Accounting Policies of Uttam Value Steels Ltd. Company

Mar 31, 2018

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance/Adoption of Ind AS for first time

In accordance with the notification issued by the ministry of corporate affairs, the company has adopted Indian Accounting Standards (referred to as “Ind-AS”) notified under the Companies (Indian Accounting Standards Rules, 2015 with effect from April 1, 2017. Previous period have been restated to Ind-AS.

For all periods up to and including the year ended 31st March 2017, the Company prepared its Standalone financial statements in accordance with requirements of the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (“Previous GAAP”). These are the first financial statements of the Company that is prepared in accordance with Ind-AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013. The date of transition to Ind AS is 1st April 2016.

These Standlone Financial Statements have been prepared in accordance with Ind-AS as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.

(b) Basis of Preparation of Accounts

The financial statements are prepared under the historical cost convention, except for certain financial instruments, and Land, which are measured at fair values at the end of reporting period, as explained in accounting policies below. Historical cost is generally based on fair value of the consideration given in exchange for goods and services. Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the meassurement date. Further, insurance & other claims, on the ground of prudence or uncertainty in realisation, are accounted for as and when accepted / received. The Company accrues individual items of Income/Expenses above Rs. 5000/- per item. The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year.

(c) Use of Estimates & Judgements

The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected. Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, is in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities.

Impairement of Investments

The Company reviews its carrying value of investments carried at amortised cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.

Useful lives of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.

d) Revenue Recognition

Revenue is measured at fair value of the consideration received or receivable. The Company recognizes revenues on sale of products, net of discounts, sales incentives, rebates granted, returns, sales taxes and duties when the products are delivered to customer or when delivered to a carrier for export sale, which is when significant risks and rewards of ownership pass to the customer. Sale of products is presented gross of manufacturing taxes like excise duty wherever applicable. Revenue from sale of by-products are included in revenue.

e) Cost Recognition

Costs and expenses are recognised when incurred and have been classified according to their nature.

The costs of the Company are broadly categorised in to material consumption, cost of trading goods, employee benefit expenses, depreciation and amortisation, other operating expenses and finance cost. Employee benefit expenses include employee compensation, gratuity, leave encashment, contribution to various funds and staff welfare expenses. Other expenses broadly comprise manufacturing expenses, administrative expenses and selling and distribution expenses.

f) Leasing

Leases are classifed as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

g) Dividend

Dividend income is recognized when right to receive payment is established.

h) Intangible Assets

Intangible assets purchased are measured at cost or fair value as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any

i) Lease Rentals

Lease rentals are expensed with reference to lease terms.

j Foreign Currency Transactions

The functional currency of the Company is determined on the basis of the primary economic environment in which it operates. The functional currency of the Company is Indian National Rupee (INR).

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period/year are translated at the period/ year end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items. Forward exchange contracts entered into, to hedge foreign currency risk of an existing asset/ liability. The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period.

k) Custom duty

Customs Duty payable on imported raw materials, components and stores and spares is recognized to the extent assessed by the customs department.

l) Custom duty benefit

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.

m) Borrowing Cost

Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Ind-AS 23, “Borrowing Costs” are capitalized as part of the cost of such asset up to the date when substantially all the

activities necessary to prepare the qualifying asset for its intended use or sale are complete. Any related foreign currency fluctuations on account of qualifying asset under construction is capitalized and added to the cost of asset concerned. Other borrowing costs are expensed as incurred.

n) Government grants

Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in the Statement of Profit and Loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate Government grants relating to tangible fixed assets are treated as deferred income and released to the Statement of profit and loss over the expected useful lives of the assets concerned. The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

o) The Treatement of expenditure during construction period

All expenditure and interest cost during the project construction period, are accumulated and shown as Capital Work-in- Progress until the project/assets commences commercial production. Assets under construction are not depreciated. Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress.

p) Property, plant and equipment

Property, plant and equipment, other than land, are carried at cost less accumulated depreciation and impairment loss, if any in accordance with Ind-AS 16. Land is valued at fair market price, based on the valuation carried out by an independent valuer. The Company review the fair value with sufficient frequency to ensure that the carrying amount does not differ materially from its fair value

Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on assets is claimed on such ‘reduced’ cost.

