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Accounting Policies of Hindustan Zinc Ltd. Company

Mar 31, 2015

A) BASIS OF ACCOUNTING

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared as a going concern on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation as more fully described in Note 30.

b) USE OF ESTIMATES

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c) FIXED ASSETS (TANGIBLE AND INTANGIBLE)

Fixed assets (including research and development assets) are recognised at cost of acquisition including any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use, net of cenvat or value added tax less accumulated depreciation, amortization and impairment loss. Grant received towards fixed assets is reduced from the cost of the related assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase or completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Fixed assets acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till the project is ready for its intended use.

Mine development expenditure includes leases, costs incurred for acquiring or developing properties or rights up to the stage of commercial production.

d) CAPITAL WORK-IN-PROGRESS

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses.

e) IMPAIRMENT OF FIXED ASSETS

The carrying amount of assets or cash generating units are reviewed at each balance sheet date, if there is any indication of impairment based on internal or external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value.

An impairment loss is recognised in the Statement of Profit and Loss where the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f) DEPRECIATION AND AMORTISATION

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 subject to following deviations:

- Additions and disposals are reckoned on the first day and the last day of the month respectively;

- Individual items of plant and machinery and vehicles costing upto Rs. 25,000 and other assets upto Rs. 5,000 are wholly depreciated in the year of purchase; and

- In respect of additions arising on account of insurance spares, on additions or extension forming an integral part of existing plants, and on the revised carrying amount of assets identified as impaired, on which depreciation has been provided over residual life of the respective fixed assets.

Intangible assets including mining rights/right to use assets are amortized over its expected useful life on straight line method.

Amortization of leasehold land has been done in proportion to the period of lease.

Mine development expenditure is amortized in proportion to the annual ore raised to the remaining mineable ore reserves. In the year of abandonment of mine, the residual mine development expenditure is written off.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.

g) FINANCIAL ASSET INVESTMENTS

- Investments are recorded as long term investments unless they are expected to be sold within one year or held for sale. Investments in joint venture are valued at cost less provision for impairment, if any. Investments are reviewed for impairment at the year end.

- Investments classified as ''Held for Trading'' that have a market price are measured at fair value and gains and losses arising on account of fair valuation are routed through Statement of Profit and Loss. Investments in unquoted equity instruments that do not have a market price and whose fair value cannot be reliably measured, are measured at cost.

- Investments classified as ''Available for Sale'' are initially recorded at cost and then re-measured at subsequent reporting dates to fair value. Unrealised gains/losses on such investments are recognised directly in Investment Revaluation Reserve Account. At the time of disposal, de-recognition or impairment of the investments, cumulative gain or loss previously recognised in the Investment Revaluation Reserve Account is recognised in the Statement of Profit and Loss. Currently no investment are classified as ''Available for Sale''.

h) INVENTORIES

- Ore, concentrate (mined metal), work-in-progress and finished goods (including significant by- products) are valued at lower of cost and net realizable value on weighted average basis.

- Stores and spares are valued at lower of cost and net realisable value on weighted average basis.

- Immaterial by-products, aluminum scrap, chemical lead scrap, anode scrap and coke fines are valued at net realisable value.

i) CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby profit or (loss) 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

j) REVENUE AND EXPENSES

Revenue on sale of products (net of volume rebates) is recognized on delivery of product and / or on passage of title to the buyer.

Revenue relating to insurance or railways claims and interest on delayed or overdue payments from trade receivable for sale of energy is recognised when no significant uncertainty as to measurability or collection exists.

Interest income is accounted on accrual basis. For income on financial assets, please refer section on Financial Asset Investments. Dividend income is accounted for when the right to receive it is established.

Expenditure on projects is:

- capitalised when projects are commissioned

- written off in other cases

Technical knowhow, not directly identifiable to any plans, layout of buildings or plant and machinery, etc. are written off. Expenditure relating to fixed assets not owned by Company is charged to Statement of Profit and Loss.

