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Accounting Policies of Scan Steels Ltd. Company

Mar 31, 2023

Note -1A SIGNIFICANT ACCOUNTING POLICIES

1.1 Company Overview

M/s Scan Steels Limited is a public limited company domiciled in Maharastra, India. The company has its listings on the BSE Limited in India. The company is engaged in manufacturing of steel products and in generation of power for captive consumption.

1.2 Basis of Preparation

(i) Compliance with Ind AS :

The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

(ii) Historical Cost Convention :

The financial statements have been prepared and presented on accrual basis and under the historical cost convention, except for the following:

a) certain financial assets and liabilities and contingent consideration that is measured at fair value;

b) Assets held for sale - measured at fair value less cost to sell;

c) Defined benefit plans - plan assets measured at fair value; and share-based payments.

As the year end figures taken from the source and rounded to nearest digits,the figures reported for the previous quarters might not always add up to the year end figures reported in this statement.

1.3 Use of Estimates :

(ii) Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements.

(iii) Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact and that are believed to be reasonable under the circumstances.

1.4 Property, Plant and Equipment, Intangible Assets and Capital Work-in-Progress

i. Property,Plant and Equipment

a) Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

b) The whole of the finance charges paid on assets acquired under Hire Purchase Scheme are considered as âUnmatured finance chargesâ under the head âOther Current Assetsâ in the Balance sheet. Subsequently, at the end of the year the portion of finance charges is transferred to profit & loss account on the basis of the number of instalments due during the year.

ii Depreciation methods, Estimated useful lives and Residual value

a) Depreciation is provided on the straight line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013.

b) Depreciation on assets purchased/acquired during the year is charged from the date of purchase of the assets.

c) An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.

d) Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).

iii. Intangible Assets :

a) Intangible assets are recorded at the consideration paid for acquisition of such assets and claimed at cost less accummulated amortization and impairment.

b) Amortisation methods and periods

The entity amortises intangible assets with a definite useful life using the straight-line method.

iv. Capital Work-in-Progress

Capital Work-In-Progress comprises of the cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

1.5 Financial Instruments Initial Recoginition

Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of the instruments. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities(other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial assets or financial liability. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in Statement of profit and loss.

Subsequent Recognition

i. Financial Assets

a) Measured at amortised cost:

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flow that are solely payments of principal and interest on the principal amount outstanding.

b) Measured at fair value through other comprehensive income:

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates to cash flow that are solely payments of pricipal and interest on the principal amount outstanding and selling financial assets.

c) Measured at fair value through profit or loss:

Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or fair value through other comprehensive income on initial recognition.

d) Equity instruments:

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities. Equity instruments are recognised at the proceeds received net off direct issue cost.

Investment in quoted equity instruments are measured at fair value through other comprehenesive income on the basis active bid market prices and accordingly the changes in fair value has been recognised in the retained earnings as at the date of transiton and subsequently in the Other Comprehensive income.

ii. Financial Liabilities

a) Financial liabilities are measured at amortised cost using effective interest method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.

b) Interest bearing loans and borrowings are subsequently measured at amortised cost using effective interest rate method.Gain and losses recognised in profit and loss when the liabilities are derecognised.

iii De-Recoginition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial

liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires. The entity transfers the difference between the carrying amount of Financial Liability (Bank Loan) and the consideration paid in full settlement to wave off the loan to profit and loss account.

1.6 Inventories :

Raw materials, Stores and Spares, Semi-finsihed Goods, Traded and Finished Goods

a) Raw materials, components and stores & spares are valued at cost following FIFO method. Cost includes purchase price, freight, handling charges and other directly attributable costs to bring the material to its present location and are net of duties and taxes wherever applicable.

b) Semi-finished goods, finished goods and traded goods are valued at lower of cost or Net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on average cost of production.

c) Cost of finished goods inside the plant is exclusive of GST

d) Net realizable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.

1.7 Cash and Cash Equivalents :

For the purpose of presentation in the statement of financial statements, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

1.8 Contributed Equity :

a. Equity shares are classified as equity.

b. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.9 Borrowings :

i. Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

ii. Preference shares, which are mandatorily redeemable on a specific date, are classified as Non Current Financial Liabilities in the âNote 12 - Borrowingsâ.

iii. Borrowings are withdrawn from the balance sheet when obligations specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in Statement of profit and loss as other gains/(losses).

iv. Borrowings are classified as current liabilities unless the entity has an unconditional right

to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current and if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.

