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Accounting Policies of Uttam Galva Steels Ltd. Company

Mar 31, 2015

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 2013.

(b) Use of Estimates:

The preparation of financial statements in conformity with GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by 'foreign exchange cover' with banks are booked at contracted rates. Income/ Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income/ expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted

rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

(iii) The Company does not enter into derivative contracts for trading or speculative purposes.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Borrowing cost, Premium on redemption of Debentures / Debts:

(a) Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard 16 "Borrowing Costs" are capitalized as part of the cost of such asset up to the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

(b) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2015 financial years. The Company is treating interest payable (yearly rate) as interest accrued.

(c) On rescheduling and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year

end are appropriately accounted along with material cost in Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-Progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is 'Put to Use'. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on 'reduced' cost.

(c) Depreciation on fixed assets has been provided on straight line method based on the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013, except in case of RCC roads where the management estimates its useful life is 20 years.

(d) Pursuant to Companies Act 2013 (the Act) becoming effective from April 1, 2014, the Company has re-worked depreciation with reference to the estimated useful lives of fixed assets prescribed under Schedule II to the Act or as per technical evaluation and componentization.

(e) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is 'Put to Use'.

1.06A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The Company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Progress - At Material Cost plus labour and other appropriate portion of production

and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive ofanytaxes and duties

incurred.

(iv) Stores Spares etc. - At Cost.

(v) Arisings - At realisable value.

(vi) Stock In Trade Land - At Fair market value.

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961.

Deferred tax charged or credited reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credited and the corresponding deferred tax liability or asset are recognized using the tax rates that have been enacted or substantively enacted on the Balance Sheet date.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 'Earning per Share' issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets:

(a) In conformity with AS-29, 'Provisions, Contingent Liabilities and Contingent Assets', issued by the ICAI. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(c) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Advances received from customers against exports, which is spilled over/ executable/ adjustable/ repayable beyond period of 12 months as on the date of Balance Shee is treated as Non-Current Liabilities, under the sub head Other Long Term Liabilities.

1.13 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Spares consumed

(c) Export incentives receivable on export performance are recognised in pursuance to 'Accounting Standard 9 on Revenue Recognition', (AS-9) with reference to certainty of collectability of such export incentives.

1.14 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central

Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net Present Value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax under Reverse Charge Mechanism for various services availed by the Company, at the time of booking an expenditure. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Employee Benefits:

A. Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

B. Long Term Employee Benefits

Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.

1) Term Loans, ECBs & FCTL from Banks and Financial Institutions are secured by mortgage and the lenders have first pari passu charge on all the present and future movable and immovable assets of the Company but not limited to plant and machinery, machinery spares, tools and accessories in possession or not, stored, or to be brought in Company's premises or lying at any other place of the Company's representative affiliates and all the intangible assets of the Company, except for Packing machine supplied by PESMEL, Finland.


Mar 31, 2014

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with Accounting Standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The preparation of financial statements in conformity with GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11). (ii) Import contracts covered by ''foreign exchange cover'' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments.

Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loan balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

(iii) The company does not enter into derivative contracts for trading or speculative purposes.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Borrowing cost, Premium on Redemption of Debentures / Debts:

(a) Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard 16 "Borrowing Costs" are capitalized as part of the cost of such asset upto the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

(b) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(c) On rescheduling and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at the year end are appropriately accounted along with material cost in Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in- progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is ''Put to Use''. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and Long Term Foreign Currency Debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work-In-Progress. Interest and consequential cost is appropriately accounted.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on ''reduced'' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ''Put to Use''.

(e) Computer Software is depreciated over an estimated useful life of 5 Years. 1.06A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Progress - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost (v) Arisings - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act, 1957. Deferred tax charged or credited reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credited and the corresponding deferred tax liability or asset are recognized using the tax rates that have been enacted or substantively enacted on the Balance Sheet date.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 ''Earning per Share'' issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent Liabilities and Contingent Assets:

(a) In conformity with AS-29, ''Provisions, Contingent Liabilities and Contingent Assets'', issued by the ICAI, the Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(c) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Advances received from customers against exports, which is spilled over/ executable/ adjustable/ repayable beyond period of 12 months as on the date of Balance Sheet is treated as Non-Current Liabilities, under the sub head Other Long Term Liabilities.

1.13 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme, Focus Market Scheme, Focus Product Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Spares consumed

(c) Export incentives receivable on export performance are recognised in pursuance to Accounting Standard 9 on Revenue Recognition'', (AS-9) with reference to certainty of collectability of such export incentives.

