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Accounting Policies of Sathavahana Ispat Ltd. Company

Mar 31, 2015

(a) Basis of preparation:

The Financial Statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis in compliance with all material aspects of the Accounting Standards specified under Section 133 of the Companies Act, 2013 ("the Act"), read with Rule 7 of the Companies (Accounts) Rules, 2014, other relevant provisions of the Act, other pronouncements of the Institute of Chartered Accountants of India and also the guidelines issued by the Securities and Exchange Board of India (SEBI) The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

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 time between 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 generally accepted accounting principles requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of Financial Statements and reported amounts of revenues and expenses for the year. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

(c) Tangible Assets:

i. Tangible assets are stated at historical cost less accumulated depreciation thereon and impairmrnt losses, if any. Historical cost is inclusive of freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT / VAT credit availed against tax and Cess paid on such items.

ii. Expenditure directly relating to construction activity is capitalised. Indirect expenditure is capitalized to the extent those relate to the construction activity or is incidental thereto. Income earned during the construction period is deducted from the total expenditure relating to construction activity.

iii. Blast Furnace relining is capitalised. The written down value of the asset consisting of lining / relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

iv Assets retired from active use and held for disposal are stated at their estimated net realisable values or net book values, which ever is lower and shown under other current assets.

(d) Depreciation:

i. Depreciation is computed on a straight line basis so as to write off cost of assets over the useful lives of tangible fixed assets in the manner prescribed in Schedule II of the Act. Depreciation in respect of its electricity business is provided at the rates as well as methodology notified by the Central Electricity Regulatory Commission. The useful life of the assets are periodically reviewed and re-determined based on a technica evaluation and expected use and the unamortised depreciable amount is charged over the remaining useful life of such assets.

ii. Depreciation on fixed assets used for the project under construction is included under expenditure during construction period pending capitalisation.

(e) Intangible assets and amortisation

Intangible assets are stated at historical cost less accumulated amortisation thereon and impairment loss, if any. These assets are amortised over a period of 3 years, which is based on their estimated useful life.

(f) Impairment of Assets:

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortised historical cost.

(g) Excise Duty:

Excise duties recovered are included in "Gross Sales". Excise Duty on sales is shown as an item of expense and deducted from Gross Sales. The value of closing inventory of finished goods includes Excise Duty paid/payable on such stocks wherever applicable.

(h) Investments:

i. Investments that are readily realisable and 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.

ii. Current investments are carried at lower of cost and fair value determined on individual investment basis.

iii. Long-term investments are carried at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments. iv. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged to or credited to the Statement of Profit and Loss.

(i) Inventories:

i. Raw materials, stores, spares and consumables are valued at lower of cost, calculated on first-in-first-out (FIFO) basis. Items held for use in the production of inventories are not written down below cost if the finished product in which these will be incorporated are expected to be sold at or above cost.

ii. Finished goods and work-in-progress are valued at lower of cost and net realisable value except for By-products and Scrap which are valued at net realisable value. Cost includes materials, labour and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes Excise Duty. Cost is determined on a First-in-First-out (FIFO) basis.

iii. Trading goods are valued at lower of cost and net realisable value.

iv. Net realisable value is the estimated selling price in the ordinary course of business, reduced by the estimated costs of completion and costs to effect the sale.

v. Obsolete, defective and unserviceable inventories are duly provided for.

(j) Employee benefits:

i. Short-term benefits:

Short-term benefits are charged off to the Statement of Profit and Loss at the undiscounted amount in the year in which the services have been rendered.

ii. Long-term benefits:

a). The Contributions to Provident Fund and Employee State Insurance Schemes, which are defined contributions schemes, to the relevant funds administered and managed by the Central Government of India are charged off to Statement of Profit and Loss as and when incurred. The Company has no further obligations under these plans beyond its monthly contributions.

b). Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

c). Leave Encashment BenefitThe Company records its unavailed leave liability based on actuarial valuation using projected unit credit method. Actuarial gains / losses arising during the year are recognised in Statement of Profit and Loss. iii. Terminal benefits are recognised as an expense as and when incurred.