1.10 Trade and Other Payables :

These amounts represent liabilities for goods and services provided to the entity prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 90 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

1.11 Provisions & Contingent Liabilities:

a. A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Contingent assets are not recognized.

b. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

c. Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.The measurement of provision for restructuring includes only direct expenditures arising from the restructuring, which are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

1.12 Income Tax :

i. The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

ii. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.

iii. Current income tax expense comprises taxes on income from operations in India and is determined in accordance with the provisions of the Income Tax Act, 1961.

iv. Deferred income tax is provided in full, using the balance sheet approach, on temporary

differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

v. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

vi. Deferred tax assets and liabilities are set off when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are set off where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

vii. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

1.13 Revenue Recognition :

i. Revenue is measured at fair value of

consideration received or receivable. Amount

disclosed as revenue are net of returns, trade allowances, rebates, Goods and services tax and amounts collected on behalf of third parties.

ii. It recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the company.

iii. The company adopts the following criteria for recognizing the revenue:-

a) Sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.

b) Sale of stock in trade is recognized when the goods are dispatched to the customers.

1.14 Purchases :

Purchase of materials is recognized on dispatch of such goods by the suppliers based on certainty of receipt of such goods at the factory. It is shown net of GST credit wherever applicable.

1.15 Employee Benefits :

(i) Short-term employee benefit obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

All Short term employee benefits such as salaries, incentives, special award, medical benefits which fall due within 12 months of the period in which the employee renders related

services, which entitles him to avail such benefits and non accumulating compensated absences (like maternity leave and sick leave) are recognized on an undiscounted basis and charged to Statement of Profit and loss.

(ii) Post-employment obligations

The entity operates the following postemployment schemes:

(a) defined benefit plans such as gratuity, Superannuation; and

(b) defined contribution plans such as provident fund.

Provident fund obligations

Contribution to the provident fund, which is a defined contribution plan, made to the Regional Provident Fund Commissioner is charged to the Statement of Profit and loss on accrual basis.

Gratuity and Superannuation obligations

The company has not made any provision with regard to gratuity and superannuation benefits on actuarial basis in compliance to the provisions laid in accounting standard on accounting for retirement benefits. However the company has taken a group gratuity policy with life insurance corporation of india in respect of retirement benefits of its employees,the annual premium of whihc is charged to the Statement of Profit and Loss.

(iii) Bonus plans

The entity recognises a liability and an expense for bonus. It recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

1.16 Borrowing Costs :

a) General and specific borrowing costs that are directly attributable to the acquisition,

construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

b) Other borrowing costs are expensed in the period in which they are incurred.

1.17 Segment Reporting :

(i) The Company is primarily engaged in the business of manufacturing of steel and power for captive consumption.

(ii) The companyâs products are dispatched from plants located at Rajgangpur (Odisha), and Bellary (Karnataka) to various parts of the country and considering the customer base which is wide spread all over the country, no such geographical differentiation can be done for presenting the information.

1.18 Rounding of Amounts :

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated. Also the figures of additions and/or substractions have been rounded up/off autometically for reporting at INR in lakhs.

NOTE - 1B: SIGNIFICANT ACCOUNTINGESTIMATES & JUDGEMENTS

The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets, valuation

of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc.

Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.

A. JUDGEMENTS

In the process of applying the companyâs accounting policies, management has made the following judgements, which have the significant effect on the amounts recognised in the financial statements:

Materiality

Ind AS requires assessment of materiality by the Company for accounting and disclosure of various transactions in the financial statements. Accordingly, the Company assesses materiality limits for various items for accounting and disclosures and follows on a consistent basis. Overall materiality is also assessed based on various financial parameters such as Gross Block of assets, Net Block of Assets, Total Assets, Revenue and Profit Before Tax. The materiality limits are reviewed and approved by the Board.

Contingencies

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to

occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.

B. ESTIMATES AND ASSUMPTIONS

The key assumptions concerning the future and other key sources of estimation at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Existing circumstances and assumptions about future developments, however, may change due

to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

Income Taxes

The Company uses estimates and judgements based on the relevant facts, circumstances, present and past experience, rulings, and new pronouncements while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised.

Mar 31, 2018

Note -1 SIGNIFICANT ACCOUNTING POLICIES

1.1 Company Overview

M/s Scan Steels Limited is a public limited company domiciled in India. The company has its listings on the BSE Limited in India. The company is engaged in manufacturing of steel products and in generation of power for captive consumption. The company is also involved in derivative contracts that are intended for trading.

1.2 Basis of Preparation

(i) Compliance with Ind AS :

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.The financial statements up to year ended 31 March 201 6 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

(ii) Historical Cost Convention :

The financial statements have been prepared and presented on accrual basis and under the historical cost convention, except for the following:

a) certain financial assets and liabilities and contingent consideration that is measured at fair value;

b) assets held for sale - measured at fair value less cost to sell;

c) defined benefit plans - plan assets measured at fair value; and share-based payments.

1.3 Use of Estimates :

(i) The preparation of the financial statements are in conformity with Indian Accounting Standards (Ind AS)that requires management to make judgment estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosures relating to contingent liabilities as at the end of the reporting period. Although these estimates are based on the managementâs best knowledge of current events and action uncertainty above these consumptions and estimates could not in the outcomes requiring a material adjustments to the carrying amounts of assets and liabilities in future periods.

