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Accounting Policies of Steelco Gujarat Ltd. Company

Mar 31, 2015

1 Basis of Accounting:

The financial statements are prepared under "historical cost convention" on a going concern assumption (as detailed in note no.35) except in case of certain revalued fixed assets, on "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted in India and comply with Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government to the extent applicable and with the applicable provisions of the Companies Act, 1956 and the provisions of the Companies Act, 2013, which are made effective from and after 12th September. 2013. The company has consistently applied the Accounting Policies in preparation and presentation of the financial statements.

2 Use of Estimates:

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amount of income and expenses during the Year. Actual results/outcome could differ from these estimates. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Any revision to the accounting estimates is recognised prospectively in the year in which such estimates are actually materialized.

3 Fixed Assets and Depreciation:

A All Fixed Assets are valued at cost less depreciation / amortization. Cost [net of Cenvat credit available] comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Financing costs directly attributable to the construction of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use. Cost of addition or extension to an existing asset, which is of a capital nature and/or which becomes an integral part of the existing asset is capitalised and added to the gross book value of that asset.

All fixed assets are stated at their Historical Costs as against the revalued amounts at which they were stated upto 31st March, 2014.

B Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II except in cases of Buildings and Plant and Machineries, where the estimated useful life has been estimated at a longer period than that is specified in Schedule - II based on an external technical assessment and evaluation independent technical assessors. Accordingly the unamortised carrying value is being depreciated / amortised over the revised/remaining useful lives.

C The written down value of fixed Assets whose lives have expired as at 1st April 2014 have been adjusted in the Profit and Loss Account after retaining its residual value.

D Leasehold Land is being amortised over the life of the lease.

E Depreciation is now provided on a Straight Line basis for all assets as against the policy of providing on written down value basis for some assets and Straight line basis for others.

F For determining the appropriate depreciation rates, plant and machinery falling under the category of continuous process plant has been identified on the basis of technical opinion obtained.

G Depreciation on additions to and disposals of the Fixed Assets during the period has been provided on pro-rata basis, according to the period each such asset was used during the period except in case of low value items not exceeding Rs. 10,000/-, which are depreciated fully in the period of addition.

H Depreciation on addition or extension to the existing Fixed Asset, which becomes integral part of that asset is provided on pro-rata basis according to the remaining useful life of the existing asset.

4 Impairment of Assets:

A 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 recoverable amount of the asset, being higher of the net selling price and value in use. Value in use is determined from the present value of estimated future cash flows from continuing use of such assets discounted at weighted average cost of capital.

B If recoverable amount of such asset or the recoverable amount of the cash generating unit to which such asset belong is found to be lower than its carrying amount, then carrying amount of such asset is reduced to the extent of its recoverable amount. Such reduction is treated as impairment loss and is charged to the statement of Profit and Loss.

C After impairment of an asset, the depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

D At a balance sheet date, if there is an indication that a previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount and previously recognised impairment loss is reversed.

5 Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition/ construction of qualifying Fixed Assets are capitalized as a part of the cost of the respective asset upto the date when such assets are ready for their intended use and borrowing costs other than these costs are charged to Profit and Loss Account.

6 Expenditure during the Construction Period:

The expenditure incidental to the expansion / new projects is carried forward as "Pre-operative and Project expenditure pending allocation/capitalization" and are allocated to Fixed Assets in the period of commencement of the commercial production / respective assets being put to use.

7 Inventories:

A Inventories consisting of Raw Materials, Work-in-Process and Finished Goods are valued at lower of cost and net realizable value.

B For this purpose, the cost of raw material is determined using quarterly moving average cost method (net of Cenvat credit availed).

C Cost of finished goods and Work-in-process is determined by taking average material costs ( net of Cenvat credit availed) and other appropriate and relevant manufacturing overheads.

D Inventories consisting of Stores, Consumables, Spare Parts, and Packing Materials etc. are valued at lower of cost and net realizable value.

For this purpose direct costs, and appropriate relevant overheads are apportioned using the FIFO method. 8 Revenue Recognition:

A Revenue is recognised to the extent it is possible that economic benefits will flow to the company and the revenue can be reliably measured and there is a reasonable certainty regarding ultimate collection.

B Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated exclusive of Sales Tax / VAT, trade discounts and sales returns.

C Export benefits / incentives are accounted on accrual basis in accordance with various government schemes in respect thereof and are shown under"Other Operating Revenue".

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

E Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

9 Foreign Currency Transactions:

A The transactions in foreign currencies are converted into Indian Rupees at the rates of exchange prevailing on the date of transactions.

