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Accounting Policies of Ramsarup Industries Ltd. Company

Mar 31, 2015

1. CORPORATE INFORMATION:

Ramsarup Industries limited ("the Company") is a public company domiciled in India. It is incorporated under the Companies Act, 1956 and its shares are listed in national Stock exchange (nSe) and Bombay Stock exchange (BSe). the company has been primarily engaged in production and distribution of Iron & Steel, Wire products, pig Iron, Sponge Iron, tMt Bar, Galvanized & Black Wires, power Generation & turnkey projects contracts for various infrastructure projects. the company presently has manufacturing facilities at Kalyani, Shyamnagar, Durgapur & Kharagpur all in West Bengal which due to unfavorable financial position is presently not in operations except some of the contracts in Infrastructure projects and power generation.

A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

these financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the accounting standards prescribed in the Companies (Accounts) Rules, 2014 and issued by the Central Government, the relevant provisions of the Companies Act, 2013 and other accounting principles generally accepted in India, to the extent applicable.

the accounting policies have been consistently applied by the company and are consistent with those used in the previous year.

B) USE OF ESTIMATES:

the preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of Revenue & expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.

C) CURRENT AND NON CURRENT CLASSIFICATION

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 the 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.

D) TANGIBLE FIXED ASSETS:

a. Free Hold / lease Hold land are stated at original cost of acquisition, inclusive of incidental expenses there to.

b. the cost of an asset comprises its cost / interest on specific borrowings obtained for the purpose of acquiring fixed assets up to the date of commissioning of the assets and any directly attributable costs of bringing the assets to working conditions for its intended use. the purchase cost of Fixed Assets has been stated net of Canvas / VAt wherever applicable.

c. When assets are sold or discarded, their cost and accumulated depreciation are removed from the accounts and any gain / loss resulting from their disposal are included in Statement of profit & loss.

d. Capital Work in progress comprises direct cost of fixed assets, technical know-how & related administrative and incidental expenses together with attributable interest on borrowed fund for acquisition of plant & Machinery, cost of erection and adjustment for foreign exchange difference etc. the total expenditure stands allocated to the respective fixed assets on completion of the project.

E) INTANGIBLE ASSETS:

Intangible Assets is capitalized where it is expected to provide future enduring economic benefits and amortization over a period of 3 years from the date of acquisition.

F) DEPRECIATION / AMORTISATION:

a. leasehold land is amortized over the lease period.

b. Depreciation on fixed assets acquired prior to 01.04.87 has been charged on written down value basis at the rates specified in Income tax Act, 1961 (As amended)

c. Depreciation on fixed assets acquired after 01.04.87 has been charged in accordance with useful life specified in schedule II of the Companies Act, 2013.

G) 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 recognised in Statement of profit and loss in the period in which they are incurred.

H) INVENTORIES:

Raw materials, components, stores and spares are valued at lower of cost and net realizable value.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis. Cost of traded goods includes purchase and allied costs incurred to bring inventory to its present condition and location, determined on FIFo basis.

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.

Scrap & Bye-products are valued at estimated realizable value.

I) REVENUE RECOGNITION:

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

i. Sale of Goods:

Revenue is recognized 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. In consistence with the practice followed by the Company Insurance Claim, unexpected Claims, Govt. dues & others are accounted for on the basis of actual payment/receipt.

iii. Contracts revenue is recognized by reference to the stage of completion of the contracts activity at the reporting date of the financial statements on the basis of percentage of completion method.

iv. the stage of completion of contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date, bear to the estimated total contract cost for each contract.

v. An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract cost will exceed the total contract revenue.

J) EMPLOYEE BENEFITS:

Defined contribution plans such as provident Fund etc are charged to the profit & loss Account as incurred.

"Defined Benefit plans-the present value of the obligation under such plan, is determined based on an actuarial valuation using the projected unit Credit Method.Acturial gains & losses arising on such valuation are recognized immediately in the profit and loss account. In case of funded defined benefit plans, the fair value of the plan assets is reduced from the gross obligation under the defined benefit plans, to recognize the obligation on net basis. Further for certain employees, the monthly contribution for provident Fund is made to a trust administrated by the Company. the interest payable by the trust is notified by the Government. the Company has an obligation to make good the shortfall, if any.

other long term employee Benefits are recognized in the same manner as Defined Benefit plans. termination benefits are recognized as and when incurred. However, the termination benefits which fall due more than twelve months after the Balance Sheet date are discounted using the yield on Government Bonds."

K) TAXES ON INCOME:

tax expense comprises of current and deferred tax.

i. Current tax (if any) is determined as the amount of tax payable in respect of taxable income for the year, as per Income tax Act 1961.

ii. Deferred tax liability / (Asset) if any, is recognised, subject to the consideration of virtual certainty supported with convincing evidences for future income in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

L) EARNING PER SHARE (Basic and Diluted):

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. earnings considered in ascertaining the Company's earnings per share is the net profit/(loss) for the year after deducting preference dividends if any and any attributable tax thereto for the year.

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

M) PROVISION AND CONTINGENT LIABILITIES:

i. provisions: 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.

ii. Contingent liabilities: 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, is termed as a contingent liability.

N) CASH AND CASH EQUIVALENTS:

Cash and cash equivalents includes Cash in hand and at Bank, unpaid Dividend in Current Account, Fixed deposit and Margin Money with Banks.