(iv) All the assets and liabilities have been classified as current and non-current as per the companyâs normal operating cycle of twelve months and other criteria set our in Schedule-III of the Companies Act,2013.

1.4 Property, Plant and Equipment, Intangible Assets and Capital Work-in-Progress

i. Property, Plant and Equipment

b) Capital Work-In-Progress comprises of the cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

c) The whole of the finance charges paid on assets acquired under Hire Purchase Scheme are considered as âUnmatured finance chargesâ under the head âOther Current Assetsâ in the Balance sheet. Subsequently, at the end of the year the portion of finance charges is transferred to profit & loss account on the basis of the number of instalments due during the year.

ii Depreciation methods, Estimated useful lives and Residual value

a) Depreciation is provided on the straight line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act,2013.

b) Depreciation on assets purchased/acquired during the year is charged from the date of purchase of the assets. Assets that are acquired during the year are depreciated fifty percent of the amount calculated for one year based on the new method and the balance is proposed to be in the year of disposal

c) An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.

d) Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).

iii. Intangible Assets :

a) Intangible assets are recorded at the consideration paid for acquisition of such assets and claimed at cost less accummulated amortization and impairment.

b) Amortisation methods and periods

The entity amortises intangible assets with a definite useful life using the straight-line method.

iv. Capital Work-in-Progress

Capital Work-In-Progress comprises of the cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

1.5 Revenue Recognition :

i. Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty,net of returns, trade allowances, rebates, Goods and services tax and amounts collected on behalf of third parties.

ii. It recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the company.

iii. The company adopts the following criteria for recognizing the revenue:-

a) Sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.

b) Sale of traded goods is recognized when the goods are dispatched to the customers.

1.6 Inventories :

Raw materials,Stores and Spares,Semi-finsihed Goods, Traded and Finished Goods

b) Semi-finished goods and finished goods are valued at lower of cost or Net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on average cost of production.

c) Cost of finished goods inside the plant is exclusive of GST

d) Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

1.7 Financial Instruments

Financial assets and liabilities are recognised when the company becomes a party to the contractual provisions of the instruments.Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities(other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial assets or financial liability.The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in Statement of profit and loss.

i. Financial Assets

a) measured at amortised cost

b) measured at fair value through other comprehensive income

c) measured at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or fair value through other comprehensive income on initial recognition.

d) Equity instruments

An equity instrument is a contract that evidences residual interest in the assets of the company after deducting all of its liabilities.Equity instruments are recognised at the proceeds received net off direct issue cost.

All equity instruments classified under financial assets are subsequently measured at fair value.Equity instruments which are held for trading are measured at FVTPL.

ii. Financial Liabilities

a) Financial liabilities are measured at amortised cost using effective interest method.Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.

1.8 Borrowings :

ii. Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The cost on these preference shares are recognised in profit or loss as finance costs.

iv. Borrowings are classified as current liabilities unless the entity has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current and if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.

1.9 Employee Benefits :

(i) Short-term employee benefit obligations

All Short term employee benefits such as salaries, incentives, special award, medical benefits which fall due within 12 months of the period in which the employee renders related services, which entitles him to avail such benefits and non accumulating compensated absences (like maternity leave and sick leave) are recognized on an undiscounted basis and charged to Statement of Profit and loss.

(ii) Post-employment obligations

âThe entity operates the following postemployment schemes:

(a) defined benefit plans such as gratuity,Superannuation and

(b) defined contribution plans such as provident fund.â

Provident fund obligations

Contribution to the provident fund, which is a defined contribution plan, made to the Regional Provident Fund Commissioner is charged to the Statement of Profit and loss on accrual basis.

Gratuity and Superannuation obligations

The company has not made any provision with regard to gratuity and superannuation benefits on actuarial basis in compliance to the provisions laid in accounting standard on accounting for retirement benefits. However the company has taken a group gratuity policy with life insurance corporation of India in respect of retirement benefits of its employees, the annual premium of which is charged to the Statement of Profit and Loss.

(iii) Bonus plans

The entity recognises a liability and an expense for bonuses. It recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

1.10 Foreign currency translation :

(i) Functional and presentation currency

Each items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions i.e. Revenue, expense and cash-flow items denominated in foreign currencies are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.

(iii) Adjustments for foreign exchange differences

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses).

1.11 Income Tax :

ii. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

iii. Current income tax expense comprises taxes on income from operations in India and is determined in accordance with the provisions of the Income Tax Act, 1961. Minimum Alternate Tax (MAT) is paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability.

