Accounting Policies of Bihar Sponge Iron Ltd. Company

Mar 31, 2015

1. Basis of preparation of financial information

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India ('Indian GAAP') to company with the accounting standard specified under section 133 of the Companies Act, 2013 read with rule 7 of The Companies (Accounts) Rules 2014 and the relevant provision of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on accrual basis (except for revaluation of certain fixed assets).

2. Use of Estimates

The preparation of financial statements require the management to make some estimates and assumptions which affect the reported amount of assets and liabilities and the disclosures relating the contingent liabilities as at the date of the financial statements and the reported amount of income and expense during the year. Examples of such estimates include provisions for doubtful receivables, employee benefit, provision for tax & duties (including interest on arrear statutory dues/liabilities), the useful lives of depreciable fixed assets and provisions for impairment. Future results could differ due to change in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known/materialised.

3. Inventories

a) Stocks of raw materials and stores and spares and consumables are valued at lower of weighted average cost or net realisable value. The cost being exclusive of cenvatable excise duty and set offs of VAT, if any.

b) The material in transit is valued at invoice cost.

c) Closing stock of finished goods is valued at lower of cost or estimated net realisable value. For this purpose, cost includes depreciation and direct expenses to the point of stocking and excise duty but excludes interest, administrative and selling expenses.

d) Work-in-progress is carried at the lower of cost or net realisable value; for this purpose cost does not include excise duty.

4. Fixed Assets:

a) Fixed Assets are stated at cost or revalued cost, less accumulated depreciation/amortization. Costs include taxes duties (net of CENVAT and set off),cost of stores materials issued and expenditure incurred during construction and installation where applicable. Indirect expenses are not capitalised alongwith the fixed assets.

b) An impairment loss is recognized based on the review conducted by the management at each balance date wherever the carrying value of existing assets exceed its net selling price or value in use, whichever is higher.

5. Expenditure during Construction:

In respect of new projects, all expenses including interest incurred up to the date of commencement of commercial production are capitalized.

In respect of substantial expansion of business, at existing locations, only direct costs are capitalized together with interest on the funds relatable to them up to the date of commercial production.

6. Depreciation / Amortization

a) Depreciation on Tangible fixed assets other than land is charged on straight line method so as to write off the cost/carrying amount of assets (including revalued amount) as on 1-04-2014 over the useful life of assets as per Schedule II of the Companies Act, 2013. For assets acquired or sold during the year, the depreciation is calculated on pro-rata basis from the date of addition or upto the date of sale or discarded. Further where the remaining useful life of the asset is nil as on 1.4.2014, after retaining the residual value, depreciation has been recognized in the opening balance of retained earnings.

b) Lease hold land is depreciated over the lease period.

c) Intangible assets are being amortised over their useful life / licenses period.

7. Foreign Currency Translation:

a) Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of transactions.

b) Foreign Currency Loans and other Liabilities are stated at the exchange rate prevailing as on the date of the balance sheet.

c) Exchange variation arising as a result of the translation of foreign currency loans are Capitalized / de-capitalized to relating plant & machinery / assets.

d) Exchange variations arising as a result of translation of interest on foreign currency loans accrued but not due are treated as income or expense.

8. Revenue Recognition:

a) Sales are accounted for based on despatch of finished goods to the customers from various stocking points, and includes excise duty but exclusive of VAT / CST and is net of trade discounts.

b) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest on tax refund is accounted for on receipt basis.

c) Other miscellaneous revenues are recognized when the amount and the collectability are certain. Accordingly insurance claims are accounted for on settlement.

9. Raw Material consumption is accounted for after ascertaining the year end closing stock of the raw materials by an independent Surveyor from the total of the opening stocks and purchases.

10. Salaries and wages on repairs and maintenance of plant & machinery, where carried out internally, are charged to salaries and wages account.

11. Extraordinary Items:

Extraordinary items of income & expenditure as covered by AS-5, are disclosed separately.

12. Borrowing cost

Borrowing cost attributable to the acquisition or construction of a qualifying assets are capitalized as part of cost of that asset. Other borrowing costs are recognized as expense in the period to which they relate.

