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Accounting Policies of Jayaswal Neco Industries Ltd. Company

Mar 31, 2016

1.01 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013 as adopted consistently by the Company. The financial statements have been prepared on a going concern basis under the historical cost convention except for certain fixed assets which are carried at revalued amounts.

1.02 USE OF ESTIMATES:

The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

1.03 FIXED ASSETS:

Tangible Assets

Tangible Assets are stated at cost net of Central Value Added Tax and Value Added Tax Credits, less accumulated depreciation and impairment loss, if any. The cost of Tangible Assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use. Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as “Capital Work-in-Progress”.

Intangible Assets

Intangible Assets are stated at cost less accumulated amortization. Process Development Cost is amortized over a period of ten years. Technical Know-how is amortized over the useful life of the underlying plant. Software’s are amortized over a period of three years and Indefeasible Right to Use has been amortized over the period of the agreement.

1.04 LEASE:

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

1.05 MINING RIGHTS /MINE DEVELOPMENT EXPENDITURE:

Mining Rights/ mine development expenditure includes leases, costs incurred for acquiring / developing properties / rights up to the stage of commercial production and site restoration cost. The site restoration costs are provided upfront and comprises provision for expenses related to abandonment cost of its operational coal mine which includes dismantling of structures / demolition and cleaning of sites, rehabilitation of mining machinery, plantation, physical / biological reclamation, landscaping, biological reclamation of left out Overburden dump, post environmental monitoring for 3 years, rehabilitation measures, etc. Actual payments for restoration are charged directly against the provision. The present obligation is revised annually based on technical estimates by internal or external specialists. If the exploration activities are found to be not fruitful, the expenditure on such exploratory work included in mine development expenditure is written off in the year in which it is decided to abandon the project. Mining Rights/Mine Development Expenditure are depreciated over the useful life of the mine or lease period whichever is shorter.

1.06 DEPRECIATION:

i) Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Straight Line Method. Depreciation is provided over useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of following assets where the useful life is different as per technical evaluation than those prescribed in Schedule II:

ii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term.

iii) The leasehold land has been amortized over the lease period.

iv) In respect of additions or extensions forming an integral part of existing assets and insurance spares, depreciation is provided as aforesaid over the residual life of the respective assets.

1.07 IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.08 INVESTMENT:

Current investments are carried at the lower of cost and quoted / fair value, computed category- wise. Non Current Investments are stated at cost. Provision for diminution in the value of Non Current Investments is made only if such a decline is other than temporary.

1.09 INVENTORY:

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost and net realizable value. The Cost of Inventories comprise of all costs of purchase, costs of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Materials and Stores & Spares are determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at Net Realizable Value. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

1.10 FOREIGN CURRENCY TRANSACTIONS:

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

ii) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference in the Statement of Profit and Loss and the premium paid on forward contracts has been recognized over the life of the contract.

iii) Non monetary foreign currency items are carried at cost.

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

1.11 FINANCIAL DERIVATIVES:

In respect of derivative contracts, premium paid, gains / losses on settlement and losses on restatement are recognized in the Statement of Profit and Loss.

1.12 REVENUE RECOGNITION:

Revenue is recognized only when risk and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes income from sale of goods, trial run products, services, job work, excise duty and is net of rebates, discounts, sales tax and value added tax recovered. Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable. Dividend is considered when the right to receive is established.

1.13 CUSTOMS:

Liability on account of Customs Duty on Imported materials in transit or in bonded warehouse is accounted in the year in which the goods are cleared from customs.

1.14 BORROWING COSTS:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (net of income earned on deployment of funds) are capitalized as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss.

1.15 DEFERRED LIABILITIES:

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

1.16 EMPLOYEE BENEFITS:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss / Preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss / Preoperative expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques based on projected unit credit method. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss / Preoperative expenditure.

1.17 PRELIMINARY AND ISSUE EXPENSES:

Preliminary and Issue Expenses are adjusted against the Securities Premium Account.

1.18 SEGMENT ACCOUNTING:

i) Segment Accounting Policies :

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments are included under "Unallocable expenditure".

(c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

(d) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise investments, Unallocable loans and advances and deferred revenue expenditure. Unallocable liabilities include mainly loan funds and interest liabilities.

ii) Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

1.19 PROVISION FOR DOUBTFUL TRADE RECEIVABLES AND LOANS AND ADVANCES:

Provision is made in the accounts for doubtful trade receivables and loans and advances in cases where the management considers the trade receivables, loans and advances, to be doubtful of recovery.

