Accounting Policies of Tata Steel BSL Ltd. Company

Mar 31, 2017

1. Corporate information

Bhushan Steel Limited ("BSL") is one of the prominent players in the Indian steel industry. Backed with more than 28 years of experience, now India''s 3rd largest Secondary steel producing Company with an existing steel production capacity of 5.6 million ton per annum. As one of the largest integrated steel players in India, BSL is a source for vivid variety of products such as Hot Rolled Coil, CRCA, CRFH, Galvanised Coil & sheet, Color coated Tiles, High Tensile Steel strips, Hardened & Tempered steel strips, precision tubes, HFW/ ERW pipe, 3LP Coated pipes, billets and sponge iron. Being amongst the prime movers of the technological revolution in Indian Cold Rolled Steel Industry, BSL has emerged as the country''s largest and the only Cold Rolled Steel Plant with an independent line for manufacturing Cold Rolled Coil and sheet up to a width of 1700 mm. Along with this, the Company also has a Galvanised Coil and sheet line up to a width of 1350 mm.

The Company is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The registered office of the Company is located at Bhushan Centre, Ground Floor, Hyatt Regency Complex, Bhikaji Cama Place, New Delhi- 66.

The standalone financial statements were authorized for issue in accordance with a resolution of the directors on 5th July 2017.

2. Significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.

For all 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 (Indian GAAP). These financial statements for the year ended 31st March 2017 are the first the Company has prepared in accordance with Ind AS. Refer to note 44 for information on how the Company adopted Ind AS.

The financial statements have been prepared on a historical cost basis, except certain assets and liabilities measured at fair value (refer accounting policies).

The financial statements are presented in INR and all values are rounded to the nearest Lacs ('' 00,000), except when otherwise indicated.

2.2 Application of new and revised Indian Accounting Standards

Ministry of Company Affairs in India (MCA) notified Companies (Indian Accounting Standards) (Amendment) Rules, 2017 to amend Indian Accounting Standard 7- Statement of Cash flows (Ind AS 7) and Indian Accounting Standard 102- Share based payments (Ind AS 102), but the same have not become effective on the Company as on the date of authorization of these financial statements. The amendments are applicable to the Company from April 1st, 2015.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company has evaluated that the adoption of this amendment is not expected to have any impact on the financial statement.

2.3 Summary of significant accounting policies

a. Current versus non-current classification

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

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

- Held primarily for the purpose of trading;

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

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

All other assets are classified as non-current.

A liability is current when:

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

- It is held primarily for the purpose of trading;

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

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

The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.

The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has determined its operating cycle, as explained in Schedule III of the Companies Act, 2013, as twelve months, having regard to the nature of business being carried out by the Company. The same has been considered for classifying assets and liabilities as ''current'' and ''non-current'' while preparing the financial statements.

b. Property, plant and equipment

Under the previous GAAP (Indian GAAP), property, plant and equipment were carried in the balance sheet at cost net of accumulated depreciation and accumulated impairment losses, if any as at 31st March 2015.The Company has elected to regard deemed cost as fair value for property, plant and equipment at the date of transition to Ind AS except for certain items which have been continued to measure at the carrying value as on that date.

Property, plant and equipment and capital work in progress are stated at cost [i.e., cost of acquisition or construction inclusive of freight, erection and commissioning charges, non-refundable duties and taxes, expenditure during construction period, borrowing costs (in case of a qualifying asset) upto the date of acquisition/ installation], net of accumulated depreciation and accumulated impairment losses, if any.

When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.

As per the bulletin 2 issued by ICAI, the capitalization of expenditure incurred on construction of assets on land not owned by a Company would depend on the facts and circumstances of each case.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.

Depreciation on all property, plant and equipment at Khopoli Plant and a Cold Rolling Plant acquired prior to 1st April 1996 and Galvanising Plant & Power Plant acquired before 1st April 2002 including addition or extension forming integral part of above plants at Sahibabad Plant has been provided on Written Down Value method and depreciation on all other property, plant and equipment at Sahibabad Plant and Orissa Plant has been provided on Straight Line Method.

The Economic Useful Life of all major plants at various units has been re-determined as per technical assessment and in respect of all other property, plant and equipment the life has been taken as per Schedule-II to the Companies Act, 2013.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

c. Borrowing Costs

Borrowing Costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

Eligible transaction/ ancillary costs incurred in connection with the arrangement of borrowings are adjusted with the proceeds of the borrowings.

d. Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to other comprehensive income (OCI). For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation surplus.

For assets an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

e. Inventories

Items of inventories are measured at lower of cost and net realizable value after providing for obsolescence, wherever considered necessary. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business based on market price at the reporting date and discounted for the time value of money if material, less estimated costs of completion and estimated costs necessary to make the sale.

Cost is determined on the following basis:

Raw material is recorded at cost on a first-in-first-out (FIFO) basis.

Finished goods and work-in-progress are valued at raw material cost cost of conversion and attributable proportion of manufacturing overhead incurred in bringing inventories to its present location and condition.

By products and scrap are valued at net realizable value.

Spare parts including other items are recorded on weighted average basis.

Excise duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

f. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payments. Exports sales are net of ocean freight, insurance.

Based on the Educational Material on Ind AS 18 issued by the ICAI, sales tax/ value added tax (VAT) and service tax is not received by the company on its own account. Rather, it is tax collected on value added to the property by the seller on behalf of the government. Accordingly, it is excluded from revenue.

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

Interest income is recorded using the effective interest rate (EIR) for all debt instruments measured either at amortized cost. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability.

g. Foreign currencies

The Company''s financial statements are presented in INR, which is also its functional currency.

Transactions and balances:

Transactions in foreign currencies are initially recorded by the Company at functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange at the reporting date.

For foreign currency loans taken before 31st March 2016 for, adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalized. For foreign currency loans taken after 31st March 2016, exchange differences arising on settlement or translation of monetary items are recognized in statement of profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in OCI or statement of profit or loss are also recognized in OCI or statement of profit or loss, respectively).

h. Taxes Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted in India, at the reporting date.

Current income tax relating to items recognized outside statement of profit or loss is recognized outside statement of profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Current tax assets are offset against current tax liabilities if, and only if, a legally enforceable right exists to set off the recognized amounts and there is an intention either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are 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.

The carrying amount of deferred 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 tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year 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.

Deferred tax relating to items recognized outside statement of profit or loss is recognized outside statement of profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

MAT credit is recognized as an asset, whenever there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

i. Employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the service rendered by employees are recognized during the period when the employee renders the services.

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. Gratuity and leave encashment is a defined benefit obligation.

Company''s contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare Fund are made in accordance with the Statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

Remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets, are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to statement of profit or loss in subsequent periods.

Past service costs are recognized in statement of profit & loss on the earlier of:

- The date of the plan amendment or curtailment, or

- The date that the Company recognizes related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:

- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and no routine settlements; and

- Net interest expense or income

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.

j. Leases

The determination of whether an arrangement is,or contains a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

For arrangements entered into prior to 1st April 2015, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.

Company as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.

Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs . Contingent rentals are recognized as expenses in the periods in which they are incurred.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term however, rent expenses shall not be straight-lined, if escalation in rentals is in line with expected inflationary cost.

Company as a less or

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease shall not be straight-lined, if escalation in rentals is in line with expected inflationary cost. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income.

Contingent rents are recognized as revenue in the period in which they are earned.

k. Provisions

Provisions 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 resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

l. Earnings per share

Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing adjusted net profit after tax by the aggregate of weighted average number of equity shares and dilutive potential equity shares during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

m. Contingent liabilities

In the normal Course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, these are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements, although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the financial position or probability.

n. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand, cheques on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.

o. Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Intangible assets are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit & loss when the asset is derecognized.

Costs relating to Computer Software are capitalized and amortized on straight line basis over their useful economic lives of one to three years.

p. 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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability; or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operations.

External valuers are involved for valuation of significant assets, such as properties. Involvement of external valuers is decided by the management after discussion with and approval by the Company''s management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.

At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be premeasured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

q. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial assets

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through statement of profit & loss, transaction costs that are attributable to the acquisition of the financial asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

- Debt instruments at amortized cost

- Debt instruments at fair value through other comprehensive income (FVTOCI)

- Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL)

- Equity instruments measured at fair value through other comprehensive income (FVTOCI)

Debt instruments at amortized cost

A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:

(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

(b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit & loss. The losses arising from impairment are recognized in the statement of profit & loss. This category generally applies to trade and other receivables.

Debt instrument at FVTOCI

A ''debt instrument'' is classified as at the FVTOCI if both of the following criteria are met:

(a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets; and,

(b) The asset''s contractual cash flows represent solely payments of principal and interest.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit & loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to statement of profit & loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch''). The Company has not designated any debt instrument as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit & loss.

Equity investments

All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit & loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit & loss.

Investments in the equity instruments of subsidiaries, joint venture and associate companies are measured at cost in accordance with the principles of Ind AS 27- Separate Financial Statements.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:

- The rights to receive cash flows from the asset have expired, or

- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Impairment of financial assets

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

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

(b) Financial assets that are debt instruments and are measured as at FVTOCI.

(c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.

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

The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes 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 a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.

Lifetime ECL 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 cash shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to consider:

- All contractual terms of the financial instrument (including prepayment, extension, call and similar options) 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

- 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) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head ''other expenses'' in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:

Financial assets measured as at amortized cost and contractual revenue receivables: 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.

For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.

Loans and borrowings

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in statement of profit & loss when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit & loss.

This category generally applies to borrowings.

Other financial liabilities such as trade payables, other liabilities, etc. are also subsequently measured at amortized cost.

Derivatives are initially recognized as fair value at the date the derivative contracts are entered into and are subsequently premeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in Statement of Profit & Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in Statement of Profit & Loss depends on the nature of the hedge item.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit & loss.

Reclassification of financial assets

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, a 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 period following the change in business model. The Company does not reinstate any previously recognized gains, losses (including impairment gains or losses) or interest.

Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

r. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received.

Government grants are recognized in the statement of profit and loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.

The benefit of a government loan at below market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on the prevailing market interest rates.

4. Capital work in progress

Capital work in progress as at 31st March 2017 comprises expenditure for the plant in the course of construction. Total amount of CWIP is Rs. 1,17,060.76 Lakhs (31st March 2016 Rs. 2,72,868.30 Lakhs, 1st April 2015 Rs. 2,41,305.65 Lakhs).

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Mar 31, 2015

1) PRESENTATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in compliance to the requirements of the Companies Act, 2013 (the Act), applicable Accounting Standards and the requirements of Schedule-Ill of the Act.

2) BASIS OF PREPARATION

The financial statements have been prepared on historical cost convention, in accordance with applicable Accounting Standards and provisions of the Act as adopted consistently by the Company, except for defined benefit pension / other funds obligations that have been measured at fair value. The carrying value of certain monetary items denominated in foreign currency is translated at the exchange rates applicable on the date of Balance Sheet.

3) USE OF ESTIMATES

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of the revenue and the expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4) REVENUE / EXPENDITURE RECOGNITION

Revenue is recognized when it can be reliably measured and when all significant risks and rewards / ownership are transferred to the customer. Sales are inclusive of sales during trial run, excise duty, custom duty. Exports sales are net of ocean freight, insurance and discount.

Dividend is recognized when company's right to receive is established. Interest income is recognized on accrual basis in the income statement.

Expenditure is accounted for on accrual basis and provision is made for all known losses and obligations.

5) FIXED ASSETS

The initial cost of Fixed Assets comprises its purchase price, including import duties, net of modvat / cenvat, less accumulated depreciation and include directly attributable costs of bringing an asset to working condition and location for its intended use, including borrowing costs relating to the qualified asset over the period upto the date the asset is ready to commence commercial production. Adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalized.

Machine spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalized. The replacement of such spares is charged to revenue.

Capital expenditure on assets not owned by the company with exclusive right to use is reflected in capital work-in-progress till the period of completion and thereafter in Fixed Assets.

6) ASSETS IN THE COURSE OF CONSTRUCTION

Assets in the course of construction are capitalized in the assets under construction account. At the point when an asset is operating at management's intended use, the cost of construction is transferred to appropriate category of fixed assets. Costs associated with the commissioning of an asset are capitalized where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.

7) INTANGIBLE ASSETS

In accordance with Accounting Standard (AS)-26 relating to intangible assets, all costs incurred on technical know how / license fee relating to production process are charged to revenue in the year of incurrence. Technical know how/license fee relating to process design / plants / facilities are capitalized at the time of capitalization of the said plant/facility and amortized over a period of three years.

8) IMPAIRMENT OF ASSETS

Carrying amount of cash generating units / fixed assets are reviewed for impairment, if events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The excess of carrying value of the asset over the recoverable amount is charged, as an impairment loss to the Statement of Profit and Loss.

9) DEPRECIATION

Depreciation on all fixed assets at Khopoli Plant and a Cold Rolling Plant acquired prior to 1st April, 1996 and Galvanising Plant and Power Plant acquired before 1st April, 2002 including addition or extension forming integral part of above plants at Sahibabad Plant has been provided on Written Down Value method and depreciation on all other fixed assets at Sahibabad Plant and Orissa Plant has been provided on Straight Line Method.

The Economic Useftul Life of all major plants at various units has been determined as per technical assessment and in respect of all other fixed assets the life has been taken as per Schedule-II to the Companies Act, 2013.

The Economic Useful Life of Plants including auxiliary equipments has been determine below:-

S. No. Description of Plant Life Span in Years

1 Sinter Plant 35-38

2 Blast Furnace 35-38

3 Coke Ovens 35-38

4 Rolling Mill in Steel Plant 35-38

5 Basic Oxygen Furnace Converter 35-38

6 DRI Plant 38

7 Tube Mill, Large Dia Pipe Plant, H&T, 35 HTSS

8 Power Plant (Thermal Base) 38

9 Power Plant (HSD / Gas Base) 30

10 Lab Equipment 20

10) INVENTORIES

Inventories are valued at lower of cost or net realizable value, less any provisions for obsolescence.

