Accounting Policies of Modern Steels Ltd. Company

Mar 31, 2015

NOTE : 1 CORPORATE INFORMATION

Modern Steels Limited (the Company) is a public listed Company incorporated under the provisions of the Companies Act, 1956 on 19th November 1973. The Company is engaged in manufacturing of Steel Rolled products.

2.1 Accounting Convention

The Financial Statements are prepared under the Historical Cost Convention in accordance with applicable Accounting Standards referred to in section 129(1) and relevant presentational requirements of the Companies Act, 2013.

2.2 Use of Estimate

The preparation of financial statements, in conformity with the generally accepted accounting principles, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize.

2.3 Fixed Assets and Depreciation

All tangible fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and other attributable cost including financing & other cost of borrowed funds attributable to construction or acquisition of tangible fixed assets for the period up to the date when the assets are first put to use. Modvat credit, service tax credit and VAT credit on tangible fixed assets has been reduced from the cost. Expenditure during construction is being capitalized.

Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule II of the Companies Act, 2013.

2.4 Intangibles and Amortization

Intangible assets are recognized if it is probable that the future economic benefits attributable to that assets will fowl to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard-26 on "Intangibles" issued by the Institute of Chartered Accountant of India. Intangibles assets are amortized on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.

2.5 Inventories

The cost in respect of various items of inventory is computed as under:- i) In case of Raw-material on FIFO Basis (net of Modvat, Service Tax & VAT). ii) In case of Work in Progress - Rolling Mill Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads. iii) In case of Finished Goods at cost plus all appropriate allocable overheads and Excise Duty thereon.

Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads and Excise Duty thereon Fresh Stock of Stores, spares & Fuel are valued at cost or net realizable value, whichever is lower and cost is computed on FIFO Basis (net of MODVAT, Service tax, VAT). Stocks in working condition are valued at depreciated value or realizable value whichever is less. Disposable and used stocks is valued at net realizable value.

2.6 Foreign Exchange Transaction

The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the Profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.

Forward Exchange contracts not intended for trading or speculation purpose.

In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the period.

2.7 Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. Al other investments are classified as Non Current investments.

Currents investments are carried in the financial statements at lower of cost and fair value determined and long term investments are carried at cost. However, provision for dilution in value is made to recognized a declined other than temporary in the value of investments.

2.8 Employees Benefits

- Provident Fund

Retirement benefits in the form of Provident Fund and Family Pension Fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to Statement of Profit & Loss of the year.

- Gratuity

The retirement benefits in the form of Gratuity Scheme have been provided for the year ended as on 31st March, 2015. In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined "benefit" scheme.

2.9 Borrowing Costs

To capitalize the borrowing costs that is directly attributable to the acquisition or Construction of that Capital asset. Other borrowing Costs are recognized as an expense in the period in which they are incurred.

2.10 Revenue Recognition

Revenues / Incomes and Cost /Expenditures are being generally accounted on accrual basis, as they are earned or incurred. Expenditures have been disclosed net of excise duty, service tax and VAT which are Moveable.

- Sales

Sales comprise of value of sales of products (net of returns) excluding VAT and Trade Discounts but including excise duty. Sales are recognized when the title of the goods is passed to the customers. Excise duty is reduced from gross sales to arrive at net sales.

- Interest

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

- Dividend

Dividend Income is accounted for in the year in which the right to receive the same is established

2.11 Taxes on Income

Provision for Taxation is made on the basis of the taxable Profits computed for the current accounting period in accordance with the Income Tax Act, 1961 and Wealth Tax Act. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

2.12 Impairment of Fixed Assets

As at 31st March, 2015 the company has reviewed the future earning of its cash generating unit in accordance with the "Accounting Standards 28 Impairment of Assets" issued by the Institute of Chartered Accountants of India. As the carrying amount of the assets does not exceed the future recoverable amount consequently, no adjustment is considered necessary by the management.

2.13 Provisions for Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

2.14 Earnings Per Share

Basic earnings per share is computed by dividing the net Profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by taking into the account the aggregate of the weighted average number of equity shares outstanding during the period and weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares.

2.15 Cash Flow Statement

The cash fow statement has been in accordance with the Accounting Standard (AS)-3 on "Cash Flow Statements" issued by the Companies (Accounting Standard) Rules, 2006

2.16 Accounting policies not specifically referred to above are consistent with Generally Accepted Accounting Practices (GAAP).