Mar 31, 2014

A) USE OF ESTIMATES :

The preparation of Financial Statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.

b) INVESTMENT :

Long Term Investment are carried at cost and classified as Non Current Investment.

c) TANGIBLE FIXED ASSETS :

i. Free Hold / Lease Hold Land are stated at original cost of acquisition, inclusive of incidental expenses there to.

ii. The cost of an asset comprises its cost / interest on specific borrowings obtained for the purpose of acquiring fixed assets up to the date of commissioning of the assets and any directly attributable costs of bringing the assets to working conditions for its intended use. The purchase cost of Fixed Assets has been stated net of CENVAT / VAT wherever applicable.

iii. When assets are sold or discarded, their cost and accumulated depreciation are removed from the accounts and any gain / loss resulting from their disposal is included in Statement of profit & loss.

iv. Capital Work in progress comprises direct cost of fixed assets, Technical know-how & related administrative and incidental expenses together with attributable interest on borrowed fund for acquisition of Plant & Machinery, cost of erection and adjustment for foreign exchange difference etc. The total expenditure stands allocated to the respective fixed assets on completion of the project.

d) INTANGIBLE ASSETS :

Intangible Assets is capitalised where it is expected to provide future enduring economic benefits and amortisation over a period of 5 years from the date of acquisition.

e) DEPRECIATION / AMORTISATION :

i. Leasehold Land is amortised over the lease period.

ii. Depreciation on fixed assets acquired prior to 01.04.87 has been charged on written down value basis at the rates specified in Income Tax Act, 1961 (As amended).

iii. Depreciation on fixed assets acquired after 01.04.87 has been charged in accordance with straight line method

(SLM) as per rates specified in schedule XIV of the Companies Act, 1956 as amended by Notification GSR No: 756E dated 16.12.93 issued by Ministry of Law. Department of Company affairs.

iv. Classification of Plant & Machinery into continuous & non-continuous process where applicable is done as per technical certification and depreciation thereon is provided accordingly.

v. Assets costing less than Rs. 5,000 are fully depreciated in the year of addition.

vi. Goodwill is being amortised over a period of five years.

f) 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 recognised in Statement of Profit and Loss in the period in which they are incurred.

g) INVENTORIES :

Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, raw materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis. Cost of traded goods includes purchase and allied costs incurred to bring inventory to its present condition and location, determined on FIFO basis.

Scrap and bye products are valued at estimated realisable value.

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.

h) FOREIGN CURRENCY TRANSACTIONS :

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

ii. Monetary items denominating in foreign currencies at the year end are restated at year end rates. In case of items covered by the foreign exchange contracts, the difference between the year end rate and the rate on the date of contract is recognized as exchange difference and the premium paid on forward contract is recognized over the life of the contract.

iii. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of Profit & loss except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

i) REVENUE RECOGNITION :

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

i. Sale of Goods :

Revenue is recognized 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. In consistence with the practice followed by the Company Insurance Claim, Unexpected Claims, Govt. dues & others are accounted for on the basis of actual payment/receipt.

iii. Conversion charges are recorded on receipt/despatch of materials.

iv. Contracts revenue is recognized by reference to the stage of completion of the contracts activity at the reporting date of the financial statements on the basis of percentage of completion method.

v. The stage of completion of contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date, bear to the estimated total contract cost for each contract.

vi. An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract cost will exceed the total contract revenue.

vii. Interest :

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

j) RETIREMENT AND OTHER EMPLOYEE BENEFITS :

i. Short Term Employee Benefits :

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

ii. Long Term Employee Benefits :

- Defined contribution Scheme : This benefit includes contribution to Employee''s State Insurance Corporation and provident fund scheme. The contribution is recognized during the period in which the employee renders the service.

- Defined Benefit Scheme : The Company provides gratuity, a defined benefit plan (the ''Gratuity Plan'') covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on respective employee''s salary and the tenure of employment. The Company''s liability is provided and funded on the basis of year end Actuarial valuation (using the Projected Unit Credit method). Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.

- Compensated Absences : Accumulated compensated absences which are expected to be availed or encashed within 12 months from the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlements as at the year end.

Accumulated compensated absences which are expected to be availed or encashed beyond 12 months from the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise. The Company presents the entire leave as a current liability in the balance sheet, since it does not have a unconditional right to defer its settlement for 12 months after the reporting date

k) TAXES ON INCOME :

Tax expense comprises of current and deferred tax.

i. Current Tax (if any) is determined as the amount of tax payable in respect of taxable income for the year, as per Income Tax Act 1961.

ii. Deferred Tax liability / (Asset) if any, is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

l) EARNING PER SHARE (Basic and Diluted) :

Basic earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit/(loss) for the year after deducting preference dividends if any and any attributable tax thereto for the year.

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

m) PROVISION AND CONTINGENT LIABILITIES :

i. Provisions : Provisions are recognised 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.

ii. Contingent Liabilities : 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, is termed as a contingent liability.

n) CASH AND CASH EQUIVALENTS :

Cash and cash equivalents includes Cash in hand and at Bank, Unpaid Dividend in Current Account, Fixed deposit

and Margin Money with Banks.

3.1 RIGHTS, PREFERENCE & RESTRICTION ATTACHED TO SHARES

A EQUITY SHARES

The Company has only one class of Equity Share having a par value of Rs 10/- each. Each holder of Equity Share is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting except in the case of interim dividend . In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts , in proportion to their shareholding.