1.14 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central

Excise Duty; as may be applicable. (b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net Present Value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1. 17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax under Reverse Charge Mechanism for various services availed by the company, at the time of booking an expenditure. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Employee Benefits:

(a) Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.


Mar 31, 2013

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts / advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by ''foreign exchange cover'' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits:

A. Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

B. Long Term Employee Benefits

Post employment and other long term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in- progress Pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is ''Put to Use''. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on ''reduced'' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ''Put to Use''.

I.06 A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(a) Fixed as Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost

(v) Arising''s - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act 1957.

Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 ''Earning per Share'' issued by the ICAI. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets

(a) In conformity with AS-29, ''Provisions, Contingent Liabilities and Contingent Assets'', issued by the Institute of Chartered Accountants of India. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to ''Accounting Standard 9 on Revenue Recognition'', (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.16 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.17 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year end are appropriately accounted along with material cost in Profit and Loss Account.

1.18 Inter Unit transactions are eliminated to the extent possible.


Mar 31, 2012

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when the risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by 'foreign exchange cover' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits:

(a) Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

(i) The Company has taken Group Gratuity Policy with the Life Insurance Corporation of India (LIC) for future payment of Gratuities. Any deficit in Plan Assets managed by LIC and as compared to the Actuarial Liability is recognized as a liability immediately.

(ii) Leave Encashment benefit accrued at the year end.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is "Put to Use". Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work-in-Progress. Interest and consequential cost is appropriately accounted / reimbursements.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat Credit, Sales Tax and Service Tax Credit and such other levies / taxes. Depreciation on such assets is claimed on 'reduced' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is" Put to Use".

1.06 Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The Company does not provide for temporary diminution in value of long term investments, if any, Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost

(v) Arising's - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current Year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act, 1957.

Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning Per Share (EPS):

The Company reports basic and diluted earning per share in accordance with AS-20 "Earning per Share" issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets:

(a) In conformity with AS-29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the ICAI. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to "Accounting Standard 9 on Revenue Recognition", (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 Cold Rolled (C.R.) Coils Production excludes C.R. baby coils produced.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / (loss) on settlement and provisions for gain / (loss) at year end are appropriately accounted along with material cost in Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.

1) 11.25 % Non Convertible Redeemable Debentures are secured by first pari passu Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machinery spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

2) Term Loan from Banks and Financial Institutions namely Axis Bank, Bank of Baroda, Dena Bank, Exim Bank of India, Oriental Bank of Commerce, Punjab National Bank, State Bank of India, Syndicate Bank, State Bank of Hyderabad,IDFC and ICICI Bank Limited are secured by mortgage and the lenders have pari passu charge on all the present and future movable and immovable assets of the Company except Packing Machine supplied by PESMEL Finland but not limited to plant and machinery, machinery spares, tools and accessories in possession or not, stored, or to be brought in companies premises or lying at any other place of the companies representative affiliates and all the intangible assets of the company. The above security will rank pari passu amongst the lenders.

3) ECB Loan from ICICI Bank Limited are secured by Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machineries spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

4) ECA from Nordea Bank is secured by hypothecation of Packing Machine supplied by PESMEL Finland.

5) Term Loan from ICICI Bank Limited, IFCI, LIC, GIC, and UII ranking pari pasu are secured by Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machineries spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

25,02,500 Equity Shares (Previous Year 25,02,500 equity shares) held by Promoters are pledged against term loan of Rs 9.55 Crores availed from ICICI Bank Limited.

Working Capital Loans from Banks on Cash Credit (CC) & Packing Credit (PC) Accounts are Secured by Hypothecation of all Tangible, Moveable assets such as Raw Material, WIP, Finished Goods, Stock in Transit and Book Debts etc. and the second charge on fixed assets of the Company except Packing Machine supplied by PESMEL, Finland.

# Sales includes Rs 832.09 Crores ( Previous Year Nil )towards sales from trial run/stabilisation of Production, of 4 Hi Skin Pass Mill

* GP Sales includes Rs 698.75 Crores ( Previous Year Nil ) towards sales during stabilisation of Super Galvanising Line (SGL)

** Sales of surplus generated Power includes Rs 66.92 Crores towards sales during stabilisation of Captive Power Plant (CPP) *** Sale of Manufactured Goods includes Export Sales Rs 1066.96 Crores (Previous Year Rs 932.97 Crores).

The Company has provided for Unclaimed Leave Encashment Benefits as at 31st March, 2012 to the tune of Rs 5.99 Crores.

Liability for employee benefits in respect of gratuity has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Accounting Standard 15 (Revised) the details of which are as follows:

 
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