B The Company is exposed to the risks of foreign currency fluctuations on foreign currency assets, liabilities and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rates fluctuations by using various risk mitigation alternatives available. The company enters into forward contracts where the counter parties are banks. The gain/loss on the contracts settled during the year is recognised in the Profit and Loss Account. The outstanding forward contracts meant for hedging the receivable / payable outstanding as at balance sheet date are marked to market and resultant loss / gain is recognised in Profit and Loss Account. However, the gain or loss on forward contracts outstanding as at the Balance Sheet date meant for hedging the currency fluctuation risks in respect of the forecasted cash flows resulting from sales expected during the subsequent period based on the orders on hand as on the Balance Sheet date is computed taking the difference between contracted rate and the spot rate on the balance sheet date. Such gain/loss will be recognised in the statement of the Profit and Loss Account of the period during which such hedged transaction are actually crystallized. Such loss/gain would be contra set off by the corresponding effect on actual sales realisation.

C The balances in Current Assets and Current Liabilities in foreign currencies at the date of Balance Sheet have been converted into Indian Rupees at the rate of exchange prevalent on that date. The resultant net gain/loss arising out of such foreign exchange translations is taken to Profit and Loss Account except in respect of such differences related to acquisition of fixed assets from a country outside India which are capitalized as a part of cost of respective fixed asset.

10 Excise Duty:

Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

11 Employee Benefits:

A Defined Contribution Plans:

The Company contributes on a defined contribution basis to Employees' Provident Fund towards post employment benefits, all of which are administered by the respective Government authorities, and it has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

B Defined Benefit Plans:

The Superannuation scheme is administered through the Life Insurance Corporation of India (LIC). The liability for the defined benefit plan is funded by way of payment of premium as determined by the LIC of India and the same is administered by LIC and the Company has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

The Company administers the gratuity scheme being unfunded liability. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

C Leave Entitlements (Long Term Employee Benefit):

The employees of the company are entitled to leave as per the leave policy of the Company. The unfunded liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary, which is calculated using projected unit credit method as at the year end and charged to the Profit and Loss Account.

12 Provision for Bad and Doubtful Debts/Advances:

Provision is made for Bad & Doubtful Debts / Advances which in the opinion of the management is considered doubtful of recovery.

13 Taxes on Income:

A Tax expenses comprise of current and deferred tax.

B Current tax is measured at the amount expected to be paid on the basis of relief and deductions available in accordance with the provisions of Indian Income Tax Act, 1961 and includes Minimum Alternate Tax ("MAT") paid by the company on book profits in accordance with the provisions of the Income Tax Act, 1961.

C MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period and will be able to set off such MAT credit entitlement.

D Deferred income tax reflects the impact of the current year reversible timing differences between the taxable income and accounting income for the Year and reversal of timing differences of the earlier Year.

Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

14 Leases:

Leases are classified as operating leases where the lessor effectively retains substantially all the risks and benefits of the whole ownership of the leased assets. Operating lease payments are recognized as expenses in the statement of Profit and Loss as and when paid.

15 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made.

Contingent liability is disclosed for:

A Possible obligations which will be confirmed by future events not wholly within the control of the Company, or

B Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.


Mar 31, 2014

1 Basis of Accounting:

The financial statements are prepared under "historical cost convention" on a going concern assumption (as detailed in note no.35) except in case of certain revalued fixed assets, on "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted in India and comply with Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government to the extent applicable and with the applicable provisions of the Companies Act, 1956 and the provisions of the Companies Act, 2013, which are made effictive from 12th September. 2013. The company has consistently applied the Accounting Policies in preparation and presentation of the financial statements.

2 Use of Estimates:

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amount of income and expenses during the Year.

Actual results/outcome could differ from these estimates. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Any revision to the accounting estimates is recognised prospectively in the year in which such estimates are actually materialized.

3 Fixed Assets and Depreciation:

A All Fixed Assets are valued at cost less depreciation / amortization. Cost [net of Cenvat credit available] comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Financing costs directly attributable to the construction of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use.

Cost of addition or extension to an existing asset, which is of a capital nature and/or which becomes an integral part of the existing asset is capitalised and added to the gross book value of that asset.

Certain assets were revalued as on 31st March, 2011 and resultant surplus has been added to the cost of the assets with a corresponding credit to Revaluation Reserve Account. [Refer Note No. 10 (1) to the financial statements.]

B Leasehold Land is being amortised over the life of the lease.

C Depreciation on Buildings & Electrical Installations, Furniture, Fixtures, Office Equipment and Vehicles has been provided on Written Down Value Method, as per Section 205(2) (a) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto.

D Depreciation on all other assets has been provided on Straight Line Method, as per Section 205(2)(b) of the Companies Act, 1956, at the rates prescribed in Schedule XIV thereto.

For determining the appropriate depreciation rates, plant and machinery falling under the category of continuous process plant has been identified on the basis of technical opinion obtained.

E Depreciation on additions to and disposals of the Fixed Assets during the period has been provided on pro-rata basis, according to the period each such asset was used during the period except in case of low value items not exceeding Rs. 10,000/-, which are depreciated fully in the period of addition.

