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Accounting Policies of Maithan Alloys Ltd. Company

Mar 31, 2015

A. Basis of Preparation of Financial Statements:

These financial statements have been prepared to comply with the generally accepted Accounting Principles in India (Indian GAAP), including the Accounting Standards notified under the relevant provisions of the Companies Act, 2013. These financial statements have been prepared on accrual basis under historical cost convention. The accounting policies are consistently followed by the Company.

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.

b. 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, disclosures 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.

c. Fixed Assets:

Tangible Assets:

Tangible Assets are stated at cost net of recoverable taxes, less accumulated depreciation and impairment loss, if any. The cost of tangible asset comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rates variations attributable to the assets.

Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Projects under which assets are not ready for their intended use are disclosed under Capital Work-in-Progress.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognized immediately in the Statement of Profit and Loss.

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

Intangible Assets:

Intangible Assets are stated at cost of acquisition, net of recoverable taxes less accumulated amortization/depletion and impairment losses, if any. The cost comprises purchase price, borrowing cost and any cost directly attributable to bringing the asset to the working condition for its intended use, and net charges on foreign exchange contracts and adjustments arising from exchange rates variations attributable to the intangible assets.

d. Depreciation, Amortization and Depletion:

Tangible Assets:

Depreciation on Fixed Assets is provided on Straight Line Method (SLM), except on additions made after 1st April 2006 to Building and Plant & Machineries of Ferro Alloys Units on which depreciation has been provided on Written Down Value (WDV) method. Depreciation is provided based on the basis of useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.

Intangible Assets:

Intangible assets such as software, etc. are amortized based upon their estimated useful lives of 6 years.

e. Impairment:

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

f. Investments:

Investments that are readily realizable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. Current investments are carried at cost or fair value, whichever is lower. Long-term investments are carried at cost. However, provision for diminution is made to recognize a decline, other than temporary, in the value of the investments, such reduction being determined and made for each investment individually.

g. Inventories:

Inventories are stated at cost (net of CENVAT credit) or net realisable value, whichever is lower. Cost is determined on weighted average method and comprises expenditure incurred in the normal course of business in bringing such inventories to their present location and condition and includes, where applicable appropriate overheads. Obsolete, slow moving and defective inventories are identified at the time of physical verification and where necessary, provision is made for such inventories.

h. Revenue Recognition:

Revenue is recognized only when risks and rewards incidental to ownership are transferred to the customer, it can be reliably measured and it is reasonable to expect ultimate collection.

i. Revenue From Operations:

Sale of Goods:

Revenue is recognized when the significant risks and rewards of ownership of goods are transferred to the customer, which generally coincides with delivery. It includes excise duty but excludes value added tax/sales tax.

Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass book (DEPB) scheme are recognized in the Statement of Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant exports proceeds.

ii. Other income:

Interest:

Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend income:

Income is recognised only when the right to receive the same is established by the reporting date.

i. Employee Benefits:

Short term employee benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized as an expense during the period when the employees render the services. These benefits include performance incentive and compensated absences.

Post-employment benefits:

Defined contribution plans:

A defined contribution plan is a post-employment benefit plan under which the Company pays specified monthly contributions to Provident Fund. The Company's contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

Defined benefit plans:

The Company provides for gratuity and leave encashment, a defined benefit plan (the "Gratuity Plan and Leave Encashment Plan") covering eligible employees. The Company's liability is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees services. Actuarial losses/ gains are recognized in the Statement of Profit and Loss in the year in which they arise.

j. Foreign Currency transaction:

Initial Recognition:

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction or that approximates the actual rate at the date of the transaction.

Subsequent Recognition:

Monetary items denominated in foreign currencies at the year end are re-stated at the year end rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction;

Exchange Differences:

Foreign currency assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the period and exchange loss/gain arising there from, is adjusted to the cost of fixed assets or charged to the statement of Profit & Loss, as the case may be.