Cost is determined on the following basis

Raw Material is recorded at cost on a first-in-first-out (FIFO) basis.

Finished goods and work-in-progress are valued at raw material cost cost of conversion and attributable proportion of manufacturing overhead incurred in bringing inventories to its present location and condition.

By products and scrap are valued at net realizable value.

Excise duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

11) INVESTMENTS

Investments are classified into Current and Non-current investments. Current investments are stated at lower of cost or market value / fair value. Non Current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

12) FOREIGN EXCHANGE TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

13) BORROWING COST

Borrowing Cost relating to acquisition or construction of qualifying assets are included in the costs of those assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

14) MODVAT / CENVAT / VAT

Modvat / Cenvat / Vat claimed on capital goods is credited to Assets / Capital work in progress account. Modvat/ Cenvat/ VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

15) CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted for at the time of acceptance.

16) EMPLOYEE BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of twelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Company's contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. The leave encashment and gratuity benefit obligations recognized in the balance sheet represent the present value of the obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

17) TAX EXPENSE

Provision for current income tax is made after taking credit for allowance and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)-22 "Accounting for Taxes on Income", the Deferred tax liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

18) LEASES

(a) Lease Payment made on operating lease has been recognized as an expense in the statement of Profit and Loss on straight line basis with reference to lease term and other consideration.

(b) Assets acquired under finance lease from 01.04.2001 are capitalized at the lower of their fair value or the present value of the minimum lease payments.

19) DERIVATIVE FINANCIAL INSTRUMENTS

In respect of the financial derivative contracts the premium / interest paid and profit / loss on settlement is charged to Statement of Profit and Loss. The contracts entered into are marked to market at the year end and the resultant profit / loss is charged to Statement of Profit and Loss except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.

20) PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the company, is classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

21) CONTINGENCIES & COMMITMENTS

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, these are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements, although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the financial position or profitability.

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Mar 31, 2014

1) PRESENTATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in compliance to the requirements of the Companies Act 1956, applicable Accounting Standards and the requirements of Part-I & II of Schedule-VI (revised).

2) BASIS OF PREPARATION

The financial statements have been prepared on historical cost convention, in accordance with applicable Accounting Standards and provisions of the Companies Act, 1956 as adopted consistently by the Company, except for Defined benefit pension / other funds obligations that have been measured at fair value. The carrying value of certain monetary items denominated in foreign currency is translated at the exchange rates applicable on the date of Balance Sheet.

3) USE OF ESTIMATES

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of the revenue and the expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4) REVENUE/EXPENDITURE RECOGNITION

Revenue is recognized when it can be reliably measured and when all significant risks and rewards / ownership are transferred to the customer. Sales are inclusive of sales during trial run, excise duty, customs duty. exports sales are net of ocean freight, insurance and discount.

Dividend is recognized when company''s right to receive is established. Interest income is recognized on accrual basis in the income statement.

expenditure is accounted for on accrual basis and provision is made for all known losses and obligations.

5) EXTRAORDINARY ITEMS

extraordinary items are those income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise, and, therefore, are not expected to recur frequently or regularly.

6) EXCEPTIONAL ITEMS

exceptional items are those items of income or expense arising from ordinary activities, or of such size, nature or incidence that requires separate disclosure to explain the performance of the enterprise.

7) FIXED ASSETS

The initial cost of Fixed Assets comprises its purchase price, including import duties, net of modvat / cenvat, less accumulated depreciation and include directly attributable costs of bringing an asset to working condition and location for its intended use, including borrowing costs relating to the qualified asset over the period upto the date the asset is ready to commence commercial production. Adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalized.

Machine spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalized. The replacement of such spares is charged to revenue.

Capital expenditure on assets not owned by the company with exclusive right to use is refected in capital work-in-progress till the period of completion and thereafter in Fixed Assets.

8) ASSETS IN THE COURSE OF CONSTRUCTION

Assets in the course of construction are capitalized in the assets under construction account. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to appropriate category of fixed assets. Costs associated with the commissioning of an asset are capitalized where the asset is available

for use but incapable of operating at normal levels until a period of commissioning has been completed.

9) INTANGIBLE ASSETS

In accordance with Accounting Standard (AS)-26 relating to intangible assets, all costs incurred on technical know how / license fee relating to production process are charged to revenue in the year of incurrence. Technical know how/license fee relating to process design / plants / facilities are capitalized at the time of capitalization of the said plant/facility and amortized over a period of three years.

10) IMPAIRMENT OF ASSETS

Carrying amount of cash generating units / fixed assets are reviewed for impairment, if events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The excess of carrying value of the asset over the recoverable amount is charged, as an impairment loss to the Statement of profit and Loss.

11) DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956 except :

a) Cold Rolling Plant situated at Sahibabad acquired prior to 1st April, 1996, Galvanizing Plant, Power Plant acquired before 1st April, 2002 including addition or, extension forming integral part of above plants on which depreciation is provided on written down value method.

b) Plant situated at Khopoli (Maharashtra) on which depreciation has been provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

On incremental / decremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation has been provided as aforesaid over the residual life of the respective plants.

Capital expenditure on assets not owned by the company with exclusive right to use is amortized over a period of five years from the year in which the relevant assets have been completed and available for use. In other cases these are amortised in the year in which expenditure is incurred.

Premium on leasehold land is amortized over the period of lease except on leasehold land acquired on lease of ninety years or more. Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing Rs.5,000/- or less are depreciated in full in the year of purchase.

12) INVENTORIES

Inventories are valued at lower of cost or net realizable value, less any provisions for obsolescence.

Cost is determined on the following basis :- Raw Material is recorded at cost on a frst-in-frst-out (FIFO) basis.

Finished goods and work-in-progress are valued at raw material cost cost of conversion and attributable proportion of manufacturing overhead incurred in bringing inventories to its present location and condition.

By products and scrap are valued at net realizable value.

excise duty on closing stock of fnished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

13) INVESTMENTS

Investments are classified into Current and Non-current investments. Current investments are stated at lower of cost or market value / fair

value. Non Current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

14) FOREIGN EXCHANGE TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of profit and Loss except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

15) BORROWING COST

Borrowing Cost relating to acquisition or construction of qualifying assets are included in the costs of those assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

16) MODVAT / CENVAT / VAT

Modvat / Cenvat / Vat claimed on capital goods is credited to Assets / Capital work in progress account. Modvat/Cenvat/VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

17) CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted for at the time of acceptance.

18) EMPLOYEE BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of twelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund, a Defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Company''s contribution to state Defined contribution plans namely employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, Defined benefit plans, are determined using the Projected unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. The leave encashment and gratuity benefit

obligations recognized in the balance sheet represent the present value of the obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Statement of profit and loss.

19) TAX EXPENSE

Provision for current income tax is made after taking credit for allowance and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)-22 "Accounting for Taxes on Income", the Deferred tax liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

20) LEASES

Assets acquired under finance lease from 01.04.2001 are capitalized at the lower of their fair value or the present value of the minimum lease payments.

