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Accounting Policies of Uttam Galva Steels Ltd. Company

Mar 31, 2017

CORPORATE INFORMATION

The Company is promoted by Miglani Family since the year 1985, and Arcelor Mittal has joined as Co-Promoter in the year 2009-10.

The Company is in the business of manufacturing of intermediate steel products i.e Cold Rolled Steel (CR) and Galvanised Products comprising of Galvanised Plain (GP), Galvanised Corrugated (GC) and Colour Coated Products (CCP) Coils and Sheets; situated at Khopoli, Mumbai, Western part of India. The Company is in the business of procuring Hot Rolled Steel (HR) and processing it in to CR and further in to GP and PPGI. Its current facilities are mainly in thicker and thinner guage material. The CR not used for galvanizing is converted to value added grades in Cold Rolled Closed Annealed (CRCA) coils, Cut to Length (CTL) Sheets and also sold as Full Hard CR in Domestic and Overseas markets. The market segments for value added grades include Appliance, General Engineering, Automotive, Construction, Packaging, Sandwich Panels and Others.

The Registered office of the Company is situated at Uttam House, 69, P D''Mello Road, Carnac Bunder, Mumbai - 09.

A. SIGNIFICANT ACCOUNTING POLICIES

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

In accordance with the notification issued by the ministry of corporate affairs, the company has adopted Indian Accounting Standards (referred to as "Ind-AS”) notified under the Companies (Indian Accounting Standards Rules,2015 with effect from April 1,2016. Previous period have been restated to Ind-AS. In accordance with Ind-AS 101 first-time Adoption of Ind-AS, the Company has presented a reconciliation from the presentation of financial statements under Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 ("Previous GAAP”) to presentation of Financial Statements under Ind-AS of Shareholders'' equity as at 31st March, 2016 and 1st April, 2015 and of the comprehensive net income for the year ended 31st March, 2016.

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

(b) Basis of Preparation:

The financial statements are prepared under the historical cost convention, except for certain financial instruments, and Land, which are measured at fair values at the end of reporting period, as explained in accounting policies below. Historical cost is generally based on fair value of the consideration given in exchange for goods and services. Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(c) Use of estimates and judgments:

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

Impairment of investments.

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

Useful lives o f property, plant and equipment.

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

(d) Revenue Recognition:

The Company recognizes revenue in accordance with Ind-AS 18. Revenue is recognized when a customer obtains control of goods or services and thus has the ability to direct the use and obtained the benefits of the goods or services. Any advance received against supply of goods and services is recognized under the head current liabilities, sub head trade and other payables.

(e) Cost recognition:

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

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

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted in the entities functional currency at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is hedged, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement of the contract, are appropriately accounted as a part of material (consumption) cost. Similarly all related monetary liabilities at the year-end are re-instated at exchange rate prevailing at year end.

(ii) Import contracts covered by ''foreign exchange cover'' with banks are booked at contracted rates. Income/ Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved/ date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted in the entities functional currency at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realization are appropriately accounted in the statement of profit and loss.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income/ expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved/ date of execution are treated as export realization, and forms part of revenue from operations.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end.

(iii) The company does not enter into derivative contracts for trading or speculative purposes.

(d) Such gain/ loss in transactions referred in para (c) above, and other foreign currency contracts and/ or derivative contracts and relevant exchange gain/ loss thereto, are considered as finance cost.

1.03 Borrowing costs:

Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Ind-AS 23, "Borrowing Costs” are capitalized as part of the cost of such asset up to the date when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. Any related foreign currency fluctuations on account of qualifying asset under construction is capitalized and added to the cost of asset concerned. Other borrowing costs are expensed as incurred.

1.04 The Treatment of Expenditure during Construction Period:

Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress Pending capitalization under fixed asset.

1.05 Property, plant and equipment:

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

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on assets is claimed on such ''reduced'' cost.

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

(d) Depreciation on fixed assets has been provided on straight line method based on the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.

