Accounting Policies of Surana Industries Ltd. Company

Mar 31, 2015

2.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to com- ply with the Accounting Standards specified under Sec- tion 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the rel- evant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act, 1956 ("the 1956 Act"), as appli- cable. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets acquired in the year 2000-01, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those fol- lowed in the previous year.

2.2 Use of Estimates

The preparation of the financial statements in confor mity with Indian GAAP requires the Management to make estimates and assumptions considered in the re- ported amounts of assets and liabilities (including con- tingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial state- ments are prudent and reasonable. Future results could differ due to these estimates and the differences be- tween the actual results and the estimates are recognised in the periods in which the results are known / materialise.

2.3 Inventories

Inventories are valued at the lower of cost determined on weighted average basis and net realisable value af- ter providing for obsolescence and other losses, where considered necessary. Cost includes all direct costs and applicable production overheads incurred in bringing such inventories to their present location and condi- tion. Cost includes all charges incurred in bringing the goods to the point of sale including Octroi and other levies, transit insurance and receiving charges. Work in progress and finished goods include appropriate pro- portion of overheads and where applicable, excise duty.

2.4 Cash and Cash Equivalents ( for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.5 Cash Flow Statement

Cash flows are reported using the indirect method, whereby loss before extraordinary items and tax is ad- justed for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash re- ceipts or payments. The cash flows from operating, in- vesting and financing activities of the Company are seg- regated based on the available information.

2.6 Depreciation

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

Leasehold land is amortised over the duration of the lease.

Refer to Note 33 for change in estimate of useful life of fixed assets.

2.7 Revenue Recognition Sale of Goods

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.

Other Income

Interest income is accounted on accrual basis. Dividend Income is accounted for when the right to receive it is established.

2.8 Fixed Assets

Fixed assets are carried at cost less accumulated preciation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expendi- ture on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Sub- sequent expenditure on fixed assets after its purchase / completion is capitalised only if such expenditure re- sults in an increase in the future benefits from such asset beyond its previously assessed standard of per- formance.

The Company revalued certain assets during the year 2000-2001. The revalued assets are carried at the re- valued amounts less accumulated depreciation until March 31,2014 and impairment losses, if any. Increase in the net book value on such revaluation is credited to "Revaluation reserve account" except to the extent such increase is related to and not greater than a decrease arising from a revaluation / impairment that was previ- ously recognised in the Statement of Profit and Loss, in which case such amount is credited to the State- ment of Profit and Loss. Decrease in book value on revaluation is charged to the Statement of Profit and Loss except where such decrease relates to a previ- ously recognised increase that was credited to the Re- valuation reserve, in which case the decrease is charged to the Revaluation reserve to the extent the reserve has not been subsequently reversed / utilised.

Capital work-in-progress

Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

2.9 Foreign currency transactions and translations

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates pre- vailing on the date of the transaction or at rates that closely approximate the rate at the date of the transac- tion. Foreign currency monetary items of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Com- pany are carried at historical cost. Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognised as income or expense in the Statement of Profit and Loss.

2.10 Investments

Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

2.11 Employee Benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity and compensated absences.

i) Defined Contribution Plan

The Company's contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are ren- dered by the employees.

ii) Defined Benefit Plan

The liability for Gratuity to employees as at Balance Sheet date is determined on the basis of actuarial valuation based on Projected Unit Credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised imme- diately to the extent that the benefits are already vested and otherwise is amortised on a straight- line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost. Any asset resulting from this calculation is limited to past service cost.

iii) Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under :

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

iv) Long Term Employee Benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the de- fined benefit obligation as at the balance sheet date.

2.12 Borrowing Cost

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to con- struction / development of the qualifying asset up to the date of capitalisation of such asset are added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

2.13 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.

2.14 Earning per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive poten- tial equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conver- sion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.

Potential dilutive equity shares are deemed to be con verted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined inde- pendently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bo- nus shares, as appropriate.

2.15 Taxes on Income

Current tax is the amount of tax payable on the taxable income for the year as determined in accor- dance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accord- ingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent pe- riods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax as- sets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

2.16 Impairment of assets

The carrying values of assets / cash generating units at each balance sheet date are reviewed for impair- ment. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.

If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss, unless the asset is carried at revalued amount, in which case any impairment loss of the re- valued asset is treated as a revaluation decrease to the extent a revaluation reserve is available for that asset.

When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was previously charged to the State- ment of Profit and Loss. In case of revalued assets such reversal is not recognised.

2.17 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable esti- mate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabili- ties are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

2.18 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is ac- counted and when there is reasonable certainty in availing / utilising the credits.

2.19 Operating Cycle

Based on the nature of products / activities of the Com- pany and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the pur- pose of classification of its assets and liabilities as current and non-current.