(k) Foreign Exchange Transactions:

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 foreign currency at the date of the transaction.

ii. Conversion: Foreign currency monetary items are reported at year-end rates. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

iii. Exchange difference: Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

iv. Forward exchange contracts not intended for trading purpose: In case of forward exchange contracts, difference between forward rate and the exchange rate on the date of transaction is recognised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change.Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

(I) 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 readily measured.

i. Sales:

Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to the customers. Gross sales includes Excise Duty and adjustments for price variation. Revenue from product sales is stated exclusive of returns, sales tax and applicable trade discounts and allowances.

ii. Interest:

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

iii. Dividend:

Dividend is recognised when the shareholders' right to receive payment is established by the Balance Sheet date.

iv. Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(m) Segment Accounting:

Segments are identified based on the types of products, the risks and returns, internal performance reporting system and the internal organisation and management structure. The Company has identified business segment as its primary reporting segment with secondary information reported geographically. The Company's primary segments consist of Pig Iron and the Metallurgical Coke with co -generation of power. Geographical segment is considered based on sales within India and outside India.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company Segment Assets and Liabilities include all operating assets and liabilities Segment results include all related income and expenditure. Unallocated expenditure represents other income and expenses which relate to the Company as a whole and are not allocated to segments.

(n) Leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

(o) Taxes on Income:

i Tax expense or saving is the aggregate of current year tax, deferred tax charged or credited to the Statement of Profit and Loss for the year.

ii. Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961. The Company also provides for such disallowances made on completion of assessment pending appeals, as considered appropriate depending on merits of each case.

iii. Deferred tax:

Deferred income taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the Company is entitled to tax holiday under Income Tax Act, 1961 no deferred tax is recognized in respect of timing differences which reverse during the tax holiday period, to the extent Company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which timing difference originate.

Unrecognized deferred tax assets of earlier years are reassessedand recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes- down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. iv. Minimum Alternate Tax (MAT) / MAT credit entitlement:

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal tax during the specified year. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

(p) Proposed / Interim Dividend:

Dividend as proposed, if any, by the Board of Directors is accounted in the books of account, pending approval at the Annual General Meeting.

(q) Provisions:

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(r) Borrowing Costs:

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to acquisition or construction of fixed assets which necessarily take a substantia period of time to get ready for their intended use, incurred till the time of commencement of commercial production or their intended use are capitalized. All other borrowing costs are expensed in the period they occur

(s) Earnings per Share:

i. The basic Earnings Per Share (EPS) 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.

ii. Diluted 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 as adjusted for the effects of all dilutive potential Equity Shares.

(t) Cash and Cash Equivalents:

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank and in hand and short- term investments with an original maturity of three months or less. (u) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent Liabilities which are possible or present obligations that may probably will not require outflow of resources are not recognised but are disclosed in the Notes to the Financial Statements Contingent Assets are neither recognised nor disclosed in the Financial Statements.


Mar 31, 2014

(a) Basis of preparation:

The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis to comply in all material respects with the notified Accounting Standards by the Companies (Accounting Standards) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 and also the guidelines issued by the Securities and Exchange Board of India (SEBI). The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

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 Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and time between 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 generally accepted accounting principles requires the management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenues and expenses for the year. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognised in the period in which the results are known / materialized.

(c) Fixed Assets:

i. Fixed assets are stated at cost of acquisition inclusive of freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT / VAT credit availed against tax and Cess paid on such items.

ii. Expenditure directly relating to construction activity is capitalised. Indirect expenditure is capitalized to the extent those relate to the construction activity or is incidental thereto. Income earned during the construction period is deducted from the total expenditure relating to construction activity.

iii. Blast Furnace relining is capitalised. The written down value of the asset consisting of lining / relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

iv Assets retired from active use and held for disposal are stated at their estimated net realisable values or net book values, which ever is lower and shown under other current assets.