1.20 PROVISION FOR CURRENT AND DEFERRED TAX:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future. In the case of unabsorbed depreciation and carry forward tax losses, all deferred tax asset are recognized only if there is virtual certainty that they can be realized against future taxable profits.

1.21 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.

2.03 3,26,49,600 (Previous Year 3,26,49,600) shares were allotted in the last five years pursuant to Scheme of Arrangement without payment being received in cash.

2.04 Rights of Equity Shareholders

The Company has only one class of equity shares having a face value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the equity shareholders will be entitled to receive any of remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder


Mar 31, 2015

1.01 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013 as adopted consistently by the Company. The financial statements have been prepared on a going concern basis under the historical cost convention except for certain fixed assets which are carried at revalued amounts.

1.02 USE OF ESTIMATES:

The preparation of financial statements in conformity with Indian GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

1.03 FIXED ASSETS: Tangible Assets

Tangible Assets are stated at cost net of Central Value Added Tax and Value Added Tax Credits, less accumulated depreciation and impairment loss, if any. The cost of Tangible Assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use. Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Capital Work-in-Progress".

Intangible Assets

Intangible Assets are stated at cost less accumulated amortization. Process Development Cost is amortized over a period of ten years. Technical Know-how is amortized over the useful life of the underlying plant. Software's are amortized over a period of three years and Indefeasible Right to Use has been amortized over the period of the agreement.

1.04 LEASE:

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.

1.05 MINING RIGHTS /MINE DEVELOPMENT EXPENDITURE:

Mining Rights/ mine development expenditure includes leases, costs incurred for acquiring / developing properties / rights up to the stage of commercial production and site restoration cost. The site restoration costs are provided upfront and comprises provision for expenses related to abandonment cost of its operational coal mine which includes dismantling of structures / demolition and cleaning of sites, rehabilitation of mining machinery, plantation, physical / biological reclamation, landscaping, biological reclamation of left out Overburden dump, filling up of decoaled void, post environmental monitoring for 3 years, rehabilitation measures, etc. Actual payments for restoration are charged directly against the provision. The present obligation is revised annually based on technical estimates by internal or external specialists. If the exploration activities are found to be not fruitful, the expenditure on such exploratory work included in mine development expenditure is written off in the year in which it is decided to abandon the project.

Mining Rights/Mine Development Expenditure are depreciated over the useful life of the mine or lease period whichever is shorter.

1.06 DEPRECIATION:

i) Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Straight Line Method.

Depreciation is provided over useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of following assets where the useful life is different as per technical evaluation than those prescribed in Schedule II:

The Management believes that the useful lives as given above represent the period over which management expects to use these assets. ii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term. iii) The leasehold land has been amortised over the lease period. iv) In respect of additions or extensions forming an integral part of existing assets and insurance spares, depreciation is provided as aforesaid over the residual life of the respective assets.

1.07 IMPAIRMENT OF ASSETS:

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.08 INVESTMENT:

Current investments are carried at the lower of cost and quoted / fair value, computed category- wise. Non Current Investments are stated at cost. Provision for diminution in the value of Non Current Investments is made only if such a decline is other than temporary.

1.09 INVENTORY:

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost and net realizable value. The Cost of Inventories comprise of all costs of purchase, costs of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Materials and Stores & Spares are determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at Net Realizable Value. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

1.10 FOREIGN CURRENCY TRANSACTIONS:

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

ii) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference in the Statement of Profit and Loss and the premium paid on forward contracts has been recognized over the life of the contract.

iii) Non monetary foreign currency items are carried at cost.

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

1.11 FINANCIAL DERIVATIVES:

In respect of derivative contracts, premium paid, gains / losses on settlement and losses on restatement are recognized in the Statement of Profit and Loss.

1.12 REVENUE RECOGNITION:

Revenue is recognized only when risk and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes income from sale of goods, trial run products, services, job work, excise duty and is net of rebates, discounts, sales tax and value added tax recovered. Interest income is recognized on a time proportion basis taking into account the amount outstanding and rate applicable. Dividend is considered when the right to receive is established.

1.13 CUSTOMS:

Liability on account of Customs Duty on Imported materials in transit or in bonded warehouse is accounted in the year in which the goods are cleared from customs.

1.14 BORROWING COSTS:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (net of income earned on deployment of funds) are capitalized as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss.

1.15 DEFERRED LIABILITIES:

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

1.16 EMPLOYEE BENEFITS:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss / Preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss / Preoperative expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques based on projected unit credit method. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss / Preoperative expenditure.

1.17 PRELIMINARY AND ISSUE EXPENSES:

Preliminary and Issue Expenses are adjusted against the Securities Premium Account.