All items of repairs and maintenance are recognised in the statement of profit and loss, except those meet the recognition principle as defined in Ind-AS 16

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

Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ‘Available for Intended Use’.

Any revaluation of an asset is recognised in other comprehensive income and shown as revaluation reserves in other equity.

q) Fair value measurement

The Company reviews the fair value of Land with sufficient frequency to ensure that the carrying amount does not differ materially from its fair value . Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses valuation techniques that are appropriate in circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant absorbable inputs and minimizing the use of un-absorbable inputs. External valuers are appointed for valuing land. The selection criteria for these valuers include market knowledge, reputation, independence and whether professional standards are maintained.

r) Amortization of expenses

i) Equity Issue expenses : Expenditure incurred in equity issue is being treated as

Deferred Revenue

Expenditure to be amortized over a period of 10 year

ii) Debenture Issue Expenses : Debenture Issue expenditure is amortized over the period of 10 years.

iii) Deferred Revenue Expenses : Deferred Revenue expenses are amortized over a period of 5 years.

s) Research and development expenses

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

t) Impairment of assets

Property plant and equipment are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverable amount of assets to be held and used is the higher of fair value less cost of disposal or value in use as envisaged in Ind-AS 36. 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 recoverable value of the asset. Impairment loss is recognised in the statement of profit and loss except for properties previously revalued with revaluation taken to other comprehensive income. For such properties impairment loss is recognised in other comprehensive income up to the amount of any previous revaluation

u) Investment in Associates:

Investment in associates are recognised at cost. The company provides for any permanent diminution, if any, in value of such investment.

v) Inventories

“The general practice adopted by the company for valuation of inventory is as under:-

i) Raw Materials : *At lower of cost and net realizable value.\

ii) Stores and spares : At cost

iii) Work-in-process/semi-finished goods : At material cost plus labour and other appropriate portion of production and administrative overheads and depreciation

iv) Finished Goods/Traded Goods : At lower of cost and market value.

v) Finished Goods at the end of trial run : At net realizable value.

vi) Scrap material : At net realizable value.

vii) Tools and equipments : At lower of cost and disposable value.

*Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.”

w) Employee Benefits:

Short term employee benefits

Short Term employee benefits such as salaries, wages, bonus etc, are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.

Long term employee benefits

The liability towards Gratuity & Leave Encashment is not funded. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirement of Ind-AS 19-Employee Benefits. The liability recognized in the balance sheet is the present value of the defined benefit obligations on the balance sheet date. The current service cost, interest earned on opening present value of defined benefit plan & net acturial gain & losses except gratuity have been recognised in profit & loss A/c. Acturial gans and losses through re-measurements of net defined benefit of Gratuity is recognised in other comprehensive income.

x) Income Taxes

Income Tax expenses comprises current tax expense and the net changes in the deferred tax asset or liability during the year. Current & deferred taxes are recognised in the statement of Profit & Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current & deferred tax are also recognised in other comprehensive income or directly in equity, respectively.

Current Income Taxes

Income tax expense is the aggregate amount of Current tax. Current tax is the amount of income tax determined to be payable in respect of taxable income for an accounting period or computed on the basis of the provisions of Sectin 115JB of Income Tax Act, 1961 by way of minimum alternate tax at the prescribed percentage on the adjusted book profits of a year, when Income Tax Liability under the normal method of tax payable basis works out either a lower amount or nil amount compared to the tax liability u/s 115JA Deferred Tax

Deferred tax liabilities are recognised for all taxable temporary differences in accordance with Ind-AS 12. Deferred tax assets are recognised to the extend it is probable that taxable profit will be available, against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax asset is reviewed at each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rate that are expected to apply in the year when the assets are realized or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date

Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside the statement of profit and loss. Deferred tax items are recognised in correlation to the underlying transaction either in statement of total comprehensive income or directly in equity.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities

y) Earning per share

The Company reports basic and diluted earning per share in accordance with Ind-AS 33, ‘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 but before other comprehensive income by the weighted average number of shares outstanding during the year.

The weighted average number of equity shares outstanding during the year is adjusted for treasury shares, bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).