Prior period and prepaid expenses exceeding Rs. 5 Lacs are appropriately disclosed.

All revenue expenses on research and development are written off.

k) GOVERNMENT GRANTS, SUBSIDIES AND EXPORT INCENTIVES

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants or subsidies will be received.

Export benefits are accounted for in the year of exports based on eligibility and when there is no significant uncertainty in receiving the same.

l) FOREIGN CURRENCY TRANSACTIONS

1) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the date of the transaction.

2) Monetary items denominated in foreign currencies at the year-end are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done as per "Accounting Standard - 30, Financial Instruments: Recognition and Measurement". The fair value of foreign currency contracts are calculated with reference to current forward exchange rates for the contracts with similar maturity profile.

3) Non-monetary foreign currency items are carried at cost.

4) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

m) DERIVATIVE FINANCIAL INSTRUMENTS

In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward options or any other derivative financial instruments with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency. The Company does not hold derivative financial instruments for speculative purposes. Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. The hedged item is recorded at fair value and any gain or loss is recorded in the Statement of Profit and Loss and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recycled in the Statement of Profit and Loss in the periods when the hedged item is recognised in the Statement of Profit and Loss.

Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognised in the Statement of Profit and Loss immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the Statement of Profit and Loss.

n) BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

o) SEGMENT REPORTING

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive management in deciding how to allocate resources and in assessing performance.

Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market or fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under ''unallocated revenue / expenses / assets / liabilities''.

p) EMPLOYEE BENEFITS

i) Short term

Short term employee benefits including termination benefits are recognised as an expense at the undiscounted amount incurred during the year.

ii) Long term

1. Defined contribution plan and family pension scheme:

The Company''s contribution to family pension scheme paid or payable during the year is recognised to the Statement of Profit and Loss.

2. Defined benefit plan:

(a) Gratuity

The Company accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation carried out annually and determined using the Projected Unit Credit Method. The Company makes annual contributions to funds administered by trustees and managed by Insurance Company for amounts notified by the said insurance Company. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

(b) Provident fund

The Company''s contribution to the Employee provident fund scheme is a defined benefit plan. Both the employee and the Company make monthly contributions to the ''Hindustan Zinc Limited Employee''s Contributory Provident Fund'' equal to specified percentage of employees'' salary. The Company''s contribution paid or payable to the Fund is recognised as expenses in the Statement of Profit and Loss. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund.

(c) Other long term benefit plan : Compensated absences

The Company has a scheme for leave encashment for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year using Projected Unit Credit Method.

q) VOLUNTARY RETIREMENT EXPENSES

Voluntary retirement expenses are charged to the Statement of Profit and Loss in the year of occurrence.

r) TAXATION

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

The Company''s income taxes include taxes on the Company''s taxable profits, adjustment attributable to earlier periods and changes in deferred taxes.

Provision for current tax is made after taking into account rebates and reliefs available under the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset, if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefits associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their readability.

Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.

s) EARNING PER SHARE

Basic earnings per share are calculated by dividing the net profit or loss after tax (including the post-tax effect of extraordinary items, if any) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss after tax (including the post-tax effect of extraordinary items, if any) for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, if any.

t) DIVIDEND

Dividend payment including tax thereon is appropriated from profits for the year and provision is made for proposed final dividend and tax thereon is subject to consent of the shareholders at the Annual General Meeting.

u) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the Financial Statements.

v) OPERATING CYCLE

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

ii) 2,743,154,310 Equity Shares (2014: 2,743,154,310 ) are held by Sesa Sterlite Limited the holding company .The ultimate holding company is Vedanta Resourses PLC, United Kingdom (VRPLC) . No shares are held by VRPLC or its other subsidiaries or associates.

v) Other disclosures

The Company has one class of equity shares having a par value of Rs. 2 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividends as and when declared by the Company. Interim dividend is paid as and when declared by the Board. Final dividend is paid after obtaining shareholder''s approval. Dividends are paid in Indian Rupees. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amount in proportion to their shareholding.


