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Accounting Policies of India Steel Works Ltd. Company

Mar 31, 2015

1.1 Basis for preparation of financial statements

The financial statements have been prepared on historical cost convention on accrual basis and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies Accounts Rules, 2014, the relevant provisions of the Companies Act 2013 ("The 2013 Act")/ Companies Act 1956 ) 'The 1956 Act'), as applicable.

The accounting policies adopted in the preparation of this financial statements are consistent with those of the previous year. .

Estimates and Assumptions used in the preparation of financial statements are based upon the management's evaluation of relevant fact and the circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.

1.2 Inventories :

Inventories are valued at cost or net realizable value whichever is lower; cost is ascertained on the following basis :

a. Raw Material, Packing Material, tools, spares and consumable are valued at cost on plus direct cost incurred to bring the stock to its existing level.

b. Work in progress are valued at cost of manufacturing based on cost of Raw material and labour and overheads cost up to the relevant stage of completion.

c. Finished Goods valued at cost or Market price which ever is less.

1.3 Cash and cash equivalents (for purposes of Cash Flow Statement) :

Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.4 Events occurring after the date of Balance Sheet :

Material events occurring after the date of Balance Sheet are considered up to the date of approval of the accounts by the board of directors. There are no substantial events having an impact on the results of the current year Balance Sheet.

1.5 Prior Period Items and Changes in Accounting Policies :

No Prior Period items have materially affected this year's financial statements. Figures of previous year have been regrouped, rearranged and stated in line with the current year's presentation.

1.6 Depreciation :

Depreciation on all tangible assets has been calculated on Straight Line Method (SLM) as per the rates and manner prescribed under Schedule II of the Companies Act, 2013.

1.7 Revenue recognition :

Sales are accounted on net of tax, less sales Returns / rejection. Revenue from sale of products is recognized upon passage of title to the customer on acceptance of goods which generally coincides with the dispatch of materials.

Dividend Income is recognized when the right to receive the dividend is unconditional at the Balance Sheet date. Interest Income is recognized on accrual basis.

1.8 Fixed Asset :

Fixed Assets are accounted at cost of acquisition or construction. Fixed assets are capitalized net of CENVAT / VAT for which credit is taken and includes borrowing cost directly attributable to construction or acquisition of fixed assets, up to the date the asset is ready to use.

1.9 Employee Benefits

a. Contributions to defined contribution schemes such as provident fund and family pension fund are charged to the Profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined on internal workings.

c. Terminal benefits are recognized as an expense as and when incurred.

1.10 Borrowing costs :

Borrowing costs that are directly attributable to the acquisition, construction or production of fixed assets are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.11 Related Party Transactions :

The related parties are identified by the management of the Company and relied upon by the Auditors. The related party transactions are reported at their net value (Excluding indirect taxes).

1.12 Taxes on income :

Tax Expenses for the year, comprising Current Tax including Wealth Tax, and is included in determining the net profit for the year. A provision is made for the current tax and based on tax liability computed in accordance with relevant tax rates and tax laws.

1.13 Deferred Tax- Asset/ Liability :

The Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered accountants of India, has become applicable to the Company. The Deferred Tax is recognized for all timing differences being the difference between "Taxable Income" and "Accounting Income" that originate in one period, and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. Deferred Tax Assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying value at each balance sheet date.

1.14 Miscellaneous Expenditure :

Miscellaneous expenditure is written off over a period of future economic benefit available not exceeding five years.

1.15 Foreign Currency Transaction

All transactions in foreign currency are recorded at the rate of exchange prevailing on dates when the relevant transactions take place. In case of payment/realizations against these transactions in the same accounting year the respective expense/income head is debited/credited. In case of transactions where payments/realizations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

1.16 Provisions and contingencies :

The company recognizes provisions when there is a present legal or constructive obligation as a result of past event that probably require an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure of a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect current best estimates.

1.17 Capital work in Progress :

The Expenditure which is of Capital nature and the assets for which it is incurred which has not come into existence/ put to use during the year is shown under this head.