Diluted earnings per share is computed by dividing the profit/ (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.

z) Accounting for Provisions, Contigent Liabilities & Contigent Assets

In conformity with Ind-AS 37, ‘Provisions, Contingent Liabilities and Contingent Assets’, issued by the ICAI. A provision is recognised when the Company has a present obligation as a result of past event and it is probable than an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. Contigent liabilities are not recognized in the financial statements. A contigent asset is neither recognised nor disclosed in financial statements. za) Provision for doubtful debts

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts. zb) Deferred sales tax incentive available to the compay under Maharashtra Value Added Tax (MVAT) is recognised as long term liability zc) The company has entered into Long term Utility and Facility service agreement dated 31st March 2016, with Uttam Galva Mettalics Ltd. And has received interest free secutiry deposit of Rs. 116.74 Crs (P.Y.Rs.294.37 Crs.) zd) Other Comprehensive Income

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Mar 31, 2017

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31^ST MARCH 2017.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation of Accounts

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material aspects with the Accounting Standards notified under section I33 of the Companies Act 20I3 read together with paragraph 7 of the Companies (Accounts) Rules 20I4 issued by the Ministry of Corporate Affairs. The financial statements have been prepared under the historical cost convention on an accrual basis. Further, insurance & other claims, on the ground of prudence or uncertainty in realization, are accounted for as and when accepted / received. The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 20I3. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle for the purpose of current - noncurrent classification of assets and liabilities.

Significant accounting policies

a) System of Accounting

The financial statements are prepared under the historical cost convention and comply in all material aspects with the applicable accounting principles in India, accounting standards notified under Section I33 of the Companies Act, 20I3 and the relevant provisions of the Companies Act, 20I3. The Company accrues individual items of Income/Expenses above Rs. 5000/- per item.

b) Fixed assets

(i) Fixed Assets are valued at cost, net of CENVAT, unless revalued, for which proper disclosure is made.

(ii) All expenditure and interest cost during the project construction period, are accumulated and shown as Capital Work-in- Progress until the project/assets commences commercial production. Assets under construction are not depreciated. Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress.

c) Depreciation

Depreciation on fixed assets is provided on depreciable value of assets using straight-line method on the basis of useful life specified in Schedule II to the Companies Act, 20I3.

d) Revenue Recognition

Sales/Income in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return & trade discounts. Export benefits accrue on the date of export, which are utilized for custom duty free import of material / transferred for consideration.

e) Excise duty

Excise duty is accrued for at the point of manufacture of goods and accordingly is considered for valuation of finished goods stock lying in the factory as on the balance sheet date.

f) Custom duty

Customs Duty payable on imported raw materials, components and stores and spares is recognized to the extent assessed by the customs department.

g) Custom duty benefit

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports affected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.

h) Lease Rentals

Lease rentals are expensed with reference to lease terms

i) Inventories

The general practice adopted by the company for valuation of inventory is as under:-

i) Raw Materials : *At lower of cost and net realizable value.

ii) Stores and spares : At cost

iii) Work-in-process/semi-finished goods : At cost.

iv) Finished Goods/Traded Goods : At lower of cost and market value.

v) Finished Goods at the end of trial run : At net realizable value.

vi) Scrap material : At net realizable value.

vii) Tools and equipments : At lower of cost and disposable value.

- Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.

j) Research and development expenses

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

k) Provision for Gratuity

Provision for Gratuity is made on the basis of actuarial valuation based on the provisions of the Payment of Gratuity Act, I972.

l) Provision for Leave encashment

Provision for Leave encashment is made on the basis of actuarial valuation at the end of the year. m) Investments

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value.

n) Amortization of expenses

i) Equity Issue expenses : Expenditure incurred in equity issue is being treated as Deferred Revenue

Expenditure to be amortized over a period of I0 years

ii) Debenture Issue Expenses : Debenture Issue expenditure is amortized over the period of I0 years

iii) Deferred Revenue Expenses: Deferred Revenue expenses are amortized over a period of 5 years.

o) Foreign currency transactions

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period/year are translated at the period/ year end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items. Forward exchange contracts entered into, to hedge foreign currency risk of an existing asset/ liability.