Mar 31, 2013

A) Basis of Accounting

The financial statements are prepared as a going concern under historical cost convention on accrual basis in accordance with Companies Act 1956 read together with early adoption of Accounting Standard (AS) 30 ''Financial instruments: Recognition and Measurement'' by the Company, and the consequential limited revisions to certain Accounting Standards by The Institute of Chartered Accountants of India (ICAI) which have been measured at their fair value. Accounting polices not stated explicitly otherwise are consistent with generally accepted accounting principles.

b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the periods in which the results are known or materialise.

c) Fixed Assets (Tangible and Intangible)

Fixed assets (including research and development assets) are recognised at cost of acquisition including expenditure up to the date of commissioning, net of Cenvat or value added tax less accumulated depreciation, amortisation and impairment loss. Grant received towards fixed assets is reduced from the cost of the related assets.

Mine development expenditure includes leases, costs incurred for acquiring or developing properties or rights up to the stage of commercial production.

d) Capital Work-In-Progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses.

e) Impairment of Fixed Assets

The carrying amount of assets/cash generating units are reviewed at each balance sheet date, if there is any indication of impairment based on internal or external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is recognised in the Statement of Profit and Loss where the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

f) Depreciation and Amortisation

Depreciation on fixed assets is provided using the straight- line method at rates prescribed under Schedule XIV of the Companies Act, 1956 subject to the following deviations:

- Additions and disposals are reckoned on the first day and the last day of the month respectively.

- Individual items of plant and machinery and vehicles costing upto Rs. 25000 are wholly depreciated.

- In respect of additions arising on account of insurance spares, on additions or extension forming an integral part of existing plants and on the revised carrying amount of the assets identified as impaired on which depreciation has been provided over residual life of the respective fixed assets.

Intangible assets are amortised over its expected useful life.

Amortisation of leasehold land has been done in proportion to the period of lease.

Mine development expenditure is amortised in proportion to the annual ore raised to the remaining mineable ore reserves. In the year of abandonment of mine, the residual mine development expenditure is written off.

g) Financial Asset Investments

- Investments are recorded as long term investments unless they are expected to be sold within one year.

- Investments in joint venture are valued at cost less provision for impairment, if any. Investments are reviewed for impairment.

- Investments classified as ''held for trading'' that have a market price are measured at fair value and gains and losses arising on account of fair valuation is routed through Statement of Profit and Loss. Investments in unquoted equity instruments that do not have a market price and whose fair value cannot be reliably measured, are measured at cost.

- Investments classified as Available for Sale are initially recorded at cost and then re-measured at subsequent reporting dates to fair value. Unrealised gains/losses on such investments are recognised directly in Investment Revaluation Reserve Account. At the time of disposal, de-recognition or impairment of the investments, cumulative gain or loss previously recognised in the Investment Revaluation Reserve Account is recognised in the Statement of Profit and Loss.

h) Inventories

- Ore, concentrate (Mined Metal), work-in-progress and finished goods (including significant by-products) are valued at lower of cost and net realisable value on weighted average basis.

- Stores and spares are valued at lower of cost and net realisable value on weighted average basis.

- Immaterial by-products, aluminum scrap, chemical lead scrap, anode scrap and coke fines are valued at net realisable value.

i) Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

j) Revenue and Expenses

Revenue on sale of products (net of volume rebates) is recognised on delivery of product and / or on passage of title to the buyer. Export benefits are recognised on recognition of export sales.

All other revenue and expenses are recognised on accrual basis. Revenue relating to interest on staff loans, insurance or railway claims is recognised when recoverability is certain.

Expenditure on projects is:

- capitalised when projects are commissioned.

- written off in other cases.

Technical knowhow, not directly identifiable to any plans, layout of buildings or plant and machinery, etc. are written off. Expenditure relating to fixed assets not owned by Company is charged to revenue.