Mar 31, 2014

1.1 Basis for preparation of financial statements

The financial statements have been prepared on historical cost convention and as a going concern and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notifed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the Section 211(3C) of the Companies Act, 1956.The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.

Estimates and Assumptions used in the preparation of financial statements are based upon the management''s evaluation of relevant fact and the circumstances as of the date of the financial statements, which may differ from the actual results at a subsequent date.

1.2 Inventories :

Inventories are valued at cost or net realizable value whichever is lower; cost is ascertained on the following basis :

a. Raw Material, Packing Material, tools, spares and consumable are valued at cost on plus direct cost incurred to bring the stock to its existing level.

b. Work in progress are valued at cost of manufacturing based on cost of Raw material and labour and overheads cost up to the relevant stage of completion.

c. Finished Goods valued at cost or Market price which ever is less.

1.3 Cash and cash equivalents (for purposes of Cash Flow Statement) :

Cash comprises cash in hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.4 Events occurring after the date of Balance Sheet :

Material events occurring after the date of Balance Sheet are considered up to the date of approval of the accounts by the board of directors. There are no substantial events having an impact on the results of the current year Balance Sheet.

1.5 Prior Period Items and Changes in Accounting Policies :

No Prior Period items have materially affected this year''s financial statements. Figures of previous year have been regrouped, rearranged and stated in line with the current year''s presentation.

1.6 Depreciation :

Depreciation on all tangible assets has been calculated on Straight Line Method (SLM) as per the rates and manner prescribed under Schedule XIV of the Companies Act, 1956.

1.7 Revenue recognition :

Sales are accounted on net of tax, less sales Returns / rejection. Revenue from sale of products is recognized upon passage of title to the customer on acceptance of goods which generally coincides with the dispatch of materials.

Dividend Income is recognized when the right to receive the dividend is unconditional at the Balance Sheet date.

Interest Income is recognized on accrual basis.

1.8 Fixed Asset :

Fixed Assets are accounted at cost of acquisition or construction. Fixed assets are capitalized net of CENVAT / VAT for which credit is taken and includes borrowing cost directly attributable to construction or acquisition of fixed assets, up to the date the asset is ready to use.

1.9 Employee benefits

a. Contributions to Defined contribution schemes such as provident fund and family pension fund are charged to the profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined on internal workings.

c. Terminal benefits are recognized as an expense as and when incurred.

1.10 Borrowing costs :

Borrowing costs that are directly attributable to the acquisition, construction or production of fixed assets are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.11 Related Party Transactions :

The related parties are identified by the management of the Company and relied upon by the Auditors. The related party transactions are reported at their gross value (Including indirect taxes).

1.12 Taxes on income :

Tax Expenses for the year, comprising Current Tax including Wealth Tax, and is included in determining the net profit for the year. A provision is made for the current tax and based on tax liability computed in accordance with relevant tax rates and tax laws.

Current and deferred tax relating to items directly recognized in equity is recognized in equity and not in the Statement of profit and Loss Account.

1.13 Deferred Tax- Asset/ Liability :

The Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered accountants of India, has become applicable to the Company. The Deferred Tax is recognized for all timing differences being the difference between "Taxable Income" and "Accounting Income" that originate in one period, and are capable of reversal in one or more subsequent periods and measured using relevant enacted tax rates. Deferred Tax Assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying value at each balance sheet date.

1.14 Miscellaneous Expenditure :

Miscellaneous expenditure is written off over a period of future economic benefit available not exceeding five years.

1.15 Foreign Currency Transaction

All transactions in foreign currency are recorded at the rate of exchange prevailing on dates when the relevant transactions take place. In case of payment/realizations against these transactions in the same accounting year the respective expense/income head is debited/credited. In case of transactions where payments/realizations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

1.16 Provisions and contingencies :

The company recognizes provisions when there is a present legal or constructive obligation as a result of past event that probably require an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure of a contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to refect current best estimates.

1.17 Capital work in Progress :

The Expenditure which is of Capital nature and the assets for which it is incurred which has not come into existence/ put to use during the year is shown under this head.