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period.

p) Impairment of assets

The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of impairment thereof based on external/ internal factors. An impairment loss in accordance with Accounting Standard-28 "Impairment of Assets” is recognized wherever the carrying amount of an assets exceeds its recoverable amount, which represent the greater of the net selling price of assets and their value in use.

q) Provision for doubtful debts

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts.

r) Cash and Cash Equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprise cash at bank and in hand and fixed deposits with an original maturity of three months or less.

s) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that any outflow of resources will be required to settle the obligation. A contingent liability also arises in an extremely rare case where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.

t) Earnings 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.

(b) Terms and Rights attached to equity shares

The company has only one class of shares having a par value at Rs. I/- per share. Each holder of equity shares is entitled to one vote per share.

(c) Terms and Rights attached to redeemable preference shares

The Redeemable preference shares will be redeemed with a premium of 11.50 % in 6(six) annual installments commencing from financial year 2016. No such shares shall be redeemed except out of the profits of the company which would otherwise be available for dividend or out of the proceeds of the fresh issue of shares made for the purpose of the redemption.

i) i) Term Loan from IDBI :Repayment in 56 monthly installments commencing from Sept I,20II to April I, 20I6, in a manner such that 20 % of the outstanding dues to be paid in first 24 installments and remaining 80 % in balance 32 installments.

ii) ZCL : Repayment in 36 monthly installment commencing from April I, 20I7 carrying 5% interest rate.

Charge : The loan is secured by way of first pari-passu charge on company''s immovable properties both present and future and by way of second pari-passu charge on company''s movable properties both present and future.

Charge : The Term Loan facilities are secured by way of Ist charge on all fixed assets of the company both present & future at pari passu basis with all lenders and 2nd pari passu charge on entire current assets of the company and also personal guarantee of Mr. Rajendra Miglani, Mr. Anuj R. Miglani, & Mr. Ankit Miglani.

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Mar 31, 2015

A) System of Accounting

The financial statements are prepared under the historical cost convention and comply in all material aspects with the applicable accounting principles in India, accounting standards notified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013. The Company accrues individual items of Income/ Expenses above Rs. 5000/- per item.

b) Fixed assets

(i) Fixed Assets are valued at cost, net of CENVAT, unless revalued, for which proper disclosure is made.

(ii) All expenditure and interest cost during the project construction period, are accumulated and shown as Capital Work-in- Progress until the project/assets commences commercial production. Assets under construction are not depreciated. Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress.

c) Depreciation

Depreciation on fixed assets is provided on depreciable value of assets using straight-line method on the basis of useful life specified in Schedule II to the Companies Act, 2013.

d) Revenue Recognition

Sales/Income in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return & trade discounts. Export benefits accrue on the date of export, which are utilized for custom duty free import of material / transferred for consideration.

e) Excise duty

Excise duty is accrued for at the point of manufacture of goods and accordingly is considered for valuation of finished goods stock lying in the factory as on the balance sheet date.

f) Custom duty

Customs Duty payable on imported raw materials, components and stores and spares is recognized to the extent assessed by the customs department.

g) Custom duty benefit

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.

h) Lease Rentals

Lease rentals are expensed with reference to lease terms.

i) Inventories

The general practice adopted by the company for valuation of inventory is as under:-

i) Raw Materials : *At lower of cost and net realizable value.

ii) Stores and spares : At cost

iii Work-in-process/semi-finished goods : At cost.

iv) Engineering Plant Finished Goods : At lower of cost and market value.

v) Finished Goods/Traded Goods : At lower of cost and market value.

vi) Finished Goods at the end of trial run : At net realizable value.

vii) Scrap material : At net realizable value.

viii) Tools and equipments : At lower of cost and disposable value.

*Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.

j) Research and Development expenses

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

k) Provision for Gratuity

Provision for Gratuity is made on the basis of actuarial valuation based on the provisions of the Payment of Gratuity Act, 1972.

l) Provision for Leave encashment

Provision for Leave encashment is made on the basis of actuarial valuation at the end of the year.

m) Investments

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value.

n) Amortization of expenses

i) Equity Issue expenses : Expenditure incurred in equity issue is being treated as Deferred Revenue Expenditure to be amortized over a period of 10 years

ii) Debenture Issue Expenses : Debenture Issue expenditure is amortized over the period of 10 years.

iii) Deferred Revenue Expenses : Deferred Revenue expenses are amortized over a period of 5 years.

o) Foreign Currency Transactions

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/ receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period/year are translated at the period/ year end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items Forward exchange contracts entered into, to hedge foreign currency risk of an existing asset/ liability.