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Mar 31, 2014

1.1) Accounting Convention

The Financial Statements are prepared under the Historical Cost Convention in accordance with applicable Accounting Standards referred to in Section 211(3c) and relevant presentational requirements of the Companies Act, 1956.

2.2) Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize.

2.3) Fixed Assets and Depreciation

All tangible fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and other attributable cost including financing & other cost of borrowed funds attributable to construction or acquisition of tangible fixed assets for the period upto the date when the assets are first put to use. Modvat credit, service tax credit and VAT credit on tangible fixed assets has been reduced from the cost. Expenditure during construction is being capitalized.

Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule XIV of the Companies Act, 1956, except for assets costing less than and up to Rs.5,000/- which are fully depreciated in the year of purchase.

2.4) Intangibles and Amortisation

Intangible assets are recognized if it is probable that the future economic benefits attributable to that assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard-26 on "Intangibles" issued by the Institute of Chartered Accountant of India. Intangibles assets are amortized on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.

2.5) Inventories

Inventories are valued at cost or net realizable value, which ever is lower. The cost in respect of various items of inventory is computed as under:-

i) In case of Raw-material on FIFO Basis (net of Modvat, Service Tax & VAT).

ii) In case of Work in Progress - Rolling Mill Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads.

iii) In case of Finished Goods at cost plus all appropriate allocable overheads and Excise Duty thereon. Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads and Excise Duty thereon.

Fresh Stocks of Stores, spares & Fuel are valued at cost or net realizable value, whichever is lower and cost is computed on FIFO Basis (net of MODVAT, Service tax, VAT). Stocks in working condition are valued at depreciated value or realizable value whichever is less. Disposable and used stocks is valued at net realizable value.

2.6) Foreign Exchange Transaction

The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.

Forward Exchange contracts not intended for trading or speculation purpose

In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the period.

2.7) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as Non Current investments.

Currents investments are carried in the financial statements at lower of cost and fair value determined and long term investments are carried at cost. However, provision for dilution in value is made to recognized a declined other than temporary in the value of investments.

2.8) Employees Benefits Provident Fund

Retirement benefits in the form of Provident Fund and Family Pension Fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to Statement of Profit & Loss of the year. Gratuity

The retirement benefits in the form of Gratuity Scheme have been provided for the year ended as on 31st March, 2014. In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined "benefit" scheme.

2.9) Borrowing Costs

To capitalize the borrowing costs that is directly attributable to the acquisition or construction of that Capital asset. Other borrowing Costs are recognized as an expense in the period in which they are incurred.

2.10) Revenue Recognition

Revenues / Incomes and Cost /Expenditures are being generally accounted on accrual basis, as they are earned or incurred. Expenditures have been disclosed net of excise duty, service tax and VAT which are Modvatable.

Sales

Sales comprise of value of sales of products (net of returns) excluding VAT and Trade Discounts but including excise duty. Sales are recognized when the title of the goods is passed to the customers. Excise duty is reduced from gross sales to arrive at net sales.

Interest

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

Dividend

Dividend Income is accounted for in the year in which the right to receive the same is established.

2.11) Taxes on Income

Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act, 1961 and Wealth Tax Act. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

2.12) Impairment of Fixed Assets

As at 31st March, 2014 the Company has reviewed the future earning of its cash generating unit in accordance with the "Accounting Standards 28 Impairment of Assets" issued by the Institute of Chartered Accountant of India. As the carrying amount of the assets does not exceed the future recoverable amount consequently, no adjustment is considered necessary by the management.

2.13) Provisions for Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

2.14) Earning Per Share

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into the account the aggregate of the weighted average number of equity shares outstanding during the period and weighted average number of equity shares which would be issued on conversion of all the dilutive potential equity shares into equity shares.

2.15) Cash Flow Statement

The cash flow statement has been in accordance with the Accounting Standard (AS)-3 on "Cash Flow Statements" issued by the Companies (Accounting Standard) Rules, 2006.

2.16) Accounting policies not specifically referred to above are consistent with Generally Accepted Accounting Practices (GAAP).

b) Rights, Preferences, Restrictions attached to Equity Shareholders:-

The Company has two classes of shares referred to as Equity Shares having par value of Rs.10/- each and 9.5% Redeemable cumulative Preference Shares of Rs.100/- each.

The Company has issued equity shares only. Hence rights / preferences applicable for Redeemable cumulative Preference capital are not disclosed separately.

Each Equity Shareholder is entitle to one vote per share.