Prior period or prepaid expenses exceeding Rs. 0.05 Crores is appropriately disclosed.

All revenue expenses on research and development are written off.

k) Government Grants, Subsidies and Export Incentives

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidies will be received.

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

l) Foreign Currency Transactions

(1) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

(2) Monetary items denominated in foreign currencies at the year-end are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done as per "Accounting Standard - 30, Financial Instruments: Recognition and Measurement". The fair value of foreign currency contracts are calculated with reference to current forward exchange rates for the contracts with similar maturity profile.

(3) Non-monetary foreign currency items are carried at cost.

(4) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

m) Derivative Financial Instruments

In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward option or any other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes. Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. The hedged item is recorded at fair value and any gain or loss is recorded in the Statement of Profit and Loss and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recycled in the Statement of Profit and Loss in the periods when the hedged item is recognised in the Statement of Profit and Loss.

Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognised in the Statement of Profit and Loss immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the Statement of Profit and Loss.

n) Borrowing Cost

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

o) Segment Reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/ loss amounts are evaluated regularly by the executive management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market or fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

p) Employee Benefits

i) Short term

Short term employee benefits including termination benefits are recognised as an expense at the undiscounted amount incurred during the year.

ii) Long term

1. Defined contribution plan and family pension scheme:

The Company''s contribution to the recognised provident fund and family pension scheme paid or payable during the year is recognised to the Statement of Profit and Loss. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund.

2. Defined benefit plan: Gratuity

The Company accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation carried out annually and determined using the projected unit credit method. The Company makes annual contributions to funds administered by trustees and managed by insurance company for amounts notified by the said insurance company. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

3. Other long term benefit plan : Compensated absences

The Company has a scheme for leave encashment for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year.

q) voluntary Retirement Expenses

Voluntary retirement expenses are charged to the Statement of Profit and Loss.

r) Taxation

The Company''s income taxes include taxes on the Company''s taxable profits, adjustment attributable to earlier periods and changes in deferred taxes.

Provision for current tax is made after taking into account rebate and relief available under the Income tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset, if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised only to the extent that there is a reasonable certainty that the future taxable profit will be available against which the deferred tax asset can be realised.

s) Dividend

Dividend payment including tax thereon is appropriated from profits for the year and provision is made for proposed final dividend and tax thereon is subject to consent of the shareholders at the annual general meeting.

t) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

Basis of Accounting

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply in all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956, except those items covered under 'Accounting Standard - 30' on 'Financial instruments: Recognition and Measurement' which are measured at fair value.

use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognised in the periods in which the results are known / materialise.

Fixed Assets

Fixed assets (including research and development assets) are recognised at cost of acquisition including expenditure upto the date of commissioning, net of cenvat /value added tax less accumulated depreciation and impairment loss. Grant received towards fixed assets is reduced from the cost of the related assets.

Mine development expenditure includes leases, costs incurred for acquiring / developing properties / rights up to the stage of commercial production.

Impairment of Fixed Assets

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal / external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is recognised in the Statement of Profit and Loss where the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Depreciation and Amortisation

Depreciation on fixed assets is provided using the straight-line method at rates prescribed under Schedule XIV of the Companies Act, 1956 subject to the following deviations:

- Additions and disposals are reckoned on the first day and the last day of the month respectively.

- Individual items of plant and machinery and vehicles costing upto Rs 25,000 /- are wholly depreciated.

- In respect of additions arising on account of insurance spares, on additions / extension forming an integral part of existing plants and on the revised carrying amount of the assets identified as impaired on which depreciation has been provided over residual life of the respective fixed assets.

Intangible assets are amortised over its expected useful life.

Amortisation of leasehold land has been done in proportion to the period of lease.

Mine development expenditure is amortised in proportion to the annual ore raised to the remaining mineable ore reserves. In the year of abandonment of mine, the residual mine development expenditure is written off.