F Depreciation on addition or extension to the existing Fixed Asset, which becomes integral part of that asset is provided on pro-rata basis according to the remaining useful life of the existing asset.

4 Impairment of Assets:

A 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 recoverable amount of the asset,being higher of the net selling price and value in use.

Value in use is determined from the present value of estimated future cash flows from continuing use of such assets discounted at weighted average cost of capital.

B If recoverable amount of such asset or the recoverable amount of the cash generating unit to which such asset belong is found to be lower than its carrying amount, then carrying amount of such asset is reduced to the extent of its recoverable amount.

Such reduction is treated as impairment loss and is charged to the statement of Profit and Loss.

C After impairment of an asset, the depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

D At a balance sheet date, if there is an indication that a previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount and previously recognised impairment loss is reversed.

5 Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition/construction of qualifying Fixed Assets are capitalized as a part of the cost of the respective asset upto the date when such assets are ready for their intended use and borrowing costs other than these costs are charged to Profit and Loss Account.

6 Expenditure during the Construction Period:

The expenditure incidental to the expansion / new projects is carried forward as "Pre-operative and Project expenditure pending allocation/capitalization" and are allocated to Fixed Assets in the period of commencement of the commercial production / respective assets being put to use.

7 Inventories:

A Inventories consisting of Raw Materials, Work-in-Process and Finished Goods are valued at lower of cost and net realizable value.

B For this purpose, the cost of raw material is determined using quarterly moving average cost method (net of Cenvat credit availed).

C Cost of finished goods and Work-in-process is determined by taking quarterly moving average material costs (net of Cenvat credit availed) and other appropriate and relevant manufacturing overheads.

D Inventories consisting of Stores, Consumables, Spare Parts, and Packing Materials etc. are valued at lower of cost and net realizable value. For this purpose direct costs, and appropriate relevant overheads are apportioned using the FIFO method.

8 Revenue Recognition:

A Revenue is recognised to the extent it is possible that economic benefits will flow to the company and the revenue can be reliably measured and there is a reasonable certainty regarding ultimate collection.

B Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated exclusive of Sales Tax / VAT, trade discounts and sales returns.

C Export benefits / incentives are accounted on accrual basis in accordance with various government schemes in respect thereof and are shown under"Other Operating Revenue".

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

E Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

9 Foreign Currency Transactions:

A The transactions in foreign currencies are converted into Indian Rupees at the rates of exchange prevailing on the date of transactions.

B The Company is exposed to the risks of foreign currency fluctuations on foreign currency assets, liabilities and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rates fluctuations by using various risk mitigation alternatives available. The company enters into forward contracts where the counter parties are banks. The gain/loss on the contracts settled during the year is recognised in the Profit and Loss Account. The outstanding forward contracts meant for hedging the receivable / payable outstanding as at balance sheet date are marked to market and resultant loss / gain is recognised in Profit and Loss Account. However, the gain or loss on forward contracts outstanding as at the Balance Sheet date meant for hedging the currency fluctuation risks in respect of the forecasted cash flows resulting from sales expected during the subsequent period based on the orders on hand as on the Balance Sheet date is computed taking the difference between contracted rate and the spot rate on the balance sheet date. Such gain/loss will be recognised in the statement of the Profit and Loss Account of the period during which such hedged transaction are actually crystallized. Such loss/gain would be contra set off by the corresponding effect on actual sales realisation.

C The balances in Current Assets and Current Liabilities in foreign currencies at the date of Balance Sheet have been converted into Indian Rupees at the rate of exchange prevalent on that date. The resultant net gain/loss arising out of such foreign exchange translations is taken to Profit and Loss Account except in respect of such differences related to acquisition of fixed assets from a country outside India which are capitalized as a part of cost of respective fixed asset.

10 Excise Duty:

Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

11 Employee Benefits:

A Defined Contribution Plans:

The Company contributes on a defined contribution basis to Employees'' Provident Fund towards post employment benefits, all of which are administered by the respective Government authorities, and it has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

B Defined Benefit Plans:

The Superannuation scheme is administered through the Life Insurance Corporation of India (LIC). The liability for the defined benefit plan is funded by way of payment of premium as determined by the LIC of India and the same is administered by LIC and the Company has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

The Company administers the gratuity scheme being unfunded liability. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

C Leave Entitlements (Long Term Employee Benefit):

The employees of the company are entitled to leave as per the leave policy of the Company. The unfunded liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary, which is calculated using projected unit credit method as at the year end and charged to the Profit and Loss Account.

12 Provision for Bad and Doubtful Debts/Advances:

Provision is made for Bad & Doubtful Debts / Advances which in the opinion of the management is considered doubtful of recovery.

13 Taxes on Income:

A Tax expenses comprise of current and deferred tax.