1.18 SEGMENT ACCOUNTING:

i) Segment Accounting Policies :

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

a) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

b) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments are included under "Unallowable expenditure".

c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallowable Corporate Income".

d) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallowable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallowable assets mainly comprise investments, unallowable loans and advances and deferred revenue expenditure. Unallowable liabilities include mainly loan funds and interest liabilities.

ii) Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

1.19 PROVISION FOR DOUBTFUL TRADE RECEIVABLES AND LOANS AND ADVANCES:

Provision is made in the accounts for doubtful trade receivables and loans and advances in cases where the management considers the trade receivables, loans and advances, to be doubtful of recovery.

1.20 PROVISION FOR CURRENT AND DEFERRED TAX:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future. In the case of unabsorbed depreciation and carry forward tax losses, all deferred tax asset are recognized only if there is virtual certainty that they can be realized against future taxable profits.

1.21 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2013

1.01 BASIS OF PREPARATION OF FINANCAL STATEMENTS:

The Financial Statements are prepared under the historic cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

1.02 USE OF ESTIMATES

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

1.03 FIXED ASSETS:

Fixed Assets are stated at cost less accumulated depreciation, net of Central Value Added Tax and Value Added Tax Credits. All costs including financing cost till commencement of commercial production are capitalised. Expenses incurred relating to project, prior to commencement of commercial operation, are considered as pre-operative expenditure and shown under Capital Work-in-Progress.

1.04 MINING RIGHTS /MINE DEVELOPMENT EXPENDITURE:

Mining Rights/ mine development expenditure includes leases, costs incurred for acquiring / developing properties / rights up to the stage of commercial production and site restoration cost. The site restoration costs are provided upfront and comprises provision for expenses related to abandonment cost of its operational coal mine which includes dismantling of structures / demolition and cleaning of sites, rehabilitation of mining machinery, plantation, physical / biological reclamation, landscaping, biological reclamation of left out Overburden dump, filling up of decoaled void, post environmental monitoring for 3 years, rehabilitation measures, etc. Actual payments for restoration are charged directly against the provision. The present obligation is revised annually based on technical estimates by internal or external specialists. If the exploration activities are found to be not fruitful, the expenditure on such exploratory work included in mine development expenditure is written off in the year in which it is decided to abandon the project.

Mining Rights/Mine Development Expenditure are depreciated over the useful life of the mine or lease period whichever is shorter.

1.05 DEPRECIATION:

i) Depreciation on Fixed Assets has been provided on straight line method at the rates and in the manner laid down in Schedule XIV of the Companies Act, 1956.

ii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term.

iii) In respect of Fixed Assets acquired pursuant to the Schemes of Arrangements, depreciation is provided for the balance period of economic useful life of those assets.

iv) The leasehold land has been ammortised over the lease period.

1.06 IMPAIRMENT OF ASSETS

The carrying amount of assets is 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 charged to the Statement of Profit and Loss in the year in which the carrying amount of an asset exceeds its recoverable amount. The impairment loss recognised in prior accounting periods is reversed if there is a change in the estimate of recoverable amount.

1.07 INTANGIBLE ASSETS:

Intangible Assets are stated at cost less accumulated amortisation. Process Development Cost is amortised over a period of ten years. Technical Know-how is amortised over the useful life of the underlying plant. Softwares are ammortised over a period of three years and Indefeasible Right to Use has been ammortised over the period of the agreement.

1.08 INVESTMENT:

Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

1.09 INVENTORY:

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost or realisable net value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Materials and Stores & Spares are determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at cost or Net Realisable Value whichever is lower. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

1.10 FOREIGN CURRENCY TRANSACTIONS:

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

b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract.

c) Non monetary foreign currency items are carried at cost.

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

1.11 FINANCIAL DERIVATIVES:

In respect of derivative contracts, premium paid, gains / losses on settlement and losses on restatement are recognised in the statement of Profit and Loss.

1.12 REVENUE RECOGNITION

Revenue from sale of goods and services is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interest income is recognised on a time proportion basis. Dividend is considered when the right to receive is established.

1.13 INCOME FROM OPERATIONS:

Income from operations includes income from sale of goods, trial run products, services, job work, excise duty and is net of rebates, discounts, sales tax and value added tax recovered.

1.14 BORROWING COSTS:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (net of income earned on deployment of funds) are capitalised as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to statement of profit and loss.

1.15 DEFERRED LIABILITIES:

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

1.16 EMPLOYEE BENEFITS:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss/preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss /Preoperative expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss /Preoperative expenditure.

1.17 LEASE:

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the statement of Profit and Loss.

1.18 PRELIMINARY AND ISSUE EXPENSES:

Preliminary and Issue Expenses are adjusted against the Securities Premium Account.