13. Employee Benefits

Employee benefits have been recognized in accordance with Accounting Standard 15 (Revised)issued by the ICAI accordingly:-

(a) Short Term Employee Benefits

Short Term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits

(i) Defined Contribution Plan Provident Fund

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both Employee and employer make monthly contribution to the plan at a predetermined rate of employee's basic salary. Contribution to Provident Fund are administered and managed by a separate fund. Contributions to Provident Fund are expensed in the Profit and Loss account.

(ii) Defined Benefits plan

(a) Leave encashment

The liability on account of un-availed earned leave at the year end is fully provided for on actuarial valuation basis.

(b) Gratuity

The Company provides for gratuity, a defined benefit plan (the 'Gratuity Plan') covering all eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, deaths incapacitation or termination of employment. Liabilities with regards to the Gratuity Plan are determined by actuarial valuation as of balance sheet date and are expensed in the Profit and Loss account.

(iii) The actuarial valuation takes note of actuarial gains and losses.

14. Provisions Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are disclosed by way of a note. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

15. Earning Per Share

The earnings considered in accounting the Company's Earning Per Share (EPS) comprise the net profit after tax and includes the post tax effect of any extraordinary items. The number of shares used in computing basic & diluted EPS is the weighted average number of shares outstanding during the periods and adjusted for all events.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive shares.

16. Taxation

a) Provision for current tax is made on the basis of applicable Income Tax Act, 1961.

b) Deferred tax assets and liabilities are accounted for in accordance with AS-22 issued by the Institute of Chartered Accountants of India.

17. Leases

Leases in which the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as Operating Leases. Assets subject to operating leases are included in fixed assets. Lease income on an operating lease is recognized in the Statement of Profit and Loss on a straight line basis over the lease term. Costs, including depreciation, are recognized as an expense in the statement of Profit and Loss.

18. Cash Flow Statement

Cash flow are reported using the indirect method, whereby profit before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows.

The cash flows from operating, investing and financing activities of the company are segregated based on the available information.

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Mar 31, 2014

I. Basis of preparation of Financial Statements

The financial statements have been prepared on the historical cost convention basis (except for revaluation of certain fixed assets and providing for depreciation on revalued amounts) on accrual basis of accounting. The generally accepted accounting principles and the Accounting Standards referred under section 211 (3C) of the Companies Act, 1956 have been adopted by the company and the disclosures made in accordance with the requirements of Schedule VI of the Companies Act, 1956 and the Indian Accounting Standards.

2 Use of Estimates

The Preparation of Financial Statements requires some estimates and assumptions which affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

3l Inventory valuation

a) Stocks of raw materials and stores and spares are valued at weighted average cost or net realisable value whichever is lower. The cost being exclusive of cenvatable excise duty and set offs of VAT, if any.

b) The material in transit is valued at invoice cost.

c) Closing stock of finished goods is valued at lower of cost or estimated realisable value. For this purpose, cost includes depreciation and direct expenses to the point of stocking and excise duty but excludes interest, administrative and selling expenses.

d) Work-in-progress is valued at lower of cost or net realisable value; for this purpose cost does not include excise duty.

4. Fixed Assets:

a) Fixed Assets are stated at cost or revalued cost; cost includes taxes, duties (net of CENVAT and set off) and expenditure during construction and installation where applicable. Indirect expenses are not capitalised alongwith fixed assets.

b) Gross block of Fixed Assets, which are revalued, are stated at the amounts revalued; base for revaluation being the replacement cost method at the time of revaluation of the depreciated value of assets as at the end of the year.

c) An impairment loss is recognized wherever the carrying value of assets exceeds its net selling price or value in use, whichever is higher.

d) The cost of stores and materials at the time of issue is debited to CWIP.

5. Expenditure during Construction:

In respect of new projects, all expenses including interest incurred up to the date of commencement of commercial production are capitalized.

In respect of substantial expansion of business, at existing locations, only direct costs are capitalized together with interest on the funds relatable to them up to the date of commercial production.