B PREFERENCE SHARES

i. 13,00,000 5% Redeemable Cumulative Preference Share of Rs 10/- each fully paid up were allotted on 31-03-2003, which is due for redemption at any time between 6th and 10th year from the date of allotment at a premium of Rs 25/- per share and the date of redemption is 31.03.2013. However the company has obtained the consent of the preference share holders to extend the period of redemption by another period of two years and will now become due for redemption on 30.03.2015 on existing terms and conditions.

ii. 31,60,000 4% Redeemable Cumulative Preference Share of Rs 10/- each fully paid up were allotted on 24-09-2004, which was due for redemption at any time between 7th and 8th year from the date of allotment at a premium of Rs 25/- per share and was due to redeemed on 24.09.2012. The Company obtained the consent of Preference share holder in their meeting held on 20.09.2012 to extend the period of redemption upto 23.03.2013. However due to continuing Financial Crunch the company has further obtained the consent of preference Share holders to extend the period of redemption by another period of two years and will now become due for redemption on 22.03.2015 on existing terms and conditions.

iii. 2,24,99,920 5% Redeemable Non Cumulative Preference Share of Rs 10/- each fully paid up were allotted on 31-03-2010, which is redeemable at a premium of Rs 90/- per share at any time within 20th year from the date of allotment.

iv. Dividend on Cumulative Preference Shares as stated in i) & ii) above are due for six years ended 31st March 2014 amounting to Rs 114.84 Lacs which has neither been declared nor provided for.

5.1 TERM LOANS AND FUNDED INTEREST TERM LOANS :

a Term Loans from IDBI Bank Limited is secured by equitable mortgage of lease hold land and First charge on certain Fixed Assets of the company''s Kalyani unit on pari-passu basis with the other lenders and personal guarantee of Managing Director together with corporate guarantee of M/s. Ramsarup Investments Ltd and Pledge of 3507848 equity shares of Company held by other related Body Corporates. The Banker had invoked entire equity shares of the company pledged with them by some of the group companies and had adjusted the proceeds against their over dues in part by sale of only 2389034 equity shares and balance 1118814 equity shares are held by IDBI Bank Limited as their holding. The Term Loan was repayable in quarterly installments, but the company has defaulted in payment and as such the entire loan has been included in current liability.

b Working Capital Term Loan (WCTL) and Funded Interest Term Loan (FITL) are secured by all the assets covered under the working capital facilities in short term borrowing .The Loan was repayable in quarterly installments, but the company has defaulted in payment and as such the entire loan has been included in current liability.

c Rupee Term Loan from Punjab National Bank is secured by way of hypothecation of Factory Shed & Building, Plant & Machineries and other Fixed assets of Durgapur Unit and also equitable mortgage of the Factory shed & land belonging to Vanguard Credit & Holding Pvt Ltd, a group company on pari-passu basis with other term lenders along with its corporate guarantee and personal guarantee of Managing Director of the company. The loan was repayable in 24 equal quarterly installments of Rs. 300 Lacs each commencing from 1st April 2011, but the company has defaulted in payment of interest and installments, therefore loan has been recalled and accordingly the same has been included in current liability.

d Rupee term loan from Axis bank Ltd. is secured by way of hypothecation of Factory Shed & building, Plant & Machineries

and other Fixed assets of Durgapur Unit and also equitable mortgage of the Factory shed & land belonging to Vanguard Credit & Holding Pvt. Ltd. a group company on pari-passu basis with other term lenders along with its corporate guarantee and personal guarantee of Managing Director of the company. The loan of Rs. 4,500 Lacs was repayable in 20 equal quarterly installments commencing from April 2010, Rs. 5,000 Lacs in 14 equal quarterly installments commencing from April 2012 and Rs. 5,000 Lacs transferred from Short term loan was repayable in one installment but due installments have not been paid till date and accordingly the same has been classified as current liability.

e Term loans for various modules of Integrated Steel project at Kharagpur have been tied up under multiple banking arrangements and secured by way of equitable mortgage of entire Land & Building on pari-passu basis. The Lender Banks are having 1st charge on movable fixed assets of the specific module of the project on pari-passu basis with other term lenders of specific modules and 2nd pari-passu charge on the said assets on a reciprocal basis and further secured by personal guarantee of the Managing Director of the Company and some of the body corporates. Since neither the installment due for repayment nor interest has been serviced as such all the accounts have become overdue to that extent. However interest thereon has been provided at the specified rates of interest at regular interval rest as per available terms of sanctions. The Term Loan was repayable in quarterly installments, however the company has defaulted in payment of interest and stipulated installments, therefore the loan has been recalled and this has been included in current liability.