B Current tax is measured at the amount expected to be paid on the basis of relief and deductions available in accordance with the provisions of Indian Income Tax Act, 1961 and includes Minimum Alternate Tax ("MAT") paid by the company on book profits in accordance with the provisions of the IncomeTax Act, 1961.

C MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period and will be able to set off such MAT credit entitlement.

D Deferred income tax reflects the impact of the current year reversible timing differences between the taxable income and accounting income for the Year and reversal of timing differences of the earlier Year.

Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

14 Leases:

Leases are classified as operating leases where the lessor effectively retains substantially all the risks and benefits of the whole ownership of the leased assets. Operating lease payments are recognized as expenses in the statement of Profit and Loss as and when paid.

15 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made.


Mar 31, 2013

1 Basis of Accounting:

The financial statements are prepared under "historical cost convention" except in case of certai n revalued fixed assets, on "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted i n India and comply with Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government to the extent applicable and with the applicable provisions of the Companies Act, 1956. The Company has consistently applied the Accounting Policies in preparation and presentation of the financial statements.

2 Use of Estimates:

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amount of income and expenses during the year. Actual results/ outcome could differ from these estimates. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Any revision to the accounting estimates is recognised prospectively in the year in which such estimates are actually materialized.

3 Fixed Assets and Depreciation:

A All Fixed Assets are valued at cost less depreciation / amortization. Cost [net of Cenvat credit available] comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Financial costs directly attributable to the construction of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use.

Cost of addition or extension to an existing asset, which is of a capital nature and/or which becomes an integral part of the existing asset is capitalised and added to the gross book value of that asset.

Certain assets were revalued as on 31st March, 2011 and resultant surplus has been added to the cost of the assets with a corresponding credit to Revaluation Reserve Account. (Refer Note No. 10 (1) to the financial statements.

B Leasehold Land is being amortised over the life of the lease.

C Depreciation on Buildings & Electrical Installations, Furniture, Fixtures, Office Equipment and Vehicles has been provided on Written Down Value Method, as per section 205(2) (a) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto.

D Depreciation on all other assets has been provided on Straight Line Method, as per section 205(2)(b) of the Companies Act, 1956, at the rates prescribed in Schedule XIV thereto.

For determining the appropriate depreciation rates, plant and machinery falling under the category of continuous process plant has been identified on the basis of technical opinion obtained.

E Depreciation on additions to and disposals of the Fixed Assets during the period has been provided on pro-rata basis, according to the period each such asset was used except in case of low value items not exceeding Rs. 10,000/-, which are depreciated fully in the period of addition.

F Depreciation on addition or extension to the existing Fixed Asset which becomes integral part of that asset, is provided on pro-rata basis according to the remaining useful life of the existing asset.

4 Impairment of Assets:

A 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 recoverable amount of the asset, being higher of the net selling price and value in use.

Value in use is determined from the present value of estimated future cash flows from continuing use of such assets discounted at weighted average cost of capital.

B If recoverable amount of such asset or the recoverable amount of the cash generating unit to which such asset belong is found to be lower than its carrying amount, then carrying amount of such asset is reduced to the extent of its recoverable amount.

Such reduction is treated as impairment loss and is charged to the statement of Profit and Loss.

C After impairment of an asset, the depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

D At a balance sheet date, if there is an indication that a previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount and previously recognised impairment loss is reversed.

5 Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition / construction of qualifying Fixed Assets are capitalized as a part of the cost of the respective asset upto the date when such assets are ready for their intended use and borrowing costs other than these costs are charged to Profit and Loss Account.

6 Expenditure during the Construction Period:

The expenditure incidental to the expansion / new projects is carried forward as "Pre-operative and Project expenditure pending allocation / capitalization" and are allocated to Fixed Assets in the period of commencement of the commercial production.

7 Inventories:

A Inventories consisting of Raw Materials, Work-in-Process and Finished Goods are valued at lower of cost and net realizable value.

B For this purpose, the cost of raw material is determined using annual weighted average cost method (net of Cenvat credit availed).

C Cost of finished goods and Work-in-process is determined by taking annual weighted average material costs (net of Cenvat credit availed) and other appropriate and relevant manufacturing overheads.

D Inventories consisting of Stores, Consumables, Spare Parts and Packing Materials etc. are valued at lower of cost and net realizable value. For this purpose direct costs and appropriate relevant overheads are apportioned using the FIFO method.

8 Revenue Recognition:

A Revenue is recognised to the extent it is possible that economic benefits will flow to the company and the revenue can be reliably measured and there is a reasonable certainty regarding ultimate collection.

B Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated exclusive of Sales Tax / VAT, trade discounts and sales returns.

C Export benefits / incentives are accounted on accrual basis in accordance with various government schemes and are shown under "Other Operating Revenue".