1.19 PREMIUM ON REDEMPTION OF DEBENTURES

Premium on redemption of debentures is adjusted against the Securities Premium Account.

1.20 SEGMENT ACCOUNTING:

(i) Segment Accounting Policies :

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocable expenditure".

(c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

(d) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise investments, unallocable loans and advances and, deferred revenue expenditure. Unallocable liabilities include mainly loan funds and interest liabilities.

(ii) Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

1.21 PROVISION FOR DOUBTFUL TRADE RECEIVABLES AND LOANS AND ADVANCES:

Provision is made in the accounts for doubtful trade receivables and loans and advances in cases where the management considers the trade receivables, loans and advances, to be doubtful of recovery.

1.22 PROVISION FOR CURRENT AND DEFERRED TAX

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

1.23 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event 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 recognized nor disclosed in the financial statements.


Mar 31, 2012

1.01 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements are prepared under the historic cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

1.02 USE OF ESTIMATES

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

1.03 FIXED ASSETS

Fixed Assets are stated at cost less accumulated depreciation, net of Central Value Added Tax and Value Added Tax. All costs including financing cost till commencement of commercial production are capitalised. Expenses incurred relating to project, prior to commencement of commercial operation, are considered as pre-operative expenditure and shown under Capital Work-in-Progress.

1.04 DEPRECIATION

i) Depreciation on Fixed Assets has been provided on straight line method at the rates and in the manner laid down in Schedule XIV of the Companies Act, 1956.

ii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term.

iii) In respect of Fixed Assets acquired pursuant to the Schemes of Arrangements, depreciation is provided for the balance period of economic useful life of those assets.

1.05 IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

1.06 INTANGIBLE ASSETS

Intangible Assets are stated at cost less accumulated amortisation. Process Development Cost is amortised over a period of ten years. Technical Know-how is amortised over the useful life of the underlying plant. Softwares are ammortised over a period of three years and Indefeasible Right to Use has been ammortised over the period of the agreement. The leasehold land has been ammortised over the lease period. Mining Rights are depreciated over the useful life of the mine or lease period whichever is shorter.

1.07 INVESTMENT

Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

1.08 INVENTORY

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost or realisable market value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Material and Stores & Spares is determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at cost or Net Realisable Value whichever is lower. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

1.09 FOREIGN CURRENCY TRANSACTIONS

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

b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract.

c) Non monetary foreign currency items are carried at cost.

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

1.10 FINANCIAL DERIVATIVES

In respect of derivative contracts, premium paid, gains / losses on settlement and provision for losses, if any; are recognised in the statement of Profit and Loss.

1.11 REVENUE RECOGNITION

Revenue from sale of goods and services is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interest income is recognised on a time proportion basis. Dividend is considered when the right to receive is established.

1.12 INCOME FROM OPERATIONS

Income from operations includes income from sale of goods, trial run products, services, job work, excise duty and is net of rebates, discounts, sales tax and value added tax recovered.

1.13 BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets (net of income earned on deployment of funds) are capitalised as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to statement of profit and loss.

1.14 DEFERRED LIABILITIES

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

1.15 EMPLOYEE BENEFITS

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss/preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Statement of Profit and Loss /Preoperative expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Statement of Profit and Loss /Preoperative expenditure.

1.16 LEASE

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions entered into on or after 1st April 2001, the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the statement of Profit and Loss.

1.17 PRELIMINARY AND ISSUE EXPENSES

Preliminary and Issue Expenses are adjusted against the Securities Premium Account.

1.18 PREMIUM ON REDEMPTION OF DEBENTURES

Premium on redemption of debentures is adjusted against the Share Premium Account.

1.19 SEGMENT ACCOUNTING

(i) Segment Accounting Policies : Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

(a) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

(b) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocable expenditure".

(c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

(d) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise investments, unallocable loans and advances and, deferred revenue expenditure. Unallocable liabilities include mainly loan funds and interest liabilities.

(ii) Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

1.20 PROVISION FOR DOUBTFUL TRADE RECEIVABLES AND LOANS AND ADVANCES

Provision is made in the accounts for doubtful trade receivables and loans and advances in cases where the management considers the trade receivables, loans and advances, to be doubtful of recovery.

1.21 PROVISION FOR CURRENT AND DEFERRED TAX

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

1.22 PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event 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 recognized nor disclosed in the financial statements.

2.03 12,37,76,856 (Previous Year 12,37,76,856) shares were allotted in the last five years pursuant to various Schemes of Amalgamation and Arrangement without payment being received in cash.