(d) Depreciation:

i. Depreciation on fixed assets is provided under straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

ii. Depreciation is provided at one hundred per cent for assets costing less than '' 5,000/-.

iii. Depreciation on fixed assets used for the project under construction is included under expenditure during construction period pending capitalisation.

(e) Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

(f) Impairment of Assets:

The company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortised historical cost.

(g) Excise Duty:

Excise duties recovered are included in"gross sales". Excise Duty on sales is shown as an item of expense and deducted from gross sales. The value of closing inventory of finished goods includes Excise Duty paid/ payable on such stocks wherever applicable.

(h) Investments:

i. Investments that are readily realisable and 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.

ii. Current investments are carried at lower of cost and fair value determined on individual investment basis.

iii. Long-term investments are carried at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

iv. On disposal of an investment , the difference between its carrying amount and net disposal proceeds is charged to or credited to the Statement of Profit and Loss.

(i) Inventories:

i. Raw materials, stores, spares and consumables are valued at lower of cost, calculated on first-in- first-out (FIFO) basis. Items held for use in the production of inventories are not written down below cost if the finished product in which these will be incorporated are expected to be sold at or above cost.

ii. Finished goods and work-in-progress are valued at lower of cost and net realisable value except for By-products and Scrap which are valued at net realisable value. Cost includes materials, labour and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a First-in-First-out (FIFO) basis.

iii. Trading goods are valued at lower of cost and net realisable value.

iv. Net realisable value is the estimated selling price in the ordinary course of business, reduced by the estimated costs of completion and costs to effect the sale.

v. Obsolete, defective and unserviceable inventories are duly provided for.

(j) Employee benefits:

i. Short-term benefits:

Short-term benefits are charged off to the Statement of Profit and Loss at the undiscounted amount in the year in which the services have been rendered.

ii. Long-term benefits:

a) The Contributions to Provident Fund and Employee State Insurance Schemes, which are defined contribution schemes, to the relevant funds administered and managed by the Central Government of India are charged off to Statement of Profit and Loss as and when incurred. The Company has no further obligations under these plans beyond its monthly contributions.

b) Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

c) Leave Encashment Benefit: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method. Actuarial gains / losses arising during the year are recognised in Statement of Profit and Loss.

iii Terminal benefits are recognised as an expense as and when incurred.

(k) Foreign Exchange Transactions:

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 foreign currency at the date of the transaction.

ii. Conversion: Foreign currency monetary items are reported at year-end rates. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

iii. Exchange difference: Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

iv. Forward exchange contracts not intended for trading purpose: In case of forward exchange contracts, difference between forward rate and the exchange rate on the date of transaction is recognised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

(l) 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 readily measured.

i. Sales:

Revenue from sale of goods is recognised when significant risks and rewards in respect of ownership of products are transferred to the customers. Gross sales includes excise duty and adjustments for price variation.

Revenue from product sales is stated exclusive of returns, sales tax and applicable trade discounts and allowances.

ii. Interest:

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

iii. Dividend:

Dividend is recognised when the shareholders'' right to receive payment is established by the Balance Sheet date.

iv. Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(m) Segment Accounting:

Segments are identified based on the types of products and the internal organisation and management structure. The Company has identified business segment as its primary reporting segment with secondary information reported geographically. The company''s primary segments consist of Pig Iron and the Metallurgical Coke with Co -generation of Power.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

Segment Assets and Liabilities include all operating assets and liabilities. Segment results include all related income and expenditure. Unallocated expenditure represents other income and expenses which relate to the company as a whole and are not allocated to segments.