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

E Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

9 Foreign Currency Transactions:

A The transactions in foreign currencies are converted into Indian Rupees at the rates of exchange prevailing on the date of transactions.

B The Company is exposed to the risks of foreign currency fluctuations on foreign currency assets, liabilities and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rates fluctuations by following established risk management policies. The Company enters into forward contracts where the counter parties are banks. The gain/loss on the contracts settled during the year is recognised in the Profit and Loss Account. The outstanding forward contracts meant for hedging the receivable outstanding as at balance sheet date are marked to market and resultant loss/gain is recognised in Profit and Loss Account. However, the gain or loss on forward contracts outstanding as at the Balance Sheet date meant for hedging the currency fluctuation risks in respect of the forecasted cash flows resulting from sales expected during the subsequent period based on the orders on hand as on the Balance Sheet date is computed taking the difference between contracted rate and the spot rate on the balance sheet date. Such gain/loss will be recognised in the statement of the Profit and Loss Account of the period during which such hedged transactions are actually crystallized. Such loss/gain would be contra set off by the corresponding effect on actual sales realisation.

C The balances in Current Assets and Current Liabilities in foreign currencies at the date of Balance Sheet have been converted into Indian Rupees at the rate of exchange prevalent on that date. The resultant net gain/loss arising out of such foreign exchange translations is taken to Profit and Loss Account except in respect of such differences related to acquisition of fixed assets from a country outside India which are capitalized as a part of respective fixed asset.

10 Excise Duty:

Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

11 Employee Benefits:

A Defined Contribution Plans:

The Company contributes on a defined contribution basis to Employees''Provident Fund towards post em ployment benefits, all of which are administered by the respective Government authorities, and it has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

B Defined Benefit Plans:

The Superannuation scheme is administered through the Life Insurance Corporation of India (LIC). The liability for the defined benefit plan is funded by way of payment of premium as determined by the LIC of India and the same is administered by LIC and the Company has no further obligation beyond making its contribution, which is expensed in the period to which it pertains.

The Company administers the gratuity scheme being unfunded liability. The liability for defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

C Leave Entitlements (Long Term Employee Benefit):

The employees of the company are entitled to leave as per the leave policy of the Company. The unfunded liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary, which is calculated using projected unit credit method as at the year end and charged to the Profit and Loss Account.

12 Provision for Bad and Doubtful Debts/Advances:

Provision is made for Bad & Doubtful Debts / Advances which in the opinion of the management is considered doubtful of recovery.

13 Taxes on Income:

A Tax expenses comprise of current and deferred tax.

B Current tax is measured at the amount expected to be paid on the basis of relief and deductions available in accordance with the provisions of Indian IncomeTax Act, 1961 and includes Minimum Alternate Tax ("MAT") paid by the Company on book profits in accordance with the provisions of the IncomeTax Act, 1961.

C MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period and will be able to set off such M AT credit entitlement.

D Deferred income tax reflects the impact of the current year reversible timing differences between the taxable income and accounting income for the year and reversal of timing differences of the earlier year.

Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date.

Deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

14 Leases:

Leases are classified as operating leases where the lessor effectively retains substantially all the risks and benefits of the whole ownership of the leased assets. Operating lease payments are recognized as expenses in the statement of Profit and Loss as and when paid.

15 Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made.

Contingent liability is disclosed for:

A Possible obligations which will be confirmed by future events not wholly within the control of the Company, or

B Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.


Mar 31, 2011

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared under "historical cost convention" except in case of certain fixed assets, which are revalued during the year, on "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted in India and comply with Accounting Standards prescribed in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government to the extent applicable and with the applicable provisions of the Companies Act, 1956. The company has consistently applied the Accounting Policies.

B. USE OF ESTIMATES:

The presentation of financial statements in conformity with the generally accepted accounting principles requires management lo make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amount of income and expenses during the reporting year. Actual results/outcome could differ from these estimates. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Any revision to the accounting estimates is recognised prospectively in the period in which such results are materialized.

C. FIXED ASSETS:

All Fixed Assets are valued at cost less depreciation / amortization. Cost [net of Cenvat credit available] comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Financing costs directly attributable to the construction of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use.

Cost of addition or extension to an existing asset, which is of a capital nature and/or which becomes an integral part of the existing asset is capitalised and added to the gross book value of that asset.

Certain assets are revalued as on 31st March, 2011 and resultant surplus has been added to the cost of the assets with a corresponding credit to Revaluation Reserve Account. (Refer Note No. II - (1)).

D. DEPRECIATION:

(i) Leasehold Land is being amortised over the life of the lease.

(ii) Depreciation on Buildings & Electrical Installations, Furniture, Fixtures, Office Equipment and Vehicles has been provided on Written Down Value Method, as per Section 205(2) (a) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto.

(iii) Depreciation on all other assets has been provided on Straight Line Method, as per Section 205(2)(b) of the Companies Act, 1956, at the rates prescribed in Schedule XIV thereto.