The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period.

p) Impairment of Assets

The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of impairment thereof based on external/ internal factors. An impairment loss in accordance with Accounting Standard-28 "Impairment of Assets" is recognized wherever the carrying amount of an assets exceeds its recoverable amount, which represent the greater of the net selling price of assets and their value in use.

q) Provision for Doubtful Debts

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts.

r) Cash and Cash Equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash at bank and in hand and fixed deposits with an original maturity of three months or less.

s) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognised because it is not probable that any outflow of resources will be required to settle the obligation. A contingent liability also arises in an extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. The company does not recognise a contingent liability but discloses its existence in the Financial statements.

t) 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.

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Mar 31, 2013

A) System of Accounting

The financial statements are prepared under the historical cost convention and comply in all material aspects with the applicable accounting principles in India, accounting standards notified under sub-section (3C) of section 2II of the Companies Act, I956 and the relevant provisions of the Companies Act, I956. The Company accrues individual items of Income/ Expenses above Rs. 5000/- per item.

b) Fixed assets

(i) Fixed Assets are valued at cost, net of CENVAT, unless revalued, for which proper disclosure is made.

(ii) All expenditure, including advances given and interest cost during the project construction period, are accumulated and shown as Capital Work-in- Progress until the project/assets commences commercial production. Assets under construction are not depreciated. Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress.

c) Depreciation

Depreciation on all the assets has been provided on Straight Line Method as per Schedule XIV of the Companies Act, I956.

d) Revenue Recognition

Sales/Income in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return & trade discounts. Export benefits accrue on the date of export, which are utilized for custom duty free import of material / transferred for consideration.

e) Inventories

The general practice adopted by the company for valuation of inventory is as under:-

i) Raw Materials : *At lower of cost and net realizable value.

ii) Stores and spares : At cost

iii) Work-in-process/semi-finished goods : At cost.

iv) Engineering Plant Finished Goods : At lower of cost and market value.

v) Finished Goods/Traded Goods : At lower of cost and market value.

vi) Finished Goods at the end of trial run : At net realizable value.

vii) Scrap material : At net realizable value.

viii) Tools and equipments : At lower of cost and disposable value.

*Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.

f) Excise duty

Excise duty is accounted for at the point of manufacture of goods and accordingly is considered for valuation of finished goods stock lying in the factory as on the Balance Sheet date.

g) Custom duty

Custom Duty payable on imported raw materials, components and stores and spares is recognized to the extent assessed by the customs department.

h) Custom duty benefit

Custom duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.

i) Lease Rentals

Lease rentals are expensed with reference to lease terms.

j) Research and development expenses

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

k) Provision for Gratuity

Provision for Gratuity is made on the basis of actuarial valuation based on the provisions of the Payment of Gratuity Act, 1972.

l) Provision for Leave encashment

Provision is made for value of unutilized leave due to employees at the end of the year.

m) Investments

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value.

n) Amortization of expenses

i) Equity Issue expenses : Expenditure incurred in equity issue is being treated as Deferred Revenue Expenditure to be amortized over a period of 10 years

ii) Debenture Issue Expenses : Debenture Issue expenditure is amortized over the period of 10 years Debentures.

iii) Deferred Revenue Expenses : Deferred Revenue expenses are amortized over a period of 5 years.

o) Foreign currency transactions

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/ receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period/ year are translated at the period/ year end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items.

p) Impairment of assets

The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of impairment thereof based on external/ internal factors. An impairment loss in accordance with Accounting Standard-28 "Impairment of Assets" is recognized wherever the carrying amount of an assets exceeds its recoverable amount, which represent the greater of the net selling price of assets and their value in use.

q) Provision for doubtful debts

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts.

r) Cash and Cash Equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash at bank and in hand and fixed deposits with an original maturity of three months or less

s) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non- occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognised because it is not probable that any outflow of resources will be required to settle the obligation. A contingent liability also arises in a extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The company does not recognise a contingent liability but discloses its existence in the Financial statements.

t) 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.