(n) Leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

(o) Taxes on Income:

i Tax expense or saving is the aggregate of current year tax, Deferred Tax charged or credited to the Statement of Profit and Loss for the year.

ii. Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961. The Company also provides for such disallowances made on completion of assessment pending appeals, as considered appropriate depending on merits of each case.

iii. Deferred tax:

Deferred Income Taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the Company is entitled to tax holiday under Income Tax Act, 1961 no deferred tax is recognized in respect of timing differences which reverse during the tax holiday period, to the extent Company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which timing difference originate.

Unrecognized deferred tax assets of earlier years are reassessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

iv. Minimum Alternate Tax (MAT) / MAT credit entitlement:

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal tax during the specified year. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

(p) Proposed / Interim Dividend:

Dividend as proposed, if any, by the Board of Directors is accounted in the books of account, pending approval at the Annual General Meeting.

(q) Provisions:

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(r) Borrowing Costs:

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to acquisition or construction of fixed assets which necessarily take a substantial period of time to get ready for their intended use, incurred till the time of commencement of commercial production or their intended use are capitalized. All other borrowing costs are expensed in the period they occur.

(s) Earnings per Share:

i. The basic earnings per share (EPS) 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.

ii. Diluted 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 as adjusted for the effects of all dilutive potential Equity Shares.

(t) Cash and Cash Equivalents:

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

(u) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities which are possible or present obligations that may probably will not require outflow of resources are not recognised but are disclosed in the Notes to the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

(a) Basis of preparation:

The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis in all material respects with the notified Accounting Standards by the Companies (Accounting Standards) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. 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 Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and time between 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 generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenues and expenses for the year. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognized in the period in which the results are known / materialized.

(c) Fixed Assets:

i. Fixed assets are stated at cost of acquisition inclusive of freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT / VAT credit availed against tax and Cess paid on such items.

ii. Expenditure directly relating to construction activity is capitalized. Indirect expenditure is capitalized to the extent those relate to the construction activity or is incidental thereto. Income earned during the construction period is deducted from the total expenditure relating to construction activity.

iii. Blast Furnace relining is capitalized. The written down value of the asset consisting of lining / relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

(d) Depreciation:

i. Depreciation on fixed assets is provided under Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

ii. Depreciation is provided at one hundred per cent for assets costing less than 55,000/-.

iii. Depreciation on fixed assets used for the project under construction is included under Expenditure during construction period pending capitalization.

(e) Intangible assets and amortization

Cost relating to intangible assets, which are acquired, is capitalized and amortized over a period of 3 years, which is based on their estimated useful life.

(f) Impairment of Assets:

The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortized historical cost.

(g) Excise Duty:

Excise duties recovered are included in "Gross Sales". Excise duty on sales is shown as an item of expense and deducted from Gross Sales. The value of closing inventory of finished goods includes excise duty paid/payable on such stocks wherever applicable.

(h) Investments:

i. Investments that are readily realizable and 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.

ii. Current investments are carried at lower of cost and fair value determined on individual investment basis.

iii. Long-term investments are carried at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

iv. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged to or credited to the Statement of Profit and Loss.

(i) Inventories:

i. Raw materials, stores, spares and consumables are valued at lower of cost, calculated on first-in-first-out (FIFO) basis. Items held for use in the production of inventories are not written down below cost if the finished product in which these will be incorporated are expected to be sold at or above cost.

ii. Finished goods and work-in-progress are valued at lower of cost and net realizable value except for Byproducts and Scrap which are valued at net realizable value. Cost includes materials, labor and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a First-in-First-out (FIFO) basis.

iii. Trading goods are valued at lower of cost and net realizable value.

iv. Net realizable value is the estimated selling price in the ordinary course of business, reduced by the estimated costs of completion and costs to effect the sale.

(j) Employee benefits:

i. Short-term benefits:

Short-term benefits are charged off to the Statement of Profit and Loss at the undiscounted amount in the year in which the services have been rendered.

ii. Long-term benefits:

a). The Contributions to Provident Fund and Employee State Insurance Schemes, which are defined contributions schemes, to the relevant funds administered and managed by the Government of India are charged off to Statement of Profit and Loss as and when incurred. The Company has no further obligations under these plans beyond its monthly contributions.

b). Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

c). Leave Encashment Benefit: The Company records its unveiled leave liability based on actuarial valuation using projected unit credit method. Actuarial gains / losses arising during the year are recognized in Statement of Profit and Loss.