For determining the appropriate depreciation rates, plant and machinery falling under the category of continuous process plant has been identified on the basis of technical opinion obtained.

(iv) Depreciation on additions to and disposals of the Fixed Assets during the year has been provided on pro-rata basis, according to the period each such asset was used during the year except in case of low value items not exceeding Rs. 5000/-, which are depreciated fully in the year of addition.

(v) Depreciation on addition or extension to the existing Fixed Asset, which becomes integral part of that asset is provided on pro rata basis according to the remaining useful life of the existing asset.

E. BORROWING COSTS:

Borrowing costs that are directly attributable to the acquisition / construction of qualifying Fixed Assets are capitalized as a part of the cost of the respective asset upto the date when such assets are ready for their intended use and borrowing costs other than these costs are charged to Profit and Loss Account.

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 recoverable amount of the asset being higher of the net selling price and value in use. Value in use is determined from the present value of estimated future cash flows from continuing use of such assets discounted at weighted average cost of capital.

If recoverable amount of such asset or the recoverable amount of the cash generating unit to which such asset belong is found to be lower than its carrying amount, then carrying amount of such asset is reduced to the extent of its recoverable amount. Such reduction is treated as impairment loss and is charged to the Profit and Loss Account.

After impairment of an asset, the depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

At a balance sheet date, if there is an indication that a previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount and previously recognised impairment loss is reversed.

G. EXPENDITURE DURING THE CONSTRUCTION PERIOD:

The expenditure incidental to the expansion / new projects is carried forward as "Pre-operative and Project expenditure pending allocation/capitalization and are allocated to Fixed Assets in the year of commencement of the Commercial production.

H. INVENTORIES:

Inventories consisting of Raw Materials, Work-in-Process and Finished Goods are valued at lower of cost and net realizable value.

For this purpose, the cost of raw material is determined using monthly moving average cost method (net of Cenvat availed).

Cost of finished goods and Work-in-process is determined by taking monthly moving average material costs (net of Convat availed) and other appropriate and relevant manufacturing overheads.

Inventories consisting of Stores, Consumables, Spare Parts, and Packing Materials etc. are valued at lower of cost and net realizable value. For this purpose direct costs and appropriate relevant overheads are apportioned using the FIFO method.

I. REVENUE RECOGNITION:

(i) Revenue is recognised to the extent it is possible that economic benefits will flow to the company and the revenue can be reliably measured and there is a reasonable certainty regarding ultimate collection.

(ii) Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated exclusive of Sales Tax / VAT, trade discounts and sales returns.

(iii) Export benefits / incentives are accounted on accrual basis in accordance with various government schemes in respect thereof and are shown under "Other Income".

(iv) Interest income is recognised on a time proportionate basis taking into account the amount outstanding and the rate applicable.

(v) Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

J. EXCISE DUTY:

Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

K. SEGMENT REPORTING:

The Company identifies business segment as primary, taking into account the nature of products and services, risks and returns, the organisation structure and the internal reporting system.

The geographical segment is demarcated into Indian and Overseas markets.

L. FOREIGN CURRENCY TRANSACTIONS:

(i) The transactions in foreign currencies are converted into Indian Rupees at the rates of exchange prevailing on the date of transactions.

(ii) The Company is exposed to the risks of foreign currency fluctuations on foreign currency assets, liabilities and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rates fluctuations by following established risk management policies. The company enters into forward contracts where the counter parties are banks. The gain/loss on the contracts settled during the year is recognised in the Profit and Loss Account. The outstanding forward contracts meant for hedging the receivable outstanding as at balance sheet date are marked to market and resultant loss/gain is recognised in Profit and Loss Account. However, the gain or loss on forward contracts outstanding as at the Balance Sheet date meant for hedging the currency fluctuation risks in respect of the forecasted cash flows resulting from sales expected during the subsequent period based on the orders on hand as on the Balance Sheet date is computed taking the difference between contracted rate and the spot rate on the balance sheet date. Such gain/loss will be recognised in the statement of the Profit and Loss Account of the period during which such hedged transaction are actually crystallized. Such loss/gain would be contra set off by the corresponding effect on actual sales realisation.

(iii) The balances in Current Assets and Current Liabilities in foreign currencies at the date of Balance Sheet have been converted into Indian Rupees at the rate of exchange prevalent on that date. The resultant net gain/loss arising out of such foreign exchange translations is taken to Profit and Loss Account except in respect of such differences related to acquisition of fixed assets from a country outside India which are capitalized as a part of respective fixed asset.

M. TAXES ON INCOME:

(i) Tax expense comprises current tax and deferred tax.

(ii) Current tax is measured at the amount expected to be paid on the basis of relief and deductions available in accordance with the provisions of Indian Income Tax Act, 1961.