Financial Asset Investments

- Investments are recorded as Long Term Investments unless they are expected to be sold within one year. Investments in associates are valued at cost less provision for impairment, if any. Investments are reviewed for impairment.

- Investments classified as 'held for trading' that have a market price are measured at fair value and gains and losses arising on account of fair valuation is routed through Statement of Profit and Loss. Investments in unquoted equity instruments that do not have a market price and whose fair value cannot be reliably measured, are measured at cost.

Inventories

- Ore, concentrate, work-in-process and finished goods (including significant by-products) are valued at lower of cost and net realisable value on weighted average basis.

- Stores and spares are valued at lower of cost and net realisable value on weighted average basis.

- Immaterial by-products, aluminum scrap, chemical lead scrap, anode scrap and coke fines are valued at net realisable value.

Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) 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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Revenue and Expenses

Revenue on sale of products (net of volume rebates) is recognised on delivery of product and / or on passage of title to the buyer. Sales include export benefit. Export benefits are recognised on recognition of export sales.

All other revenue and expenses are recognised on accrual basis. Revenue relating to interest on staff loans for conveyance, insurance / railway claims is recognised when recoverability is certain.

Expenditure on projects is:

- capitalised when projects are crystallised.

- written off in other cases.

Technical knowhow, not directly identifiable to any plans, layout of buildings / plant and machinery, etc. are written off Expenditure relating to fixed assets not owned by Company is charged to revenue.

Prior period / prepaid expenses exceeding Rs 0.05 Crores is appropriately disclosed.

All revenue expenses on research and development are written off.

Foreign Currency Transactions

(1) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

(2) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done as per "Accounting Standard - 30, Financial Instruments: Recognition and Measurement". The fair value of foreign currency contracts are calculated with reference to current forward exchange rates for the contracts with similar maturity profile.

(3) Non monetary foreign currency items are carried at cost.

(4) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

Derivative Financial Instrument

In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward, option and other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes. Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. The hedged item is recorded at fair value and any gain or loss is recorded in the Statement of Profit and Loss and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recycled in the Statement of Profit and Loss in the periods when the hedged item is recognised in the Statement of Profit and Loss.

Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognised in the Statement of Profit and Loss immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the year. Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the Statement of Profit and Loss.

Borrowing Cost

Borrowing costs that are attributable to the acquisition / construction of qualifying assets are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

Segment Reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

Employee Benefits

i) Short term

Short term employee benefits including termination benefits are recognised as an expense at the undiscounted amount incurred during the year.

ii) Long term

a) Defined contribution plan and family pension scheme:

The Company's contribution to the recognised provident fund and family pension scheme paid / payable during the year is recognised to the Statement of Profit and Loss. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund.

b) Defined benefit plan: Gratuity

The Company accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation carried out annually and determined using the projected unit credit method. The Company makes annual contributions to funds administered by trustees and managed by insurance company for amounts notified by the said insurance company. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

c) Other long term benefit plan : Compensated absences

The Company has a scheme for leave encashment for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year.

Voluntary Retirement Expenses

Voluntary retirement expenses are charged to the Statement of Profit and Loss.

Taxation

The Company's income taxes include taxes on the Company's taxable profits, adjustment attributable to earlier periods and changes in deferred taxes.

Provision for current tax is made after taking into account rebate and relief available under the Income tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset, if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised only to the extent that there is a reasonable certainty that the future taxable profit will be available against which the deferred tax asset can be realised.

Dividend

Dividend payment including tax thereon is appropriated from profits for the year and provision is made for proposed final dividend and tax thereon is subject to consent of the shareholders at the annual general meeting.

Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

BASIS OF ACCOUNTING

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply in all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956, except those items covered under Accounting Standard-30 on Financial instruments: Recognition and Measurement which are measured at fair value.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that afect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Diferences between actual results and estimates are recognised in the periods in which the results are known/materialise.