Mar 31, 2013

1. Accounting Convention

The financial statements are prepared and presented under the historical cost convention as a going concern on accrual basis of accounting and to comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of Companies Act, 1956.

2. Use of Estimates

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

3. Fixed Assets & Depreciation

Fixed Assets are stated at cost of acquisition (including cost of borrowings) or construction, less accumulated depreciation and impairment loss. Cost of acquisition or construction is inclusive of all expenses, which are directly attributable to bringing the asset to working condition for the intended use, exclusive of cenvat credit on capital account. Finance costs incurred upto the date of commissioning of the assets are capitalised towards the relevant Fixed Assets. Depreciation on fixed assets acquired upto 31st March, 1996, is provided on the "Written Down Value" basis and depreciation on additions to fixed assets on or after 1st April, 1996, is provided on "Straight Line" basis, at the rates specified in Schedule XIV to the Companies Act, 1956.

4. Impairment of Assets

Impairment loss is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised whenthe carrying value of the fixed assets of the respective cash generating units exceeds its recoverable amount, which is the greater ofthe net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present valuebased on an appropriate discount factor.

5. Investments

Investments are carried at lower of cost or market value and provision is made to recognise any decrease in the carrying value, as applicable. Unquoted investments are accounted at cost.

6. Inventories

Inventories are valued at lower of cost and net realisable value. Cost includes expenses incurred upto the point of storage but excludes financing, general administration and marketing costs.

a. Raw materials, stores and spares have been valued at cost arrived on weighted average basis at the year end.

b. Fixed overheads are allocated for inclusion in the cost of conversion based on normal levels of production capacity. Conversion cost is apportioned to finished goods and goods in process based on estimated values and proportions arrived at by the cost sheet of the last month of the financial period in which production had taken place.

c. The company considers the value of scrap stock on account of job work parties on accrual basis & has also provided the corresponding liability.

7. Foreign Currency Transaction

All transactions in foreign currency are recorded at the rate of exchange prevailing on dates when the relevant transactions take place. In case of payment / realisations against these transactions in the same accounting year the respective expense / income head is debited/credited. In case of transactions where payments/realisations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

8. Revenue Recognition

a. Sales are stated exclusive of excise duty, VAT and net of returns, quality claims & discounts. Export sales are accounted at C.I.F. value.

b. Export incentives are accounted on accrual basis under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme.

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

d. Interest income is recognized on the basis of time.

e. Revenues from sale of by products, scrap are included in turn over.

9. Employee Benefits

a. Contributions to defined contribution schemes such as provident fund and family pension fund are charged to the Profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined using the Projected Unit Credit method and are based on the results of the Actuarial Valuation carried out as on 31st March 2008 in terms of the revised

AS-15. Provision for current year has been made based on internal workings..

10. Employee Separation Cost

Compensation paid to employees under the Voluntary Retirement Scheme of the company is treated as deferred revenue expenditure & is amortized over a period of 3 years.

11. Miscellaneous Expenditure

Expenses relating to issue of shares are being amortized over a period of five years as per the provisions of Section 35D of the Income Tax Act, 1961. Deferred Revenue expenditure are being amortized over a period of three years.

12. Contingent Liabilities

Contingent Liabilities disclosed in the notes to accounts or provided for in the financial statements is based on the management perception.

13. Dividend on Preference Shares

Dividend on Cumulative Redeemable Preference Share is accounted in the year of payment.

14. Prior Period Items

Significant items of income and expenditure relating to prior-period accounting periods are accounted in the Profit and Loss Account under the head ''Prior Period Adjustment''.