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

(f) Any revaluation of an asset is recognized in other comprehensive income and shown as revaluation reserves in other equity

1.06 Fair value measurement:

The Company measures land at fair value at each balance sheet date. Fair value is the price that would be received to sell and asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses valuation techniques that are appropriate in circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant absorbable inputs and minimizing the use of un-absorbable inputs. External valuers are adopted for valuing land. The selection criteria for these valuers include market knowledge, reputation, independence and whether professional standards are maintained.

1.07 Intangible Assets:

(a) Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.

(b) Intangible assets with finite life are amortized over the useful economic life, and assessed for impairment whenever there is an indication that assets are impaired. Intangible assets with indefinite useful life are not amortized, but are tested for impairment annually.

1.08 Impairment of Assets:

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

1.09 Interest in Subsidiaries, Joint ventures and Associates:

Interest in subsidiaries, joint ventures and associates are recognized at cost. The company provides for any permanent diminution, if any, in value of such interests. Exchange Gain/ (Loss) on interest in subsidiaries, joint ventures and associates in Foreign Currency is not provided at the year end.

1.10 Inventories:

(a) Inventories are valued as under after providing for obsolescence

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and

administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or net realizable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost

(v) Arisings - At realizable value

(vi) Stock In Trade Land - At Fair market value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party/ job workers / consignees.

1.11 Taxation:

(a) Current Tax

Current income tax Assets or Liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to determine the amount are in accordance with the provisions of Income Tax Act 1961.

(b) Deferred Tax

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

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

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

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

1.12 Earning per Share:

The Company reports basic and diluted earnings per share in accordance with Ind-AS 33, ''Earning per Share'' issued by the ICAI. Basic earnings per share is computed by dividing the net profit after tax but before other comprehensive income by the weighted average number of shares outstanding during the year

1.13 Accounting for Provisions, Contingent liabilities and Contingent Assets

(a) In conformity with Ind-AS 37, ''Provisions, Contingent Liabilities and Contingent Assets'', issued by the ICAI. The Company recognizes provisions only when it has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made. When the Group expect some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

(b) No provision is recognized for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognized because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

(c) All those obligations for which provisions are not required to be recognized in accordance with Ind-AS 37 are recorded as contingent liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

In the normal course the company faces claims and assertion by various Parties. The Company assesses such claims and assertions and monitors the legal environment on ongoing basis with assistance of legal counsel, wherever necessary.

(d) Contingent Assets are not recognized in the financial statements unless it has become virtually certain that an inflow of economic benefit will arise.

1.14 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorization (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) Export incentives receivable on export performance are recognized on accrual basis, with reference to certainty of collectability of such export incentives.

1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognized as long term liability.

1.16 Employee Benefits:

(a) Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

Post-employment and other long term employee benefits are recognized as an expense in the Profit and Loss Account for the year in which the employee has rendered services. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirement of Ind-AS 19- Employee Benefits. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Statement of Profit and Loss.

1.17 Inter Unit transactions are eliminated to the extent possible.

Term Loans, ECBs & FCTL from Banks and Financial Institutions are secured by mortgage and the lenders have first pari passu charge on all the present and future movable and immovable assets of the Company but not limited to plant and machinery, machinery spares, tools and accessories in possession or not, stored, or to be brought in Company''s premises or lying at any other place of the Company''s representative affiliates and all the intangible assets of the Company, except for Packing machine supplied by PESMEL, Finland._

The Company had given a corporate guarantee of Rs,87.54 Crores (Previous Year Rs, 87.54 Crores) to Commissioner of Customs against export obligation of Uttam Galva Metallics Limited.

The Company had given a corporate guarantee of US$ 22 Million (US$ 22 Million) to Macquarie Bank Limited, against Working Capital Facility availed by Uttam Galva North America Inc, a wholly owned subsidiary

The Company had given a corporate guarantee of US$ 12.50 Million (US$ 12.50 Million) to Brown Brothers Harriman & Co. (BBH) against Working Capital Facility availed by Uttam Galva North America Inc, a wholly owned subsidiary.


Mar 31, 2015

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 2013.