6. Depreciation:

a) Depreciation is provided on straight line method on Tangible assets at the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956. Leasehold land is amortised over the lease period.

b) Depreciation on re-alignment of value of assets as a result of foreign exchange variations is amortised over the unexpired life of the assets.

c) The value added on revaluation of assets is depreciated over the remaining useful life of the assets. The additional depreciation thereon for the year is withdrawn from the revaluation reserve and credited to the Profit & Loss Account.

d) Intangible assets are being amortised over their useful life of 6 years.

7. Foreign Currency Translation:

a) Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of transactions.

b) Foreign Currency Loans and other Liabilities are stated at the exchange rate prevailing as on date of the Balance sheet.

c) Exchange variation arising as a result of the translation of foreign currency loans are Capitalized / de-capitalized to relating plant & machinery / assets.

d) Exchange variations arising as a result of translation of interest on foreign currency loans accrued but not due are treated as income on exchange.

8. Revenue Recognition:

a) Sales are accounted for based on despatch of finished goods to the customers from various stocking points, and includes excise duty but exclusive of VAT / CST and is net of trade discounts.

b) Other miscellaneous revenues are recognized when the amount and the collectability are certain. Accordingly insurance claims are accounted for on settlement.

9. Raw Material consumption is accounted for after ascertaining the year end closing stock of the raw materials by an independent Surveyor from the total of the opening stocks and purchases.

10. Salaries and wages on repairs and maintenance of plant & machinery, where carried out internally, are charged to salaries and wages account.

II. Extraordinary Items:

Extraordinary items of income & expenditure as covered by AS-5, are disclosed separately.

12 Borrowing cost

Borrowing cost attributable to the acquisition or construction of a qualifying assets are capitalized as part of cost of that asset. Other borrowing costs are recognized as expense in the period to which they relate.

13. Employee Benefits

Retirement benefits have been recognized in accordance with Revised Accounting Standard 15 issued by the ICAI accordingly:-

(a) Short Term Employee Benefits

Short Term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits (i) Defined Contribution Plan Provident Fund

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both Employee and employer make monthly contribution to the plan at a predetermined rate of employee''s basic salary. Contribution to Provident Fund are administered and managed by a separate fund. Contributions to Provident Fund are expensed in the Profit and Loss account. (ii) Defined Benefits plan

(a) Leave encashment

The liability on account of un-availed earned leave at the year end is fully provided for on actuarial valuation basis.

(b) Gratuity

The Company provides for gratuity, a defined benefit plan (the ''Gratuity Plan'') covering all eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, deaths incapacitation or termination of employment. Liabilities with regards to the Gratuity Plan are determined by actuarial valuation as of balance sheet date and are expensed in the Profit and Loss account.

(iii) The actuarial valuation takes note of actuarial gains and losses.

14. Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are disclosed by way of a note.

15. Earning Per Share

The earnings considered in accounting the Company''s Earning Per Share (EPS) comprise the net profit after tax and includes the post tax effect of any extraordinary items. The number of shares used in computing basic & diluted EPS is the weighted average number of shares outstanding during the periods and adjusted for all events.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive shares.

16 Taxation

a) Provision for current tax is made on the basis of applicable Income Tax Act, 1961.

b) Deferred tax assets and liabilities are accounted for in accordance with AS-22 issued by the Institute of Chartered Accountants of India.

(c) There is no plan assets at the beginning and at the closing of the year.

(d) Enterprise best estimate of contribution payable for the next year the gratuity plan is Rs. 88.77 lacs and for earned leave liability for Rs. 10.22 lacs.

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Mar 31, 2013

1. Basis of preparation of Financial Statements

The financial statements have been prepared on the historical cost convention basis (except for revaluation of certain fixed assets and providing for depreciation on revalued amounts) on accrual basis of accounting. The generally accepted accounting principles and the Accounting Standards referred under section 211(3C) of the Companies Act, 1956 have been adopted by the company and the disclosures made in accordance with the requirements of Schedule VI of the Companies Act, 1956 and the Indian Accounting Standards.