FIXED ASSETS

Fixed assets (including research and development assets) are recognised at cost of acquisition including expenditure upto the date of commissioning, net of cenvat/Value Added Tax less accumulated depreciation and impairment loss. Grant received towards fixed assets is reduced from the cost of the related assets.

Mine development expenditure includes leases, costs incurred for acquiring/developing properties/rights up to the stage of commercial production.

IMPAIRMENT OF FIXED ASSETS

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/ external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is recognised in the proft and loss account where the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

DEPRECIATION AND AMORTISATION

Depreciation on fixed assets is provided using the straight-line method at rates prescribed under Schedule XIV of the Companies Act, 1956 subject to the following deviations:

Additions and disposals are reckoned on the frst day and the last day of the month respectively.

Individual items of plant and machinery and vehicles costing upto Rs. 25,000/- are wholly depreciated.

In respect of additions arising on account of Insurance spares, on additions/extensions forming an integral part of existing plants and on the revised carrying amount of the assets identifed as impaired on which depreciation has been provided over residual life of the respective fixed assets. Intangible assets are amortised over its expected useful life. Amortisation of leasehold land has been done in proportion to the period of lease.

Mine development expenditure is amortised in proportion to the annual ore raised to the remaining mineable ore reserves. In the year of abandonment of mine, the residual mine development expenditure is written of.

FINANCIAL ASSET INVESTMENTS

i) Investments are recorded as Long Term Investments unless they are expected to be sold within one year. Investments in associates are valued at cost less provision for impairment if any. Investments are reviewed for impairment.

ii) Investments classifed as Held for Trading that have a market price are measured at fair value and gains and losses arising on account of fair valuation is routed through Proft and Loss account. Investments in unquoted equity instruments that do not have a market price and whose fair value cannot be reliably measured are measured at cost.

INVENTORIES

Ore, Concentrate, stock in process and fnished products are valued at lower of cost and net realisable value on weighted average basis. Stores and spares are valued at lower of cost and net realisable value on weighted average basis. Byproducts, aluminum scrap, chemical lead scrap, anode scrap and coke fnes are valued at net realisable value. Other scraps/residuals are not valued. l Stock pile of moore cake, neutral sand, lime sludge, beta cake, lead sulphate, lead hydroxide and copper cadmium cake are valued at Rs. 1 per MT.

REVENUE AND EXPENSES

Revenue on sale of products (net of volume rebates) is recognised on delivery of product and/or on passage of title to the buyer. Sales include export beneft. Export benefts are recognised on recognition of export sales.

All other revenue and expenses are recognised on accrual basis. Revenue relating to interest on staf loans for conveyance, insurance/railway claims is recognised when recoverability is certain.

Expenditure on projects is:

- capitalised when projects are crystallised.

- written off in other cases.

Technical know-how, not directly identifiable to any plans, layout of buildings/plant and machinery, etc. are written off. Expenditure relating to fixed assets not owned by Company is charged to revenue.

Prior period/prepaid expenses exceeding Rs. 0.05 Crore is appropriately disclosed.

All revenue expenses on research and development are written off.

FOREIGN CURRENCY TRANSACTIONS

1. Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

2. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done as per “Accounting Standard - 30”, Financial Instruments: Recognition and Measurement”. The fair value of foreign currency contracts are calculated with reference to current forward exchange rates for the contracts with similar maturity profile.

3. Non-monetary foreign currency items are carried at cost.

4. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account.

DERIVATIVE FINANCIAL INSTRUMENT

In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward, option and other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes. Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement. The hedged item is recorded at fair value and any gain or loss is recorded in the Income statement and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recycled in the income statement in the periods when the hedged item is recognised in the income statement.

Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognised in the income statement immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement.

BORROWING COST

Borrowing costs that are attributable to the acquisition/construction of qualifying assets are capitalised as part of cost of such asset till such time, as the asset is ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

EMPLOYEE BENEFITS (i) Short-term

Short-term employee benefits including termination benefits are recognised as an expense at the undiscounted amount incurred during the year.

