Terms/rights attached to share
The company has only one class of shares as equity shares of H 10 each with one voting right for one equity share and right to equal dividend proportionate to the shareholding. In the event of liquidation of the Company, the holders of equity will be entitled to receive the remaining assets in proportion to the number of equity shares held by the Shareholders.
Interim dividend is recorded as a liability on the date of declaration by the Company's Board of Directors. The Board has recommended a final dividend H14,04.05 lakhs @ 0.69 per equity share for the financial year 2022-23.This payment is subject to the approval of shareholder in the Annual General meeting (AGM).The Company declared a interim dividend H 61,04.56 lakhs @ 3.00 per equity share and final dividend H 61,04.56 lakhs @ 3.00per equity share for the financial year 2021-22.
Note: Liabilities for capital expenditure includes MSME payable H. 264.07 lakh and liability for expenses includes MSME payables in H 72.33 lakhs
Defined obligations - Disclosures as per Ind-AS19 : Employee benefits are as under -
A Defined Contribution Plans :
(a) Providend Fund : The Company pays fixed contribution at predetermiend rates to Provident Fund Trust, which invests the funds in permitted securities.
(b) Pension Fund : The Company pays fixed contribution to MOIL Group Superannuation Cash Accumulation Scheme (Defined Contribution) [MOIL GSCA (DC)] Trust which invests the funds in LIC of India.
B Defined Benefit Plans :
(a) Gratuity : The Group Gratuity Cash Accumulation Scheme is funded by the Company and is managed by MOIL Gratuity Trust as per Payment of Gratuity Act,1972. Liability for gratuity is recongnised on the basis of actuarial valuation. Eligible amount is paid to the employees on separation by the Trust.
(b) Post Retirement Medical Benefit : The benefit is available to retired employees and their spouse who have opted for the benefit. Liability for the same is recognised on the basis of actuarial valuation.
C Leave Benefits :
The accumulated earned leave, half pay leave/sick leave is payable on separation, subject to maximum permissible limit. The liability for the
same is recongnised on the basis of actuarial valuation.
Characteristics of defined benefit plans:
Defined Benefit Gratuity plan: - To provide funding to cater gratuity benefit to employees as per provisions of The payment of Gratuity Act 1972. Gratuity is calculated as per the provisions of said Act and is limited to maximum H 20 lakhs.
Defined Benefit Leave encashment plan: - To provide funding for terminal encashment benefits of accumulated leave to the credit of employees account at the rate of last drawn salary which is restricted to maximum 300 days leave balance, as per the leave Rules of the Company.
Assumptions and limitations:
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuation. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The principal assumptions are the discount rate & salary growth rate. The discount rate is generally based upon the market yields available on Government bonds at the accounting date relevant to currency of benefit payments for a term that matches the liabilities. Salary growth rate is company's long term best estimate as to salary increases and takes account of inflation, seniority, promotion, business plan, HR policy and other relevant factors on long term basis as provided in relevant accounting standard.
Risk:
Management has entrusted four approved fund managers namely Life Insurance Corporation of India, Bajaj Allianz Life Insurance Co. Ltd., Birla Sun Life Insurance and ICICI Prudential Life Insurance for managing the fund for Gratuity i.e. 60% is to be deposited with LIC and maximum 40% with private insurers and Life Insurance Corporation of India for leave encashment. The performance of fund, assumptions, discount rates and net assets value is evaluated for the reporting period by the management. The fund managers are regulated by IRDA and its investment norms specified by Government of India as per Gazette Notification of 2016 as mentioned below. The fund managers follow policies to mitigate risk which includes review of credit rating, exposure concentration, risk of tolerance levels, regulatory compliance standards, standard operating procedure etc. Since majority of funds invested by fund managers are in Government securities and having sovereign guarantees by Government of India, the risk is minimal.
NOTE 3:
3.1 The financial statements of the company for the year ended 31st March, 2023 are approved for issue by the Board of Directors on 26th May,2023.