2. Use of Estimates

The preparation of Financial Statements requires some estimates and assumptions which affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the year. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

3. Inventory valuation

a) Stocks of raw materials and stores and spares are valued at weighted average cost or net realisable value whichever is lower. The cost being exclusive of cenvatable excise duty and set offs of VAT, if any.

b) The material in transit is valued at invoice cost.

c) Closing stock of finished goods is valued at lower of cost or estimated realisable value. For this purpose, cost includes depreciation and direct expenses to the point of stocking and excise duty but excludes interest, administrative and selling expenses.

d) Work-in-progress is valued at lower of cost or net realisable value; for this purpose cost does not include excise duty.

4. Fixed Assets:

a) Fixed Assets are stated at cost or revalued cost; cost includes taxes, duties (net of CENVAT and set off of VAT) and expenditure during construction and installation where applicable. Indirect expenses are not capitalised alongwith fixed assets.

b) Gross block of Fixed Assets, which are revalued, are stated at the amounts revalued; base for revaluation being the replacement cost method at the time of revaluation of the depreciated value of assets as at the end of the year.

c) An impairment loss is recognized wherever the carrying value of assets exceeds its net selling price or value in use, whichever is higher.

d) The cost of stores and materials at the time of issue is debited to CWIP.

5. Expenditure during Construction:

In respect of new projects, all expenses including interest incurred up to the date of commencement of commercial production are capitalized.

In respect of substantial expansion of business, at existing locations, only direct costs are capitalized together with interest on the funds relatable to them up to the date of commercial production.

6. Depreciation:

a) Depreciation is provided on straight line method on Tangible assets at the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956. Leasehold land is amortised over the lease period.

b) Depreciation on re-alignment of value of assets as a result of foreign exchange variations is amortised over the unexpired life of the assets.

c) The value added on revaluation of assets is depreciated over the remaining useful life of the assets. The additional depreciation thereon for the year is withdrawn from the revaluation reserve and credited to the Profit & Loss Account.

d) Intangible assets are being amortised over their useful life of 6 years.

7. Foreign Currency Translation:

a) Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of transactions.

b) Foreign Currency Loans and other Liabilities are stated at the exchange rate prevailing as on date of the Balance sheet.

c) Exchange variation arising as a result of the translation of foreign currency loans are Capitalized / de-capitalized to relating plant & machinery / assets.

d) Exchange variations arising as a result of translation of interest on foreign currency loans accrued but not due are treated as income on exchange.

8. Revenue Recognition:

a) Sales are accounted for based on despatch of finished goods to the customers from various stocking points, and includes excise duty but exclusive of VAT / CST and is net of trade discounts.

b) Other miscellaneous revenues are recognized when the amount and the collectability are certain. Accordingly insurance claims are accounted for on settlement.

9. Raw Material consumption is accounted for after ascertaining the year end closing stock of the raw materials by an independent surveyor from the total of the opening stocks and purchases.

10. Salaries and wages on repairs and maintenance of plant & machinery, where carried out internally, are charged to salaries and wages account.

11. Extraordinary Items:

Extraordinary items of income & expenditure as covered by AS-5, are disclosed separately.

12. Borrowing cost

Borrowing cost attributable to the acquisition or construction of a qualifying assets are capitalized as part of cost of that asset. Other borrowing costs are recognized as expense in the period to which they relate.

13. Employee Benefits

Retirement benefits have been recognized in accordance with Revised Accounting Standard 15 issued by the ICAI accordingly:-

(a) Short Term Employee Benefits

Short Term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits (i) Defined Contribution Plan

Provident Fund

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both Employee and employer make monthly contribution to the plan at a predetermined rate of employee''s basic salary. Contribution to Provident Fund are administered and managed by a separate fund. Contributions to Provident Fund are expensed in the Statement of Profit and Loss.

(ii) Defined Benefits plan

(a) Leave Encashment

The liability on account of un-availed earned leave at the year end is fully provided for on actuarial valuation basis.