The company offsets on a year on basis, the current tax assets and liabilities, where it intends to settle such assets and liabilities on a net basis. The current tax expense recognized in the financial statements is net off MAT credit utilized during the period.

iv. Deferred income tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws] that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

1.12 Trade and Other Payables :

1.13 Purchases :

Purchase of materials is recognized on dispatch of such goods by the suppliers based on certainty irrespective of receipt of such goods at the factory. It is shown net of CENVAT/VAT credit wherever applicable.

1.14 Cash and Cash Equivalents :

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

1.15 Borrowing Costs :

a) General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

b) Other borrowing costs are expensed in the period in which they are incurred.

1.16 Segment Reporting :

(i) The Company is primarily engaged in the business of manufacturing of steel and power for captive consumption and Trading of Sponge Iron. The Company has identified two primary business segments namely Manufacturing and trading, which in context of Indian Accounting Standard 108 on âOperating Segmentsâ constitute reportable segment. However, as the turnover of trading segment is less than 10% of the total revenue, no such reporting is required.

1.17 Provisions & Contingent Liabilities:

1.18 Fair value of Investments

1.19 Contributed Equity :

a. Equity shares are classified as equity.

b. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.20 Rounding of Amounts :

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

Mar 31, 2016

Corporate Information

M/s Scan Steels Limited is a public limited company domiciled in India. The company has its primary listings on the BSE Limited in India. The company is engaged in manufacturing of steel products and in generation of power for captive consumption. The company is also involved in derivative contracts that are intended for trading.

1. Significant Accounting Policies: i Basis of Accounting:

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting stands as prescribed under Section 133 of the Companies Act.,2013 )''Act'') read with Rule 7 of the Companies (Accounting) Rules, 2014 the provisions of the Act (to the extent notified ) and guidelines issued by the Securities and exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

ii. Use of Estimates:

The preparation of the financial statements'' in conformity with GAAP requires management to make judgment estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosures relating to contingent liabilities as at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and action uncertainty above these consumptions and estimates could not in the outcomes requiring a material adjustments to the carrying amounts of assets and liabilities in future periods.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

iii. Classification of Assets and Liabilities:

All the asset and liabilities of the companies are segregated into current and non-current based on the principles and definitions as set out in the schedule III of the Companies Act.2013 as amended. The company has adopted a period of twelve months as its operating cycle.

iv. Fixed Assets:

a. Tangible Assets are stated at cost net of CENVAT credit after deducting the accumulated depreciation. The cost of an asset comprises its purchase price and any attributable costs of bringing such assets to its working condition for intended use.

b. Intangible assets are recorded at the consideration paid for acquisition of such assets and a claimed at cost less accommodated amortization and impairment.

c. Capital Work-In-Progress comprises of the cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

d. The whole of the finance charges paid on assets acquired under Hire Purchase Scheme are considered as "Un matured finance charges" under the head "Other Current Assets" in the Balance sheet. Subsequently, at the end of the year the portion of finance charges is transferred to profit & loss account on the basis of the number of installments due during the year.

v. Inventories:

a. a. Raw materials, components and stores & spares are valued at cost following FIFO method. Cost includes purchase price, freight, handling charges and other directly attributable costs to bring the material to its present location and are net of duties and taxes wherever applicable.

b. Work-in-progress and finished goods are valued at lower of cost or Net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on average cost of production.

c. Cost of finished goods inside the plant includes excise duty.

d. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

e. Shares held as stock-in trade are valued at current market price.

vi. Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured. The company adopts the following criteria as for recognizing the revenue:-

a. Sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods, net of Value-added taxes.

b. Sale of traded goods is recognized when the goods are dispatched to the customers.

c. Sale of Share is accounted when contract for sale is entered into.

d. Net gain arising from trading of derivatives contracts is recognized after considering the offsetting effect of the net loss if any.

vii. Provisions and Contingent Liabilities:

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Contingent assets are not recognized.

viii Foreign Currency Transactions:

Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.

ix. Cash and Cash equivalents:

Cash and cash equivalents comprise cash and cash on deposit with banks. The Company considers highly liquid investments with a maturity of more than twelve months and that are readily convertible to known amounts of cash to be cash equivalents.

x. Excise Duty:

Excise duty is accounted for on dispatch of products from the factory and on closing stock.

xi Purchase:

xii. Employee Benefits:

a. Short Term Employee Benefits:

b. Defined Contribution Plan:

Contribution to the provident fund, which is a defined contribution plan, made to the Regional Provident Fund Commissioner is charged to the Profit and loss Statement on accrual basis.

c. Defined Benefit Plan:

The company has not made any provision with regard to gratuity and superannuation benefits on actuarial basis in compliance to the provisions laid in accounting standard on accounting for retirement benefits. However, the Company has taken a group gratuity policy with Life Insurance Corporation of India in respect of retirement benefits of its employees, the annual premium of which is charged to the profit and loss statement

xiii. Borrowing costs:

Borrowing costs directly attributable to the acquisition, construction or production of quelling asset are capitalized as part of the respective asset. All other borrowing costs are expended in the period they occur.

xiv. Depreciation:

Depreciation is provide on Straight Line Method over the period of assets after keeping 5% of cost as residual value in the manner prescribed in the Companies Act, 2013. Depreciation on assets purchased/acquired during the year is charged from the date of purchase of the assets. Assets that are acquired during the year are depreciated fifty percent of the amount calculated for one year based on the new method and the balance is proposed to be in the year of disposal. Similarly depreciation on assets sold/discarded during the year is charged up the date of sale of assets.

xv. Tax Expenses:

a. Current income tax expense comprises taxes on income from operations in India and is determined in accordance with the provisions of the Income Tax Act, 1961.Minimum Alternate Tax (MAT) is paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability. The company offsets on a year on basis, the current tax assets and liabilities, where it intends to settle such assets and liabilities on a net basis. The current tax expense recognized in the financial statements is net off MAT credit utilized during the period.

b Deferred tax liability or asset is recognized on timing difference related to depreciation on fixed assets being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in subsequent periods. Deferred tax assets and liabilities are calculated using the tax rates and tax laws prevailing on the balance sheet date.

xvi Segment Reporting:

a. The Company is primarily engaged in the business of manufacturing of steel and power for captive consumption and Trading of Sponge Iron. The Company has identified two primary business segments namely Manufacturing and trading, which in context of Accounting Standard 17 on Segment Reporting" constitute reportable segment. However, as the turnover of trading segment is less than 10% of the total revenue, no such reporting is required.

b. The company''s products are dispatched from plants located at Rajgangpur (Odisha), and Bellary (Karnataka) to various parts of the country and considering the customer base which is wide spread all over the country, no such geographical differentiation can be done for presenting the information.

v. The company has allotted on Preferential basis 1,10,05,330 no of equity shares & 1,28,49,605 no. of preference shares at a premium as decided by the Board of Directors. Further, the company has also allotted on Preferential basis 80,00,000 Noâs of share warrants having an option/entitlement to apply for end be allotted equivalent number of equity shares of face value of Rs. 10 each of the company at an exercise price of Rs. 50(Rupees Fifty Only) (including a premium of Rs. 40) per equity shares, in its Board Meeting held on 14th October,2015, the allottees had exercised such power to convert 44,53,330 number of warrants into equity shares at board meeting held on different dates during the year.

vi. The banker State Bank of India, being leader of Consortium has treated its lending facilities to the company as non-performing on 28th November, 2015. The insufficient cash flow due to drastic reduction in prices of steel products, cheaper imports into India & slowdown of global economy, being the reasons for non honoring commitments to the bank. As a result interest component on such loan of Rs. 80,00,00,000 has not been provided in the financial statement for the period from 20th December 2015 to 31st March,2016 which has impact on the profitability for the year under reporting, the said figure not being determinable as of now. Further, in relation to this one more banker has classified the lending facilities of Rs. 5,84,00,000

Pursuant to the scheme of Arrangement (the scheme) 3 approved by the shareholders and sanctioned by the S Hon''ble High Court of Odisha and at Bombay whereby Scan Steels Ltd. the transferor company are amalgamated with M/s Clarus Infrastructure Realities Ltd. the transferee company. The scheme became effective on 1st of April, 2010. Under the provisions of the Companies Act 1956, the transferor company was transferred to and vested in the company as a going concern basis.

ix. The Amalgamation has been accounted for in the books of account of ''Clarus Infrastructure Realties Ltd. under "Pooling of Interest Method" as prescribed under Accounting Standard (As) 14 "Accounting for Amalgamations" issued by the Institute of Chartered Accountants of India.

xi. Diminution in value of Inventory:

This denotes the reduction in value of inventory held for day to day operation as raw materials, finished goods, semi-finished goods and trading goods of the company. The reduction in value of stock arose due to sharp decline in finished goods price mainly arose on account of cheaper import of steel into India and fall in international raw material prices. During this slowdown of economy, the company has suffered a lot. The company has calculated reduction value amounting to ''78,42,86,306 which has been treated as non-current assets in the audited financial statement for the year under review. The board of directors has decided to amortize this amount in the subsequent years by charging to profit & loss account on proportionate basic.

xii. Trade Payable includes acceptances of bill representing liability towards Letter of Credit and MSME RFS limit from Banks. The Letter Of credit is primarily secured with hypothecation of merchandise covered under said LC on pari-passu basis with Consortium member Banks. The MSME RFS limit solely sanctioned by SIDBI is primarily secured with pledge of Fixed Deposit, personal guarantee of directors along with other specified collateral securities in the company'' name.

xiii. The company has not received any intimation from the suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. and hence disclosures, relating to amount unpaid as at the yearend together with the interest paid /payable as required under the said act have not been given.