15. Derivative Contracts

The Company enters into derivative contracts in the nature of commodity futures, which are "marked to market" and losses/gains are recognized in the Profit and Loss Account 1A Of the above, 2,42,70,000 fully paid-up equity shares of Rs. 1/- each represent the shares which were reduced from a face value of Rs. 10/- each to Rs. 1/- each pursuant to the Bombay High Court Order in the last 5 years Of the above, 10,00,00,000 fully paid-up equity shares of Re 1/- each represent the shares which were alloted on a preferential basis to the promoters of the Company in the last 5 years Of the above, 8,70,00,000 fully paid-up equity shares of Rs. 1/- each represent the shares which were alloted on a preferential basis to the Strategic Investors of the Company in the last 5 years Of the above, 2,00,00,000 fully paid-up equity shares of Rs. 1/- each represent the shares which were alloted pursuant to the CDR Scheme without payments being received in cash, in the last 5 years. Of the above, 28,10,925 fully paid-up equity shares of Rs. 1/- each represent the shares which were alloted pursuant to cash payment of Rs. 1 Lac & balance against settlement of dues in the last 5 years


Mar 31, 2012

1. Accounting Convention

The financial statements are prepared and presented under the historical cost convention as a going concern on accrual basis of accounting and to comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of Companies Act, 1956.

2. Use of Estimates

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

3. Fixed Assets & Depreciation

Fixed Assets are stated at cost of acquisition (including cost of borrowings) or construction, less accumulated depreciation and impairment loss. Cost of acquisition or construction is inclusive of all expenses, which are directly attributable to bringing the asset to working condition for the intended use, exclusive of cenvat credit on capital account. Finance costs incurred upto the date of commissioning of the assets are capitalised towards the relevant Fixed Assets.

Depreciation on fixed assets acquired upto 31st March, 1996, is provided on the "Written Down Value" basis and depreciation on additions to fixed assets on or after 1st April, 1996, is provided on "Straight Line" basis, at the rates specified in Schedule XIV to the Companies Act, 1956.

4. Impairment of Assets

Impairment loss is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised when the carrying value of the fixed assets of the respective cash generating units exceeds its recoverable amount, which is the greater of the net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

5. Investments

Investments are carried at lower of cost or market value and provision is made to recognise any decrease in the carrying value, as applicable. Unquoted investments are accounted at cost.

6. Inventories

Inventories are valued at lower of cost and net realisable value. Cost includes expenses incurred upto the point of storage but excludes financing, general administration and marketing costs.

a. Raw materials, stores and spares have been valued at cost arrived on weighted average basis at the year end.

b. Fixed overheads are allocated for inclusion in the cost of conversion based on normal levels of production capacity. Conversion cost is apportioned to finished goods and goods in process based on estimated values and proportions arrived at by the cost sheet of the last month of the financial period in which production had taken place.

c. The company considers the value of scrap stock on account of job work parties on accrual basis & has also provided the corresponding liability.

7. Foreign Currency Transaction

All transactions in foreign currency are recorded at the rate of exchange prevailing on dates when the relevant transactions take place. In case of payment/realisations against these transactions in the same accounting year the respective expense/income head is debited/credited. In case of transactions where payments/realisations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

8. Revenue Recognition

a. Sales are stated exclusive of excise duty, VAT and net of returns, quality claims & discounts. Export sales are accounted at C.I.F. value.

b. Export incentives are accounted on accrual basis under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme.

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

d. Interest income is recognized on the basis of time.

e. Revenues from sale of by products, scrap are included in turn over.

9. Employee Benefits

a. Contributions to defined contribution schemes such as provident fund and family pension fund are charged to the Profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined using the Projected Unit Credit method and are based on the results of the Actuarial Valuation carried out as on 31st March 2008 in terms of the revised AS-15. Provision for current year has been made based on internal workings..

10. Employee Separation Cost

Compensation paid to employees under the Voluntary Retirement Scheme of the company is treated as deferred revenue expenditure & is amortized over a period of 3 years.

11. Miscellaneous Expenditure

Expenses relating to issue of shares are being amortized over a period of five years as per the provisions of Section 35D of the Income Tax Act, 1961. Deferred Revenue expenditure are being amortized over a period of three years.

12. Contingent Liabilities

Contingent Liabilities disclosed in the notes to accounts or provided for in the financial statements is based on the management perception.

13. Dividend on Preference Shares

Dividend on Cumulative Redeemable Preference Share is accounted in the year of payment.

14. Prior Period Items

Significant items of income and expenditure relating to prior-period accounting periods are accounted in the Profit and Loss Account under the head 'Prior Period Adjustment'.