The Company declares and pays dividend in Indian Rupees. In respect to Equity Shares, the dividend if any, proposed by the Board of Directors will be subject to approval of shareholders in Annual General Meeting.

In the event of liquidation of Company, the holders of Equity Shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of Equity Shares held by the shareholders.

c) Shares held by holding Company or its ultimate holding Company or subsidiary or associates of the holding Company or the ultimate holding in aggregate Nil (Nil).

d) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without being received in cash Nil(Nil), bonus shares and shares buy back for the period of five years immediately preceding the reporting date Nil (Nil).

f) Forfeiture of share warrants

In the F.Y. 2011-12, the amount paid up on 7,71,641 warrants @ Rs.8.25/- (Per warrant) of Rs.63.66 lacs stands forfeited as not converted.

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Mar 31, 2012

1.1) Accounting Convention

The Financial Statements are prepared under the Historical Cost Convention in accordance with applicable Accounting Standards referred to in Section 211 (3c) and relevant presentational requirements of the Companies Act, 1956.

1.2) Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize.

1.3) Fixed Assets and Depreciation

All tangible fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and other attributable cost including financing & other cost of borrowed funds attributable to construction or acquisition of tangible fixed assets for the period upto the date when the assets are first put to use. Modvat credit, service tax credit and VAT credit on tangible fixed assets has been reduced from the cost. Expenditure during construction is being capitalized.

Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule XIV of the Companies Act ,1956, except for assets costing less then and upto Rs 5,000/- which are fully depreciated in the year of purchase.

1.4) Intangibles and Amortisation

Intangible assets are recognized if it is probable that the future economic benefits attributable to that assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard-26 on "Intangibles" issued by the Institute of Chartered Accountants of India.

Intangibles assets are amortised on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.

1.5) Inventories

Inventories are valued at cost or net realizable value, which ever is lower. The cost in respect of various items of inventory is computed as under:-

i) In case of Raw material, Stores, Spares & Fuel on FIFO Basis (net of Modvat, Service Tax & VAT).

ii) In case of Work in Progress Rolling Mill Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads.

iii) In case of Finished Goods at cost plus all appropriate allocable overheads and Excise Duty thereon. Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads and Excise Duty thereon.

Disposable stores and used items have been valued at net realizable value.

1.6) Foreign Exchange Transaction

The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the Statement of Profit & Loss relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.

Forward Exchange contracts not intended for trading or speculation purpose.

In case of forward exchange contract, the premium or discount arising at the inception of such contract, is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the period.

1.7) Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non current investments.

Currents investments are carried in the financial statements at lower of cost and fair value determined and long term investments are carried at cost. However, provision for dilution in value is made to recognise a decline other than temporary in the value of investments.

1.8) Retirement Benefits Provident Fund

Retirement benefits in the form of Provident Fund and Family Pension Fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to Statement of Profit & Loss of the year.

Gratuity

The retirement benefits in the form of Gratuity Scheme have been provided for the year ended as on 31st March, 2012. In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined "benefit" scheme.

1.9) Borrowing Costs

To capitalize the borrowing costs that is directly attributable to the acquisition or construction of that capital asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

1.10) Revenue Recognition

Revenues / Incomes and Cost /Expenditures are being generally accounted on accrual basis, as they are earned or incurred. Expenditures have been disclosed net of excise duty, service tax and VAT which are Moveable.

Sales

Sales comprise of value of sales of products (net of returns) excluding VAT and trade discounts but including excise duty. Sales are recognized

when the title of the goods is passed to the customers. Excise duty is reduced from gross sales to arrive at net sales.

Interest

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

Dividend

Dividend Income is accounted for in the year in which the right to receive the same is established.

1.11) Taxes on Income

Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act, 1961 and Wealth Tax Act. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of lax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

1.12) Impairment of Fixed Assets

As at 31st March, 2012, the Company has reviewed the future earning of its cash generating unit in accordance with the "Accounting Standard 28 Impairment of Assets" issued by the Institute of Chartered Accountant of India. As the carrying amount of the assets does not exceed the future recoverable amount consequently, no adjustment is considered necessary by the management.

1.13) Provisions for Contingent liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

1.14)Accounting policies not specifically referred to above are consistent with Generally Accepted Accounting Principles (GAAP).