(b) Gratuity

The Company provides for gratuity, a defined benefit plan (the ''Gratuity Plan'') covering all eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lump sum payment to vested employees at retirement, deaths incapacitation or termination of employment. Liabilities with regards to the Gratuity Plan are determined by actuarial valuation as of Balance Sheet date and are expensed in the Statement of Profit & Loss account.

(iii) The actuarial valuation takes note of actuarial gains and losses.

14. Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are disclosed by way of a note.

15. Earning Per Share

The earnings considered in accounting the Company''s Earning Per Share (EPS) comprise the net profit after tax and includes the post tax effect of any extraordinary items. The number of shares used in computing basic & diluted EPS is the weighted average number of shares outstanding during the periods and adjusted for all events.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive shares.

15 Taxation

a) Provision for current tax is made on the basis of applicable Income Tax Act, 1961.

b) Deferred tax assets and liabilities are accounted for in accordance with AS-22 issued by the Institute of Chartered Accountants of India.

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Mar 31, 2012

1. Basis of preparation of Financial Statements

The financial statements have been prepared on the historical cost convention basis (except for revaluation of certain fixed assets and providing for depreciation on revalued amounts) on accrual basis of accounting. The generally accepted accounting principles and the Accounting Standards referred under section 211 (3C) of the Companies Act, 1956 have been adopted by the company and the disclosures made in accordance with the requirements of Schedule VI of the Companies Act, 1956 and the Indian Accounting Standards.

2. Inventory valuation

a) Stocks of raw materials and stores and spares are valued at weighted average cost or net realisable value whichever is lower. The cost being exclusive of cenvatable excise duty and set offs of VAT, if any.

b) The material in transit is valued at invoice cost.

c) Closing stock of finished goods is valued at lower of cost or estimated realisable value. For this purpose, cost includes depreciation and direct expenses to the point of stocking and excise duty but excludes interest, administrative and selling expenses.

d) Work-in-progress is valued at lower of cost or net realisable value; for this purpose cost does not include excise duty.

3. Fixed Assets:

a) Fixed Assets are stated at cost or revalued cost; cost includes taxes, duties (net of CENVAT and set off) and expenditure during construction and installation where applicable. Indirect expenses are not capitalised along with fixed assets.

b) Gross block of Fixed Assets, which are revalued, are stated at the amounts revalued; base for revaluation being the replacement cost method at the time of revaluation of the depreciated value of assets as at the end of the year.

c) An impairment loss is recognized wherever the carrying value of assets exceeds its net selling price or value in use, whichever is higher.

d) The cost of stores and materials at the time of issue is debited to CWIP.

4. Expenditure during Construction:

In respect of new projects, all expenses including interest incurred up to the date of commencement of commercial production are capitalized.

In respect of substantial expansion of business, at existing locations, only direct costs are capitalized together with interest on the funds relatable to them up to the date of commercial production.

5. Depreciation:

a) Depreciation is provided on straight line method on Tangible assets at the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956. Leasehold land is amortised over the lease period.

b) Depreciation on re-alignment of value of assets as a result of foreign exchange variations is amortised over the unexpired life of the assets.

c) The value added on revaluation of assets is depreciated over the remaining useful life of the assets. The additional depreciation thereon for the year is withdrawn from the revaluation reserve and credited to the Profit & Loss Account.

d) Intangible assets are being amortised over their useful life of 6 years.

6. Foreign Currency Translation:

a) Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of transactions.

b) Foreign Currency Loans and other Liabilities are stated at the exchange rate prevailing as on date of the Balance sheet.

c) Exchange variation arising as a result of the translation of foreign currency loans are Capitalised / de-capitalised to relating plant & machinery / assets.

d) Exchange variations arising as a result of translation of interest on foreign currency loans accrued but not due are treated as income on exchange.

7 Revenue Recognition:

a) Sales are accounted for based on despatch of finished goods to the customers from various stocking points, and includes excise duty but exclusive of VAT / CST and is net of trade discounts.

b) Other miscellaneous revenues are recognized when the amount and the collectability are certain. Accordingly insurance claims are accounted for on settlement.