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Mar 31, 2012

(a) System of Accounting:-

The financial statements are prepared under the historical cost convention and comply in all material aspects with the applicable accounting principles in India, accounting standards notified under sub-section (3C) at section 211 of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.The Company accrues individual items of Income/ Expenses above Rs 5000/- per item

(b) Fixed Assets:-

1, Fixed Assets are valued at cost, net of CENVAT, unless revalued, for which proper disclosure is made,

2. All expenditure, including advances given and interest cost during the project construction period, are accumulated and shown as Capital Work-in-Progress until the project/assets commences commercial production. Assets under construction are not depreciated Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress

(c) Depreciation :-

Depreciation on all the assets has been provided on Straight Line Method as per Schedule XIV of the Companies Act, 1956.

(d) Revenue Recognition :-

Sales/Income in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return & trade discounts Export benefits accrue on the date of export, which are utilized for custom duty free import of material / transferred for consideration.

(e) Inventories :

The general practice adopted by the company for valuation of inventory is as under -

Raw Materials : "At lower of cost and net

realizable value Stores and spares : At cost Work-in-process/

semi-finished goods . At cost Engineering Plant .

Finished Goods At lower of cost and market

value

Finished Goods/

Traded Goods : At lower of cost and market

value.

Finished Goods at : At net realizable value, the end of trial run

Scrap material At net realizable value

Tools and equipments . At lower of cost and disposable value

-Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost

(f) Excise Duty

Excise duty is accounted for at the point of manufacture of goods and accordingly is considered for valuation of finished goods stock lying in the factory as on the balance sheet date

(g) Customs Duty

Customs Duty payable on imported raw materials, components and and spares is recognized to the extent assessed by the customs department

(h) Customs Duty Benefit .

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made

(i) Lease Rentals :

Lease rentals are expensed with reference to lease terms (j) Research and Development :

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

(j) Provision of Gratuity :

Provision for Gratuity is made on the basis of actuarial valuation based on the provisions of the Payment of Gratuity Act, 1972.

(k) Leave Salary :

Provision is made for value of unutilized leave due to employees at the end of the year (m) Investments :

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value (n) Amortization of Expenses :

i) Equity Issue Expenses:

Expenditure incurred in equity issue is being treated as Deferred Revenue Expenditure to be amortized over a period of ten years.

ii) Debenture Issue Expenses:

Debenture Issue expenditure is amortized over the period of 10 years Debentures.

iii) Deferred Revenue Expenses:

Deferred Revenue expenses are amortized over a period of 5 years (o) Foreign Currency Transactions:

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/receipt Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period/year are translated at the period/ year end rate The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items (p) impairment of Assets :

The carrying amount of assets is reviewed at each balance sheet date to determine if there is any indication of impairment thereof based on external/ internal factors An impairment loss in accordance with Accounting Standard- 28 "Impairment of Assets " is recognized wherever the carrying amount of an assets exceeds its recoverable amount, which represent the greater of the net selling price of assets and their value in use.

(l) Provision for doubtful debts:

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts (r) Contingent Liability Unprovoked Contingent Liabilities are disclosed in the accounts by way of notes giving the nature and quantum of such liabilities

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Jun 30, 2011

(a) System at Accounting:

The financial statements are prepared under the historical cost convention and comply in all material aspects with the applicable accounting principles in India, accounting standards notified under sub-section (3C) of section 211 of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.The Company accrues individual items of Income/ Expenses above Rs 5000/- per item.

(b) Fixed Assets:-

1. Fixed Assets are valued at cost, net of CENVAT, unless revalued, for which proper disclosure is made.

2. Ali expenditure, including advances given and interest cost during the project construction period, are accumulated and shown as Capital Work-in-Progress until the project/assets commences commercial production. Assets under construction are not depreciated. Expenditure/Income arising out of trial run is part of pre-operative expenses included in Capital Work-in-Progress

(c) Depreciation:-

Depreciation on all the assets has been provided on Straight Line Method as per Schedule XIV of the Companies Act, 1956.

(d) Revenue Recognition:-

Sales/Income in case of contracts/orders spreading over more than one financial year are booked to the extent of work billed. Sales include export benefits & net of sales return & trade discounts. Export benefits accrue on the date of export, which are utilized tor custom duty tree import of material / transferred tor consideration.