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Mar 31, 2011

A) Accounting Convention

The Financial Statements are prepared under the Historical Cost Convention in accordance with applicable Accounting Standards referred to in Section 211 (3c) and relevant presentational requirements of the Companies Act, 1956.

b) Fixed Assets and Depreciation

All tangible fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and other attributable cost including financing & other cost of borrowed funds attributable to construction or acquisition of tangible fixed assets for the period upto the date when the assets are first put to use. Modvat credit availed service tax credit and VAT credit on tangible fixed assets has been reduced from the cost. Expenditure during construction is being capitalized.

Depreciation on tangible fixed assets has been provided on straight-line method according to the Schedule XIV of the Companies Act 1956, except for assets costing less than and upto Rs 5000/- which are fully depreciated in the year of purchase

c) Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principals, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results materialize.

d) Intangibles and Amortisation

Intangible assets are recognized if it is probable that the future economic benefits attributable to that assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard-26 on "Intangibles" issued by the Institute of Chartered Accountant of India.

Intangible assets are amortised on straight line basis over their useful lives, which range from 1 -5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.

e) Inventories

Inventories are valued at cost or net realizable value, which ever is lower. The cost in respect of various items of inventory is computed as under:-

i) In case of Raw-material, Stores, Spares & Fuel on FIFO Basis (net of Modvat, Service Tax & VAT).

ii) In case of Work in Process - Rolling Mill Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads.

iii) In case of Finished Goods at cost plus all appropriate allocable overheads and Excise Duty thereon. Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads and Excise Duty thereon.

Disposable Stores and Used items have been valued at net realizable value.

f) Foreign Exchange Transaction

The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India are adjusted to revenue.

Forward Exchange contracts not intended for trading or speculation purpose.

In case of forward exchange contract, the premium or discount arising at the inception of such contract is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception/ the last reporting date, is recognized as income/ expense for the period.

g) Retirement Benefits

i) Provident Fund

Retirement benefits in the form of Provident Fund and Family Pension Fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to Profit & Loss account of the year.

ii) Gratuity

The retirement benefits in the form of Gratuity Scheme have been provided for the year ended as on 31sMarch, 2011. In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined "benefit" scheme.

h) Borrowing Costs

To capitalize the borrowing costs that is directly attributable to the acquisition or Construction of that Capital asset. Other borrowing Costs are recognized as an expense in the period in which they are incurred.

i) Revenue Recognition

Revenues / Incomes and Cost /Expenditures are being generally accounted on accrual basis, as they are earned or incurred. Expenditures have been disclosed net of Excise Duty, Service Tax and VAT which are modvatable.

i) Sales

Sales comprise of value of sales of goods (net of returns) excluding VAT and trade discounts but including excise duty. Sales are recognized when the title of the goods is passed to the customers. Excise duty is reduced from gross sales to arrive at net sales.

ii) Interest

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

iii)Dividend

Dividend Income is accounted for in the year in which the right to receive the same is established.

j) Taxes on Income & Wealth

Provision for income tax is made on the basis of the taxable profits computed for the current accounting year in accordance with the provisions of Income Tax Act, 1961. Provision for wealth tax is made as per provisions of Wealth Tax Act, 1957. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred TaxAssets can be realized.

k) Segment Reporting

The Company is engaged in the business of Steel Manufacturing which in context of Accounting Standards - 17 - "Segment Report" issued by the Institute of Chartered Accountants of India is considered the only business segment. So separate segment reporting is not necessary.

l) Impairment of Fixed Assets

As at 31st March, 2011 the Company has reviewed the future earning of its cash generating unit in accordance with the "Accounting Standards 28 Impairment of Assets" issued by the Institute of Chartered Accountant of India. As the carrying amount of the assets does not exceed the future recoverable amount consequently, no adjustment is considered necessary by the management.

m) Provisions Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

n) Long term investments are stated at cost less provision, if any, for diminution other than temporary in the value of such investments. Current investments are valued at cost.

o) Accounting policies not specifically referred to above are consistent with Generally Accepted Accountina Principles (GAAP).

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Mar 31, 2010

A) Accounting Convention

The Financial Statements are prepared under the Historical Cost Convention in accordance with applicable accounting standards referred to in Section 211 (3c) and relevant presentational requirements of the Companies Act, 1956.

b) Fixed Assets and Depreciation

Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and other attributable cost including financing & other cost of borrowed funds attributable to construction or acquisition of fixed assets for the period upto the date when the assets are first put to use. Modvat credit availed and VAT credit on Fixed Assets has been reduced from the cost. Expenditure during construction is being capitalized.