Notes to Financial Statements

f Working Capital Term Loan (WCTL) and Funded Interest Term Loan (FITL) were to be repaid in quarterly installments but the same have not been paid and to the said extent its has become overdue. Interest have been provided on all these accounts at the respective rates of sanction at specified rests and/or on the Basis Of Statements of accounts wherever received from the Banks. The Working Capital Term Loan was repayable in quarterly installments, however the company has defaulted in payment of interest and stipulated installments , therefore the loan has been recalled and this has been included in current liability.

g Term Loan from ICICI Bank Ltd. was provisionally secured by way of first equitable mortgage of all immovable properties along with WBIDC Ltd. and hypothecations of movable assets other than book debts, stock of raw material, finished, semi finished goods of the Shyamnagar unit & guaranteed by Managing Director of the Company. However WBIDC has not provided NOC for the same. The term loan is further secured by pledge of 5,00,000 equity shares of the company held by promoters group company which has been further supplemented by another 5,37,970 equity shares of the company held by other companies/group companies for further financing credit facilities to Ramsarup Infrastructure one of the unit of the company. The Term Loan was repayable in 30 quarterly installments commencing from June, 2013, but the company has defaulted payment of interest and as such loan has been recalled and hence this has been included in current liability.

h The Term Loan from WBIDC Ltd was secured by way of 1st equitable mortgage of immovable property and hypothecation of all movable fixed assets pertaining to Shyamnagar unit and personal guarantee of Managing Director of the company. The debt has been recalled by the WBIDC Ltd. and the amount of Rs. 1422.46 lacs has been included under the head current liabilities. Since 30.07.2012 WBIDC has invoked the provision of section 29(1) of the State Financial Act 1951 by which they have taken possession of the Shyamnagar unit with its fixed assets including plant and machinery mortgage/ hypothecated to them.

i Working capital Term loan and Funded Interest Term Loan of Shyamnagar Unit from United Bank of India was repayable in 20 quarterly installments and is secured by assets against the working capital facilities. But the due amount has not been paid till date, hence the loan has been recalled and therefore this has been included in current liability.

j Term Loan from IREDA is secured by way of First charge by creation of mortgage on all immovable properties & hypothecation of movable assets/ properties both existing and future pertaining to 3.75 MW Wind Farm Project at Village Khori, Taluka Sakri, District Dhule, in the State of Maharashtra and elsewhere excluding specified movables to be charged to bankers for Working Capital Borrowings as agreed By IREDA. The Loan was Repayable in 24 equal quarterly installments of Rs. 52 Lacs commencing from 31st March, 2006 and finally due on 31st March, 2012 but last 9 quarterly installments w.e.f. 4th quarter of 2009-10 upto 4th quarter 2011-12 have not been paid and also defaulted in payment of interest accrued thereon, hence the entire loan has been classified as Current Borrowing.

k Long Term Loan has been classified as secured on basis of available securities and market value of Fixed Assets as estimated by the management which has been relied upon. However no current valuation report has been obtained.

l Funded Interest Term Loan (FITL) was on account of Cash credit facility from ICICI Bank Repayable in 30 quarterly installments from June, 2013. However due to non servicing of interest the account turned overdue and the entire facility was recalled by the bank and as such the amount has been classified as current borrowings.

m The Loan has been classified as secured on basis of available securities and market value of fixed assets as estimated by the valuer and that it has been shown as current borrowings as debts have been recalled and/or the company is in default in paying the installments and interest thereon. Since the terms &conditions of the term loan, Working Capital facility Loan and Funded Interest Term Loan have not been complied with and the Compnay made default in compliance, as such the entire loan has been classified under the head Short Term Borrowings.

6.0 DEFERRED TAX (LIABILITY)/ASSET

During the year, due to accumulated Business Loss and Unabsorbed Depreciation and other benefits as computed in accordance with the provisions of Income Tax Act 1961, there is no Deferred Tax Liability. However Deferred Tax Assets could be created but in absence of convincing evidences and virtual certainty for realization of such "deferred tax assets", against future taxable income and also in view of the prudent accounting policy, deferred tax asset has not been recognized.

9.1 SECURED LOAN :

A From Banks :

i. Working Capital facilities from banks for Kalyani unit are secured by hypothecation of stock of raw materials, finished goods, stock in process, stores & spares etc. and book debts and personal guarantee of Managing Director of the Company and one of his relative together with corporate guarantee of Ramsarup Investments Ltd and collaterally secured by way of equitable mortgage on leasehold Land and Building thereon at Kalyani on Pari-Passu basis with the Consortium of Banks and IDBI Bank Limited and 2nd Charge on Fixed Assets financed by IDBI Bank Limited and accordingly taking the estimated market value of the fixed assets by the management the same has been classified as secured loan.

ii. Working Capital facilities from United Bank of India are secured by hypothecation of stock of raw materials, finished goods, stock in process, stores & spares etc. and book debts and second charge on its Fixed Assets at Shyamnagar unit and personal guarantee of Managing Director together with corporate guarantee of M/s. Ramsarup Investments Limited but the cash credit facility has already been recalled.

iii Working Capital Term loan, FITL and Cash Credit facility from United Bank of India have become overdue due to non- payment of installments and/or servicing of the interest as such provision for interest has been made on basis of rates available in sanction letter at regular interval rest or as per interest debited by the bank where available.

iv All the Bank Borrowings have become overdue, due to non-payment of installment of loan and interest thereon as per the terms of sanction.

v Working Capital Facilities from Punjab National Bank and IDBI Bank Ltd are secured on pari-passu basis by hypothecation of entire stocks, stock in process, Finished goods, stores & spares, stocks-in-transit, stock lying with others for conversion and book debts of Durgapur Unit and further secured by personal guarantee of Managing Director of the Company. First charge on fixed asset of Durgapur Unit is already held by Punjab National bank on Term Loan Account and therefore taking the estimated market value of the fixed asset, short term borrowings have been classified as secured.