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

(k) Foreign exchange transactions:

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 foreign currency at the date of the transaction.

ii. Conversion: Foreign currency monetary items are reported at year-end rates. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

iii. Exchange difference: Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.

iv. Forward exchange contracts not intended for trading purpose: In case of forward exchange contracts, difference between forward rate and the exchange rate on the date of transaction is recognized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.

(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 readily measured.

i. Sales:

Revenue from sale of goods is recognized when significant risks and rewards in respect of ownership of products are transferred to the customers. Gross sales includes excise duty and adjustments for price variation.

Revenue from product sales is stated exclusive of returns, sales tax and applicable trade discounts and allowances.

ii. Interest:

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

iii. Dividend:

Dividend is recognized when the shareholders'' right to receive payment is established by the Balance Sheet date.

iv. Service income is recognized as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(m) Leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the less or are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term.

(n) Taxes on Income:

i Tax expense or saving is the aggregate of Current Year Tax, Deferred Tax charged or credited to the Statement of Profit and Loss for the year.

ii. Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the company under the Income Tax Act, 1961 .The Company also provides for such disallowances made on completion of assessment pending appeals, as considered appropriate depending on merits of each case.

iii. Deferred tax:

Deferred Income Taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax Assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all Deferred Tax Assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the company is entitled to tax holiday under Income tax Act, 1961 no deferred tax is recognized in respect of timing differences which reverse during the tax holiday period, to the extent company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which timing difference originate.

Unrecognized Deferred Tax Assets of earlier years are reassessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such Deferred Tax Assets can be realized.

The carrying amount of Deferred Tax Assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a Deferred Tax Asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which Deferred Tax Asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

iv. Minimum Alternate Tax (MAT) / MAT credit entitlement:

MAT credit is recognized as an Asset only when and to the extent there is convincing evidence that the Company will pay normal tax during the specified year. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

(o) Proposed /Interim Dividend:

Dividend as proposed, if any, by the Board of Directors is accounted in the books of account, pending approval at the Annual General Meeting.

(p) Provisions:

A provision is recognized when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(q) Borrowing Costs:

Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to acquisition or construction of Fixed Assets which necessarily take a substantial period of time to get ready frothier intended use, incurred till the time of commencement of commercial production or their intended use are capitalized. All other borrowing costs are expensed in the period they occur, (r) Earnings Per Share:

i. The basic Earnings Per Share (EPS) 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.

ii. Diluted 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 as adjusted for the effects of all dilutive potential Equity Shares.

(s) Cash and Cash Equivalents:

Cash and cash equivalents for the purpose of Cash Flow Statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

(t) 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 which are possible or present obligations that may probably will not require outflow of resources are not recognized but are disclosed in the Notes to the financial statements. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2012

(a) Accounting convention:

The financial statements are prepared under the historical cost convention on an accrual basis of accounting and in accordance with notified Accounting Standards issued by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956 and generally accepted accounting principles in India.

(b) Use of Estimates:

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

(c) Fixed Assets:

i. Fixed assets are stated at cost of acquisition inclusive of freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT / VAT credit availed against tax and cess paid on such items.

ii. Expenditure during construction period is treated as un-allocated expenditure pending capitalisation and the same is allocated to the respective fixed assets on commencement of commercial production.

iii. Blast Furnace relining is capitalised. The written down value of the asset consisting of lining / relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

(d) Depreciation:

i. Depreciation is provided on fixed assets used during the year under Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956 excepting Blast Furnace lining/relining at Haresamudram. Depreciation on Blast Furnace lining/relining is provided on straight line method at an accelerated rate of 33.33% per annum considering the estimated useful life of three years.

ii. Depreciation is provided at one hundred per cent for assets costing less than A 5,000/-.

iii. Depreciation on fixed assets used for the project under construction is included under Unallocated Expenditure Pending Capitalisation.