3.2 Fair Value measurement
3.3 Financial Risk Management
Risk management framework
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Board of Directors has established the Risk Management framework for developing and monitoring the Company's risk management policies. The Risk management committee regularly reports its activities to the Board of Directors through Audit Committee on regular basis.
The Company's risk management framework is established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management framework and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Board of Directors through Audit Committee monitors the compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
A Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and deposits with banks.
(a) Trade receivables
The Company sales are generally based on advance payments and through letters of credit/ Bank guarantees. The trade receivables in the books are mainly on account of credit sales to M/s SAIL MEL Limited (Chandrapur),SAIL Bhilai Steel Plant and Salem Steel, CPSEs under the Ministry of Steel.
The impairment provisions for trade receivables disclosed above are based on assumptions about risk of default and expected loss rates.
(b) Financial instruments and cash deposits
Credit risk from balances with banks is managed by the Company's treasury department in accordance with DPE guidelines & Company's policy. Investments of surplus funds in term deposits are made only with scheduled commercial banks having a minimum net worth of H 500 Crore and will not exceed 5% of the net worth of the bank as per the latest financial information available. Similarly, investment in term deposit in any one bank will not exceed 25% of surplus funds and limits have been assigned to each bank as per the credit rating of the bank . Investment in mutual funds will be only in liquid debt based mutual funds of public sector AMCs not exceeding 30% of the surplus fund available.. The limits are reviewed by the Company's Board of Directors through Audit Committee on regular basis. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
B. Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
Typically the Company ensures that it has sufficient cash on demand to meet the current and the expected operational expenses , including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
Maturities of financial liabilities :
The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payments.
C. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
(i) Foreign currency risk :
Since majority of the company's operations are being carried in India and since all the material balances are denominated in its functional currency, the company does not carry any material exposure to currency fluctuation risk.
(ii) Interest rate risk :
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Since the interest rates on fixed deposits are fixed, the company does not have any interest rate risk. Further as the Company does not have any borrowings. Hence, there is no interest rate risk.
3.4 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.
3.5 In accordance with paragraph 117 of Ind AS 1 Presentation of Financial Statements, we have made disclosures regarding significant accounting policies, the measurement basis in Accounting policy No.1.1 (b) used in preparing the financial statements and the other accounting policies used that are relevant to an understanding of the financial statements.
3.6 Hedge accounting is not applicable.
3.7 Capital Management
(a) Risk management
The primary objective of the Company's capital management is to maximise the shareholder value. The Company's objectives when managing the capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders.
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors and senior management monitors the return on capital, which the Company defines as result from operating activities divided by total shareholders' equity.
For the purpose of the Company's capital management, capital(Equity) includes issued equity share capital and other equity attributable to the equity holders. The company has no external borrowings as on 31st March 2023.
Income tax expense comprises of current and deferred income tax of current year in the statement of profit and loss. Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Direct tax contingencies: The company has ongoing dispute with Income tax authorities for AY 2018-19 and AY 2020-21 with regards to pending litigation for addition made for disallowances for mine closure expenses and stamp duty for alteration in share capital, NSDL & CDSL fees for alteration in share capital. The appeal for the same has been filed.
3.9 Income tax deducted at source from interest received by the company amounts to H 477.06 lakhs (H 681.35 lakhs). TDS from e-auction and customers under section 194O and 194Q respectively H 153.15 lakhs ( H 303.95 lakhs). Tax deduction certificates are awaited in some cases.
3.10 Transactions with related parties - Disclosures of transactions with related parties as per Ind AS 24/Companies Act, 2013 are as under.
