liquidation of
Stores & Spares
4.1 The closing stock of stores and spare parts has been considered in the
Accounts as per balances appearing in priced stores ledger of the Central
Stores and as per physically verified stores lying at the collieries/units.
4.2 Provision for Rs. 135.75 lacs (171.86 lacs) has been kept in the
accounts for unserviceable or obsolete spares which is considered adequate.
4.3 Stores and Spares also include loose tools and aircraft spares-value of
which is not separately ascertained.
4.4 As per consistent practice, over and above the provision mentioned in
para 6.1.1 (Part `A of this Schedule) a further provision of Rs. 237.67
lakhs being 90% balance value of slow moving Coal as per Survey Measurement
Team's report has been kept in the Accounts.
5. Sundry Debtors
5.1 Provision for Bad & Doubtful Debts amounting to Rs. 1073.84 lacs (Rs.
1072.36 lacs) is considered adequate.
6.1 During the year the Company has redeemed
(i) 17% Non-Convertible Secured Bonds (D-Series) amounting to Rs. 589.00
(ii) 12.25% Non-Convertible Un-Secured Bonds (K-Series) amounting to Rs.
7. Loans & Advances
7.1 The fund available with the Company against Cash, Bank Balances, Road
Coupons etc. taken over by the Company from the Management period of non-
coking coal mines i.e. on 1.5.1973 has been adjusted against the deposit
made by the Company on behalf of the Govt. of India to Commissioner of
Payments on account of surplus of the Management Period in respect of such
non coking coal mines.
7.2 Claims receivable include Rs. 218.40 lacs due from Railways for
missing/diversion of wagons (Rs. 215.23 lacs) etc.
7.3 Pending reconciliation with regard to dues to Port Authorities net
amount has been shown in certain cases.
7.4 Funding of Exploration Services provided by CMPDIL to ECL
During the year an amount of Rs. 950.86 lacs has been funded by CIL for
carrying out exploratory drilling in Blocks under ECL. Command Area and has
been shown in CIL books under `Exploratory Drilling Work for ECL' in the
Schedule of "Loans & Advances". The total advance on this account as on
31.03.2003 stood at Rs. 1310.92 lacs.
8. Secured Loans
8.1 Cash Credit
Pending finalisation of formalities for transfer of assets and liabilities
of erstwhile CMAL and its divisions, now Coal India Ltd. the Bank
Borrowings of Coal India Ltd. has been secured by creating charge against
stock of Coal, stock of stores and spare parts and book debts and other
assets of CIL and its Subsidiary Companies.
Out of total cash credit limit of Rs. 700.00 Crores, sub-limit of Rs. 87.00
Crores have been allocated to the subsidiaries against which Coal India
Ltd. is contingently liable to the extent the facility has been actually
utilised by subsidiaries as on 31.3.03.
9. Current Liabilities & Provisions
9.1 The provisions made in the Accounts against slow moving/non-moving and
obsolete stores, claims receivable, advance, doubtful debts etc. are
considered adequate to cover possible losses.
9.2 Interest paid/payable on the amounts collected from the employees
towards the Pension Scheme and held by the Company has been charged in the
accounts at rates prescribed by Coal Mines Pension Scheme, 1998.
9.3 The balance of the current account with the Subsidiaries are being
reconciled on a continuous basis, and the same as on 31.3.2003 has been
reconciled substantially, while reconciliation of the balance is in
9.4 Current Account balance with IICM (in Current Liabilities & Provisions
Schedule of Balance Sheet) represents the fund accumulated by receiving Re.
0.50 per tonne of productions of Subsidiaries, net of expenditure/Fund
made/remitted on behalf of IICM.
10. Profit & Loss Account
10.1 Recognition of Revenue in respect of interest claim amounting to Rs.
22309.10 lacs (Rs. 24159.33 lacs) and Apex Charges amounting to Rs. 4417.55
lacs (Rs. 4381.00 lacs) attributable to ECL, BCCL & CCL in year's account
have been deferred. These have been done in keeping with the Accounting
Standard - 9 of ICAI of Revenue Recognition.
10.2 Interim dividend declared by four subsidiaries namely, NCL, MCL, SECL
& WCL amounting to Rs. 48527.52 lacs pertaining to the year 2002-03 has
been accounted for as income for the year.
10.3 Gains amounting to Rs. 1557.01 lacs (Rs. 3437.26 lacs) arising from
cancellation of Forward Contracts against Foreign Exchange Loans taken by
the Company for its subsidiaries have been kept as a separate Reserve.
10.4 Helicopter engine purchased during the year 2000-01 has been
depreciated on the basis of balance life (as per books) of the original
aircraft in keeping with the provisions of the Accounting Standard for
Depreciation Accounting (AS-6).