xiv. The exceptional items represent expenses of LC Usance Interest and Stores, Spares and Consumables related to earlier years.

xv. Debtors & Creditors balances are subject to confirmation.

xvi. Previous year figures have been regrouped and/or rearranged wherever necessary, confirming to current year. Figures in bracket represent previo

Mar 31, 2015

Corporate Information:

M/s Scan Steels Limited is a public limited company domiciled in India. The company has its primary listings on the BSE Limited in India. The company is engaged in manufacturing and filling of sponge iron, billet /ingot and TMT bars and in generation of power for captive consumption. The company is also involved in derivative contracts that are intended for trading.

i Basis of Accounting :

These financial statements are prepared in accordance with Indian Generally Accepted Ac- counting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises manda- tory accounting stands as prescribed under Section 133 of the Companies Act.,2013 )'Act') read with Rule 7 of the Companies (Accounting) Rules, 2014 the provisions of the Act (to the extent notified ) and guidelines issued by the Securities and exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

ii. Use of Estimates :

The preparation of the financial statements' in conformity with GAAP requires management to make judgment estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosures relating to contingent liabilities as at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and action uncertainty above these consumptions and estimates could not in the outcomes requiring a material adjustments to the carrying amounts of assets and liabilities in future periods.

Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

iii. Classification of Assets and Liabilities :

All the asset and liabilities of the companies are segregated into current and non-current based on the principles and definitions as set out in the schedule III of the Companies Act.2013 as amended. The company has adopted a period of twelve months as its operating cycle.

iv Fixed Assets :

a. Tangible Assets are stated at cost net of CENVAT credit after deducting the accumulated depreciation. The cost of an asset comprises its purchase price and any attributable costs of bringing such assets to its working condition for intended use.

b. Intangible assets are recorded at the consideration paid for acquisition of such assets and an claimed at cost less accommodated amortization and impairment.

c. Capital Work-In-Progress comprises of the cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

d. The whole of the finance charges paid on assets acquired under Hire Purchase Scheme are considered as "Un matured finance charges" under the head "Other Current Assets" in the Balance sheet. Subsequently, at the end of the year the portion of finance charges is transferred to profit & loss account on the basis of the number of installments due during the year.

v. Inventories :

a. a. Raw materials, components and stores & spares are valued at cost following FIFO method. Cost includes purchase price, freight, handling charges and other directly attributable costs to bring the material to its present location and are net of duties and taxes wherever appli- cable.

b. b. Work-in-progress and finished goods are valued at lower of cost or Net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on average cost of production.

c. Cost of finished goods inside the plant includes excise duty.

d. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

e. Shares held as stock-in trade are valued at current market price.

vi Revenue Recognition :

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be readily measured. The company adopts the following criteria as for recognizing the revenue:-

a. Sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods, net of Value-added taxes.

b. Sale of traded goods is recognized when the goods are dispatched to the customers.

c. Sale of Share is accounted when contract for sale is entered into.

d. Net gain arising from trading of derivatives contracts is recognized after considering the offsetting effect of the net loss if any.

vii. Provisions and Contingent Liabilities :

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Contingent assets are not recognised.

viii Foreign Currency Transactions :

Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.

ix. Cash and Cash equivalents :

Cash and cash equivalents comprise cash and cash on deposit with banks. The Company considers all highly liquid investments with a remaining maturity of less than twelve months and that are readily convertible to known amounts of cash to be cash equivalents.

x. Excise Duty:

Excise duty is accounted for on dispatch of products from the factory and on closing stock.

xi Purchase:

Purchase of materials is recognized on dispatch of such goods by the suppliers based on certainty irrespective of receipt of such goods at the factory. It is shown net of CENV AT/VAT credit wherever applicable.

xii. Employee Benefits:

a. Short Term Employee Benefits:

All Short term employee benefits such as salaries, incentives, special award, medical benefits which fall due within 12 months of the period in which the employee renders related services, which entitles him to avail such benefits and non accumulating compensated absences (like maternity leave and sick leave) are recognized on an undiscounted basis and charged to Profit and Loss Statement.

b. Defined Contribution Plan:

Contribution to the provident fund, which is a defined contribution plan, made to the Regional Provident Fund Commissioner is charged to the Profit and loss Statement on accrual basis.

c. Defined Benefit Plan:

The company has not made any provision with regard to gratuity and superannuation benefits on actuarial basis in compliance to the provisions laid in accounting standard on ac- counting for retirement benefits. However, the Company has taken a group gratuity policy with Life Insurance Corporation of India in respect of retirement benefits of its employees, the annual premium of which is charged to the profit and loss statement

xiii. Borrowing costs:

Borrowing costs directly attributable to the acquisition, construction or production of quelling asset are capitalized as part of the respective asset. All other borrowing costs are ex- pended in the period they occur.