vi Working Capital Facility from ICICI Bank Secured against hypothecation of Stock of Raw material, Work in Progress, Consumable Stores etc and book debts of Infrastructure Division and pari-passu charge on fixed assets with Development Credit Bank and further secured by 1037970 equity shares of the company held by some of the Group companies and personal guarantee of Managing director.

vii Working Capital Facility in infrastructure Division from Development Credit Bank is secured against hypothecation of stock & book Debts and Pari-Passu Charge on entire fixed assets with ICICI Bank Ltd and personal guarantee of Managing Director.

viii Working Capital / Bill discounting facility from SIDBI is partly secured by First charge on the Current Assets of M/s. N.C. Das & Company which is one of the unit of Infrastructure Division of the company together with personal guarantee of Managing Director.

ix Amount due to IDBI Bank Ltd against guarantee invoked is partly secured by pari-passu first charges on assets of infrastructure division of the company with other lenders.

x Working Capital facilities from Punjab National Bank for the Mini Blast Furnace at Kharagpur is secured by Hypothecation of entire stock and book debts of the unit and personal guarantee of Managing Director and collaterally secured by 3rd charge on Plant & Machinery of the unit on pari-passu basis with the charges created and/or to be created by the company in favour of the other working capital lenders. This facility has become overdrawn due to non servicing of accumulated interest and some of other terms of sanction.

B From Financial Institution :

i Some of the Loans from financial institutions are covered by pledge of certain equity shares of the company held by various group companies and Managing Director, subservient charges on Movable Fixed Assets, hypothecation of Heavy equipments and/or equitable mortgage of land held by some of the group companies along with personal guarantee of Managing Director. This facility has been recalled due to non servicing of accumulated interest and terms of sanction.

C Unsecured Loans :

i All Unsecured loan from Bank, Financial Institutions, etc. are guaranteed by Managing Director of the company.

ii Loans from Related Parties / Group Companies are interest free and repayable on demand. Some of the group entities had pledged the shares for credit facilities granted to the company but shares were invoked for non payment of the dues and the banks on disposal of such shares had credited the proceeds in the account of the company against their dues in part. To the said extent, the amount is further included in the loan payable to them.

D Borrowing from Banks stated above has not been confirmed by the company to the banks and in absence of statements of accounts and confirmation from bank we are of the opinion that the Loan amount together with interest thereon is likely to vary substantially. Further more some of the secured/unsecured Lenders have already assigned their debts to some of Asset Reconstruction Companies, without any acceptance from the company. Pending availability of the complete docu- ments necessary adjustments have not been made in the accounts.


Mar 31, 2013

1.1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

These financial statements have been prepared in accordance with generally accepted accounting principles in India under the historical cost convention and on the principal of a going concern. These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 1956.

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 the Schedule VI to the Companies Act, 1956. 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.

1.2. USE OF ESTIMATES :

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of Revenue & Expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.

1.3. TANGIBLE FIXED ASSETS :

i. Free Hold / Lease Hold Land is stated at original cost of acquisition, inclusive of incidental expenses there to.

ii. The cost of an asset comprises its cost / interest on specific borrowings obtained for the purpose of acquiring fixed assets up to the date of commissioning of the assets and any directly attributable costs of bringing the assets to working conditions for its intended use. The purchase cost of Fixed Assets has been stated net of CENVAT / VAT wherever applicable.

iii. When assets are sold or discarded, their cost and accumulated depreciation are removed from the accounts and any gain / loss resulting from their disposal is included in Statement of profit & loss.

iv. Capital Work in progress comprises direct cost of fixed assets, Technical know-how & related administrative and incidental expenses together with attributable interest on borrowed fund for acquisition of Plant &

Machinery, cost of erection and adjustment for foreign exchange difference etc. The total expenditure stands allocated to the respective fixed assets on completion of the project.

1.4. INTANGIBLE ASSETS :

Intangible Assets is capitalized where it is expected to provide future enduring economic benefits and amortization over a period of 5 years from the date of acquisition.

1.5. DEPRECIATION / AMORTISATION :

i. Leasehold Land is amortized over the lease period.

ii. Depreciation on fixed assets acquired prior to 01.04.87 has been charged on written down value basis at the rates specified in Income Tax Act, 1961 (As amended)

iii. Depreciation on fixed assets acquired after 01.04.87 has been charged in accordance with straight line method (SLM) as per rates specified in schedule XIV of the Companies Act, 1956 as amended by Notification GSR No: 756E dated 16.12.93 issued by Ministry of Law. Department of Company affairs.

iv. Classification of Plant & Machinery into continuous & non-continuous process where applicable is done as per technical certification and depreciation thereon is provided accordingly.

v. Assets costing less than Rs. 5,000 are fully depreciated in the year of addition.

vi. Goodwill is being amortized over a period of five years.

1.6. 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.

1.7. INVESTMENT:

Long Term Investment are carried at cost and classified as Non Current Investment.

1.8. INVENTORIES:

i. Inventories are stated at lower of cost and net realizable value. Cost is determined on weighted average / first in, first out (FIFO) basis, as considered appropriate by the Company. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. Provision / Adjustment in value is made for obsolete/slow moving/defective stocks, wherever necessary.

ii. Fuel, Chemical, stores & spares, etc. are valued at lower of cost less V"AT, CENVAT including Service Tax, Education Cess or estimated realizable value, in view of suspension of manufacturing process.

iii. Scrap & Bye-Products are valued at estimated realizable value.