This has resulted in an additional charge of depreciation of Rs. 51.74 lacs
(Rs. 59.41 lacs).
10.5 Depreciation includes the amount charged on account of amortisation of
cost of Leasehold Land.
10.6 An ad-hoc provision @10 % of Basic Pay of the non-executives prevalent
as on 30.06.2001 amounting to Rs. 741.71 lacs ( Rs. 553.94 lacs) has been
made in the Accounts to cover against likely rise in all elements of wages
of non-executives with the finalisation of NCWA-VII which, as per extant
practice, is due for negotiation and implementation w.e.f. 01.07.2001.
Interest on the loans owed by subsidiary companies to CIL has been charged
on the opening balance of the loan in their books at rates determined in
consideration of the provisions contained in the loan agreement as well as
the principles of Corporatisation of financial flows adopted by the Board.
The above amount is utilised to meet the obligations of CIL in respect of
interest on Government loans, Intercorporate loans, Fund based facilities,
Bonds, etc. net of interest earned on short term deposits for the year.
12. Foreign Exchange Loan
The loan drawn from IBRD and JBIC Banks on account of Coal Sector
Rehabilitation Project to be implemented in various subsidiaries has been
shown under the head Unsecured Loan (Ref. Schedule-D)
In terms of the agreement with IBRD and JBIC Banks Coal India Ltd. has
entered into back to back loan agreements with its participating
Subsidiaries and loans including effect of exchange rate variation have
been shown under " Loans to Subsidiaries" and all other financial charges
viz -Interest, Commitment Charges etc. and interest earned are transferred
through "Current Account with Subsidiaries".
13.1 In the opinion of the management current assets, Loans and Advances,
Sundry Debtors etc. have realisable value in the course of business atleast
equal to the net amount at which they are stated.
13.2 Cash & Bank Balance (Sch.-I) includes fund held on behalf of Orissa
Cyclone Relief Fund created by contribution from employees of Coal India
Ltd., its Subsidiaries and others.
13.3 Balance with Post Office Savings Bank Account in Schedule-I (Cash &
Bank Balances) includes Rs. 0.27 lakhs short credited by Post offices in
1991-92 on Postal Orders deposited with them for which full provision has
been made in the accounts.
13.4 Interest has been paid on Surplus Fund parked by Northern Coalfields
Ltd., Mahanadi Coalfields Ltd. and Western Coalfields Ltd. (all
subsidiaries of Coal India Ltd.). Such interest to NCL and MCL has been
paid after considering the interest free fund accessed from these two
Subsidiaries out of their surplus funds parked during the year.
13.5 In absence of balance confirmation from the parties, Sundry Debtors,
Creditors, Loans & Advances and Deposits have been taken in the Accounts as
per their book value.
13.6 As per extant practice, goods purchased by CIL on behalf of
Subsidiaries are accounted for in the books of the Subsidiary Companies.
13.7 (a) Interest on advance to employees e.g. House Building, Purchase of
Conveyance etc., are accounted for on realisation after recovery of
(b) Insurance and escalation claims are accounted for on the basis of
(c) Additional Liability for royalty, cess etc. - if any, are accounted for
in the year in which final assessment orders are received.
13.8 An amount of Rs. 3450.00 lacs has been provided in the Accounts
towards provision for Income Tax. The above amount includes Rs. 2214.14
lacs towards provision for income tax for the current year calculated on
the basis of Minimum Alternate Tax provision and Rs. 1235.86 lacs towards
provision for income tax relating to the earlieer years. The balance is
considered adequate to cover any liability towards Wealth Tax etc.
The Company is having a deferred tax asset on the basis of calculation as
per Accounting for taxes on income (AS-22). Since as per 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 CIL is expected to have loss in future,
as a prudent practice no deferred tax asset is recognised in the Accounts
in keeping with the provisions of Accounting for taxes on income (AS-22).
Effect of change in Accounting Policy
13.9 The policy of charging off of terminal benefits over and above related
grants received under Voluntary Retirement Scheme has been changed from
hitherto over 4 years to over 5 years (See policy no. 9.2 in part-A of this
The above has resulted in an increase in profit by Rs. 122.29 lacs.
Further, due to the adoption of Policy to provide at the rate of 100% for
unserviceable damaged and obsolete stores and 50% for stores & spares not
moved for 5 years excepting insurance items. (refer Policy no. 6.2.2)
against hitherto practice of making such provision on an adhoc basis, has
resuited in an increase in profit by Rs. 46.97 lacs.