xiv. Depreciation:

a. The Company has with effective from 01.04.2014 revised the method of charging depreciation based on the useful life of its various tangible assets as prescribed in Part D of Schedule II to the Companies Act,2013. As a result, depreciation for the year ended 31st March, 2015 calculated on straight line method has been reduced by Rs. 5,13,40,175/-. Similarly in the case of those tangible assets, whose useful life has been completed as on 31st March, 2014 the carrying value (net of residual value) of those fixed assets amounting to Rs. 1,28,48,045/- (net of deferred tax of Rs. 57,41,435.00) have been debited to the opening balance of retained earnings.

b. Assets that are acquired during the year are depreciated fifty percent of the amount calculated for one year based on the new method and the balance is proposed to be in the year of disposal.

c. Intangible Assets are amortized on written down value method basis, commencing from the date the asset is available to the company for its use.

xv. Tax Expenses:

a. Current income tax expense comprises taxes on income from operations in India and is deter- mined in accordance with the provisions of the Income Tax Act, 1961.Minimum Alternate Tax (MAT) is paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability. The company offsets on a year on basis, the current tax assets and liabilities, where it intends to settle such assets and liabilities on a net basis. The current tax expense recognised in the financial statements is net off MAT credit utilised during the period.

b Deferred tax liability or asset is recognised on timing difference related to depreciation on fixed assets being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in subsequent periods. Deferred tax assets and liabilities are calculated using the tax rates and tax laws prevailing on the balance sheet date.

xvi Segment Reporting:

a. The Company is primarily engaged in the business of manufacturing of steel and power for captive consumption and Trading of Sponge Iron. The Company has identified two primary business segments namely Manufacturing and trading, which in context of Accounting Standard 17 on Segment Reporting" constitute reportable segment. However, as the turnover of trading segment is less than 10% of the total revenue, no such reporting is required

b. The company's products are dispatched from plants located at Rajgangpur (Odisha), and Bellary (Karnataka) to various parts of the country and considering the customer base which is wide spread all over the country, no such geographical differentiation can be done for presenting the information.

Mar 31, 2014

I. Use of Estimates:

The preparation of financial statements are in conformity with the generally accepted accounting principles which requires estimates and assumptions to be made, that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported period. Differences between the actual results and estimates are recognised in the year in which the results are known/ materialized.

ii. Fixed Assets:

a. Fixed Assets are stated at cost net of CENVAT credit after deducting the accumulated depreciation. The cost of an asset comprises its purchase price and any attributable costs of bringing such assets to its working condition for intended use.

b. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalized till the date on which the asset is put for its intended use. Other borrowing costs are recognised as an expense in the period in which these are incurred.

c. The whole of the finance charges paid on assets acquired under Hire Purchase Scheme are considered as "Un matured finance charges" under the head "Other Current Assets" in the Balance sheet. Subsequently, at the end of the year the portion of finance charges is transferred to profit & loss account on the basis of the number of installments due during the year.

iii. Investments:

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

Current Investments are carried in financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost.

iv. Secured Loans:

a. The term loans are secured by charge on the company''s immovable and movable assets both present and future financed by the lenders ranking paripassu among member banks depending upon exposure of particular bank.

b. The term loan repayment is to be made in quarterly installments specified against each loan commencing from 01.04.2014 as per banker''s specification.

v. Inventory

Raw materials, components and stores & spares are valued at cost following FIFO method. Cost includes purchase price, freight, handling charges and other directly attributable costs to bring the material to its present location and are net of duties and taxes wherever applicable.

Work-in-progress and finished goods are valued at lower of cost or Net realizable value. Cost includes direct materials, labour and a proportion of manufacturing overheads based on average cost of production.

Cost of finished goods inside the plant includes excise duty.

Stock of Equity Shares held as stock in trade by the company is valued at lower of cost or market value.Cost is determined on "first in first out basis"

Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

vi. Revenue Recognition:

a. Sale of manufactured goods is accounted for on transfer of title on the goods to the buyer.

b. Sale of Stock in Trade is recognized on despatch of such goods to customers.

c. Sales figure stated in Statement of Profit and Loss is inclusive of Excise Duty.

d. Sale of shares is accounted when the contract for sale is entered into.

vii. Excise Duty:

Excise duty is accounted for on despatch of products from the factory and on closing stock.

viii. Purchase:

Purchase of materials is recognized on despatch of such goods by the suppliers based on certainty irrespective of receipt of such goods at the factory. It is shown net of CENVAT/VAT credit wherever applicable.

ix. Employee Benefits:

a. Short Term Employee Benefits:

All Short term employee benefits such as salaries, incentives, special award, medical benefits which fall due within 12 months of the period in which the employee renders related services, which entitles him to avail such benefits and non accumulating compensated absences (like maternity leave and sick leave) are recognized on an undiscounted basis and charged to Profit and Loss Statement.