(e) Inventories:

The general practice adopted by the company for valuation of inventory is as under- Raw Materials : 'At lower of cost and net realizable value. Stores and spares : At cost Work-in-process/semi-finished goods : At cost. Engineering Plant Finished Goods : #At lower of cost and market value. Steel Plant Finished Goods : At lower of cost and market value. Finished Goods at the end of trial run : At net realizable value. Scrap material : At net realizable value. Tools and equipments : At lower of cost and disposable value. 'Material and other supplies held for use in the production of the inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.

# The Company has changed the valuation method, of Engineering Plant Finished Goods.lrom contract price method to lower of cost and market value method. Sines there is no Finished Goods Inventories as on 30.06.2011 there is no impact on the financials in the current period.

(f) Excise Duty:

The Excise duty payable on finished goods dispatches is accounted on the clearance thereof from the factory premises. Excise duty is provided on the finished goods lying at the factory premises and not yet dispatched as per the Accounting Standard 2 "Valuation of Inventories"

(g) Customs Duly :

Customs Duty payable on imported raw materials, components and stores and spares is recognized to the extent assessed by the customs department.

(h) Customs Duty Benetit:

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the period are accounted on estimate basis as incentive till the end of the period in respect of duty free imports of raw material yet to be made.

(i) Lease Rentals:

Lease rentals are expensed with reference to lease terms.

(j) Research and Development:

Research and Development costs (other than cost of fixed assets acquired) are expensed in the period in which they are incurred.

(k) Provision of Gratuity :

Provision for Gratuity is made on the basis of actuarial valuation based or) the provisions of the Payment of Gratuity Act, 1972.

(I) Leave Salary:

Provision is made for value of unutilized leave due to employees at the end of the year

(m) Investments :

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value.

(n) Amortization of Expenses :

i) Equity Issue Expenses:

Expenditure incurred in equity issue is being treated as Deferred Revenue Expenditure to be amortized over a period of ten years.

ii) Debenture Issue Expenses: Debenture Issue expenditure is amortized over the period of 10 years Debentures.

iii) Deferred Revenue Expenses:

Deferred Revenue expenses are amortized over a period of 5 years.

(o) Foreign Currency Transactions:

Foreign currency transactions during the accounting period are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the period are translated at the period end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items.

(p) Impairment of Assets :

The company determines whether a provision should be made for impairment loss on fixed assets (including Intangible Assets), by considering the indications that an impairment loss may has occurred in accordance with Accounting Standard - 28 "Impairment of Assets". Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made.

(q) Provision for doubtful debts:

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts.

(r) Contingent Liability:

Unprovided Contingent Liabilities are disclosed in the accounts by way of notes giving the nature and quantum of such liabilities.

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Mar 31, 2010

1. a. Long Term Loans referred to in 1(a) and 1(b) above, are secured by way of hypothecation of all the movables except book debts, including movable machinery, machinery spares, tools and accessories, present and future, subject to prior charges created and/or to be created in favour of the Companys Bankers for Working Capital facilities.

b. (i) Long Term Loans referred to in 1(a) and 1(b) above, to the extent of Rs. 48866.43 lacs, are also secured by way of first mortgage and charge on Companys immovable properties, both present and future (excluding Staff Quarters at Wardha), ranking pari passu with other First Charge holders, subject to prior charge on specific equipments hypothecated to Banks for deferred credits and SBI Home Finance Limited for housing colony for the employees at Wardha and specified movables, both present and future, hypothecated to Banks for Working Capital.