2.04 Rights of Equity Shareholders

The Company has only one class of equity shares having a face value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation of the Company, the equity shareholders will be entitled to receive any of remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.

2.05 During the financial year 2010-11, the Board of Directors has approved the Scheme of Arrangement (“the Scheme”) under sections 391-394 of the Companies Act, 1956, between the Company and Corporate Ispat Alloys Limited (“CIAL”) providing for demerger of Steel Division of CIAL for the purpose of its merger with the Company with effect from 1st April, 2008. Necessary approvals from the Stock Exchanges under clause 24(f) of the Listing Agreement have been received. The Company has in compliance of the order of the High Court held meetings of Shareholders and Creditors of the Company on 20th April, 2012. The shareholders have unanimously approved the scheme. The creditors' meeting has been adjourned at the request of the creditors present. On obtaining the required statutory approvals and sanctions of the High Courts, and the Scheme coming into force, the Company shall issue 3,26,49,600 fully paid-up Equity Shares of Rs. 10/- each to the eligible shareholders of CIAL in the ratio of 114 Equity Shares of the Company for every 10 Equity Shares held by them in CIAL as on the record date.

4.01 The term loans from banks, financial institutions and others referred to above aggregating to Rs. 106325.77 lacs and Rs. 13775.38 lacs included in Current Maturities of Long Term Debts in Note No. 10 are guaranteed by some of the Directors in their personal capacities.

4.02 Term loans from Banks and Financial Institution referred to above aggregating to Rs. 99975.46 lacs and Rs. 13775.38 Lacs included in Current Maturities of Long Term Debts in Note No. 10 are secured/ to be secured by way of :

a. First Charge on the moveable and immoveable fixed assets of the company, both present and future on pari-passu basis with other participating Financial Institutions/ Banks except the moveable and immoveable fixed assets created/to be created at Moitra Coking Coal Block Including Washery at North Karanpura Coalfields near Hazaribagh in Jharkhand.

b. First Ranking Charge on all titles and interest of the borrower in respect of all project documents / contracts/licences including insurance contracts and rights except mining rights pertaining to the assets of the borrower on pari-passu basis with other participating Financial Institutions/ Banks.

c. Charge on all the current assets of the company including raw materials, finished goods, stock-in-process, trade receivable, both present and future on pari-passu basis with other participating Financial Institutions/ Banks amongst them ranking next to the charge in favour of bankers to secure their working capital loans.

4.03 Rs.6350.31 Lacs are secured/to be secure by way of first charge on whole of the moveable and immoveable properties, except Book Debts, Store and Spares and Stocks, both present and future relating to coking coal mines project including washery at Moitra coking coal block at North Karanpura Coalfields near Hazaribagh in Jharkhand (the project) and charge on Current Assets of the Company on pari-passu basis amongst banks funding the project ranking next to the charge in favour of bankers to secure their working capital loans.

4.04 Rs. 186.41 lacs are secured by way of hypothecation of the specific Equipments financed.

4.05 Vehicle Loans aggregating to Rs. 195.65 lacs from Banks are secured by hypothecation of the specific vehicles financed.

4.06 Term Loans from Banks and Financial Institutions referred to above and Rs.14040.81 lacs included in current maturities of long term debt in Note No.10 are to be repaid as under :

Rs. 4250 . 00 lacs is repayable in 36 equal monthly instalments of Rs.118.06 lacs each, ending on March, 2015.

Rs. 7887.15 lacs is repayable in 35 equal monthly instalments of Rs.225.35 lacs each, ending on March, 2015.

Rs. 1275 . 00 lacs is repayable in 24 equal monthly instalments of Rs.53.13 lacs each, commencing from April, 2015 and ending on March, 2017.

Rs. 5803.75 lacs is repayable in 42 equal monthly instalments of Rs.138.90 lacs each, ending on September, 2015.

Rs. 1215 . 28 lacs is repayable in 36 equal monthly instalments of Rs.34.72 lacs each, ending on March, 2015.

Rs. 437 . 00 lacs is repayable in 14 equal quarterly instalments of Rs. 30 . 88 lacs each, ending on September, 2015.

Rs. 5156 . 25 lacs is repayable in 11 equal quarterly instalments of Rs. 468 . 75 lacs each, ending on July, 2014.

Rs. 958 . 33 lacs is repayable in 23 equal monthly instalments of Rs. 41 . 67 lacs each, ending on March, 2014.

Rs. 9500 . 00 lacs is repayable in 19 equal quarterly instalments of Rs. 500 . 00 lacs each, ending on October, 2016.

Rs. 12500 . 00 lacs is repayable in 60 structured monthly instalments, ending on March, 2017.