(ii) Long-term

a) Defned contribution plan and family pension scheme:

The Companys Contribution to the recognised Provident Fund and family pension scheme paid / payable during the year is recognised to the Profit and Loss Account. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund.

b) Defned Beneft plan: Gratuity

The Company accounts for the net present value of its obligations for gratuity benefts based on an independent external actuarial valuation carried out annually and determined using the projected unit credit method. The Company makes annual contributions to funds administered by trustees and managed by insurance company for amounts notifed by the said insurance company. Actuarial gains and losses are immediately recognised in the Proft and Loss Account.

c) Other Long term beneft plan: Compensated absences

The Company has a scheme for Leave encashment for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year.

VOLUNTARY RETIREMENT EXPENSES

Voluntary retirement expenses are charged to the proft and loss account.

TAXATION

The Companys income taxes include taxes on the Companys taxable profts, adjustment attributable to earlier periods and changes in deferred taxes.

Provision for current tax is made after taking into account rebate and relief available under the Income-tax Act, 1961.

Deferred tax resulting from "timing diference" between book and taxable proft is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised only to the extent that there is a reasonable certainty that the future taxable proft will be available against which the deferred tax asset can be realised.

DIVIDEND

Dividend payment including tax thereon is appropriated from profts for the year and provision is made for proposed fnal dividend and tax thereon subject to consent of the shareholders at the annual general meeting.

PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2010

Basis of Accounting

The financial statements are prepared as a going concern under historical cost convention on an accrual basis and comply in all material respects with the Generally Accepted Accounting Principles in India and the relevant provisions of the Companies Act, 1956, except those items covered under Accounting Standard-30onFinancial instruments: Recognition and Measurement which are measured at fair value.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between actual results and estimates are recognized in the periods in which the results are known/materialise.

Fixed Assets

Fixed assets (including research and development assets) are recognised at cost of acquisition including expenditure up to the date of commissioning, net of cenvat Value Added Tax) less accumulated depreciation and impairment loss. Grant received towards fixed assets is reduced from the cost of the related assets.

Mine development expenditure includes leases, costs incurred for acquiring/developing properties/rights up to the stage of commercial production.

Impairment of Fixed Assets

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is recognised in the profit and loss account where the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

Depreciation and Amortisation

Depreciation on fixed assets is provided using the straight-line method at rates prescribed under Schedule XIV of the Companies Act, 1956 subject to the following deviations:

- Additions and disposals are reckoned on the first day and the last day of the month respectively.

- Individual items of plant and machinery and vehicles costing uptoRs 25,000/-are wholly depreciated.

- in respect of additions arising on account of Insurance spares, on additions/extentions forming an integral part of existing plants and on the revised carrying amount of the assets identified as impaired on which depreciation has been provided over residual life of the respective fixed assets.

Intangible assets are amortised over its expected useful life.

Amortisation of leasehold land has been done in proportion to the period of lease.

Mine development expenditure is amortised in proportion to the annual ore raised to the remaining mineable ore reserves. In the year of abandonment of mine, the residual mine development expenditure is written off.

Financial Asset Investments

i) Investments are recorded as Long Term Investments unless they are expected to be sold within one year. Investments in associates are valued at cost less provision for impairment if any. Investments are reviewed for impairment.

ii) Investments classified as Held for Trading that have a market price are measured at fair value and gains and losses arising on account of fair valuation is routed through Profit and Loss account. Investments in unquoted equity instruments that do not have a market price and whose fair value cannot be reliably measured are measured at cost.

Inventories

- Ore, Concentrate, stock in process and finished products are valued at lower of cost and net realizable value on weighted average basis.

- Stores and spares are valued at lower of cost and net realisable value on weighted average basis.

- Byproducts, aluminum scrap, chemical lead scrap, anode scrap and coke fines are valued at net realisable value. Other scraps/residuals are not valued.