3.12 Expenditure of capital nature for exploration- MOIL GMDC JVC yet to be incorporated: Detailed MoU has been signed between MOIL Limited and Gujrat Mineral Development Corporation Limited (GMDC) on 01.10.2019 to explore the possibility of mining of manganese ore in the state of Gujrat. As per Clause (c) of Mutual detailed MoU agreed by and between them , the cost of exploration will be initially borne by MOIL and GMDC in equal proportion and it shall be treated as investment in JVC after formation of joint venture company. MECL has completed exploratory work in 1st phase by geophysical prospecting and core drilling. MOIL Ltd. is now preparing Techno Economic Feasibility Report based on 1st phase report of MECL for underground mining operations. As the project seems to be viable, MOIL has awarded work to prepare TEFR to CSIR-CIMFR . Draft report is submitted by CSIR-CIMFR which is under consideration of MOIL. After finalisation of TEFR, MOIL will signed JV agreement with GMDC with shareholding of 51% and 49% respectively, in terms of MoU already signed. As MOIL GMDC JVC is yet to be incorporated, consolidated financial statement is not required to be prepared. The JV agreement has been prepared mutually by MOIL and GMDC. the legal vetting of the JV agreement is under tender process.
3.13 Expenditure of capital nature for exploration - MOIL-MPSMCL JV yet to be incorporated : MOIL has signed a tripartite MoU with Govt. of Madhya Pradesh and Madhya Pradesh Mining Corporation Limited to explore the possibilities of manganese mining in 4 districts viz. Jabalpur,Jhabuwa,Chhindwara and Balaghat in the State of Madhya Pradesh on dated 27/10/2016. Accordingly MOIL has carried out a remote sensing survey 4 districts with the help of National Remote Sensing Centre (NRSC) and applied for reservation under rule 61 of Mineral (other that Atomic and Hydro Carbon minerals) concession rule 2016 for all 4 districts. In the response to our application Government of Madhya Pradesh has reserved 487 sq. kms., 850 sq. kms. & 92.87 ha. area in Chhindwara, Balaghat and Jabalpur respectively and reservation for remaining 1 district is under process with Government of Madhya Pradesh.
For ground exploration, MOIL contacted MECL. In response to our query, MECL submitted budgetary offer for one block at Chhindwara and Balaghat respectively. MOIL has formed a committee to negotiate the rate with MECL. Due to high rates quoted by MECL, the
Competent Authority decided to explore the blocks through open tender process. The tendering work is completed and work order for exploration was awarded during FY 2022-23. The drilling work is in progress. After assessment of ore resources, if project found economically viable then JV agreement will be signed with Madhya Pradesh State Mining Corporation Limited with 51:49 Equity.
3.14 Expenditure of capital nature for exploration - MOIL-CMDC MoU: To explore the possibility of manganese bearing areas in Chhattisgarh, MOIL has signed an MoU between MOIL and CMDC (Chhattisgarh Mineral Development Corporation) in the month of January 2023. Accordingly, an application has been submitted under rule 67 of Mineral (other than Atomic and Hydro Carbon minerals) concession rule 2016 to state government. The application is under consideration at state government. After reservation of area, MOIL will start exploration as per the MoU. After assessment of ore resources, if project found economically viable then JV agreement will be signed with CMDC with 51:49 Equity of MOIL and CMDC respectively.
3.15 Contingent liabilities and Commitments :
(i) Contingent Liabilities
(a) Claims against the company not acknowledged as debts-
Disputed statutory demands (Income tax, entry tax, central sales tax and value added tax, service tax, central excise duty and employees' profession tax) H 44896.20 lakhs (H 42693.41 lakhs).
(b) Other money for which the company is contingently liable
Other claims- legal cases, etc. H 5778.95 lakhs (H 449.52 lakhs).
(ii) Capital Commitment
Estimated amount of contracts remaining to be executed on capital account and not provided for is H 37,771.85 lakhs (H 45756 lakhs). Advance paid for contracts is H 2359.59 lakhs (H 2292.10 lakhs).
(iii) Other Commitments:
Estimated amount of long term contractual revenue services covered under other commitments remain to be executed and not provided for is H 14,328.45 lakhs (H 10182.74 lakhs).