8 Raw Material consumption is accounted for after ascertaining the year end closing stock of the raw materials by an independent Surveyor from the total of the opening stocks and purchases.

9 Salaries and wages on repairs and maintenance of plant & machinery, where carried out internally, are charged to salaries and wages account.

10 Extraordinary Items:

Extraordinary items of income & expenditure as covered by AS-5, are disclosed separately.

11. Borrowing cost

Borrowing cost attributable to the acquisition or construction of a qualifying assets are capitalized as part of cost of that asset. Other borrowing costs are recognized as expense in the period to which they relate.

12. Employee Benefits

Retirement benefits have been recognized in accordance with Revised Accounting Standard 15 issued by the ICAI accordingly:-

(a) Short Term Employee Benefits

Short Term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits

(i) Defined Contribution Plan Provident Fund

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both Employee and employer make monthly contribution to the plan at a predetermined rate of employee's basic salary. Contribution to Provident Fund are administered and managed by a separate fund. Contributions to Provident Fund are expensed in the Profit and Loss account.

(ii) Defined Benefits plan

(a) Leave encashment

The liability on account of un-availed earned leave at the year end is fully provided for on actuarial valuation basis.

(b) Gratuity

The Company provides for gratuity, a defined benefit plan (the 'Gratuity Plan') covering all eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity Plan provides a lumpsum payment to vested employees at retirement, deaths incapacitation or termination of employment.

Liabilities with regards to the Gratuity Plan are determined by actuarial valuation as of balance sheet date and are expensed in the Profit and Loss account.

(iii) The actuarial valuation takes note of actuarial gains and losses.

13 Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are disclosed by way of a note.

14 Earning Per Share

The earnings considered in accounting the Company's Earning Per Share (EPS) comprise the net profit after tax and includes the post tax effect of any extra ordinary items. The number of shares used in computing basic & diluted EPS is the weighted average number of shares outstanding during the periods and adjusted for all events.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive shares.

15 Taxation

a) Provision for current tax is made on the basis of applicable Income Tax Act, 1961.

b) Deferred tax assets and liabilities are accounted for in accordance with AS-22 issued by the Institute of Chartered Accountants of India,

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Mar 31, 2010

1. Basis of preparation of Financial Statements

The financial statements have been prepared on the historical cost convention basis (except for revaluation of certain fixed assets and providing for depreciation on revalued amounts) on accrual basis of accounting. The generally accepted accounting principles and the Accounting Standards referred under section 211(3C) of the Companies Act, 1956 have been adopted by the company and the disclosures made in accordance with the requirements of Schedule VI of the Companies Act, 1956 and the Indian Accounting Standards.

2. Inventory valuation

a) Stocks of raw materials and stores and spares are valued at weighted average cost or net realisable value whichever is lower. The cost being exclusive of cenvetable excise duty and set offs of VAT, if any.

b) The material in transit is valued at invoice cost.

c) Closing stock of finished goods is valued at lower of cost or estimated realisable value. For this purpose, cost includes depreciation and direct expenses to the point of stocking and excise duty but excludes interest, administrative and selling expenses.

d) Work-in-progress is valued at lower of cost or net realisable value; for this purpose cost does not include excise duty.

- 3. Fixed Assets:

a) Fixed Assets are stated at cost or revalued cost; cost includes taxes, duties (net of CENVAT and set off) and expenditure during construction and installation where applicable. Indirect expenses are not capitalised alongwith fixed assets.

b) Gross block of Fixed Assets, which are revalued, are stated at the amounts revalued; base for revaluation being the replacement cost method at the time of revaluation of the depreciated value of assets as at the end of the year.

c) An impairment loss is recognized wherever the carrying value of assets exceeds its net selling price or value in use, whichever is higher.

d) The cost of stores and materials at the time of issue is debited to CWIP.

4. Expenditure during Construction:

In respect of new projects, all expenses including interest incurred upto the date of commencement of commercial production are capitalised.