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Mar 31, 2013

(a) Basis for Accounting

The financial statements are prepared under the historical costcon ventinaccrual basis of accounting in ac- cordance with the g e nerally accepted accounting principles, Accounting Standards notifed under Section 211(3C) of the Companies Act, 1956 and the relevant provisions thereof.

(b) Revenue Recognition

Sales comprises sale of goods and services, net of trade discounts.

(c) Employee B enefts

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Post employment benefts such as Gratuity, EL encashment arere cog nised as an expense in the P roft and Loss Account for the year in which the employee has rendered services. The expense is recognised at the present value of the amount payable towards contributions.

(iii) Actuarial gains and losses in respect of post employment benefts are charged to the Proft and Loss Account.

(d) Fixed Assets

All fxed a s s e ts are valued at cost less accumulated depreciation. Pre-operation expenses including trial run expenses are capitalised. Borrowing costs during the period of construction is added to the cost of fxed assets.

(e) Depreciation

The depreciation is provided on a straight line basis applying the rates specifed in Schedule XIV to the Companies Act, 1956.

(f) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of excha n g e prevai ling at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the proft & loss account for the year, except to the extent that they relate to new projects till the date of capitalization w hicha re carried t o pre-operative expenses.

(g) Investments

Long term investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value.

(h) Inventories

Finished and semi-fnished products produced and purchased by the Company are carried at lower of cost and net realisable value.

Coal, iron ore and other raw materials purchased by the Company are carried at lower of cost and net realisable value.

Stores and spare parts are c arried at cost. Necessary provision ismade and charged to revenue in caseo f identifed obsolete and non-moving items.

Cost of inventories is generally ascertained on ‘weighted average’ basis. Work-in-progress and fnished and semi- fnished products are valued on full absorption cost basis.

(i) Taxes on Income

Tax expense comprises of current tax and deferred tax. Current income tax is provided on the taxable income for the period as per the provisions of Income tax Act 1961.Defered tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable incomesa n da cc ounting income that originate in one period and is capable of reversal ino ne or more subsequent periods.

(j) Impairment of Assets:

Specified assets are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which the asset’s carrying amount exceeds its recoverable amount being the higher of the asset’s net selling price and its value in use. Value in use is based on t h e p resent value of the estimated future cash fows relating to the asset.

(k) Provisions and Contingent Liabilities:

Provisions are recognized for present obligations of uncertain timin g ora m oun t arising as a result of a pa st event where a reliable estimate can be made and it is probable that an outfow of resources embodying economic benefts will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflowo f resources embodying economic benefts is re mote.

Possible obligations, whose existence will only be confrmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outfow of resources embodying economic beneft is remote.

(l) Earnings Per Share

Basic E arn ings per Share (before dilution) is calculated by dividing the net proft after tax for the year attributable to equity shareholders of the Company by the w eighted avera ge number of equity shares forthe year.

Diluted Earnings per Share is calculated by dividing the net proft after tax for the year attributable to equity shareholders of the company. by the weighted average number of equity shares determined and assuming conversion of all potential dilute securities.

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Mar 31, 2012

(a) Basis for Accounting

The financial statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles, Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 and the relevant provisions thereof.

(b) Revenue Recognition

Sales comprises sale of goods and services, net of trade discounts.

(c) Employee Benefits

(i) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Post employment benefits such as Gratuity, EL encashment are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable towards contributions.

(iii) Actuarial gains and losses in respect of post employment benefits are charged to the Profit and Loss Account.

(d) Fixed Assets

All fixed assets are valued at cost less accumulated depreciation. Pre-operation expenses including trial run expenses are capitalized. Borrowing costs during the period of construction is added to the cost of fixed assets.

(e) Depreciation

The depreciation is provided on a straight line basis applying the rates specified in Schedule XIV to the Companies Act, 1956.

(f) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the profit & loss account for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to pre-operative expenses.

(g) Investments

Long term investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value.

(h) Inventories

Finished and semi-finished products produced and purchased by the Company are carried at lower of cost and net realizable value.

Coal, iron ore and other raw materials purchased by the Company are carried at lower of cost and net realizable value.

Stores and spare parts are carried at cost. Necessary provision is made and charged to revenue in case of identified obsolete and non-moving items.

Cost of inventories is generally ascertained on 'weighted average' basis. Work-in-progress and finished and semi- finished products are valued on full absorption cost basis.

(i) Taxes on Income

Tax expense comprises of current tax and deferred tax. Current income tax is provided on the taxable income for the period as per the provisions of Income tax Act 1961.Defered tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(j) Impairment of Assets:

Specified assets are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which the asset's carrying amount exceeds its recoverable amount being the higher of the asset's net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset.