Forward Exchange Contracts:

In case of transactions covered by forward contracts, the difference between the contract rate and exchange rate prevailing on the date of transaction, is adjusted to the cost of fixed assets or charged to the Statement of Profit & Loss, as the case may be, proportionately over the life of the contract.

k. Borrowing Cost:

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred.

l. Income Taxes:

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

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised only if there is virtual certainty that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

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

m. Financial derivatives and Commodity Hedging Transactions:

In respect of derivative contracts , premium paid, gains / losses on settlement and losses on restatement are recognized in the Statement of profit and loss except in case where they relate to the acquisition or construction of Fixed assets, in which case , they are adjusted to the carrying cost of such assets.

n. Government grants and subsidies:

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, these are deducted from related expense which it is intended to compensate. Where the grants or subsidy relates to an asset, its value is deducted in arriving at the carrying amount of the related asset.

o. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized when there is a present obligation as a result of a past event it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

Contingent Assets are neither recognized nor disclosed in the financial statements.

p. Segment Reporting :

The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Inter-segment revenues have been accounted for based on prices normally negotiated between the segments with reference to the costs, market prices and business risks, within an overall optimisation objective for the Company. Revenue and expenses have been identified with segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under "Unallocated/ Others."

q. Cash and Cash Equivalents :

Cash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an in-significant risk of change in value.

r. Earnings Per Share:

i. Basic Earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares outstanding during the year.

ii. Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.


Mar 31, 2013

A. FIXED ASSETS: Tangible Assets:

Tangible Assets are stated at cost less accumulated depreciation and impairment loss, if any. The cost of an asset comprises its purchase price net of Cenvat credit plus any directly attributable costs of bringing the asset to the working condition for its intended use. Preoperative expenses for major projects are also capitalized where appropriate.

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss.

Depreciation on Fixed Assets is provided on Straight Line Method in the manner and the rates specified in Schedule XIV to the Companies Act, 1956, except on additions made to Building and Plant & Machineries of Ferro Alloys Units with effect from 1st April 2006 on which depreciation has been provided on Written Down Value method in the manner and the rates specified in Schedule XIV to the Companies Act, 1956.

Intangible Assets:

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. All costs, including financing costs till commencement of production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalized.

Intangible assets such as softwares, etc. are amortized based upon their estimated useful lives of 5 years.

B. IMPAIRMENT:

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

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have deceased.

However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation ) had no impairment loss been recognized for the asset in prior years.

C. INVESTMENTS:

Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made are classified as Current Investments. All other investments are classified as Non-current Investments. Non-current Investments are stated at cost. Provision for diminution in the value of each non-current investment is made to recognise a decline, other than that of temporary in nature.

D. INVENTORIES:

Inventories are valued at lower of cost or estimated net realisable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition.

Cost Formula:

Raw Materials : At Weighted Average Cost

Work-In-Process and Finished Goods : At Standard Cost

Trading Stock and Stock-In-Transit : At Acquisition Cost

Packing Materials and Stores and Spares : At Weighted Average Cost

Standard Cost of inventories approximates actual cost.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Cost of finished goods includes excise duty.

E. REVENUE RECOGNITION:

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.

i. Sale of Goods:

Revenue is recognised when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. It includes excise duty but excludes value added tax/sales tax. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability that arose during the year.

ii. Interest:

Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii. Dividend on Investment in Subsidiary Companies:

Revenue is recognised only when the right to receive the same is established by the reporting date.

iv. Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass book (DEPB) scheme are recognized in the Statement of Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant exports proceeds.

v. Purchases:

Purchases are inclusive of freight and net of Cenvat Credit, trade discount and claims.

F. EXCISE DUTY AND SALES TAX/VALUE ADDED TAX: Excise Duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse. Sales tax / Value Added Tax paid is charged to the Statement of profit and loss.

G. CENVAT CREDIT: Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for by reducing the acquisition cost of the related goods / Fixed Assets.

H. EMPLOYEE BENEFITS:

Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of profit and loss of the year in which the related service is rendered.

Post employment and other long term employee benefits are recognized as an expense in the Statement of profit and loss 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.

In respect of Employee Stock Option, the excess of fair price on the date of grant, over the exercise price, is recognized as Deferred Compensation cost and amortised over vesting period.