Rs. 3667 . 75 lacs is repayable in 24 structured monthly instalments, ending on March, 2014.

Rs. 2200.00 lacs is repayable in 48 equal monthly instalments of Rs. 45.83 lacs each, commencing from August, 2012 and ending on July, 2016.

Rs. 8183.80 lacs is repayable in 28 equal quarterly instalments of Rs. 292.28 lacs each, commencing from January, 2013 and ending on October, 2019.

Rs. 6350.31 lacs is repayable in 48 equal monthly instalments of Rs. 132.30 lacs each, commencing from July, 2014 and ending on June, 2018. Rs. 7000.00 lacs is repayable in 22 quarterly instalments of Rs. 318.18 lacs each, commencing from December 2015 and ending in March 2021.

Rs. 43716.52 lacs is repayable in 78 equal monthly instalments of Rs. 560.47 lacs each, commencing from September, 2014 and ending on February, 2021.

Vehicle Loans included in Term Loans above are repayable in 36 to 60 monthly equal instalments (including interest) as per repayment schedule.

Term Loans from Others referred to above are repayable in 24 to 36 monthly equal instalments (including interest) as per repayment schedule.

4.08 The Company is entitled to defer its liability to pay Sales Tax (including a portion of Purchase Tax) in respect of its certain units. The liability under the Schemes as on 31st March, 2012 is Rs. 6150.51 lacs (Previous Year : Rs. 5096.14 lacs) which is provided for on the basis of its Net Present Value of Rs. 2744.86 lacs (Previous Year : Rs.2124.96 lacs). This Sales-tax liability is repayable in five equal annual instalments starting at the end of the year from the year to which it relates.

8.01 Working Capital Loans from Banks are secured/to be secured by the hypothecation of whole of moveable properties including Stocks and Book Debts, both present and future, and by 2nd charge on immovable properties of the Company, excluding the moveable and immoveable fixed assets created/to be created at Moitra Coking Coal Block Including Washery at North Karanpura Coalfields near Hazaribagh in Jharkhand, ranking next to the mortgage charge of Financial Institutions and Banks for securing their Term Loans.

8.02 All the Working Capital Loans from banks are guaranteed by some of the Directors in their personal capacities.

8.03 The Short Term Loan from a Bank as at 31st March, 2011 was sanctioned and disbursed for the project to be repaid out of the Long Term Project Loan in the consortium which has been repaid accordingly.

11.01 The Company has recognised liabilities based on substantial degree of estimation for Excise Duty payable on clearance of goods lying in stock, Entry Tax and Cess on Metallurgical Coke paid under dispute. The excise duty payable on clearance of goods lying in stock as at 31st March, 2011 was of Rs. 1441.57 lacs as per the estimated pattern of despatches. During the year Rs.1441.57 lacs was utilised for clearance of goods. Liability recognised under this clause for the year is Rs. 2139.81 lacs which is outstanding as on 31st March, 2012. Actual outflow is expected in the next financial year. Any additional information in this regard can be expected to prejudice seriously the position of the Company.

12.01 Buildings include cost of building aggregating to Rs. 144.43 lacs, constructed on land, ownership of which does not vest with the Company.

12.02 Indefeasible Right to Use represents the cost incurred by the Company for the exclusive right of usage of certain pieces of land during the contract period.

12.03 Addition to Plant and Equipments includes Borrowing Cost of Rs 1968.92 lacs (Previous Year Nil).

12.04 The gross block of fixed assets includes Rs. 44.28 lacs ( Previous Year Rs. 44.28 lacs) on account of revaluation of fixed assets. Consequent to said revaluation there is an additional charge of depreciation of Rs. 0.77 lacs (Previous Year Rs. 0.76 lacs) and an equivalent amount has been withdrawn from Revaluation Reserve and credited to Surplus.

12.05 During the year Softwares and Office Equipments amounting to Rs.17.40 lacs and Rs. 1.42 lacs (Gross Block) respectively have been regrouped from Plant & Equipments.

12.09 In accordance with the Accounting Standard (AS-28) on "Impairment of Assets", the Management during the year carried out an exercise of identifying the assets that may have been impaired in respect of each cash generating unit in accordance with the said Accounting Standard. On the basis of this review carried out by the management, there was no impairment loss on Fixed Assets during the year ended 31st March, 2012.