b. Defined Contribution Plan:

Contribution to the provident fund, which is a defined contribution plan, made to the Regional Provident Fund Commissioner is charged to the Profit and loss Statement on accrual basis.

c. Defined Benefit Plan:

The company has not made any provision with regard to gratuity and superannuation benefits on actuarial basis in compliance to the provisions laid in accounting standard on accounting for retirement benefits. However, the Company has taken a group gratuity policy with Life Insurance Corporation of India in respect of retirement benefits of its employees, the annual premium of which is charged to the profit and loss statement.

x. Borrowing costs:

Borrowing costs are accounted for as an expense in the period in which they are incurred except those that are attributable to qualifying assets which is dealt in Para 1.ii.b

xi. Depreciation:

a. Depreciation on Fixed Assets is provided on straight line method at the rates and in the manner prescribed under schedule XIV to the Companies Act, 1956.

b. Assets that cost less than Rupees five thousand is depreciated at the rate of hundred percent on a proportionate basis for the number of days for which it is put to use during the year.

xii. Deferred Taxation:

a. Current income tax expense comprises of taxes on income from operations in India and is determined in accordance with the provisions of the Income Tax Act, 1961.

b. Deferred tax expense or benefit is recognized on timing difference being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in subsequent periods. Deferred tax assets and liabilities are calculated using the tax rates and tax laws prevailing on the balance sheet date.

xiii. Segment Reporting:

a. The Company is primarily engaged in the business of manufacture, Trading of Sponge Iron, Ingot/Billet, TMT Rod etc. along with the financial segment also. The Company has identified three primary business segments namely Manufacturing, trading,of manufactured goods and sale of shares, which in context of Accounting Standard 17 on Segment Reporting" constitute reportable segment. However, as the turnover of trading segment and financial segments are less than 10% of the total revenue, no such reporting is required.

b. The company''s manufactured products are dispatched from plants located at Rajgangpur (Odisha), and Bellary (Karnataka) to various parts of the country and considering the customer base which is wide spread all over the country, no such geographical differentiation can be done for presenting the information.

xiv. Earning Per Shares:

Earning per Share has been Computed in accordance with accounting standard 20 Earning per shares'' by diluting the net profit or less for the period attributable to equity shares holders, by the weighted average number of equity shares outstanding during the period, the earning considered for accenting the company''s earnings per share is the Net Profit after tax.

Mar 31, 2010

A. Basis of Preparation of Financial Statements

Financial statements are prepared on the historical cost convention, on accrual basis, in accordance with the Generally Accepted Accounting Principals (GAAP), and applicable accounting standards and the provisions of the Companies Act, 1956.

b. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the years presented. Actual results could differ from those estimates.

c. Revenue Recognition

Incomes/Expenses/Revenues are accounted for on accrual basis in accordance with the Accounting Standard (AS-9) issued by the Institute of Chartered Accountants of India except for dividend and interest on income-tax. Revenue is recognised to the extent that it is probable that the economic benefit will flow to the company and the revenue can be reliably measured.

Sale of shares is accounted when the contract for sale is entered into.

d. Inventories

Stock of equity shares held as stock-in-trade by the company is valued at lower of cost or market value. Cost is determined on "first in first out basis.

e. Fixed Assets

Fixed Assets are stated at cost including all incidental expenses incurred for bringing the asset to its current position, less depreciation at rates prescribed in Schedule XIV to the Companies Act, 1956, subject to provisions of Accounting Standard 26 "Intangible Assets" issued by Institute of Chartered Accountants of India.

f. Depreciation

Depreciation has been provided on Straight Line Method in accordance with section 205(2) of the Companies Act, 1956 at the rates specified in schedule XIV to the Companies Act, 1956, on pro-rata basis with reference to the period of use of such assets. Assets costing less than Rs. 5,000/- per item are depreciated at 100% in the year of purchase.

g. Retirement Benefits

All short-term employee benefits are recognised at their undiscounted amount in the accounting period in which they are incurred.

Retirement Benefits in the form of gratuity and leave salary is accounted on payment basis in the year of payment.

h. Income Tax

Provision for current tax is made for the tax liability payable on taxable income after considering the allowances, deductions and exemptions and disallowances if any determined in accordance with the prevailing tax laws.

The differences between the taxable income and the net profit or loss before tax for the period as per the financial statements are identified and the tax effect on the "timing differences" is recognised as deferred tax asset or deferred tax liability. The tax effect is calculated on the accumulated timing differences at the end of the accounting period based on the tax rates and laws, enacted or substantively enacted as of the balance sheet date. i. Provisions, Contingent Liabilities & Contingent Assets

The Company creates a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the outflow.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not within the control of the company.

Contingent Assets are neither recognised nor disclosed in the Financial Statements as a matter of prudence.

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