15. Derivative Contracts

The Company enters into derivative contracts in the nature of commodity futures, which are "marked to market" and losses/gains are recognized in the Profit and Loss Account.


Mar 31, 2011

1. Accounting Convention

The financial statements are prepared and presented under the historical cost convention as a going concern on accrual basis of accounting and to comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of Companies Act, 1956.

2. Fixed Assets, Depreciation & Impairment Loss

Fixed Assets are stated at cost of acquisition (including cost of borrowings) or construction, less accumulated depreciation and impairment loss. Cost of acquisition or construction is inclusive of all expenses, which are directly attributable to bringing the asset to working condition for the intended use, exclusive of cenvat credit on capital account. Finance costs incurred upto the date of commissioning of the assets are capitalised towards the relevant Fixed Assets.

Depreciation on fixed assets acquired upto 31st March, 1996, is provided on the "Written Down Value" basis and depreciation on additions to fixed assets on or after 1st April, 1996, is provided on "Straight Line" basis, at the rates specified in Schedule XIV to the Companies Act, 1956.

Impairment loss is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised when the carrying value of the fixed assets of the respective cash generating units exceeds its recoverable amount, which is the greater of the net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

3. Investments

Investments are carried at lower of cost or market value and provision is made to recognise any decrease in the carrying value, as applicable. Unquoted investments are accounted at cost.

4. Inventories

Inventories are valued at lower of cost and net realisable value. Cost includes expenses incurred upto the point of storage but excludes financing, general administration and marketing costs.

a. Raw materials, stores and spares have been valued at cost arrived at on the yearly weighted average basis.

b. Fixed overheads are allocated for inclusion in the cost of conversion based on normal levels of production capacity. Conversion cost is apportioned to finished goods and goods in process based on estimated values and proportions arrived at by the cost sheet of the last month of the financial period in which production had taken place.

c. The company in the past neither considered the value of scrap stock on account of job work parties nor the corresponding liability for the same. However from the current year the shortfall/excess of stock of scrap of such job work parties is now being accounted on accrual basis & the company has also provided the liability of Rs 1,49,96,496/- for the same.

5. Foreign Currency Transaction

a) All transactions in foreign currency are recorded at the rate of exchange prevailing on dates when the relevant transactions take place. In case of payment/realisations against these transactions in the same accounting year the respective expense/income head is debited/credited. In case of transactions where payments/realisations take place in the subsequent years the exchange gains/losses are accounted under exchange rate difference.

6. Revenue Recognition

a. Sales are stated exclusive of excise duty, VAT and net of returns, quality claims & discounts. Export sales are accounted at C.I.F. value.

b. Export incentives are accounted on accrual basis under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme.

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

d. Interest income is recognized on the basis of time.

e. Revenues from sale of by products, scrap are included in turnover.

7. Employee Benefits

a. Contributions to defined contribution schemes such as provident fund and family pension fund are charged to the Profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined using the Projected Unit Credit method and are based on the results of the Actuarial Valuation carried out as on 31st March 2008 in terms of the revised AS-15. Provision for current year has been made based on internal workings.

c. Terminal benefits are recognized as an expense as and when incurred.

8. Miscellaneous Expenditure

Expenses relating to issue of shares are being amortised over a period of five years as per the provisions of Section 35D of the Income Tax Act, 1961. Deferred Revenue expenditure are being amortised over a period of three years.

09. Contingent Liabilities

Contingent Liabilities disclosed in the notes to accounts or provided for in the financial statements is based on the management perception.

10. Dividend on Preference Shares

Dividend on Cumulative Redeemable Preference Share is accounted in the year of payment.

11. Prior Period Items

Significant items of income and expenditure relating to prior-period accounting periods are accounted in the Profit and Loss Account under the head 'Prior Period Adjustment'.

12. Derivative Contracts

The Company enters into derivative contracts in the nature of commodity futures, which are "marked to market" and losses/gains are recognized in the Profit and Loss Account


Mar 31, 2010

1. Accounting Convention

The financial statements are prepared and presented under the historical cost convention as a going concern on accrual basis of accounting and to comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of Companies Act, 1956.