21) DERIVATIVE FINANCIAL INSTRUMENTS

In respect of the financial derivative contracts the premium / interest paid and profit / loss on settlement is charged to Statement of profit and Loss. The contracts entered into are marked to market at the year end and the resultant profit / loss is charged to Statement of profit and Loss except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.

22) PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the company, is classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

23) CONTINGENCIES & COMMITMENTS

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very diffcult to quantify reliably, these are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements, although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the financial position or profitability.

The holders of equity Shares has one vote for each equity share held by them. The registered holders of equity Shares are entitled to dividend declared from time to time. The Preference Shareholders are entitled to pro-rata dividend in preference over equity Shareholders. The dividend is cumulative at the rate specified against each category.

The premium on redemption of preference shares to the extent of premium received on issue will be adjusted against the security premium account and any premium paid over the above said amount shall be paid out of current appropriation / General Reserve.

The Preference Shares are not convertible in equity and for terms of redemption. (Refer Note 31)

Foot Note:

(1) 12.00% Redeemable Non-Convertible 250 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.2500 Lacs (Previous Year 12.00% Redeemable Non-Convertible 250 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.2500 Lacs). Debentures are redeemable at par in one bullet payment at the end of 10th year from the date of allotment i.e 31.08.2012 and are Secured by frst charge on pari passu basis on the fixed assets of the Company offering minimum Fixed Asset Coverage Ratio of 1.25 times during the tenure of debentures and personal guarantee of Shri B.B.Singal & Shri Neeraj Singal.

(2) 12.50% Redeemable Non-Convertible 2000 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.20000 Lacs (Previous

Year Rs.NIL) are redeemable in three equal annual installments commencing from the end of 5th year from the date of allotment i.e 30.08.2013 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(3) 12.00% Redeemable Non-Convertible 100 Debentures of Rs.100 Lacs each outstanding on 31st March 2014 Rs.10000 Lacs (Previous Year 12.00% Redeemable Non Convertible Debentures of Rs.100 Lacs each outstanding on 31st March 2013 Rs.10000 Lacs) (subordinate debt),are redeemable at par in one bullet payment at the end of 10 years and 1 Month from the date of allotment i.e 31.03.2008 and are secured by subsequent and subservient charge by way of hypothecation on the present and future assets of the Company so as to maintain

minimum asset coverage of 1.25 times, throughout the currency of the Debentures.Debentures are further secured by pledge of equity Shares of Bhushan Steel Limited,having market value not less than 1.5 times of loans,held by promoters/promoter entities,and Personal Guarantee of Shri B.B.Singal and Shri Neeraj Singal.

(4) 11.50% Redeemable Non-Convertible 3500 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.35000 Lacs (Previous Year 11.50% Redeemable Non-Convertible 3500 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.35000 Lacs) are redeemable in three equal annual installments commencing from the end of 5th year from the date of allotment i.e 04.01.2013 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(5) 12.00% Redeemable Non-Convertible 1050 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.10500 Lacs (Previous Year 12.00% Redeemable Non-Convertible 1050 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.10500 Lacs) are redeemable at the end of 4th,5th and 6th year in installments 35%,35% & 30% respectively commencing from the end of 4th year from the date of allotment i.e 28.03.2013 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(6) 11.75% Redeemable Non-Convertible 3000 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.30000 Lacs (Previous Year 11.75% Redeemable Non-Convertible 3000 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.30000 Lacs) are redeemable in three equal annual installments commencing from the end of 5th year from the date of allotment i.e 02.02.2012 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(7) 12.00% Redeemable Non-Convertible 4750 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.47500 Lacs (Previous Year 12.00% Redeemable Non-Convertible 4750 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.47500 Lacs). Debentures are redeemable at the end of 4th,5th and 6th year in installments 35%,35% & 30% respectively commencing from the end of 4th year from the date of allotment i.e 31.08.2012 and are Secured by frst charge on pari passu basis on the fixed assets of the Company offering minimum Fixed Assets Coverage Ratio of 1.25 times during the tenure of debentures and personal guarantee of Shri B.B.Singal and Shri Neeraj Singal.

(8) 10.50% Redeemable Non-Convertible 3000 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.30000 Lacs (Previous Year 10.50% Redeemable Non-Convertible 3000 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.30000 Lacs ) Debentures are redeemable at par in three equal anuual installments commencing from the end of 6th year from the date of allotment i.e 13.08.2010 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(9) 10.90% Redeemable Non-Convertible 1750 Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.17500 Lacs (Previous Year 10.90% Redeemable Non-Convertible 1750 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.17500 Lacs) are redeemable at par in four equal annual installments commencing from the end of 5th year from the date of allotment i.e 26.08.2010 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(10) 10.20% Redeemable Non-Convertible Nil Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.NIL (Previous Year 10.20% Redeemable Non-Convertible 1000 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.10000 Lacs) are redeemable at par in one bullet payment at the end of 7th year from the date of allotment i.e 26.03.2007 and are Secured by frst charge on pari passu basis on the fixed assets of the Company.

(11) 11.50% Redeemable Non-Convertible Nil Debentures of Rs.10 Lacs each outstanding on 31st March 2014 Rs.NIL (Previous Year 11.50% Redeemable Non-Convertible 1500 Debentures of Rs.10 Lacs each outstanding on 31st March 2013 Rs.7500 Lacs) were secured by subsequent and subservient charge on the movable fixed assets of the Company.

(12) Secured by frst mortgage charge on all of the company''s immovable & movable properties both present and future including movable machinery, spares, tools & accessories (excluding Specific charge created in favour of eCA Lenders), ranking pari passu inter-se, with the trustee of Debenture holders subject to prior charges created in favour of banks on stocks,book debts etc. for securing borrowing for working capital requirement,except Rs.37933 Lacs (Previous Year Rs.49658 Lacs) secured by subsequent & subservient charge on movable assets. Out of the above, the eCA Loans of Rs.290449 Lacs (Previous Year Rs.261124 Lacs) financed by eCA Lenders are secured by frst exclusive charge on the assets financed & personal guarantee of two promoter directors. Out of these,Loans of Rs.874937 Lacs (Previous Year Rs.758367 Lacs) are guaranteed by the Personal Guarantee of two promoter directors & Loans of Rs.19182 Lacs (Previous Year Rs.15053 Lacs) are guaranteed by the Personal Guarantee of one Promoter Director.

(13) Secured by frst mortgage charge on all of the company''s immovable & movable properties both present and future including movable machinery, spares, tools & accessories (excluding Specific charge created in favour of eCA Lenders) ranking pari passu inter-se, with the trustee of Debenture holders subject to prior charges created in favour of banks on stocks,book debts etc. for securing borrowing for working capital requirement,except Rs.4700 Lacs (Previous Year Rs.36996 Lacs) secured by subsequent & subservient charge on movable assets.Loans of Rs.1341416 Lacs (Previous Year Rs.786878 lacs) are guaranteed by the Personal Guarantee of two promoter directors & Loans of Rs.447398 Lacs (Previous Year Rs.501130 Lacs) are guaranteed by the Personal Guarantee of one Promoter Director.Apart from this,Loans of Rs.175662 Lacs (Previous year Rs.NIL) are also secured by pledge of 26% shares of Bhushan Steel Limited.