(iii) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period.

(iv) Deferred income tax reflects the impact of the current year timing differences between the taxable income and accounting income for the year and reversal of timing differences of the earlier years.

Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

N. EMPLOYEE BENEFITS:

Defined Contribution Plans:-

The company contributes on defined contribution basis to Employee's Provident Fund towards post employment benefits, all of which are administered by the respective Government Authorities and it has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

Defined Benefit Plans:-

The Superannuation scheme is administered through the Life Insurance Corporation of India (LIC). The liability for the defined benefit plan is funded by way of payment of premium as determined by the LIC of India and the same is administered by LIC and the Company has no further obligation beyond making its contribution, which is expensed in the yearto which it pertains.

The Company administers the gratuity scheme being unfunded liability. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

Leave Entitlements (Long Term Employee Benefit):-

The employees of the company are entitled to leave as per the leave policy of the Company. The unfunded liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary, which is calculated using projected unit credit method as at the year end and charged to the Profit and Loss Account.

0. PROVISION FOR BAD AND DOUBTFUL DEBTS / ADVANCE:

Provision is made for Bad & Doubtful Debts / Advances which in the opinion of the management is considered doubtful of recovery.

P. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made.

Contingent liability is disclosed for:

(i) Possible obligations which will be confirmed by future events not wholly within the control of the Company, or

(ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made.

Contingent assets are not recognised in the financial statements since this may result in the recognition of income that may never be realized.




Mar 31, 2010

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements are prepared under "historical cost convention" on "Accrual Concept" of accountancy in accordance with the accounting principles generally accepted in India and comply with Accounting Standards prescribed in the Companies ( Accounting Standards ) Rules, 2006 issued by the Central Government to the extent applicable and with the applicable provisions of the Companies Act, 1956. The Accounting Policies have been consistently applied by the company.

B. USE OF ESTIMATES :

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to make estimates and assumptions in respect of certain items like doubtful debts, employee benefits, provision for liabilities etc. that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and reported amount of income and expenses during the reporting year. Actual results/outcome could differ from these estimates. Any revision to the accounting estimates is recognized prospectively in the period in which such results are materialized.

C. FIXED ASSETS:

All Fixed Assets are valued at cost less depreciation / amortization. Cost [net of Cenvat credit available] comprises the purchase price and any attributable costs of bringing the asset to its working condition for its intended use. Financing costs directly attributable to the construction of qualifying fixed assets are also included to the extent they relate to the period till such assets are ready for their intended use.

Cost of addition or extension to an existing asset, which is of a capital nature and/or which becomes an integral part of the existing asset is capitalised and added to the gross book value of that asset.

D. DEPRECIATION:

(i) Leasehold Land is being amortised over the life of the lease.

(ii) Depreciation on Buildings & Electrical Installations, Furniture, Fixtures, Office Equipment and Vehicles has been provided on Written Down Value Method, as per Section 205(2) (a) of the Companies Act, 1956 at the rates prescribed in Schedule XIV thereto.

(iii) Depreciation on all other assets has been provided on Straight Line Method, as per Section 205(2)(b) of the Companies Act, 1956, it the rates prescribed in Schedule XIV thereto.

For determining the appropriate depreciation rates, plant and machinery falling under the category of continuous process plant has been identified on the basis of technical opinion obtained.

(iv) Depreciation on additions to and disposals of the Fixed Assets during the year has been provided on pro-rata basis, according to the period each such asset was used during the year.

(v) Depreciation on addition or extension to the existing Fixed Asset, which becomes integral part of that asset is provided on pro rata basis according to the remaining useful life of the existing asset.

E. BORROWING COSTS:

Interest and other costs in connection with the borrowing of the funds to the extent directly attributable to the acquisition / construction of qualifying Fixed Assets are capitalized upto the date when such assets are ready for their intended use and borrowing costs other than these costs are charged to Profit and Loss Account.

F. IMPAIRMENT OF ASSETS:

The company assess at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates recoverable amount of the asset being higher of the net selling price and value in use. Value in use is determined from the present value of estimated future cash flows from continuing use of such assets discounted at weighted average cost of capital.

If recoverable amount of such asset or the recoverable amount of the cash generating unit to which such asset belong is found to be lower than its carrying amount, then carrying amount of such asset is reduced to the extent of its recoverable amount. Such reduction is treated as impairment loss and is charged to the Profit and Loss Account.

After impairment of an asset, the depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

At a balance sheet date, if there is an indication that a previously recognized impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount and previously recognized impairment loss is reversed.

G. EXPENDITURE DURING THE CONSTRUCTION PERIOD:

The expenditure incidental to the expansion / new projects is allocated to Fixed Assets in the year of commencement of the . commercial production.

H. INVENTORIES:

Inventories consisting of Raw Materials, Work-in-Process and Finished Goods are valued at lower of cost and net realizable value.