2. Fixed Assets. Depreciation & Impairment Loss

Fixed Assets are stated at cost of acquisition (including cost of borrowings) or construction, less accumulated depreciation and impairment loss. Cost of acquisition or construction is inclusive of all expenses, which are directly attributable to bringing the asset to working condition for the intended use, exclusive of cenvat credit on capital account. Finance costs incurred upto the date of commissioning of the assets are capitalised towards the relevant Fixed Assets.

Depreciation on fixed assets acquired upto 31st March, 1996, is provided on the "Written Down Value" basis and depreciation on additions to fixed assets on or after 1st April, 1996, is provided on "Straight Line" basis, at the rates specified in Schedule XIV to the Companies Act, 1956.

Impairment loss is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised when the carrying value of the fixed assets of the respective cash generating units exceeds its recoverable amount, which is the greater of the net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

3. Investments

Investments are carried at lower of cost or market value and provision is made to recognise any decrease in the carrying value, as applicable. Unquoted investments are accounted at cost.

4. Inventories

Inventories are valued at lower of cost and net realisable value. Cost includes expenses incurred upto the point of storage but excludes financing, general administration and marketing costs.

a. Raw materials, stores and spares have been valued at cost arrived at on the yearly weighted average basis.

b. Fixed overheads are allocated for inclusion in the cost of conversion based on normal levels of production capacity. Conversion cost is apportioned to finished goods and goods in process based on estimated values and proportions arrived at by the cost sheet of the last month of the financial period in which production had taken place.

c. As per past practice, no value is placed on stock of scrap since its estimated net realisable / usable value is not accurately ascertainable.

5. Revenue Recognition

a. Sales are stated exclusive of excise duty, job work charges, and net of returns, quality claims & discounts. Export sales are accounted at F.O.B. value.

b. Export incentives are accounted on accrual basis under the Duty Entitlement Pass Book Scheme and Duty Drawback Scheme.

c. Dividend income is recognised when the right to receive is established.

d. Interest income is recognised on the basis of time.

6. Employee Benefits

a. Contributions to defined contribution schemes such as provident fund and family pension fund are charged to the Profit and Loss Account for the year.

b. Provisions for the leave encashment & gratuity liabilities, which are not funded, have been determined using the Projected Unit Credit method and are based on the results of the Actuarial Valuation carried out as on 31st March 2008 in terms of the revised AS-15. Provision for current year has been made based on internal workings..

c. Termination benefits are recognized as an expense as and when incurred.

7. Miscellaneous Expenditure

Expenses relating to issue of shares are being amortised over a period of five years as per the provisions of Section 35D of the Income Tax Act, 1961. Deferred Revenue expenditure are being amortised over a period of three years.

8. Contingent Liabilities

Contingent Liabilities disclosed in the notes to accounts or provided for in the financial statements is based on the management perception.

9. Dividend on Preference Shares

Dividend on Cumulative Redeemable Preference Share is accounted in the year of payment.

10. Prior Period Items

Significant items of income and expenditure relating to prior-period accounting periods are accounted in the Profit and Loss Account under the head Prior Period Adjustment.

11. Derivative Contracts

The Company enters into derivative contracts in the nature of commodity futures, which are marked to market" and losses/gains are recognized, in the Profit and Loss Account

iii) Preference Share Dividend Rs.3,82,04,684/- (Previous year Rs. 3,53,45.205/-)The Management periodically assesses, using external and internal sources whether there is an indication that an asset may be impaired. If an asset is impaired,the company recognizes an impairment loss as the excess of the carrying amount of the asset over the recoverable.

iv) Change in method of accounting for Rolls:

Upto 31st March 2006, Rolls were treated as an item of Plant & Machinery. From the year 2006-07, the Company has accounted for the consumption of Rolls as an item of expenditure, included, under the head of Cost of Materials. In the current year, the Company has reviewed the accounting for consumption of Rolls as an item of expenditure, on the basis of actual usage rather than on purchase. The difference in this accounting treatment has lead to a revaluation of inventory of rolls, and an exceptional item of income of Rs.613.81 lacs is being accounted.

 
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