(e) Excise Duty:

Excise duties recovered are included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from Gross Sales. The value of closing inventory of finished goods includes excise duty paid/payable on such stocks.

(f) Investments:

i. Investments are classified into short-term and long-term investments.

ii. Short-term investments are valued at lower of cost and fair value.

iii. Long-term investments are valued at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

iv. On disposal of an investment , the difference between its carrying amount and net disposal proceeds is charged to or credit to the Statement of Profit and Loss.

(g) Inventories:

i. Inventories are valued at cost and net realisable value which ever is lower except for by-product and scrap. By-product and Scrap are valued at net realisable value. Cost is determined using first-in-first-out (FIFO) method.

ii. Stationery, medical and canteen expenses are charged off to the revenue at the time of purchase.

(h) Employee benefits:

i. Short-term benefits:

Short-term benefits are charged off to the Statement of Profit and Loss at the undiscounted amount in the year in which the services have been rendered.

ii. Long-term benefits:

a) The contributions to Provident Fund and Employee State Insurance schemes, which are defined contributions schemes, to the relevant funds administered and managed by the Central Government of India are charged off to Statement of Profit and Loss as and when incurred. The Company has no further obligations under these plans beyond its monthly contributions.

b) Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to Statement of Profit and Loss.

c) Leave Encashment Benefit: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

(i) Foreign Exchange Transactions:

i. Transactions in foreign exchange, other than those covered by forward contracts are accounted for at the exchange rates prevailing on the date of transactions. Exchange differences, be it gain or loss, arising on foreign currency transactions settled during the year are recognised in the Statement of Profit and Loss.

ii. Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date other than those covered by forward contracts are translated at the year end rates. The resultant exchange differences are recognised in the Statement of Profit and Loss.

iii. Non-monetary assets and liabilities are recorded at the rates prevailing on the date of the transaction.

iv. Forward contracts are being entered into to mitigate the foreign currency risk of the underlying outstanding at the Balance Sheet date and also to hedge the foreign currency risk of firm commitments or highly probable forecast transactions.

In case of forward contracts not intended for trading or speculative purposes, the premium or discount on all such contracts is amortised as income or expense over the life of the contract. Any profit or loss arising on cancellation or renewal of forward contracts is recognised as income or expense for the period. The exchange differences , consisting of the difference between (a) the foreign currency amount of the contract translated at the exchange rate at the reporting date or settlement date where the transaction is settled during the reporting period (b) the same foreign currency amount translated at the latter of the date of inception of the forward exchange contract and the last reporting date, are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

v. In case of other forward contracts, the gain or loss computed considering the exchange difference between the forward rate available at the reporting date for the remaining maturity of the contract and the contracted forward rate is recognised as income or expense in the Statement of Profit and Loss.

(j) 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 readily measured.

i. Sales:

Gross sales includes excise duty and adjustments for price variation.

ii. Interest:

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

iii. Dividend:

Revenue is recognised when the shareholders'right to receive payment is established by the Balance Sheet date.

(k) Operating leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight- line basis over the lease term.

(l) Taxes on income:

Tax expense or saving is the aggregate of current year tax, and deferred tax charged or credited, as the case may be to the Statement of Profit and Loss for the year.

i. Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961.

ii. Deferred tax:

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised and carried forward only to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

iii. Minimum Alternate Tax (MAT) / MAT credit entitlement:

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal tax during the specified year. In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the statement of Profit and Loss and shown as MAT credit entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

(m) Dividends:

Dividends as proposed by the Board of Directors are accounted in the books of account, pending approval at the Annual General Meeting.

(n) Provisions:

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

(o) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time the asset is ready for its intended use. Other borrowing costs are recognised as expense for the period.