1.10. REVENUE RECOGNITION:

i. Domestic Sales are recognized on despatch of material whereas export sales are recognized on the date of Bill of Lading.

ii. Sales is inclusive of freight charges, packing & forwarding, price escalation, Export Incentives and net of Excise Duty, Vat, CST, returns, claims, rebates and discounts etc.

iii. In consistence with the practice followed by the Company Insurance Claim, Unexpected Claims, Govt, dues & others are accounted for on the basis of actual payment/receipt. Excise Duty and Vat on price escalation Bills are normally charged / accounted for as and when such bills are actually raised.

iv. Conversion charges are recorded on receipt/despatch of materials.

v. Contracts revenue is recognized by reference to the stage of completion of the contracts activity at the reporting date of the financial statements on the basis of percentage of completion method.

vi. The stage of completion of contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date, bear to the estimated total contract cost for each contract.

vii. An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract cost will exceed the total contract revenue.

viii. Export Incentives, if any, are recognized when the right to receive credit as per the terms of Incentives is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

1.11. EXCISE DUTY:

i. The Company accounts for the excise duty on finished goods, at the time of their clearance from the factory.

ii. The balance with excise department is on the basis of balance lying in PLA, including CENVAT credit, service Tax and education cess available on stock of raw materials, Capital goods, etc.

iii. CENVAT credits, Service Tax & Education Cess taken and/or utilized is given due effects in the accounts, while valuing the closing stock of raw materials, store, spares and chemicals etc.

1.12. EMPLOYEE BENEFITS:

i. Short Term Employee Benefits:

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

ii. Long Term Employee Benefits:

a) Defined contribution scheme- This benefit includes contribution to Employee''s State Insurance Corporation and provident fund scheme. The contribution is recognized during the period in which the employee render the service.

b) Defined Benefit Scheme- The Company provides gratuity, a defined benefit plan (the ''Gratuity Plan'') covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a tump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on respective employee''s salary and the tenure of employment. The Company''s liability is provided and funded on the basis of year end Actuarial valuation (using the Projected Unit Credit method). Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arises.

c) Compensated Absences: Accumulated compensated absences which are expected to be availed or '' encashed within 12 months from the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlements as at the year end.

d) Accumulated compensated absences which are expected to be availed or encashed beyond 12 months from the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise. The Company presents the entire leave as a current liability in the balance sheet, since it does not have a unconditional right to defer its settlement for 12 months after the reporting date

1.13. TAXES ON INCOME

i. Current Tax (if any) is determined as the amount of tax payable in respect of taxable income for the year, as per Income Tax Act 1961.

ii. Deferred Tax liability / (Asset) if any, is recognized, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

1.14. EARNING PER SHARE :

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company''s earnings per share is the net profit/(loss) for the year after deducting preference dividends if any and any attributable tax thereto for the year.

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

1.15. PROVISION AND CONTINGENT LIABILITIES:

i. Provisions: 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.

ii. Contingent Liabilities: 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, is termed as a contingent liability.

1.16. CASH AND CASH EQUIVALENTS:

Cash and cash equivalents includes Cash in hand and at Bank, Unpaid Dividend in Current Account, Fixed deposit and Margin Money with Banks. Both Fixed deposit and Margin Money are pledged with the banks against guarantees issued by them. ,


Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :

The financial statements have been prepared and presented under the historical cost convention using the accrual basis of accounting and comply with all mandatory Accounting Standards as specified in the Companies (Accounting Standard) Rules. 2006 and the relevant provisions of Companies Act, 1956.

2. USE OF ESTIMATES :

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of Revenue & Expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.

3. FIXED ASSETS:

a. Free Hold Land / Lease Hold Land is stated as original cost of acquisition, inclusive of incidental expenses there to.

b. The cost of an asset comprises arts purchase price / interest on specific borrowings obtained for the purpose of acquiring fixed assets up to the date of commissioning of the assets and any directly attributable costs of bringing the assets to working conditions for its intended use. The purchase cost of Fixed Assets has been stated net of CENVAT /VAT wherever applicable.

c. When assets are sold or discarded, their cost and accumulated depreciation are removed from the accounts and any gain / loss resulting from their disposal is included in profit & loss account.

d. Capital Work in progress comprises direct cost of fixed assets, Advances to Suppliers, Technical know-how & relates incidental expenses together with attributable interest on borrowed fund for acquisition of Plant & Machinery, cost of erection etc. The total expenditure is to be allocated to the respective fixed assets on completion of the projects.

4. DEPRECIATION/AMORTISATION:

a. Leasehold Land is amortised during the respective lease period.

b. Depreciation on fixed assets acquired prior to 01.04.87 has been charged on written down value basis at the rates specified in Income Tax Act, 196 I (As amended)

c. Depreciation on fixed assets acquired after 01.04.87 has been charged in accordance with straight line method (SLM) as per rates specified in schedule XIV of the Companies Act, 1956 as amended by Notification GSR No: 756E dated I 6.12.93 issued by Ministry of Law. Department of Company affairs.

d. Classification of Plant & Machinery into continuous & non-continuous process is done as per technical certification anc depreciation thereon is provided accordingly.

e. Assets costing less than Rs.5,000 are fully depreciated in the year of addition.

f. Preliminary expenses are written off to profit & Loss Account.