(14) Out of these Loans of Rs.3750 Lacs (Previous year Rs.6000 Lacs) are Secured by frst mortgage charge on all of the company''s immovable & movable properties both present and future including movable machinery, spares, tools & accessories (excluding Specific charge created in favour of eCA Lenders) ranking pari passu inter-se, with the trustee of Debenture holders subject to prior charges created in favour of banks on stocks,book debts etc. for securing borrowing for working capital requirement and guaranteed by the Personal Guarantee of one Promoter Director.Apart from this Loans of Rs.1793 Lacs(Previous year Rs.NIL) are secured by subsequent & subservient charge on movable assets.

(15) Secured by the hypothecation of Specific assets.

(16) Guaranteed by the Personal Guarantee of one Promoter Director.

(17) Out of these Loans of Rs.NIL (Previous Year Rs.31487 Lacs) are guaranteed by the Personal Guarantee of two Promoter Directors & Loans of Rs.NIL (Previous Year Rs.10860 Lacs) are guaranteed by the Personal Guarantee of one Promoter Director.

Detail of Repayment and Rate of Interest

(18) Maturity Profle of Long Term Borrowing (Other than NCDs) are set out as below:

(Rs in Lacs) 1 year 2-3 Years Beyond 3 years

Term Loans 338497 569500 1784110

(19) Domestic Loans sanctioned by SBI Syndication for Phase I & II of Orissa project was sanctioned at rate of interest of SBI Base Rate 2.00% (presently 12.00% p.a.) and repayable in 24 quarterly installments commencing from 24 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(20) Foreign Currency Loans for Phase I & II of Orissa project was sanctioned at interest rate of euRIBOR 0.45% (Presently 0.794% p.a.) repayable in 20 Half Yearly Installments commencing from six Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(21) Domestic Loans sanctioned by SBI Syndication for Phase III of Orissa project was sanctioned at rate of interest of SBI Base Rate 2.50% (presently 12.50% p.a.) and repayable in 17 quarterly installments commencing from 18 months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(22) Foreign Currency Loans for Phase III of Orissa project was sanctioned at interest rate of euRIBOR 1.50% (Presently 1.944% p.a.) repayable in 20 half yearly installments commencing from 6 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(23) Another Foreign Currency Loan sanctioned for Phase III of the Orissa Project at interest rate of uSD LIBOR 3.95% (Presently 4.309% p.a.) repayable in 6 annual installments commencing from 36 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(24) Another Foreign Currency Loan sanctioned for Phase III of the Orissa Project at interest rate of euRIBOR 1.75% (Presently 2.093% p.a.) repayable in 18 half yearly installments commencing from three Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(25) Domestic Loans sanctioned for Coke Oven 2 of Orissa project was sanctioned at rate of interest of Base Rate 2.50% (Presently 12.00% p.a.) and repayable in 24 quarterly installments commencing from 15 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(26) Foreign Currency Loans for Coke Oven 2 of Orissa Project was sanctioned at interest rate of euRIBOR 4.50% (Presently 4.9562%

p.a.) repayable in 12 half yearly installments commencing from 15 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(27) Other Foreign Currency Loan for Orissa Project was sanctioned at rate of interest of uSD LIBOR 3.50% (Presently 3.9459% p.a. ) repayable in three annual installments commencing from 48 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(28) Domestic Loans sanctioned for CRCA & CRNGO Project of Orissa project was sanctioned at rate of interest of Base Rate 2.25% (Presently 12.25% p.a.) and repayable in 24 quarterly installments commencing from 12 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(29) Domestic Loans sanctioned for Addition,modification & Replacement Project at Orissa Site was sanctioned at rate of interest of Base Rate TP 1.25% (Presently 12.00% p.a.) and repayable in 32 quarterly installments commencing from 3 Months after completion of the project as per terms stipulated in respective loan/facility agreement/s.

(30) Domestic Loans sanctioned for shoring up of Net Working Capital / Normal Capital expenditure was sanctioned at rate of interest of Base Rate 2.50% (Presently 12.50% p.a.) and repayable in 40 quarterly installments commencing from 30th June 2016 as per terms stipulated in respective loan/facility agreement/s.

(31) Rate of interests of other Term Loans/Foreign Currency Loans are linked with the Base Rate / LIBOR of the respective lenders.

Foot Note :

(1) Working Capital Loans are secured by hypothecation of stock & book debts,second charge on company''s land,building and other immovable properties ranking pari passu inter-se and personal guarantee of two promoter directors.

(2) Including Commercial Papers Rs.2500 Lacs (Previous Year Rs.Nil) personally guaranteed by two promoter directors. Apart from these other loans are secured by Subsequent and subservient charge on movable assets of the company. Out of these(other than commercial papers) Loans of Rs.nil (Previous Year Rs.15000 Lacs ) were guaranteed by the personal guarantee of two promoter directors & Loans of Rs.31950 Lacs (previous year Rs.25000 Lacs) are guaranteed by the personal guarantee of one promoter director.

(3) Secured by Subsequent and subservient charge on movable assets of the company.Out of these Loans of Rs.NIL (Previous Year Rs.9990 Lacs ) were guaranteed by the personal guarantee of two promoter directors & Loans of Rs.NIL (previous year Rs.4890 Lacs) are guaranteed by the personal guarantee of one promoter director.

(4) Including Commercial Papers Rs.Nil (Previous Year Rs.63000 Lacs) personally guaranteed by two promoter directors. Apart from these Loans of Rs.nil (Previous Year Rs.5032 Lacs) were personally guaranteed by one promoter director.

(5) Rs.NIL (Previous Year Rs.10860 lacs) guaranteed by the personal guarantee of one promoter director.

Notes:

1. Certain Building under Possession of the Company are pending registration in the name of the Company.

2. No write off has been done for lease hold land acquired on lease of 90 years and more.

3. Depreciation for the year includes Rs.1314.50 Lacs (Previous Year Rs.748.40 Lacs) charged to Capital Work In Progress.

4. Adjustment during the year includes addition of Rs.143554.32 Lacs (Previous Year Rs.62802.07 Lacs) on account of borrowing cost / exchange fuctuation and deduction of Rs.946.77 Lacs (Previous Year Rs.267.03 Lacs) on account of depreciation capitalised.

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Mar 31, 2013

1) PRESENTATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in compliance to the requirements of the Companies Act 1956, applicable Accounting Standards and the requirements of Part-I & II of Schedule-VI (revised).

2) BASIS OF PREPARATION

The financial statements have been prepared on historical cost convention, in accordance with applicable Accounting Standards and provisions of the Companies Act, 1956 as adopted consistently by the Company, except for defined benefit pension / other funds obligations that have been measured at fair value. The carrying value of certain monetary items denominated in foreign currency is translated at the exchange rates applicable on the date of Balance Sheet.