13.10. Previous years' figures have been regrouped and rearranged wherever
13.11 Figures in the parentheses relates to previous year.
13.12 The Accounts together with Notes thereon approved by the Board of
Directors of the Company vide Item no. 208.4(M) of 208th meeting held on
25th June, 2003 and reported upon by the Statutory Auditors on 30th June,
2003 has been revised to comply with the observations of the Comptroller
and Auditor General of India. The revision has affected the accounts and
Notes on Accounts for the year as follows
(Rs. in lakhs)
A. Profit & Loss A/c
(i) Profit of the Company has increased due to acceptance
of the observations of the Comptroller & Auditor General
of India 4.32
Transfer to General Reserve increased by 0.43
B. Balance Sheet
(i) Reserve & Surplus
General Reserve increased by 0.43
Profit & Loss A/c balance increased by 3.89
(ii) Capital Work-in-Progress decreased by 17.65
(iii) Inventories increased by 46.97
(iv) Current Liabilities & Provisions increased by 25.00
(v) Revision of Note No.4.2 and 13.9 in Notes on Accounts
(Part-B, Schedule -M of the Revised Accounts)
(vi) Revision of cash flow statement (Note no. 13.10, Part-B,Sch.-M)
Balance Sheet Abstract and General Business Profile (Annexure to Sch.M)
Schedule A to L form part of the Balance sheet as at 31st March, 2003 and 1
to 16 form part of Profit & Loss Account for the year ended on that date
and Schedule-M represents Accounting Policies and explanatory notes on the
Accounts. Additional information required as per Schedule-VI (Part-II and
III) of the Companies Act, 1956 are given in the Annexure to Schedule-M.
Sd/- Sd/- Sd/- Sd/-
Dr. H. Sarkar P.K. Dutta D.K. Verma Lakshmi Chand
Company Secretary Chief General Manager (F) Director (F) Addl. Secretary
Place : Kolkata In terms of our attached report of even date
Date : 22nd August 2003 For S. Ghosh & Co.
5th September, 2003
ANNEURE TO SCHEDULE - M
(Rs. in `00,000)
Current Year Previous Year
1. Directors' Remuneration
(i) Salaries 27.94 50.23
(ii) Company's Contribution to
Provident Fund & other Funds. 2.95 5.86
(iii) Medical Benefits 2.83 2.77
(iv) Perquisites 3.60 1.00
(a) Perquisites do not include charges for electrical energy which has been
recovered as per Rules of the company.
(b) Besides above, Directors have been allowed to use of cars for private
journey upto a ceiling of 1000/750 KMs on payment of Rs. 400/Rs.250 per
month as per service conditions.
II. The information required in paragraph 3 & 4 of Part (ii) of Schedule -
VI of Companies Act, 1956, 3(b) value of imports on CIF basis.
(Rs. in '000, 000)
Current Year Previous Year
(i) Raw Material Nil Nil
(ii) Capital Goods Nil Nil
(iii) Stores, Spares & components 20.51 Nil
III. Expenditure incurred in Foreign Currency on, account of
(Rs. in `00, 000)
Current Year Previous Year
(i) Know how Nil Nil
(ii) Interest & commitment charges 5354.73 6631.14
(iii) Exchange variation Nil 32.59
(iv) Commission to Foreign Agents Nil Nil
(v) Training expenses and payments to
Foreign Technicians Nil Nil
(vi) Travelling 9.67 12.60
(vii) Medical Treatment Nil Nil
(viii) Membership Fees Nil Nil
(ix) Advertisement Nil Nil
IV. Earning in Foreign
Exchange on account of
(i) Export of Goods (calculated
on FOB basis) Nil Nil
(ii) Exchange variation 76.57 Nil
(iii) Miscellaneous Nil 3437.26
V. Total Consumption of
Stores during the year
(i) Imported materials Nil Nil
(ii) Indigenous 745.21 724.50
Additional information required in paragraph 3 & 4 of Part-II of schedule
VI to the Companies Act, 1956 for the year ended 31st March, 2003.
(i) Installed Capacity Not Applicable Not Applicable
(ii) Licenced Capacity Not Applicable Not Applicable
VI. Statement of Opening Stock, Production, Purchases, Turnover and Closing
Stock of Coal, Coke and Other Product and by-product including its trading
(Rs. in `00, 000)
(Quantity in `000 MT)
Current Year Previous Year
Qty Value Qty. Value
Coal & Coke 489.09 2990.18 472.66 1609.33
Coal 633.00 - 640.02 -
Coal - - - -
Sales : (Adjusted &
excl. Levies &
Coal 639.78 8343.58 620.31 7852.57
Free issue to
Consumption 3.84 29.88 3.28 25.16
Coal & Coke 478.47 3990.45 489.09 2990.18