3.16 Land at Bobbili : The land at Bobbili was purchased by MOIL from APIIC for setting up of Ferro/Silico Manganese plant. A Joint Venture Company was formed with RINL. Techno economic feasibility report (TEFR) was prepared by MECON in 2009. Based on the viability of project as suggested in the TEFR certain initial formalities such as environmental clearances, soil testing etc. were carried out and global tenders were floated for supply of main furnace and equipment. The tenders could not be finalized due to technical reasons and in the interim period the tariff of electricity units was increased from H 2.50/kwh to H 5.00/kwh by the A.P Electricity Board. In view of the above, revised TEFR was prepared by MECON in 2013 which indicated that the project was not be viable in view of the power tariff increase and the reduction in market prices of the Ferro/Silico Manganese. The abnormal increase in power tariff caused the delay in implementation of the project for such a long time. Management has made sincere efforts to implement the project. However, the project could not be materialized.
MOIL requested APIIC for allotment of land at Appiconda, Vishakhapatnam by swapping arrangement against land purchased by MOIL at Bobbili. Even after physical meeting with APIIC officials, till date no communication has been received from APPIC. Hence, financial impact of such swapping is not ascertainable. The management is exploring the possibility to use the land for alternate purpose depending upon viability. In view of above, H 909.76 lakhs (cost of land H 898.92 lakhs and wdv of Building H10.84 lakhs) has been considered as contingent liability under Note No.3.15(i) (b).
3.17 Bank guarantees are issued to Mining office and Pollution Control Board for H 9567.77 lakhs ( H 4068.31 lakhs) towards mining plan/ lease and others activities. The bank guarantees are backed by equivalent amount of fixed deposits.
3.18 Letters for balance confirmation of trade receivables and trade payables have been sent to the parties. Out of total trade receivable outstanding of H 14334.00 lakhs as on 31.03.2023, H 11745.81 lakhs have been confirmed. Out of total trade payable of H 3060.64 lakhs as on 31.03.2023, H 647.09 lakhs have been confirmed. In respect of confirmations received, the company is in the process of scrutinizing and reconciling the balances.
3.20 Revenue is recognized on the basis of energy injected by wind turbine generator of 15.2MW capacity into grid for sale, at tariff rate agreed in power purchase agreement.
3.21 Power is generated at 4.8MW wind turbine generator units and are captively consumed at mine/plant.
3.22 Power is generated by solar power generating panels are (at head office, Munsar, Tirodi, Ukwa and Balaghat) used for captive consumpion at HO/Mine/Plant.
3.23 Company has written back provision amounting to H 281.66 lakhs relating to arbitration award but unclaimed since FY 1995-96 and shown the same as exceptional item.
3.24 EPS as on 31.03.2023 is calculated on weighted average paid-up share capital and EPS as on 31.03.2022 was calculated on weighted average paid-up share capital (due to buy-back of shares on 18.02.2022).
3.25 Information about major Customers : The total revenue for the year ended 31st March 2023 have sales from SAIL, which accounts for 13% of total sale of products from mining activity.
3.27 During the year a case of syphoning of Government fund by an employee has been detected through a complaint received under Public Interest Disclosure & Protection of Informer Resolution (PIDPIR) by Chief Vigilance Officer of the Company. As per the advice of Ministry in consultation with CVC, the case has been handed over to independent investigation agency. The amount involved in the case is not significant considering that the value of transactions under investigation is approx. H 1.35 crores.
Note : In respect of power generated at wind turbine generators and solar power plants, electricity charges of consuming units are grossed up by the amount of credit given by Madhya Pradesh Electricity Distribution Company Ltd. and Maharashtra Electricity Distribution Company ltd., in power bills on account of electricity units credited and the same is recognised as inter-segment revenue of power generating unit so as to arrive at the segment revenue.
# Includes unallocated capital expenditure, corporate assets and corporate liabilities
3.32 (i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding
any Benami property.
(ii) The Company do not have any transactions with companies struck off.
(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,
(iv) The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall :
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
(vi) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company doesn't have any Borrowings during the year and has never been declared wilful defaulter by any bank or financial Institutions or any other lender.
3.33 Corresponding figures for previous year have been shown in brackets and regrouped/rearranged wherever necessary, to make them comparable.
Note No. 1 to 3.33 forms an integral part of financial statements.
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