3) USE OF ESTIMATES

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of asset and liabilities on the date of the financial statements and the reported amount of the revenue and the expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4) REVENUE/EXPENDITURE RECOGNITION

Revenue is recognized when it can be reliably measured and when all significant risks and rewards / ownership are transferred to the customer. Sales are inclusive of sales during trial run, excise duty, customs duty. Exports sales are net of ocean freight, insurance and discount.

Dividend is recognized when company''s'' right to receive payment is established. Interest income is recognized on accrual basis in the income statement.

Expenditure is accounted for on accrual basis and provision is made for all known losses and obligations.

5) EXTRAORDINARY ITEMS

Extraordinary items are those income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise, and, therefore, are not expected to recur frequently or regularly.

6) EXCEPTIONAL ITEMS

Exceptional items are those items of income and expense arising from ordinary activities, or of such size, nature or incidence that requires separate disclosure to explain the performance of the enterprise.

7) FIXED ASSETS

The initial cost of Fixed Assets comprises its purchase price, including import duties, net of modvat / cenvat, less accumulated depreciation and include directly attributable costs of bringing an asset to working condition and location for its intended use, including borrowing costs relating to the qualified asset over the period upto the date the asset is ready to commence commercial production. Adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalized.

Machine spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalized. The replacement of such spares is charged to revenue.

Capital expenditure on assets not owned by the company with exclusive right to use is reflected in capital work-in-progress till the period of completion and thereafter in Fixed Assets.

8) ASSETS IN THE COURSE OF CONSTRUCTION

Assets in the course of construction are capitalized in the assets under construction account. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to appropriate category of fixed assets. Costs associated with the commissioning of an asset are capitalized where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.

9) INTANGIBLE ASSETS

In accordance with Accounting Standard (AS)-26 relating to intangible assets, all costs incurred on technical know how / license fee relating to production process are charged to revenue in the year of incurrence.Technical know how / license fee relating to process design / plants / facilities are capitalized at the time of capitalization of the said plant / facility and amortized over a period ofthree years.

10) IMPAIRMENT OF ASSETS

Carrying amount of cash generating units / fixed assets are reviewed for impairment, if events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The excess of carrying value of the asset over the recoverable amount is charged, as an impairment loss to the statement of Profit and Loss.

11) DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956 except :

a) Cold Rolling Plant situated at Sahibabad acquired prior to 1st April, 1996, Galvanizing Plant, Power Plant acquired before 1st April, 2002 including addition or, extension forming integral part of above plants on which depreciation is provided on written down value method.

b) Plant situated at Khopoli (Maharashtra) on which depreciation has been provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

On incremental / decremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation has been provided as aforesaid over the residual life of the respective plants.

Capital expenditure on assets not owned by the company with exclusive right to use is amortized over a period of five years from the year in which the relevant assets have been completed and available for use. In other cases these are amortised in the year in which expenditure is incurred.

Premium on leasehold land is amortized over the period of lease except on leasehold land acquired on lease of ninety years or more. Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing Rs.5,000/- or less are depreciated in full in the year of purchase.

12) INVENTORIES

Inventories are valued at lower of cost or net realizable value, less any provisions for obsolescence.

Cost is determined on the following basis :-

Raw Material is recorded at cost on a first-in-first-out (FIFO) basis.

Finished goods and work-in-progress are valued at raw material cost cost of conversion and attributable proportion of manufacturing overhead incurred in bringing inventories to its present location and condition.

By products and scrap are valued at net realizable value.

Excise duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

13) INVESTMENTS

Investments are classified into Current and Non-current investments. Current investments are stated at lower of cost or market value / fair value. Non Current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

14) FOREIGN EXCHANGE TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

15) BORROWING COST

Exchange difference on foreign currency borrowings relating to acquisition or construction of qualifying assets are included in the costs of those assets when they are recorded as adjustment to interest costs on those foreign currency borrowings. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

16) MODVAT / CENVAT / VAT

Modvat / Cenvat / Vat claimed on capital goods is credited to Assets / Capital work in progress account. Modvat / Cenvat / VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

17) CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted for at the time of acceptance.

18) EMPLOYEE BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end ofthe period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end oftwelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Company''s contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. The leave encashment and gratuity benefit obligations recognized in the balance sheet represent the present value ofthe obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Statement of profit and loss.

19) TAX EXPENSE

Provision for current income tax is made after taking credit for allowance and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)-22 "Accounting for Taxes on Income", the Deferred tax liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

20) LEASES

Assets acquired under finance lease from 01.04.2001 are capitalized at the lower of their fair value or the present value of the minimum lease payments.

21) DERIVATIVE FINANCIAL INSTRUMENTS

In respect of the financial derivative contracts the premium / interest paid and profit / loss on settlement is charged to Statement of Profit and Loss. The contracts entered into are marked to market at the year end and the resultant profit / loss is charged to Statement of Profit and Loss except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.

22) PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the company, is classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

23) CONTINGENCIES & COMMITMENTS

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, these are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements, although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the financial position or profitability.

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Mar 31, 2012

1) PRESENTATION OF FINANCIAL STATEMENTS

The financial statements have been prepared in compliance to the requirements of the Companies Act 1956, applicable Accounting Standards and the requirements of PartI & II of ScheduleVI (revised).

2) BASIS OF PREPARATION

The financial statements have been prepared on historical cost convention, in accordance with applicable Accounting Standards and provisions of the Companies Act, 1956 as adopted consistently by the Company, except for defined benefit pension/ other funds obligations that have been measured at fair value. The carrying value of certain monetary items denominated in foreign currency is translated at the exchange rates applicable on the date of Balance Sheet.

3) USE OF ESTIMATES

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of asset and liabilities on the date of the financial statements and the reported amount of the revenue and the expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

4) REVENUE/EXPENDITURE RECOGNITION

Revenue is recognized when it can be realibly measured and when all significant risks and rewards/ownership are transferred to the customer. Sales are inclusive of sales during trial run, excise duty, customs duty. Exports sales are net of ocean freight, insurance and discount.

Dividend is recognized when company's' right to receive payment is established. Interest income is recognized on accrual basis in the income statement.

Expenditure is accounted for on accrual basis and provision is made for all known losses and obligations.

5) EXTRAORDINARY ITEMS

Extraordinary items are those income or expenses that arise from events or transactions that are clearly distinct from the ordinary activities of the enterprise, and, therefore, are not expected to recur frequently or regularly.

6) EXCEPTIONAL ITEMS

Exceptional items are those items of income and expense arising from ordinary activities, or of such size, nature or incidence that requires separate disclosure to explain the performance of the enterprise.

7) FIXED ASSETS

The initial cost of Fixed Assets comprises its purchase price, including import duties, net of modvat/cenvat, less accumulated depreciation and include directly attributable costs of bringing an asset to working condition and location for its intended use, including borrowing costs relating to the qualified asset over the period upto the date the asset is ready to commence commercial production. Adjustments arising from exchange rate variations relating to long term monetary items attributable to the depreciable fixed assets are capitalized.

Machine spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalized. The replacement of such spares is charged to revenue.