(b) Use of Estimates:

The preparation of financial statements in conformity with GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection. The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by 'foreign exchange cover' with banks are booked at contracted rates. Income/ Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income/ expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted

rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

(iii) The Company does not enter into derivative contracts for trading or speculative purposes.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Borrowing cost, Premium on redemption of Debentures / Debts:

(a) Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard 16 "Borrowing Costs" are capitalized as part of the cost of such asset up to the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

(b) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2015 financial years. The Company is treating interest payable (yearly rate) as interest accrued.

(c) On rescheduling and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year

end are appropriately accounted along with material cost in Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-Progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is 'Put to Use'. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on 'reduced' cost.

(c) Depreciation on fixed assets has been provided on straight line method based on the useful life of the assets as prescribed in Schedule II to the Companies Act, 2013, except in case of RCC roads where the management estimates its useful life is 20 years.

(d) Pursuant to Companies Act 2013 (the Act) becoming effective from April 1, 2014, the Company has re-worked depreciation with reference to the estimated useful lives of fixed assets prescribed under Schedule II to the Act or as per technical evaluation and componentization.

(e) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is 'Put to Use'.

1.06A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The Company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Progress - At Material Cost plus labour and other appropriate portion of production

and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive ofanytaxes and duties

incurred.

(iv) Stores Spares etc. - At Cost.

(v) Arisings - At realisable value.

(vi) Stock In Trade Land - At Fair market value.

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961.

Deferred tax charged or credited reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credited and the corresponding deferred tax liability or asset are recognized using the tax rates that have been enacted or substantively enacted on the Balance Sheet date.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 'Earning per Share' issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets:

(a) In conformity with AS-29, 'Provisions, Contingent Liabilities and Contingent Assets', issued by the ICAI. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(c) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Advances received from customers against exports, which is spilled over/ executable/ adjustable/ repayable beyond period of 12 months as on the date of Balance Shee is treated as Non-Current Liabilities, under the sub head Other Long Term Liabilities.

1.13 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Spares consumed

(c) Export incentives receivable on export performance are recognised in pursuance to 'Accounting Standard 9 on Revenue Recognition', (AS-9) with reference to certainty of collectability of such export incentives.

1.14 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central

Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net Present Value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax under Reverse Charge Mechanism for various services availed by the Company, at the time of booking an expenditure. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Employee Benefits:

A. Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

B. Long Term Employee Benefits

Post employment and other long term employee benefits 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 amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.

1) Term Loans, ECBs & FCTL from Banks and Financial Institutions are secured by mortgage and the lenders have first pari passu charge on all the present and future movable and immovable assets of the Company but not limited to plant and machinery, machinery spares, tools and accessories in possession or not, stored, or to be brought in Company's premises or lying at any other place of the Company's representative affiliates and all the intangible assets of the Company, except for Packing machine supplied by PESMEL, Finland.


Mar 31, 2014

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with Accounting Standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The preparation of financial statements in conformity with GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

Revenue is recognized when it is earned and no significant uncertainty exists as to its realization or collection.The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11). (ii) Import contracts covered by ''foreign exchange cover'' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments.

Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loan balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss, where these relate to the acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and in other cases are amortized over the period of such long term monetary item.

(iii) The company does not enter into derivative contracts for trading or speculative purposes.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Borrowing cost, Premium on Redemption of Debentures / Debts:

(a) Borrowing costs attributable to the acquisition or construction of qualifying assets as defined in Accounting Standard 16 "Borrowing Costs" are capitalized as part of the cost of such asset upto the date when the asset is ready for its intended use. Other borrowing costs are expensed as incurred.

(b) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(c) On rescheduling and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at the year end are appropriately accounted along with material cost in Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in- progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is ''Put to Use''. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and Long Term Foreign Currency Debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work-In-Progress. Interest and consequential cost is appropriately accounted.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on ''reduced'' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ''Put to Use''.