(p) Earning Per Share:

i. Basic Earnings Per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of Equity Shares during the year.

ii. Diluted Earnings per Share are calculated by dividing the net profit or loss for the year by the weighted average number of Equity Shares outstanding during the year as adjusted for the effects of all dilutive potential Equity Shares.

(q) Cash and Cash Equivalents:

Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short- term investments with an original maturity of three months or less.

(r) Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities which are possible or present obligations that may probably will not require outflow of resources are not recognised but are disclosed in the Notes to the financial statements. Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2011

A) Fixed Assets:

i) Fixed assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition.

ii) Expenditure during construction period is treated as unallocated expenditure and tine same is allocated to the respective fixed assets on commencement of commercial production.

iii) Blast Furnace relining is capitalised. The written down value of the asset consisting of lining/ relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

b) Depreciation:

i) Depreciation is provided on fixed assets used during the year under Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956 excepting Blast Furnace lining/ relining at Haresamudram. Depreciation on Blast Furnace lining/relining is provided on straight line method at an accelerated rate of 33.33% per annum considering the estimated useful life of three years.

ii) Depreciation is provided at one hundred per cent for assets costing less than Rs. 5,0007 .

c) Excise Duty:

Excise duties recovered are included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. The value of closing stock of finished goods includes excise duty paid/payable on such stocks.

d) Investments:

Investments made by the Company in various securities are primarily meant to be held over long term period and are valued at cost. Provision is made for decline, other than temporary, in the value of long term investments.

e) Inventories:

i) Inventories are valued at cost and net realisable value which ever is lower except for by-product and scrap. By-product and scrap are valued at net realisable value. Cost is determined using first-in-first-out (FIFO) method.

ii) Stationery, medical and canteen expenses are charged off to the revenue at the time of purchase.

f) Retirement Benefits;

A. Defined Contribution Plans:

Provident Fund: Contribution to Provident Fund is made at the prescribed rates to the Employees Provident Fund Scheme by the Central Government and is charged to the Profit and Loss Account.

B. Defined Benefit Plans:

i). Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per Projected unit credit method. Actuarial gains/losses are immediately taken to Profit and Loss Account.

ii) Leave Encashment Benefit: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

C. Short Term Employee benefits:

Short term employee benefits are recognised as an expense as per the Company's scheme based on expected obligation on undiscounted basis.

D. State Plans:

Employers'contribution to Employee's State Insurance is charged to Profit and Loss Account.

g) Foreign Exchange Transactions:

Transactions in foreign exchange, other than those covered by forward contracts are accounted for at the exchange rates prevailing on the date of transactions. Assets and Liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

h) Forward Exchange Contracts not intended for trading or speculation purposes:

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract and the same is recognised in statement of profit and loss. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for that year.

i) 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 readily measured.

i) Sales: Gross sales includes excise duty and adjustments for price variation.

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

iii) Dividend: Revenue is recognised when the shareholders' right to receive payment is established by the Balance Sheet date.

j) Accounting Convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

k) Operating leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straighMine basis over the lease term.

I) Taxation:

Tax expense or saving is the aggregate of Current Year Tax, and Deferred Tax charged or credited, as the case may be to the Profit and Loss Account for the year.

i) Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961.

ii) Deferred Tax:

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

iii) Minimum Alternate Tax (MAT) Credit Entitlement:

In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

m) Dividends:

Dividends as proposed by the Board of Directors are accounted in the books of account, pending approval at the Annual General Meeting.

n) Contingent Liabilities:

Contingent Liabilities are disclosed by way of Notes on the Balance Sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the Balance Sheet.

o) Provisions:

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to refiect the current best estimates.

p) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time the asset is ready for its intended use.

q) Earnings Per Share:

Basic Earnings Per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of Equity Shares during the year.