5. INVENTORIES :

a. Inventories are valued as follows :-

Raw Materials are valued at lower of cost less VAT / CENVAT including Service Tax, Education Cess etc or net releasable value.

i) Goods-in-transit are valued at cost.

ii) Material for contract in process etc. is valued at cost / estimated cost.

iv) Finished Goods (Including for re-sale) is valued at cost and / or realizable value whichever is lower

v) Fuel, Chemical, stores & spares, etc. are valued at cost less VAT, CENVAT including Service Tax, Education Cess.

vi) By Products are valued at estimated realisable value.

b. The shortage/surplus found on physical verification of stock/ stores etc are duly adjusted in the quantitative records as and when detected.

6. EXCISE DUTY :

a. The Company accounts for the excise duty on finished goods, at the time of their clearance from the factory.

b. The balance with excise department is on the basis of balance lying in PLA, including CENVAT credit, service Tax and education cess available on stock of raw materials, Capital goods, etc.

c. CENVAT credits, Service Tax & Education Cess taken and/or utilised is given due effects in the accounts, while valuing the closing stock of raw materials, store, spares and chemicals etc.

7. FOREIGN CURRENCY TRANSACTIONS :

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

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

c. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the profit & loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

8. FINANCIAL DERIVATIVES AND HEDGING TRANSACTIONS :

In respect of derivative contracts, premium paid, gains/losses on settlement and profit/loss on hedging transactions are recognized at the relevant time in the profit & loss account.

9. REVENUE RECOGNITION :

a. Domestic Sales are recognised on dispatch of material whereas export sales are recognised on the date of Bill of Lading.

b. Sales is inclusive of freight charges, packing & forwarding, price escalation, Export Incentives and net of Excise Duty Vat, returns, claims, rebates and discounts etc.

c. In consistence with the practice followed by the Company Insurance Claim, Unexpected Claims, Govt, dues & others are accounted for on the basis of actual payment/receipt. Excise Duty and Vat on price escalation Bills are normally charged /accounted for as and when such bills are actually raised.

d. Conversion charges are recorded on receipt/dispatch of materials.

e. Contracts revenue is recognized by reference to the stage of completion of the contracts activity at the reporting date of the financial statements on the basis of percentage of completion method.

f The stage of completion of contract is measured by reference to the proportion that contract cost incurred for work performed up to the reporting date, bear to the estimated total contract cost for each contract.

g. An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract cost will exceed the total contract revenue.

h. Price escalation and other claims and or variation in the contact work are included in contract revenue when negotiations have reached at such an advanced stage that it is probable that the customer will accept the claim. Export Incentives are recognized when the right to receive creed* as per the terms of Incentives is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

10. BORROWING COST:

Borrowing cost that are directly attributable to the construction / purchase of qualifying assets, is capitalised as part of cost of that assets and other borrowing cost are recognised as an expense in the period in which they are incurred.

11. PROVISIONS, CONTINGENT ASSETS & LIABILITIES :

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

12. EMPLOYEE BENEFITS :

a. Short Term Employee Benefits

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

b. Long Term Employee Benefits:

1) Defined contribution scheme- This benefit includes contribution to Employee's State Insurance Corporation and provident fund scheme. The contribution is recognized during the period in which the employee rendered service.

i) Defined Benefit Scheme- For defined benefit scheme the cost of providing benefit is determined using the projected unit credit method with actuarial valuation being carried out at each balance sheet date. The retirement benefit obligation recognized in the balance sheet represents value of defined benefit obligation as reduced by the fair value of planned assets. Actuarial gains and losses are recognized in full during the period in which they occur.

13. TAXES ON INCOME :

a. Current Tax (if any) is determined as the amount of tax payable in respect of taxable income for the year, as per Income Tax Act 196 I.

b. Deferred Tax liability / (Asset) if any is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

14. DIVIDEND:

Intent / Final Dividend proposed by Board of Directors if any is paid/ provided for in the books of accounts pending approval at the Annual General Meeting.

15. EARNING PER SHARE :

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

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


Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared and presented under the historical cost convention using the accrual basis of accounting and comply with all mandatory Accounting Standards as specified in the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of Companies Act, 1956.

2. USE OF ESTIMATES

The preparation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent liabilities on the date of financial statements and the reported amounts of Revenue & Expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.

3. FIXED ASSETS

a. Free Hold Land / Lease Hold Land is stated as original cost of acquisition, inclusive of incidental expenses there to.

b. Gross Block of Fixed Assets are stated at cost adjusted by revaluation on 31.3.93 at relevant replacement value. The cost of an asset comprises its purchase price / interest on specific borrowings obtained for the purpose of acquiring fixed assets up to the date of commissioning of the assets and any directly attributable costs of bringing the assets to working conditions for its intended use. The purchase cost of Fixed Assets has been stated net of CENVAT / VAT wherever applicable.

c. When assets are sold or discarded, their cost and accumulated depreciation are removed from the accounts and any gain / loss resulting from their disposal is included in profit & loss account.

d. Capital Work in progress comprises direct cost of fixed assets, Advances to Suppliers, Technical know-how & related Project Development expenses together with attributable interest on borrowed fund for acquisition of Plant & Machinery, cost of erection etc. The total expenditure is allocated to the respective fixed assets on completion of the projects.