(ii) Long Term Loans referred to in 1 (a) and 1 (b) above, to the extent of Rs. 2837.01 lacs, are also secured by way of first mortgage and charge on Companys immovable properties situated at Wardha, both present and future (excluding Staff Quarters at Wardha), ranking pari passu with other First Charge holders, subject to prior charge on specific equipments hypothecated to Banks for deferred credits and SBI Home Finance Limited for housing colonies for the employees at Wardha and specified movables, both present and future, hypothecated to Banks for Working Capital.

c. Long Term Loans referred to in 1(a) and 1(b) above, to the extent of Rs 16500.00 lacs, are to be secured by way of first mortgage and charge on Companys immovable properties, both present and future (excluding Staff Quarters at Wardha), ranking pari passu with other First Charge holders, subject to prior charge on specific equipments hypothecated to Banks for deferred credits and SBI Home Finance Limited for housing colonies for the employees at Wardha and specified movables, both present and future, hypothecated to Banks for Working Capital.

d The Term Loans of Rs. 353.97 lacs from SBI Home Finance Limited are secured by exclusive mortgage of the housing colony situated, at Wardha.

e. Long Term Loan referred to in 1(b) above, to the extent of Rs.3965.25 lacs, cash credit facilities assigned by banks, is secured against hypothecation of Raw Materials, Work-in-process, Finished Goods, Stores & Spares, Book Debts

etc., and by way of Second Charge on companys immovable properties, and also guaranteed by some of the directors of the Company.

2. a. Non-Convertible Debentures/ Bonds referred to in 2 above are secured / to be secured by way of first mortgage and charge on Companys immovable properties, both present and future (excluding Staff Quarters at Wardha), ranking pari passu with other First Charge holders, subject to prior charge on specific equipments hypothecated to Banks for deferred credits and SBI Home Finance Limited for housing colonies for the employees at Wardha and specified movables both present and future, hypothecated to Banks for Working Capital.

b. The Debentures referred in 2(vi) above are redeemable in 24 ballooning instalments from 31st July 2008 to 30th June 2010.

3. Cash Credit from Bank is secured against hypothecation of Raw Materials, Work-in-process, Finished Goods, Stores & Spares, Book Debts etc., and by way of Second Charge on Companys immovable properties, and also guaranteed by some of the Directors of the Company.

4. The loan mentioned in 1 above includes non interest bearing loans of Rs. 32599.40 lacs as per the loan restructuring terms.

(h) Customs Duly Benefit;

Customs duty entitlement eligible under pass book scheme / DEPB is accounted on accrual basis. Accordingly, import duty benefits against exports effected during the year are accounted on estimate basis as incentive till the end of the year in respect of duty free imports of raw material yet to be made.

(i) Lease Rentals:

Lease rentals are expensed with reference to lease terms.

(i) Research and Development:

Research and Development costs (other than cost of fixed assets acquired) are expensed in the year in which they are incurred.

(k) Provision of Gratuity: ¦ Provision for Gratuity is made on the basis of actuarial valuation based on the provisions of the Payment of Gratuity Act, 1972.

(I) Leave Salary:

Provision is made for value of unutilized leave due to employees at the end of the year.

(m) Investments:

Long term investments are carried at cost less provision for permanent diminution in value. Current investments are carried at lower of cost or fair value.

(n) Amortization of Expenses:

i) Equity Issue Expenses:

Expenditure incurred in equity issue is being treated as Deferred Revenue Expenditure to be amortized over a period of ten years.

(ii) Debenture Issue Expenses: Debenture Issue expenditure is amortized over the period of 10 years Debentures.

(iii) Deferred Revenue Expenses:

Deferred Revenue expenses are amortized over a period of 5 years.

(o) Foreign Currency Transactions:

Foreign currency transactions during the accounting year are translated at the rates prevalent on the transaction date. Exchange differences arising from foreign currency fluctuations are dealt with on the date of payment/receipt. Assets and Liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at the year end rate. The exchange difference is credited / charged to Profit & Loss Account in case of revenue items and capital items.

(p) Impairment of Assets:

The company determines whether a provision should be made for impairment loss on fixed assets (including Intangible Assets), by considering the indications that an impairment loss may has occurred in accordance with Accounting Standard - 28 "Impairment of Assets". Where the recoverable amount of any fixed assets is lower than its carrying amount, a provision for impairment loss on fixed assets is made.

(q) Provision for doubtful debts:

The management reviews on a periodical basis the outstanding debtors with a view to determine as to whether the debtors are good, bad or doubtful after taking into consideration all the relevant aspects. On the basis of such review and in pursuance of other prudent financial considerations the management determines the extent of provision to be made in the accounts.

(r) Contingent Liability:

Unprovided Contingent Liabilities are disclosed in the accounts by way of notes giving the nature and quantum of such liabilities.