Depreciation on Fixed Assets has been provided on straight-line method according to the Schedule XIV of the CompaniesAct, 1956.

c) Use of Estimates

The preparation of financial statements, in conformity with the generally accepted accounting principles, require estimates and assumptions to be made that affects the reported amount of assets and liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results materialize.

d) Intangibles and Amortisation

Intangible assets are recognized if it is probable that the future economic benefits attributable to the assets will flow to the enterprise and cost of the asset can be measured reliably in accordance with Accounting Standard-26 on "Intangibles" issued by the Institute of Chartered Accountants of India.

Intangibles assets are amortised on straight line basis over their useful lives, which range from 1-5 years, determined on the basis of expected future economic benefits. The amortization period and method would be reviewed at the end of each financial year.

e) Inventories

Inventories are valued at cost or net realizable value, which ever is lower. The cost in respect of various items of inventory is computed as under:-

i) In case of Raw-material, Stores, Spares & Fuel on FIFO Basis (net of Modvat & Vat).

ii) In case of Work in Process - Rolling Mill Raw Material are valued at monthly average cost basis. Cost for this purpose includes direct cost and all appropriate allocable overheads.

iii) In case of Finished Goods at cost plus all appropriate allocable overheads and Excise Duty thereon. Cost for this purpose includes direct cost on monthly average cost basis, all appropriate allocable overheads and Excise Duty thereon.

Disposable stores and used items have been valued at net realizable value.

f) Foreign Exchange Transaction

The transactions in Foreign exchange are accounted for at the exchange rates prevailing on the date of the transactions. The current assets and current liabilities are converted at the exchange rate prevailing at the last working day of the accounting year. The resultant gains/losses are recognized in the profit & loss account relating to current assets & current liabilities. Exchange differences on foreign currency transactions relating to fixed assets acquired from a country outside India have been adjusted to revenue.

Forward Exchange contracts not intended for trading or speculation purpose.

In case of forward exchange contract, the premium or discount arising at the inception of such contract. is amortized as income or expense over the life of contract as well as exchange difference on such contract i.e. difference between the exchange rate at the reporting/ settlement date and the exchange rate on the date of inception. The last reporting date, is recognized as income/ expense for the period.

g) Retirement Benefits

i) Provident Fund

Retirement benefits in the form of Provident Fund whether in pursuance of law or otherwise is accounted on accrual basis and charged to Profit & Loss account of the year.

ii) Gratuity

The retirement benefits in the form of Gratuity Scheme have been provided for the year ended as on 31M March 2010. In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the aforesaid defined "benefit" scheme.

h) Borrowing Costs

To capitalize the borrowing costs that is directly attributable to the acquisition or Construction of that Capital asset. Other borrowing Costs are recognized as an expense in the period in which they are incurred.

i) Revenue Recognition

Revenues / Incomes and Cost /Expenditures are being generally accounted on accrual basis, as they are earned or incurred. Expenditures have been disclosed net of Service Tax which are Modvatble.

i) Sales

Sale represents the amount receivable for goods sold including excise duty thereon. Excise duty is reduced from gross sale to arrive net sales.

ii) Interest

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

j) Taxes on Income

Provision for Taxation is made on the basis of the taxable profits computed for the current accounting period in accordance with the Income Tax Act, 1961. Deferred Tax resulting from timing difference between Book Profits and Tax Profits is accounted for at the applicable rate of tax to the extent the timing differences are expected to crystallize, in case of Deferred Tax Liabilities with reasonable certainty and in case of Deferred Tax Assets with virtual certainty that there would be adequate future taxable income against which Deferred Tax Assets can be realized.

k) Segment Reporting

The Company is engaged in the business of Steel Manufacturing which in context of Accounting Standards - 17 - "Segment Report" issued by the Institute of Chartered Accountants of India is considered the only business segment. So separate segment reporting is not necessary.

l) Impairment of Fixed Assets

As at 31st March 2010 the company has reviewed the future earning of its cash generating unit in accordance with the "Accounting Standards 28 Impairment of Assets" issued by the Institute of Chartered Accountants of India. As the carrying amount of the assets does not exceed the future recoverable amount consequently, no adjustment is considered necessary by the management.

m) Provisions Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past event and it is probable that there will be outflow of resources. Contingent liabilities are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statement.

n) Long term investments are stated at cost less provision, if any, for diminution other than temporary in the value of such investments. Current investments are valued at lower of cost or net realizable value.

o) Accounting policies not specifically referred to above are consistent with Generally Accepted Accounting Principles (GAAP).