I. FOREIGN CURRENCY TRANSACTION:

i. Initial Recognition:

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction or that approximates the actual rate at the date of the transaction.

ii. Subsequent Recognition:

Monetary items denominated in foreign currencies at the year end are restated at the year end rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Exchange Differences:

Foreign currency assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of exchange rates prevailing at the close of the period and exchange loss/gain arising there from, is adjusted to the cost of fixed assets or charged to the statement of Profit & Loss, as the case may be.

iii. Forward Exchange Contracts:

In case of transactions covered by forward contracts, the difference between the contract rate and exchange rate prevailing on the date of transaction, is adjusted to the cost of fixed assets or charged to the Statement of Profit & Loss, as the case may be, proportionately over the life of the contract.

J. BORROWING COST:

Borrowing costs relating to acquisition or construction of fixed assets which takes substantial period of time to get ready for its intended use are included in the cost of fixed assets to the extent they relate to the period till such assets are ready to be put to use. All other Borrowing costs are recognized as an expense in the year in which they are incurred.

K. 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 difference'''' 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. 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.

L. FINANCIAL DERIVATIVES AND COMMODITY HEDGING TRANSACTIONS:

In respect of derivative contracts, premium paid and gains / losses on settlement are recognized in the Statement of profit and loss except in case where they relate to the acquisition or construction of Fixed assets , in which case , they are adjusted to the carrying cost of such assets.

M. GOVERNMENT GRANTS AND SUBSIDIES:

Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, these are deducted from related expense which it is intended to compensate. Where the grants or subsidy relates to an asset, its value is deducted in arriving at the carrying amount of the related asset.

N. SEGMENT REPORTING POLICIES: i. Identification of Segments: Primary Segment: Business Segment:

The company''s operating businesses are organised and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The Identified segments are manufacturing of ferro-alloys and wind power.

Secondary segment: Geographical segment:

The analysis of geographical segment is based on the geographical location of customers. The geographical segments considered for disclosure are as follows:

¦ Sales within India include sales to customers located within India.

¦ Sales outside India include sales to customers located outside India.

ii. Allocation of common Costs:

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

iii. Unallocated Items:

The corporate and other segment include general corporate income and expense items, which are not allocated to any business segment.

O. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

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

P. EARNINGS PER SHARE:

Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

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

Q. CASH FLOW STATEMENT:

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, financing and investing activities of the company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/ cheques in hand and short-term investments with an original maturity of three months or less.

R. LEASE TRANSACTION:

Where the company is the lessee: Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases.

Operating lease''s payments are recognized as an expense in the Statement of profit & loss.

Where the Company is a lessor: Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Statement of Profit & Loss. Costs including depreciation are recognized as an expense in the Statement of Profit & Loss.


Mar 31, 2010

A) Nature of Operation

Company is engaged in the business of manufacturing and trading of Ferro Alloys and generation and supply of Wind Power.

b) Basis of Accounting

The financial statements have been prepared to comply, in all material respects, with accounting standards as notified by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956.

The financial statements have been prepared under historical cost convention on accrual basis. The accounting policies have been consistently followed by the Company and are consistent with those used in the previous year except where otherwise stated.

c) Use of Estimates

The preparation of financial statements require the management of the Company to make certain 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/materialized.

d) Fixed Assets

Fixed Assets are stated at cost less Depreciation. The cost of an asset comprises its purchase price net of Cenvat credit plus any directly attributable costs of bringing the asset to the working condition for its intended use. Pre -operative expenses for major projects are also capitalised, where appropriate.

e) Investments

Long term Investments are stated at cost. Provision for diminution in the value of each long term investment is made to recognise a decline, other than that of temporary in nature.

f) Depreciation

i) Depreciation on Fixed Assets is provided on Straight Line Method in the manner and the rates specified in Schedule XIV to the Companies Act; 1956, except on additions made to Building and Plant & Machineries of Ferro Alloys Units with effect from 1 April 2006 on which depreciation has been provided on Written Down Value method at the rate specified in Schedule XIV to the Companies Act,1956.

ii) Fixed Assets costing below Rs. 5,000/- are fully depreciated in the year of acquisition.

iii) Depreciation on Fixed Assets added/deducted during the year is provided on pro-rata basis.

iv) The depreciation charge for the assets which have been impaired, are adjusted to allocate the assets revised carrying amount less its residual value, if any, over its remaining useful life.

v) Intangible assets such as softwares, etc. are amortised based upon their estimated useful lives of 5 years.

g) Inventories

Inventories are valued at lower of cost or estimated net realisable value. Cost Formula:

Raw Materials : At Weighted Average Cost

Work-in-Process and Finished Goods : At Standard Cost

Trading Stock and Stock-in-Transit : At Acquisition Cost

Packing Materials and Stores and Spares : At Weighted Average Cost

Standard Cost of inventories approximates actual cost.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

h) Impairment

a. The carrying amounts of assets are reviewed at each balance sheet date to ascertain if there is any indication of impairment based on internal/external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

b. After Impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

c. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there is no impairment.

i) Excise Duty and Sales Tax

Excise Duty is accounted on the basis of both, payments made in respect of goods cleared as also provision made for goods lying in bonded warehouse. Sales tax paid is charged to profit and loss account.

j) Cenvat Credit

Cenvat Credit on excise duty paid goods /Fixed Assets is accounted for by reducing the acquisition cost of the related goods / Fixed Assets.

k) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be easily measured.

i) Sale of Goods:

Revenue is recognised when the significant risks and rewards of ownership of goods have passed to the buyer, which generally coincides with delivery. It includes excise duty but excludes value added tax/sales tax. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability that arose during the year.

ii) Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii) Export Benefits:

Export Entitlements in the form of Duty Drawback and Duty Entitlement Pass book (DEPB) scheme are recognised in the Profit and Loss Account when right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant exports proceeds.

I) Foreign Currency transaction

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

iii) Exchange Differences

Foreign currency assets and liabilities as on the Balance Sheet date are revalued in the accounts on the basis of

exchange rates prevailing at the close of the period and exchange loss/gain arising therefrom, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be.

iv) Forward Exchange Contracts

In case of transactions covered by forward contracts, the difference between the contract rate and exchange rate prevailing on the date of transaction, is adjusted to the cost of fixed assets or charged to the Profit & Loss Account, as the case may be, proportionately over the life of the contract.

m) Government grants and subsidies

Grants and subsidies from the government are recognised when there is reasonable assurance that the gram/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy relates to an expense item, these are deducted from related expense which it is intended to compensate. Where the grants or subsidy relates to an asset, its value is deducted in arriving at the carrying amount of the related asset.

n) Borrowing Cost

Borrowing costs relating to acquisition or construction of fixed assets which takes substantial period of time to get ready for its intended use are included in the cost of fixed assets to the extent they relate to the period till such assets are ready to be put to use. Other Borrowing costs are recognized as an expense in the year in which they are incurred.

o) Segment Reporting Policies

i) Identification of Segments: Primary Segment Business Segment:

The Companys operating businesses are organised and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The Identified segments are manufacturing of ferro-alloys and wind power.

Secondary segment

Geographical segment:

The analysis of geographical segment is based on the geographical location of customers.

The geographical segments considered for disclosure are as follows:

- Sales within India include sales to customers located within India.

- Sales outside India include sales to customers located outside India.

ii) Allocation of common Costs:

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

iii) Unallocated Items:

The corporate and other segment include general corporate income and expense items, which are not allocated to any business segment.

p) Intangible Assets

Research and Development Costs:

Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Any expenditure carried forward is amortised over the period of expected future sales from the related project, not exceeding ten years.

The carrying value of intangible assets is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable.

q) Taxation

Current tax is determined as the amount of tax payable in respect of taxable income for the period based on applicable tax rate and laws.

Deferred tax is recognised subject to consideration of prudence in respect of deferred tax asset on 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 period and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realization.

r) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates

s) Earnings Per Share

Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted Earning Per Share, the net profit or loss for the period attributable to equity shareholders and the weighted average no. of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

t) Cash Flow Statement

Cash flows are reported using indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, financing and investing activities of the Company are segregated. Cash and cash equivalents in the balance sheet comprise cash at bank, cash/ cheques in hand and short-term investments with an original maturity of three months or less.

u) Employee Benefits

i) Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account 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 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

iii) In respect of Employee Stock Option, the excess of fair price on the date of grant, over the exercise price, is recognized as Deferred Compensation cost and amortised over vesting period.

v) Lease Transaction:

Where the Company is the lessee: Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating leases payments are recognized as an expense in the profit & loss Account.

Where the Company is a Lessor: Assets subject to operating leases are included in fixed assets. Lease income is recognized in the Profit & Loss Account. Cost including depreciation are recognized as an expense in the Profit & Loss Account.

 
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