In respect of substantial expansion of business, at existing locations, only direct costs are capitalised together with interest on the funds relatable to them upto the date of commercial production.

5. Depreciation:

a) Depreciation is provided on straight line method on all fixed assets at the rates and in the manner as prescribed in Schedule XIV of the Companies Act, 1956. Leasehold land is amortised over the lease period.

b) Depreciation on realignment of value of assets as a result of foreign exchange variations is amortised over the unexpired life of the assets.

c) The value added on revaluation of assets is depreciated over the remaining useful life of the assets. The additional depreciation thereon for the year is withdrawn from the revaluation reserve and credited to the Profit & Loss Account.

d) Intangible assets are being amortised over their useful life of 6 years.

6. Foreign Currency Translation:

a) Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of transactions.

b) Foreign Currency Loans and other Liabilities are stated at the exchange rate prevailing as on date of the Balance sheet.

c) Exchange variation arising as a result of the translation of foreign currency loans are Capitalised / decapitilised to relating plant & machinery / assets.

d) Exchange variations arising as a result of translation of interest on Foreign currency loans accrued but not due are treated as income on exchange.

7. Revenue Recognition:

a) Sales are accounted for based bn despatch of finished goods to the customers from various stocking points, and includes excise duty but exclusive of VAT / CST and is net of trade discounts.

b) Other miscellaneous revenues are recognized when the amount and the collectability are certain. Accordingly insurance claims are accounted for on settlement.

8. Raw Material consumption is accounted for after ascertaining the year end closing stock of the raw materials by an independent Surveyor from the total of the opening stocks and purchases.

9. Salaries and wages on repairs and maintenance of plant & machinery, where carried out internally, are charged to salaries and wages account.

10. Extra Ordinary Items:

Extra ordinary items of income & expenditure as covered by AS-5, are disclosed separately.

11. Borrowing cost

Borrowing cost attributable to the acquisition or construction of a qualifying assets are capitalized as part of cost of that asset. Other borrowing costs are recognized as expense in the period to which they relate.

12. Leases

Lease rental paid to Lessors is recognized as expenses on accrual basis.

13. Employee Benefits

Retirement benefits have been recognized in accordance with Revised Accounting Standard 15 issued by the ICAI Accordingly :-

(a) Short Term Employee Benefits

Short Term employee benefits are recognized in the period during which the services have been rendered.

(b) Long Term Employee Benefits (i) Defined Contribution Plan

Provident Fund

All employees of the Company are entitled to receive benefits under the Provident Fund, which is a defined contribution plan. Both Employee and employer make monthly contribution to the plan at a predetermined rate of employees basic salary. Contribution to Provident Fund are administered and managed by a separate fund. Contributions to Provident Fund are expensed in the Profit and Loss account. (ii) Defined benefits plan

(a) Leave encashment

The liability on account of unavailed earned leave at the year end is fully provided for oh acturial valuation basis.

(b) Gratuity

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering all eligible employees. In accordance with the Payment of Gratuity Act, 1972, the Gratuity

Plan provides a lump sum payment to vested employees at retirement, deaths incapacitation or termination of employment. Liabilities with regards to the Gratuity Plan are determined by acturial valuation as of balance sheet date and are expensed in the Profit and Loss Account.

(iii) The acturial valuation takes note of Acturial gains and losses,

14. Contingent Liabilities

Liabilities, though contingent, are provided for if there are reasonable prospects of such liabilities maturing. Other contingent liabilities, barring frivolous claims, not acknowledged as debt, are disclosed by way of a note.

15. Earning Per Share

The earnings considered in accounting the Companys Earning Per Share (EPS) comprise the net profit after tax and includes the post tax effect of any extra ordinary items. The number of shares used in computing basic & diluted EPS is the weighted average number of shares outstanding during the periods and adjusted for all events.

The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive shares.

16. Taxation

a) Provision for current tax is made on the basis of applicable Income Tax Act, 1961.

b) Deferred tax assets and liabilities are accounted for in accordance with AS-22 issued by the Institute of Chartered Accountants of India.