Capital expenditure on assets not owned by the company with exclusive right to use is reflected in capital workinprogress till the period of completion and thereafter in Fixed Assets.

8) ASSETS IN THE COURSE OF CONSTRUCTION

Assets in the course of construction are capitalized in the assets under construction account. At the point when an asset is operating at management's intended use, the cost of construction is transferred to appropriate category of fixed assets. Costs associated with the commissioning of an asset are capitalized where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.

9) INTANGIBLE ASSETS

In accordance with Accounting Standard (AS)26 relating to intangible assets, all costs incurred on technical know how/ license fee relating to production process are charged to revenue in the year of incurrence.Technical know how/license fee relating to process design/plants/facilities are capitalized at the time of capitalization of the said plant/facility and amortized over a period of three years.

10) IMPAIRMENT OF ASSETS

Carrying amount of cash generating units/fixed assets are reviewed for impairment, if events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The excess of carrying value of the asset over the recoverable amount is charged as an impairment loss to the statement of Profit and Loss.

11) DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956 except:

a) Cold Rolling Plant situated at Sahibabad acquired prior to 1st April, 1996, Galvanizing Plant, Power Plant acquired before 1st April, 2002 including addition or, extension forming integral part of above plants on which depreciation is provided on written down value method.

b) Plant situated at Khopoli (Maharashtra) on which depreciation has been provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

On incremental / decremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation has been provided as aforesaid over the residual life of the respective plants.

Capital expenditure on assets not owned by the company with exclusive right to use is amortized over a period of five years from the year in which the relevant assets have been completed and available for use. In other cases these are amortised in the year in which expenditure is incurred.

Premium on leasehold land is amortized over the period of lease except on leasehold land acquired on lease of ninety years or more. Depreciation is charged on prorata basis for assets purchased / sold during the year. Individual assets costing Rs.5,000/ or less are depreciated in full in the year of purchase.

12) INVENTORIES

Inventories are valued at lower of cost or net realizable value, less any provisions for obsolescence.

Cost is determined on the following basis :

Raw Material is recorded at cost on a firstinfirstout (FIFO) basis.

Finished goods and workinprogress are valued at raw material cost cost of conversion and attributable proportion of manufacturing overhead incurred in bringing inventories to its present location and condition.

By products and scrap are valued at net realizable value.

Excise duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

13) INVESTMENTS

Investments are classified into Current and Noncurrent investments. Current investments are stated at lower of cost or market value/fair value. Non Current investments are stated at cost and provision for diminution in value is made only if such decline is other than temporary in the opinion of management.

14) FOREIGN EXCHANGE TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Nonmonetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item or 31st March, 2013, which ever is earlier.

15) BORROWING COST

Exchange difference on foreign currency borrowings relating to acquisition or construction of qualifying assets are included in the costs of those assets when they are recorded as adjustment to interest costs on those foreign currency borrowings. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

16) MODVAT / CENVAT / VAT

Modvat / Cenvat / Vat claimed on capital goods is credited to Assets / Capital work in progress account. Modvat/Cenvat/VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

17) CLAIMS

Claims receivable are accounted for depending on the certainty of receipt and claims payable are accounted for at the time of acceptance.

18) EMPLOYEE BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of twelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Company's contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each Balance Sheet date. The leave encashment and gratuity benefit obligations recognized in the balance sheet represent the present value of the obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reduction in future contributions to the plan. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

19) TAX EXPENSE

Provision for current income tax is made after taking credit for allowance and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the company.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)22 "Accounting for Taxes on Income", the Deferred tax liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

20) LEASES

Assets acquired under finance lease from 01.04.2001 are capitalized at the lower of their fair value or the present value of the minimum lease payments.

21) DERIVATIVE FINANCIAL INSTRUMENTS

In respect of the financial derivative contracts the premium / interest paid and profit / loss on settlement is charged to Statement of Profit and Loss. The contracts entered into are marked to market at the year end and the resultant profit / loss is charged to Statement of Profit and Loss except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.

22) PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the company, is classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

23) CONTINGENCIES & COMMITMENTS

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, these are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements, although there can be no assurance regarding the final outcome of the legal proceedings, the company does not expect them to have a materially adverse impact on the financial position or profitability.

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Mar 31, 2011

1. CONVENTION

Financial statements are prepared in accordance with generally accepted accounting principles, applicable Accounting Standards and in accordance with relevant requirements of the Companies Act, 1956. A summary of important accounting policies, which have been applied consistently, is set out below.

2. USE OF ESTIMATES

The preparation of Financial Statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3. BASIS FOR PREPARATION OF ACCOUNTS

Financial statements are prepared in accordance with the historical cost convention on accrual basis.

4. FIXED ASSETS

Fixed Assets are stated at cost, net of Modvat/Cenvat/Vat/GST, less accumulated depreciation. All costs including borrowing costs till commencement of commercial production and adjustment arising from exchange rate variations relating to long term monetary items attributable to depreciable fixed assets are captialised. Capital expenditure on assets not owned by the Company with exclusive right to use is reflected in capital work in progress till the period of completion and thereafter in the fixed assets. Machinery spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalised. Replacement of such spares ischarged to revenue.

5. INTANGIBLE ASSETS

Computer software is capitalized on the date of installation and is amortised over a period of three years.

6. IMPAIRMENT OF ASSETS

Carrying amount of cash generating units/assets is reviewed for impairment. Impairment, ifany, is recognized where the carrying amount exceeds the recoverable amount being the higher of net realizable price and value in use.

7. DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except:-

a) Cold Rolling Plant situated at Sahibabad acquired prior to 1 st April, 1 996, Galvanizing Plant, Power Plant acquired before 1 st April, 2002 including addition or, extension forming integral part of above plants on which depreciation is provided on written down value method.

b) Plant situated at Khopoli (Maharashtra) on which depreciation has been provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 On incremental / decremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation has been provided as aforesaid over the residual life of the respective plants.

Capital expenditure on assets not owned by the company with exclusive right to use is amortized over a period of five years from the year in which the relevant assets have been completed and available for use. In other cases these are amortised in the year in which expenditure is incurred.

Premium on leasehold land is amortized over the period of lease except on leasehold land acquired on lease of ninety years or more. Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing Rs.5000 or less are depreciated in full in the year of purchase.

8. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item or 31 st March, 201 2, which ever is earlier.

9. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

10.INVESTMENTS

Investments are classified into current investments and long term investments. Current investments are stated at the lower of cost and quoted / fair value. Long term investments are stated at cost, provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

11 .DIVIDEND INCOME

Dividend on investments is accounted for as and when the right to receive the same is established.

12.REVENUE RECOGNITION

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales are inclusive of sales during trial run, excise duty, custom duty and net of sales tax & discount. Export sales are net of ocean freight, insurance and discount.