For this purpose, the cost of raw material is determined using monthly moving average cost method (net of Cenvat availed).

Cost of finished goods and Work-in-process is determined by taking material costs (net of Cenvat availed) and other appropriate and relevant manufacturing overheads.

Inventories consisting of Stores, Consumables, Spare Parts, and Packing Materials etc. are valued at lower of cost and net realizable value. For this purpose direct costs, and appropriate and relevant overheads, are apportioned using the FIFO method.

I. REVENUE RECOGNITION:

(i) Revenue is recognised to the extent it is possible that economic benefits will flow to the company and the revenue can be reliably measured.

(ii) Revenue from sale of products is recognised on transfer of all significant risks and rewards of ownership of the goods to the customers, which generally coincides with the dispatch of goods. Sales are stated exclusive of Sales Tax / VAT, trade discounts and sales returns.

(iii) Export benefits / incentives are accounted on accrual basis and are shown under "Other Income".

(iv) Interest income is recognised on a time proportionate basis taking into account; the amount outstanding and the rate applicable.

(v) Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.

J. EXCISE DUTY:

Excise Duty is accounted gross of Cenvat benefit availed on inputs, fixed assets and eligible services.

K. SEGMENT REPORTING:

The company identifies business segment as primary, taking into account the nature of products and services, risks and returns, the organisation structure and the internal reporting system.

The geographical segment is demarcated into Indian and Overseas markets.

L. FOREIGN CURRENCY TRANSACTIONS:

(i) The transactions in foreign currencies are converted into Indian Rupees at the rates of exchange prevailing on the date of transactions.

(ii) The premium / discount arising at the inception of forward contract intended for hedging is amortized as expense / income over the life of the contract. Any profit or loss arising on cancellation or renewal of the forward contract is recognised as income or expense for the year. The outstanding forward contracts meant for hedging the receivable outstanding as at balance sheet date are marked to market and resultant loss/gain is recognised in Profit and Loss Account.

(iii) The company is exposed to the risks of foreign currency fluctuations on foreign currency assets, liabilities and forecasted cash flows denominated in foreign currency. The company limits the effects of foreign exchange rates fluctuations by following established risk management policies. The company enters into forward contracts where the counter parties are banks. The gain/loss on the contracts settled during the year are recognized in the Profit and Loss Account. However, the gain or loss on forward contracts outstanding as at the Balance Sheet date meant for hedging the currency fluctuation risks in respect of the sales expected during the subsequent period based on the orders on hand as on the Balance Sheet date is computed being the difference between contracted rate and the spot rate on the balance sheet date. Such gain/loss will be recognized in the statement of the Profit and Loss Account of the period during which such hedged transaction are actually crystallized. Such loss/gain would be contra set off by the corresponding effect on actual sales realisation.

(iv) The balances in Current Assets and Current Liabilities in foreign currencies at the date of Balance Sheet have been converted into Indian Rupees at the rate of exchange prevalent on that date. The resultant net gain/loss arising out of such foreign exchange translations is taken to Profit and Loss Account.

M. TAXES ON INCOME:

(i) Tax expense comprises current tax and deferred tax.

(ii) Current tax is measured at the amount expected to be paid in accordance with the provisions of Indian Income Tax Act.

(iii) Deferred income tax reflects the impact of the current year timing differences between the taxable income and accounting income for the year and reversal of timing differences of the earlier years.

Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted as at the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

N. EMPLOYEE BENEFITS:

Defined Contribution Plans:-

The company contributes on defined contribution basis to Employees Provident Fund towards post employment benefits, all of which are administered by the respective Government Authorities and it has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

Defined Benefit Plans:-

The Superannuation scheme is administered through the Life Insurance Corporation of India (LIC). The liability for the defined benefit plan is funded by way of payment of premium as determined by the LIC of India and the same is administered by LIC and the company has no further obligation beyond making its contribution, which is expensed in the year to which it pertains. The company administers the gratuity scheme being unfunded liability. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method. Actuarial gains and losses, which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account. Leave Entitlements (Long Term Employee Benefit):-

The employees of the company are entitled to leave as per the leave policy of the company. The unfunded liability in respect of unutilized leave balances is provided based on an actuarial valuation carried out by an independent actuary, which is calculated using projected unit credit method as at the year end and charged to the Profit and Loss Account.

0. PROVISION FOR BAD AND DOUBTFUL DEBTS / ADVANCE:

Provision is made for Bad & Doubtful Debts / Advances which in the opinion of the management is considered doubtful of recovery.

P. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognized when there is a present obligation as a result of past events and when a reliable estimate of the amount of the obligation can be made.

Contingent liability is disclosed for:

(i) Possible obligations which will be confirmed by future events not wholly within the control of the Company, or

(ii) Present obligation arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

 
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