4. DEPRECIATION/AMORTISATION

a. Leasehold Land is amortised during the respective lease period.

b. Depreciation on fixed assets acquired prior to 01.04.87 has been charged on written down value basis at the rates specified in Income Tax Act, 1961 (As amended)

c. Depreciation on fixed assets acquired after 01.04.87 has been charged in accordance with straight line method (SLM) as per rates specified in Schedule XIV of the Companies Act, 1956 as amended by Notification GSR No: 756E dated 16.12.93 issued by Ministry of Law. Department of Company affairs.

d. Classification of Plant & Machinery into continuous & non-continuous process is done as per technical certification and depreciation thereon is provided accordingly.

e. Assets costing less than Rs. 5,000 are fully depre- ciated in the year of addition.

f. Preliminary & Share issue expenses are written off to Profit & Loss Account.

5. INVENTORIES

a. Inventories are valued as follows :

i) Raw Materials are valued at lower of cost less VAT/CENVAT including Service Tax, Education, Cess etc. or net releasable value.

ii) Goods-in-transit are valued at cost.

iii) Stocks-in-Process are valued at estimated Cost.

iv) Construction material in process etc. is valued at cost/estimated cost.

v) Finished Goods (Including for re-sale) is valued at cost and/or realisable value whichever is lower.

vi) Fuel, Chemical, stores & spares, etc. are valued at cost less VAT, CENVAT including Service Tax, Education Cess wherever adjustable.

vii) By Products are valued at estimated realisable value.

b. The shortage/surplus found on physical verifica- tion of stock/ stores etc are duly adjusted in the quantitative records as and when detected.

6. EXCISE DUTY

a. The Company accounts for the excise duty on finished goods, at the time of their clearance from the factory.

b. The balance with excise department is on the basis of balance lying in PLA, including CENVAT credit, Service Tax and Education, Cess available on stock of raw materials, Capital goods, etc.

c. CENVAT credits, Service Tax & Education, Cess taken and/or utilised is given due effects in the accounts, while valuing the closing stock of raw materials, store, spares and chemicals etc.

7. FOREIGN CURRENCY TRANSACTIONS

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

b. Monitory items denominating foreign currencies at the year end are restated at year end rates. In case of items covered by the foreign exchange contracts, the difference between the year end rate and the rate on the date of contract is recognized as exchange difference and the premium paid on forward contract is recognized over the life of the contract.

c. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the profit & loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

8. FINANCIAL DERIVATIVES AND HEDGING TRANSACTIONS

In respect of derivative contracts, premium paid, gains/losses on settlement and profit/loss on hedging transactions are recognized at the relevant time in the profit & loss account.

9.REVENUE RECOGNITION:

a. Domestic Sales are recognised on despatch of material whereas export sales are recognised on the date of Bill of Lading.

b. Sales is inclusive of freight charges, packing & forwarding, price escalation, Export Incentives and net of Excise Duty, Vat, returns, claims, rebates and discounts etc.

c. In consistence with the practice followed by the Company Insurance Claim, Unexpected Claims, Govt. dues & others are accounted for on the basis of actual payment/receipt. Excise Duty and Vat on price escalation Bills are normally charged/ accounted for as and when such bills are actually raised.

d. Conversion charges are recorded on receipt/ despatch of materials.

e. Contract revenue is recognized by reference to the

stage of completion of the contract activity at the reporting date of the financial statements on the basis of the percentage of completion method.

f. The stage of completion of contract is measured

by reference to the proportion that contract cost incurred for work performed up to the reporting date, bear to the estimated total contract cost for each contract.

g. An expected loss on construction contract is recognized as an expense immediately when it is certain that the total contract cost will exceed the total contract revenue.

h. Price escalation and other claims and or variation in the contact work are included in contract revenue when negotiations have reached at such an advanced stage that it is probable that the customer will accept the claim.

i. Export Incentives are recognized when the right to receive credit as per the terms of Incentives is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

10. BORROWING COST

Borrowing cost that are directly attributable to the construction/production of qualifying assets, is capitalised as part of cost of that assets and other borrowing cost are recognised as an expense in the period in which they are incurred.

11. PROVISIONS, CONTINGENT ASSETS & LIABILITIES

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

12. EMPLOYEE BENEFITS

a. Short Term Employee Benefits :

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the period when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

b. Long Term Employee Benefits :

i) Defined contribution scheme - This benefit includes contribution to Employees State Insurance Corporation and provident fund scheme. The contribution is recognized during the period in which the employee rendered service.

ii) Defined Benefit Scheme - For defined benefit scheme the cost of providing benefit is deter- mined using the projected unit credit method with actuarial valuation being carried out at each balance sheet date. The retirement benefit obliga- tion recognized in the balance sheet represents value of defined benefit obligation as reduced by the fair value of planned assets. Actuarial gains and losses are recognized in full during the period in which they occur.

13. TAXES ON INCOME

a. Current Tax is determined as the amount of tax payable in respect of taxable income for the year, as per Income Tax Act 1961.

b. Deferred Tax liability if any is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years.

c. Fringe Benefit Tax is provided in the accounts whereever applicable.

14. DEFERRED REVENUE EXPENDITURE

The company amortises these expenses over a period of five years.

15. DIVIDEND

Interim/Final Dividend proposed by Board of Directors is paid/provided for in the books of accounts pending approval at the Annual General Meeting.

16. EARNING PER SHARE

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

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

 
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