(k) Provisions and Contingent Liabilities:

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefit is remote.

(l) Earnings Per Share

Basic Earnings Per Share (before dilution) is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company.

Diluted Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the company adjusted for share application money pending allotment and outstanding convertible bonds.

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Mar 31, 2011

(a) Basis for Accounting

The financial statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles, Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof.

(b) Revenue Recognition

Sales comprises sale of goods and services, net of trade discounts.

(c) Employee Benefits

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Post employment benefits such as Gratuity, EL encashment are recognised as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognised at the present value of the amount payable towards contributions.

(iii) Actuarial gains and losses in respect of post employment benefits are charged to the Profit and Loss Account.

(d) Fixed Assets

All fixed assets are valued at cost less accumulated depreciation. Pre-operation expenses including trial run expenses are capitalised. Borrowing costs during the period of construction is added to the cost of fixed assets.

(e) Depreciation

The depreciation is provided on a straight line basis applying the rates specified in Schedule XIV to the Companies Act, 1956.

(f) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the profit & loss account for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to pre-operative expenses.

(g) Investments

Long term investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value.

(h) Inventories

Finished and semi-finished products produced and purchased by the Company are carried at lower of cost and net realisable value.

Coal, iron ore and other raw materials purchased by the Company are carried at lower of cost and net realisable value.

Stores and spare parts are carried at cost. Necessary provision is made and charged to revenue in case of identified obsolete and non-moving items.

Cost of inventories is generally ascertained on weighted average basis. Work-in-progress and finished and semi- finished products are valued on full absorption cost basis.

(i) Taxes on Income

Tax expense comprises of current tax and deferred tax. Current income tax is provided on the taxable income for the period as per the provisions of Income tax Act 1961 .Defered tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(j) Impairment of Assets:

Specified assets are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which the assets carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset.

(k) Provisions and Contingent Liabilities:

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefit is remote.

(I) Earnings Per Share

Basic Earnings Per Share (before dilution) is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares in issue during the year.

Diluted Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the company by the weighted average number of equity shares determined by assuming conversion on exercise of conversion rights for all potential dilutive securities.

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Mar 31, 2010

(a) Basis for Accounting

The financial statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles, Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof.

(b) Revenue Recognition

Sales comprises sale of goods and services, net of trade discounts.

(c) Employee Benefits

(i) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Post employment benefits such as Gratuity, EL encashment are recognised as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The expense is recognised at the present value of the amount payable towards contributions.

(iii) Actuarial gains and losses in respect of post employment benefits are charged to the Profit and Loss Account.

(d) Fixed Assets

All fixed assets are valued at cost less accumulated depreciation. Pre-operation expenses including trial run expenses are capitalised. Borrowing costs during the period of construction is added to the cost of fixed assets.

(e) Depreciation

The depreciation is provided on a straight line basis applying the rates specified in Schedule XIV to the Companies Act, 1956.

(f) Foreign Currency Transactions

Foreign currency transactions are recorded at the rate of exchange prevailing at the date of the transaction. Monetary foreign currency assets and liabilities are translated at the year-end exchange rates and resultant gains / losses are recognized in the profit & loss account for the year, except to the extent that they relate to new projects till the date of capitalization which are carried to pre-operative expenses.

(g) Investments

Long term investments are carried at cost less provision for permanent diminution, if any, in value of such investments. Current investments are carried at lower of cost and fair value.

(h) Inventories

Finished and semi-finished products produced and purchased by the Company are carried at lower of cost and net realisable value.

Coal, iron ore and other raw materials purchased by the Company are carried at lower of cost and net realisable value.

Stores and spare parts are carried at cost. Necessary provision is made and charged to revenue in case of identified obsolete and non-moving items.

Cost of inventories is generally ascertained on weighted average basis. Work-in-progress and finished and semi- finished products are valued on full absorption cost basis. (i) Taxes on Income

Tax expense comprises of current tax and deferred tax. Current income tax is provided on the taxable income for the period as per the provisions of Income tax Act 1961. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods.

(j) Impairment of Assets:

Specified assets are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount for which the assets carrying amount exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the asset.

(k) Provisions and Contingent Liabilities:

Provisions are recognized for present obligations of uncertain timing or amount arising as a result of a past event where a reliable estimate can be made and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Where it is not probable that an outflow of resources embodying economic benefits will be required or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of resources embodying economic benefits is remote.

Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain events, are also disclosed as contingent liabilities unless the probability of outflow of resources embodying economic benefit is remote.

(l) Earnings Per Share

Basic Earnings Per Share (before dilution) is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares in issue during the year. Diluted Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the company by the weighted average number of equity shares determined by assuming conversion on exercise of conversion rights for all potential dilutive securities.