14.01 Presently the Company is liable to pay Minimum Alternate Tax (MAT) under section 115 JB of the Income Tax Act, 1961 ( The Act) and the amount paid as MAT is allowed to be carried forward for being set off against the future tax liabilities computed in accordance with the provisions of the Act, other than Section 115JB, in next ten years. Based on the future projection of the performances, the Company will be liable to pay the income tax computed as per provisions, other than under section 115JB of the Act. Accordingly as advised in Guidance note on “ Accounting for Credit available in respect of Minimum Alternate Tax under the Income Tax Act 1961 “ issued by the Institute of Chartered Accountants of India, Rs. 938.65 lacs being the excess of tax payable under section 115JB of the Act over tax payable as per the provisions other than section 115JB of the Act has been considered as MAT Credit Entitlement and credited to Statement of Profit and Loss. The total MAT Credit as at March 31st, 2012 is Rs.6329.53 lacs (Previous Year Rs. 5390.88 lacs)


Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCAL STATEMENTS:

The Financial Statements are prepared under the historic cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

2. USE OF ESTIMATES

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

3. FIXED ASSETS:

Fixed Assets are stated at cost less accumulated depreciation, net of Central Value Added Tax and Value Added Tax. All costs including financing cost till commencement of commercial production are capitalised. Expenses incurred relating to project, prior to commencement of commercial operation, are considered as pre-operative expenditure and shown under Capital Work-in-Progress.

4. DEPRECIATION:

i) Depreciation on Fixed Assets has been provided on straight line basis at the rates and in the manner laid down in Schedule XIV of The Companies Act, 1956 or at the rates applicable at the time of acquisition, erection or installation of the assets.

ii) Depreciation on adjustment to Fixed Assets on account of exchange differences is provided over the remaining useful life of such asset.

iii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term.

iv) The leasehold land has been ammortised over the lease period.

v) Development of Property and Mining Rights are depreciated over the useful life of the mine or lease period whichever is shorter.

vi) In respect of Fixed Assets acquired pursuant to the Schemes of Arrangements, depreciation is provided for the balance period of economic useful life of those assets.

5. INTANGIBLE ASSETS:

Intangible Assets are stated at cost less accumulated amortisation. Process Development Cost is amortised over a period of ten years. Technical Know-how is amortised over the useful life of the underlying plant. Softwares are ammortised over a period of three years and Indefeasible Right to Use has been ammortised over the period of the agreement.

6. INVESTMENT:

Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

7. INVENTORY:

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost or realisable market value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Material and Stores & Spares is determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at Net Realisable Value. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

8. FOREIGN CURRENCY TRANSACTIONS:

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

b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract.

c) Non monetary foreign currency items are carried at cost.

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

9. FINANCIAL DERIVATIVES:

In respect of derivative contracts, premium paid, gains / losses on settlement and provision for losses, if any; are recognised in the Profit and Loss Account.

10. REVENUE RECOGNITION

Revenue from sale of goods and services is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interest income is recognised on a time proportion basis. Dividend is considered when the right to receive is established.

11. TURNOVER:

Turnover includes income from sale of goods, trial run products, services, job work, excise duty, sales tax and freight and is net of rebates, discounts and value added tax recovered.

12. BORROWING COSTS:

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

13. DEFERRED LIABILITIES:

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

14. EMPLOYEE BENEFITS:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account/preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account/preoperative expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss account/project development expenditure.

15. LEASE:

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions entered into prior to 1st April 2001, lease rentals are expensed with reference to lease terms and other considerations, except for rentals pertaining to the period up to the dates of commissioning of the assets which are capitalised.

c) In respect of Lease transactions entered into on or after 1st April 2001, the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Profit and Loss Account.

16. PRELIMINARY AND ISSUE EXPENSES:

Preliminary and Issue Expenses are adjusted against the Share Premium Account.

17. PROVISION FOR DOUBTFUL DEBTS AND LOANS AND ADVANCES:

Provision is made in the accounts for doubtful debts and loans and advances in cases where the management considers the debts, loans and advances, to be doubtful of recovery.

18. SEGMENT ACCOUNTING:

i) Segment Accounting Policies :

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

a) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter- segment revenue.

b) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocable expenditure".

c) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

d) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise investments, unallocable loans and advances and, deferred revenue expenditure. Unallocable liabilities include mainly loan funds and interest liabilities.

ii) Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

19. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

20. PREMIUM ON REDEMPTION OF DEBENTURES

Premium on redemption of debentures is adjusted against the Share Premium Account.

21. PROVISION FOR CURRENT AND DEFERRED TAX

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

22. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event 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 recognized nor disclosed in the financial statements.


Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCAL STATEMENTS:

The Financial Statements are prepared under the historic cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

2. USE OF ESTIMATES

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

3. FIXED ASSETS:

Fixed Assets are stated at cost less accumulated depreciation, net of Central Value Added Tax and Value Added Tax. All costs including financing cost till commencement of commercial production are capitalised. Expenses incurred relating to project, prior to commencement of commercial operation, are considered as pre-operative expenditure and shown under Capital Work-in-Progress.