Diluted Earnings per Share are calculated by dividing the net profit or loss for the year by the weighted average number of Equity Shares outstanding during the year as adjusted for the effects of all dilutive potential Equity Shares.

r) Use of Estimates:

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


Mar 31, 2010

A) Fixed Assets:

i) Fixed assets are stated at cost of acquisition inclusive of inland freight, duties and taxes and incidental expenses related to acquisition.

ii) Expenditure during construction period is treated as un-allocated expenditure and the same is allocated to the respective fixed assets on commencement of commercial production.

iii) Blast Furnace relining is capitalised. The written down value of the asset consisting of lining/relining expenditure embedded in the cost of the furnace is written off in the year of fresh relining.

b) Depreciation:

i) Depreciation is provided on fixed assets used during the year under Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956 excepting Blast Furnace lining/relining at Haresamudram. Depreciation on Blast Furnace lining/relining is provided on straight line method at an accelerated rate of 23.75% per annum considering the estimated useful life of four years.

ii) Depreciation is provided at one hundred per cent for assets costing less than Rs. 5,000/-.

c) Excise Duty:

Excise duties recovered are included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. The value of closing stock of finished goods includes excise duty paid/payable on such stocks.

d) Investments:

Investments made by the Company in various securities are primarily meant to be held over long term period and are valued at cost. Provision is made for decline, other than temporary, in the value of long term investments.

e) Inventories:

i) Inventories are valued at cost and net realisable value which ever is lower except for by-product and scrap. By-product and scrap are valued at net realisable value. Cost is determined using first-in-first-out (FIFO) method.

ii) Stationery, medical and canteen expenses are charged off to the revenue at the time of purchase.

f ) Retirement Benefits:

A. Defined Contribution Plans:

Provident Fund: Contribution to Provident Fund is made at the prescribed rates to the Employees Provident Fund Scheme by the Central Government and is charged to the Profit and Loss Account.

B. Defined Benefit Plans:

i) Gratuity: Accruing liability towards gratuity is provided on the basis of actuarial valuation made by an independent Actuary. The actuarial valuation is done as per projected unit credit method. Actuarial gains/losses are immediately taken to Profit and Loss Account.

ii) Leave Encashment Benefit: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

C. Short Term Employee benefits:

Short term employee benefits are recognised as an expense as per the Companys scheme based on expected obligation on undiscounted basis.

D. State Plans:

Employers contribution to Employees State Insurance is charged to Profit and Loss Account.

g) Foreign Exchange Transactions:

Transactions in foreign exchange, other than those covered by forward contracts are accounted for at the exchange rates prevailing on the date of transactions. Assets and Liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

h) Forward Exchange Contracts not intended for trading or speculation purposes:

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract and the same is recognised in statement of profit and loss. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for that year.

i) 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 readily measured.

i) Sales: Gross sales includes excise duty and adjustments for price variation.

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

iii) Dividend: Revenue is recognised when the shareholders right to receive payment is established by the Balance Sheet date.

j) Accounting Convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

k) Operating leases:

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

l) Taxation:

Tax expense or saving is the aggregate of Current Year Tax, and Deferred Tax charged or credited, as the case may be to the Profit and Loss Account for the year.

i) Current year charge:

The provision for taxation is made based on an estimate of assessable income determined by the Company under the Income Tax Act, 1961.

ii) Deferred Tax:

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

iii) Minimum Alternate Tax (MAT) Credit Entitlement:

In the year in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Profit and Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.

m) Dividends:

Dividends as proposed by the Board of Directors are accounted in the books of account, pending approval at the Annual General Meeting.

n) Contingent Liabilities:

Contingent Liabilities are disclosed by way of Notes on the Balance Sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the Balance Sheet.

o) Provisions:

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

p) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time the asset is ready for its intended use.

q) Earnings Per Share:

Basic Earnings Per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of Equity Shares during the year.

Diluted Earnings Per Share are calculated by dividing the net profit or loss for the year by the weighted average number of Equity Shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares.

r) Use of Estimates:

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

 
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