13.INVENTORY VALUATION

Inventories are valued at lower of cost or net realisable value except scrap which is valued at net realisable value. The Cost is determined by using first-in-first-out (FIFO) method. Finished goods and work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Excise Duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

14.MODVAT /CENVAT/VAT

Modvat/Cenvat/VAT claimed on capital goods is credited to Assets / Capital work in progress account. Modvat/Cenvat/VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

15.INCOME TAX

Provision for current income tax is made after taking credit for allowances and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the Company.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1 961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)-22 "Accounting for Taxes on Income", the Deferred Tax Liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantiallyenactedasof the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

16.CLAIMS

Claims receivables are accounted for depending on the certainty of receipt and claims payable are accounted for at the time of acceptance.

17.PROPOSED DIVIDEND

Dividend as proposed by the Directors is provided for in the books of accounts, pending approval at the Annual General Meeting.

18.EMPLOYEE BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of twelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected UnitCredit Method on the basisof annual third party actuarial valuations.

Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Company's contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The leave encashment and gratuity benefit obligations recognized in the balance sheet represent the present value of the obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the profit and loss account.

19.PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the company, are classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

20.FINANCIAL DERIVATIVES TRANSACTIONS

In respect of the financial derivative contracts the premium/ interest paid and profit/loss on settlement is charged to profit and loss account. The contracts entered into are mark to market at the year end and the resultant profit /loss is charged to profit and loss account except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.

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Mar 31, 2010

1. CONVENTION

Financial statements are prepared in accordance with generally accepted accounting principles, applicable Accounting Standards and in accordance with relevant requirements of the Companies Act, 1956. A summary of important accounting policies, which have been applied consistently, is set out below.

2. USE OF ESTIMATES

The preparation of Financial Statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3. BASIS FOR PREPARATION OF ACCOUNTS

Financial statements are prepared in accordance with the historical cost convention on accrual basis.

4. FIXED ASSETS

Fixed Assets are stated at cost, net of Modvat/Cenvat/Vat, less accumulated depreciation. All costs including borrowing costs till commencement of commercial production and adjustment arising from exchange rate variations relating to long term monetary items attributable to depreciable fixed assets are captialised. Capital expenditure on assets not owned by the Company is reflected in capital work in progress account till the period of completion and thereafter in the fixed assets.

Machinery spares that can be used only in connection with an item of fixed asset and their use is expected to be irregular are capitalised. Replacement of such spares is charged to revenue.

5. INTANGIBLE ASSETS

Computer software is capitalised on the date of installation and is amortised over a period of three years.

6. IMPAIRMENT OF ASSETS

Carrying amount of cash generating units/assets is reviewed for impairment. Impairment, if any, is recognized where the carrying amount exceeds the recoverable amount being the higher of net realizable price and value in use.

7. DEPRECIATION

Depreciation on fixed assets is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except:- a) Cold Rolling Plant situated at Sahibabad acquired prior to 1st April, 1996, Galvanizing Plant, Power Plant acquired before 1st April, 2002 including addition or, extension forming integral part of above plants on which depreciation is provided on written down value method.

b) Plant situated at Khopoli (Maharashtra) on which depreciation has been provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

On incremental / decremental cost arising on account of translation of foreign currency liabilities for acquisition of Fixed Assets, depreciation has been provided as aforesaid over the residual life of the respective plants.

Capital expenditure on assets not owned by the Company is amortized over a period of five years from the year in which the relevant assets have been completed and available for use.

Premium on leasehold land is amortized over the period of lease except on leasehold land acquired on lease of ninety years or more. Depreciation is charged on pro-rata basis for assets purchased / sold during the year. Individual assets costing Rs. 5000 or less are depreciated in full in the year of purchase.

8. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction. Monetary items denominated in foreign currency outstanding at the year end are translated at exchange rate applicable on the date of Balance Sheet. Non-monetary items denominated in foreign currency are valued at the exchange rate prevailing on the date of transaction. Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss Account except in cases of long term monetary items, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item or 31st March, 2011, which ever is earlier.

9. BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.

10. INVESTMENTS

Investments are classified into current investments and long term investments. Current investments are stated at the lower of cost and quoted / fair value. Long term investments are stated at cost, provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

11. DIVIDEND INCOME

Dividend on investments is accounted for as and when the right to receive the same is established.

12. REVENUE RECOGNITION

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Sales are inclusive of sales during trial run, excise duty, custom duty and net of sales tax & discount. Export sales are net of ocean freight, insurance and discount.

13. INVENTORY VALUATION

Inventories are valued at lower of cost or net realisable value except scrap which is valued at net realisable value. The Cost is determined by using first-in-first-out (FIFO) method. Finished goods and work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Excise Duty on closing stock of finished goods and scrap is accounted for on the basis of payments made in respect of goods cleared as also provision made for goods lying in the factory and included in the value of such stocks.

14. MODVAT /CENVAT/VAT

Modvat/Cenvat/VAT claimed on capital goods is credited to Assets / capital work in progress account. Modvat/Cenvat/VAT on purchase of raw materials and other materials are deducted from the cost of such materials.

15. INCOME TAX

Provision for current income tax is made after taking credit for allowances and exemptions. In case of matters under appeal, due to disallowance or otherwise, provision is made when the said liabilities are accepted by the Company. Provision for fringe benefit tax is made on fringe benefits taxable under the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the Income Tax Act, 1961, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset.

In accordance with the Accounting Standard (AS)-22 "Accounting for Taxes on Income", the Deferred Tax Liability for timing differences between the book and tax profits is accounted for using the tax rates and tax laws that have been enacted or substantially enacted as of the Balance Sheet date. Deferred Tax Assets arising from temporary timing differences are recognized to the extent there is virtual certainty that the assets can be realized in future.

16. CLAIMS

Claims receivables are accounted for depending on the certainty of receipt and claims payables are accounted for at the time of acceptance.

17. PROPOSED DIVIDEND

Dividend as proposed by the Directors is provided for in the books of account, pending approval at the Annual General Meeting.

18. EMPLOYEES BENEFITS

Short term employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (which are payable after the end of twelve months from end of the period in which the employees render service) and post employment benefits (benefits which are payable after completion of employment) are measured on a discounted basis by the Projected Unit Credit Method on the basis of annual third party actuarial valuations.

Contributions to Provident Fund, a defined contribution plan are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

Companys contribution to state defined contribution plans namely Employee State Insurance and Maharashtra Labour Welfare fund are made in accordance with the statute, and are recognized as an expense when employees have rendered services entitling them to the contribution.

The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The leave encashment and gratuity benefit obligations recognized in the balance sheet represent the present value of the obligations as reduced by the fair value of Plan Assets. Any asset resulting from this calculation is limited to the discounted value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Actuarial gains and losses are recognized immediately in the profit and loss account.

19. PROVISION AND CONTINGENT LIABILITY

Show cause notices issued by various government authorities are not considered as obligation. Where the demand notices are raised, the show cause notice, disputed by the Company, are classified as possible obligation.

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes.

20. FINANCIAL DERIVATIVES TRANSACTIONS

In respect of the financial derivative contracts the premium/ interest paid and profit/loss on settlement is charged to profit and loss account. The contracts entered into are mark to market at the year end and the resultant profit /loss is charged to profit and loss account except where these relate to long term monetary items attributable to depreciable fixed assets in which case it is adjusted to the cost of fixed assets.