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Accounting Policies of Jhagadia Copper Ltd. Company

Mar 31, 2010

A. Method of Accounting

The financial statements are prepared under the historical convention, on the accrua. oasis of accounting and in accordance with the Generaliy Accepted Accounting Policies in no a and comply with the accounting standards prescribed by the Companies [Accounting Standards) Rules, 2006, to the extent applicable and in accordance with the provisions ot the Companies Act, 1956, as adopted consistently by the Company,

b. Use of Estimates:

In preparing Company''s financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues ana expenses during the reporting period Actual results could differ from *hoso estimates An-, revision to accounting estimates is recognized prospectively in current and future periods

c. Revenue Recognition

(ij Sales are recognized on dispatch of material to customers. Sales are net ot traao other discounts and rebates, duties and taxes. (ii) Sale of copper cathode is initially accounted at provisional invoice rate, pena.nq finalization of the price (quotational period price] on the future rote var''-aticns ere accounted for on final settlement of the price (lii) Sales are after considering gain or loss on hedging of Material (iv) Purchases are recognized on actual receipt of material from supplier Purchases ore net of discount, rebate, duties and taxes.

(v) Purchase of raw material is initially accounted at provisional invoice rate, penamg finalization of quotational period price. Variations are accountea for on vxii settlement of the price |vi| For the provisional purchases and sales as at the balance sheet date, net loss is calculated based on the difference between provisional price and price/future contract price of the material on the balance shcc! date Such k.ss is accounted in the profit and loss account; however if the diffeienticr is net gem * it ignored.

d. Export obligation:

Obligation/entitlements on account of Advance Licence Scheme for inpo''f o* raw rrav'',,, are accounted considering quantity consumed and net custom duty payable f the expoi; obligation is not met.

e. Hedging

The Company has approved policy of hedging of material used in the production Accordingly derivatives Contracts are entered into to hedge highly probable sales transactions or firm commitments. The said policy is approved by the Board of Directors ond the hedging relationship is documented.

As per the accounting policies adopted by the company, the gam or :oss on se''tleme-r ti- the hedge contract is adjusted in sales/purchase as the case may be. in the period in *v:,cf transaction of sales/purchase is accounted. On each balance sheet date the outstanjng contract are marked to market and the difference is transferred to hedging reserve acco,. n°. as per accounting provisions in Accounting Standard-30 for highly probable transactiors/firm commitments.

f. Fixed Assets

i Fixed assets are stated at cost of acquisition less accumulated depreciate-'''' amortization and provision for impairment, if any ii. The cost of acquisition includes purchase price and all other directly attr.txil.ir/ incidental expenses, net of cenvat credit iii. Cost of fixed assets is inclusive of interest expense incurred during construction pence

iv Capital work-in-progress comprises the cost of fixed assets that ate not ready intended use at the balance sheet date.

g. Depreciation and Amortization

i. Depreciation is provided on straight line method at the rales

Schedule XIV of the Companies Act, 1956, unless the use of nigher rate or a accelerated charge is justified through technical estimates

ii. Depreciation on additions / deductions to fixed assets is being provided on pro-rat.,

basis from / to the date of acquisition / disposal. Depreciation on exchange difference capitalised is provided prospectively over the remaining life of the assets

iii. Leasehold land is amortized aver the period of the respective lease

h. Impairment of assets:

The carrying values of assets of the Company''s cash-generating units are reviewed h/ impairment annually or more often if there is an indication of decline in value. It an, indication of such impairment exists, the recoverable amounts of those assets are estimate. and impairment loss is recognized, if carrying amount of those assets exceeds ''ne recoverable amount. The recoverable amount is the greater of the net selling price ana *r:e value in use. Value in use is arrived at by discounting the estimated future cash flows to the present value based on appropriate discount factor. However, the assessment of "rr.po <"*.-'' of assets is not carried out.

i. Borrowing Cost

Borrowing cost incurred in relation to the acquisition and construction of assets is capitate as the part of the cost of such assets up to the date when such assets are ready for tended use. Other borrowing costs are charged as on expense in the year in winch these incurred.

j. Investments

Long term investments are volued at cost less provision for permanent diminution in such investments, if any.

k. inventories

i Inventories of Stores and spares are valued at cost after providing for cosi ; : obsolescence and other anticipated losses, wherever considered necessary generally determined on weighted average cost basis and wherever appropriate overheads are taken into account.

ii Inventories of Raw Material are stated at cost.

iii. Inventories of Work In Progress and Finished Goods are valued ''At cost or Net Value, whichever is lower''. Net realizable value is estimated at the expected selling less estimated completion and selling costs.

I. Foreign Currency Transactions

Transactions in foreign currency are accounted at the exchange rate prevailing op en'' of the transactions. Assets / Liabilities in foreign currency are restated at fee exchange a'' at the vear-end. The gain or losses on exchange difference on account settlement or restatement are recognized in profit and loss account

m. Lease Accounting

Lease of an asset whereby the lessor essentially remains the owner of the asset is classif.eei as operating lease. The lease payment accrued during the year is charged to Profit & toss a/c

n. Employee Benefits:

i. Post-employment benefit plans:

The Company has both defined-contribution and defined-benefit plans The plans are

financed by the Company and in the case of some defined contribution pans bv tne

Company along with its employees,

Defined-contribution Plan"

These are plans in which the Company pays pre-defined amounts to separate tunas and does not have any legal or informal obligation to pay additional sums comprise of contributions to the employees'' provident fund, family pension tuna ana superannuation fund. The Company''s payments to the defined-contribution plans are reported as expense during the period in which the employees perform *»''e services that the payment covers,

Defined-benefit Plan:

Provision for Gratuity liability is made on the basis of actuarial valuation corresponding contribution to the recognized LIC Group Policies

ii. Short-term Employee Benefits:

Short term employee benefits are recognized as an expense at the amount expected to be paid over the period of service rendered by the employee1: to the Company.

iii. Long-term Employee Benefits:

Long term employee benefits comprise of compensated absences these are measured based on an actuarial valuation carried out by an independent actuary using the projected unit method at each Balance Sheet date unless the, are Actuarial gains and losses and past service costs are recognized immediately in the F-ot l & Loss account.

o. Taxation

Tax expenses comprise current tax, deferred tax and fringe benefit tax

Provision for deferred tax is made for timing differences arising between toxaaie income accountings income computed using tax rate and the laws that have been enacts.:, substantially enacted on balance sheet date

Deferred tax assets are recognized only if there is virtual certainty that they will be realized

p. Segment Reporting:

The Company reviewed the disclosure of segment-wise reporting and is of the view that r
q. Provisions and Contingencies:

A provision is recognized when the Company has a present obligation as a result of pas'' event and it is probable that an outflow of resources will be required to settle then in respect of which reliable estimate can be made. Provisions (excluding retirement bene''m are not discounted to its present value and are determined based on best es''imate rehire,. to settle the obligation at the balance sheet date These are reviewed at each an. f sheet date and adjusted to reflect the current best estimates,

Contingent liabilities are not recognized but are disclosed in the notes to the fman, .a statement. A Contingent asset is neither recognized nor disclosed.

r. Cash Flow Statements:

Cash-flow statements are prepared in accordance with "Indirect Method" the Accounting Standord (AS) 3 - Cash Flow Statements as prescribed under Section of the Companies Act, 1956,