- Stock pile of moore cake, neutral sand, lime sludge, beta cake, lead sulphate, lead hydroxide and copper cadmium cake are valued at Re. 1 per MT.

Revenue and Expenses

Revenue on sale of products (net of volume rebates) is recognized on delivery of product and/or on passage of title to the buyer. Sales include export benefit. Export benefits are recognized on recognition of export sales.

All other revenue and expenses are recognized on accrual basis. Revenue relating to interest on staff loans for conveyance, insurance/railway claims is recognized when recoverability is certain.

Expenditure on projects is:

- capitalised when projects are crystallised.

- written off in other cases.

Technical know how, not directly identifiable to any plans, layout of buildings/plant and machinery, etc are written off. Expenditure relating to fixed assets not owned by company is charged to revenue.

Prior period/prepaid expenses exceeding Rs 0.05 crore is appropriately disclosed.

All revenue expenses on research and development are written off.

Foreign Currency Transactions

(1) Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

(2) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are hedged by derivative instruments, the valuation is done as per Accounting Standard- 30, Financial Instruments: Recognition and Measurement. The fair value of foreign currency contracts are calculated with reference to current forward exchange rates for the contracts with similar maturity profile.

(3) Non monetary foreign currency items are carried at cost.

(4) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account.

Derivative Financial Instrument

In order to hedge its exposure to foreign exchange, interest rate and commodity price risks, the Company enters into forward, option and other derivative financial instruments. The Company does not hold derivative financial instruments for speculative purposes.Derivative financial instruments are initially recorded at their fair value on the date of the derivative transaction and are re-measured at their fair value at subsequent balance sheet dates.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement. The hedged item is recorded at fair value and any gain or loss is recorded in the Income statement and is offset by the gain or loss from the change in the fair value of the derivative.

Changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in equity. Amounts deferred to equity are recycled in the income statement in the periods when the hedged item is recognised in the income statement.

Derivative financial instruments that do not qualify for hedge accounting are marked to market at the balance sheet date and gains or losses are recognised in the income statement immediately.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the year.

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement.

Borrowing Cost

Borrowing costs that are attributable to the acquisition/construction of qualifying assets are capitalized as part of cost of such asset till such

time as the asset is ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

Employee Benefits

i) Shortterm Short term employee benefits including termination benefits are recognised as an expense at the undiscounted amount incurred during the year.

ii) Long term

a) Defined contribution plan andfamily pension scheme:

The Companys Contribution to the recognised Provident Fund and family pension scheme paid/payable during the year is recognised to the Profit and Loss Account. The shortfall, if any, between the return guaranteed by the statute and actual earnings of the Fund is provided for by the Company and contributed to the Fund.

b) Defined Benefit plan: Gratuity

The Company accounts for the net present value of its obligations for gratuity benefits based on an independent external actuarial valuation carried out annually and determined using the projected unit credit method. The Company makes annual contributions to funds administered by trustees and managed by insurance company for amounts notified by the said insurance company. Actuarial gains and losses are immediately recognised in the Profit and Loss Account.

c) Other Long term benefit plan: Leave encashment

The Company has a scheme for Leave encashment for employees, the liability for which is determined on the basis of an actuarial valuation carried out at the end of the year.

Voluntary Retirement Expenses

Voluntary retirement expenses are charged to the profit and loss account.

Taxation

The Companys income taxes include taxes on the Companys taxable profits, adjustment attributable to earlier periods and changes in deferred taxes.

Provision for current tax is made after taking into account rebate and relief available under the Income tax Act, 1961.

Deferred tax resulting from timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognized only to the extent that there is a reasonable certainty that the future taxable profit will be available against which the deferred tax asset can be realized.

Dividend

Interim dividend payments including tax thereon has been appropriated from profits for the year and provision is made for proposed final dividend and tax thereon subject to consent of the shareholders at the annual general meeting.

Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent assets are neither recognised nor disclosed in the financial statements.

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