4. DEPRECIATION:

i) Depreciation on Fixed Assets has been provided on straight line basis at the rates and in the manner laid down in Schedule XIV of

The Companies Act, 1956 or at the rates applicable at the time of acquisition, erection or installation of the assets.

ii) Depreciation on adjustment to Fixed Assets on account of exchange differences is provided over the remaining useful life of such asset.

iii) Assets acquired under finance lease on or after 1st April 2001 are depreciated on a straight line basis over the lease term. iv) The leasehold land has been ammortised over the lease period.

v) Development of Property and Mining Rights are depreciated over the useful life of the mine or lease period whichever is shorter.

vi) In respect of Fixed Assets acquired pursuant to the Schemes of Arrangements, depreciation is provided for the balance period of economic useful life of those assets.

5. INTANGIBLE ASSETS:

Intangible Assets are stated at cost less accumulated amortisation. Process Development Cost is amortised over a period of ten years. Technical Know-how is amortised over the useful life of the underlying plant. Softwares are ammortised over a period of three years and Indefeasible Right to Use has been ammortised over the period of the agreement.

6. INVESTMENT:

Current investments are carried at the lower of cost or quoted / fair value, computed category wise. Long Term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.

7. INVENTORY:

The inventories i.e. Raw Materials, Stores and Spares, Finished Goods etc. have been valued at lower of cost or realisable market value. Cost of Inventories comprise of all costs of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. The cost of Raw Material and Stores & Spares is determined at First-In-First-Out Method and Weighted Average Method respectively. By-products are valued at Net Realisable Value. The cost of Work-in-progress and Finished Stock is determined on absorption costing method. The value of inventories of Finished Goods includes Excise Duty wherever applicable.

8. FOREIGN CURRENCY TRANSACTIONS :

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

b) Monetary items denominated in foreign currencies at the year end are restated at the year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts has been recognised over the life of the contract.

c) Non monetary foreign currency items are carried at cost.

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

9. FINANCIAL DERIVATIVES:

In respect of derivative contracts, premium paid, gains / losses on settlement and provision for losses, if any; are recognised in the Profit and Loss Account.

10. REVENUE RECOGNITION

Revenue from sale of goods and services is recognized when it is earned and no significant uncertainty exists as to its ultimate collection. Interest income is recognised on a time proportion basis. Dividend is considered when the right to receive is established.

11. TURNOVER :

Turnover includes income from sale of goods, trial run products, services, job work, excise duty, sales tax and freight and is net of rebates, discounts and value added tax recovered.

12. BORROWING COSTS:

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

13. DEFERRED LIABILITIES:

Sales Tax payable under the Deferral Scheme of Incentives is provided for on the basis of Net Present Value.

14. EMPLOYEE BENEFITS:

i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account/preoperative expenditure of the year in which the related service is rendered.

ii) Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss account/project development expenditure for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long term benefits are charged to the Profit and Loss account/project development expenditure.

15. LEASE :

a) Operating Leases: Rentals are expensed with reference to lease terms and other considerations.

b) In respect of Lease transactions entered into prior to 1st April 2001, lease rentals are expensed with reference to lease terms and other considerations, except for rentals pertaining to the period up to the dates of commissioning of the assets which are capitalised.

c) In respect of Lease transactions entered into on or after 1st April 2001, the lower of the fair value of the assets and the present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Profit and Loss Account.

16. PRELIMINARY AND ISSUE EXPENSES:

Preliminary and Issue Expenses are adjusted against the Share Premium Account.

17. PROVISION FOR DOUBTFUL DEBTS AND LOANS AND ADVANCES:

Provision is made in the accounts for doubtful debts and loans and advances in cases where the management considers the debts, loans and advances, to be doubtful of recovery.

18. SEGMENT ACCOUNTING:

Segment Accounting Policies :

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment including inter-segment revenue.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocable expenditure".

Income which relates to the Company as a whole and not allocable to segments is included in "Unallocable Corporate Income".

Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocable assets mainly comprise investments, unallocable loans and advances and, deferred revenue expenditure. Unallocable liabilities include mainly loan funds and interest liabilities.

Inter-Segment Transfer Pricing :

Segment Revenue resulting from transactions with other business segments is accounted on the basis of market price.

19. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

20. PREMIUM ON REDEMPTION OF DEBENTURES

Premium on redemption of debentures is adjusted against the Share Premium Account.

21. PROVISION FOR CURRENT AND DEFERRED TAX

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from “timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

22. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event 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 recognized nor disclosed in the financial statements.

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