(e) Computer Software is depreciated over an estimated useful life of 5 Years. 1.06A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Progress - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost (v) Arisings - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act, 1957. Deferred tax charged or credited reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credited and the corresponding deferred tax liability or asset are recognized using the tax rates that have been enacted or substantively enacted on the Balance Sheet date.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 ''Earning per Share'' issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent Liabilities and Contingent Assets:

(a) In conformity with AS-29, ''Provisions, Contingent Liabilities and Contingent Assets'', issued by the ICAI, the Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(c) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Advances received from customers against exports, which is spilled over/ executable/ adjustable/ repayable beyond period of 12 months as on the date of Balance Sheet is treated as Non-Current Liabilities, under the sub head Other Long Term Liabilities.

1.13 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme, Focus Market Scheme, Focus Product Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Spares consumed

(c) Export incentives receivable on export performance are recognised in pursuance to Accounting Standard 9 on Revenue Recognition'', (AS-9) with reference to certainty of collectability of such export incentives.

1.14 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central

Excise Duty; as may be applicable. (b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.15 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net Present Value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1. 17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax under Reverse Charge Mechanism for various services availed by the company, at the time of booking an expenditure. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Employee Benefits:

(a) Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

Post employment and other long term employee benefits 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 amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.


Mar 31, 2013

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts / advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by ''foreign exchange cover'' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end, and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits:

A. Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

B. Long Term Employee Benefits

Post employment and other long term employee benefits 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 amounts payable determined using Actuarial Valuation Techniques. Actuarial gains and losses in respect of post-employment and other long term benefits are charged to Profit and Loss Account.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in- progress Pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is ''Put to Use''. Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat credit, sales tax and service tax credit and such other levies / taxes. Depreciation on such assets is claimed on ''reduced'' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ''Put to Use''.

I.06 A Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(a) Fixed as Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost

(v) Arising''s - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act 1957.

Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 ''Earning per Share'' issued by the ICAI. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets

(a) In conformity with AS-29, ''Provisions, Contingent Liabilities and Contingent Assets'', issued by the Institute of Chartered Accountants of India. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Drawback Scheme and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to ''Accounting Standard 9 on Revenue Recognition'', (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.16 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.17 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year end are appropriately accounted along with material cost in Profit and Loss Account.

1.18 Inter Unit transactions are eliminated to the extent possible.


Mar 31, 2012

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are dispatched to the customer or when delivered to the ocean carrier for export sales, which is when the risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans / Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (As per Revised AS - 11).

(ii) Import contracts covered by 'foreign exchange cover' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments. Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved / date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts of advances is treated as relevant exchange rate for exports.

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans balances are accounted at Exchange Rate prevailing at the year end and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain / loss thereto, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits:

(a) Short Term Employee Benefits

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

(b) Long Term Employee Benefits

(i) The Company has taken Group Gratuity Policy with the Life Insurance Corporation of India (LIC) for future payment of Gratuities. Any deficit in Plan Assets managed by LIC and as compared to the Actuarial Liability is recognized as a liability immediately.

(ii) Leave Encashment benefit accrued at the year end.

1.05 The Treatment of Expenditure during Construction Period:

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is "Put to Use". Interest includes exchange fluctuation on Foreign Currency Term Loans. It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work-in-Progress. Interest and consequential cost is appropriately accounted / reimbursements.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

(b) Cost excludes Cenvat Credit, Sales Tax and Service Tax Credit and such other levies / taxes. Depreciation on such assets is claimed on 'reduced' cost.

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is" Put to Use".

1.06 Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The Company does not provide for temporary diminution in value of long term investments, if any, Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Process - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores Spares etc. - At Cost

(v) Arising's - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation:

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current Year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act, 1957.

Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning Per Share (EPS):

The Company reports basic and diluted earning per share in accordance with AS-20 "Earning per Share" issued by the Institute of Chartered Accountants of India (ICAI). Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets:

(a) In conformity with AS-29, "Provisions, Contingent Liabilities and Contingent Assets", issued by the ICAI. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to "Accounting Standard 9 on Revenue Recognition", (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of dispatch to customers / endorsement of documents and includes Central Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 Cold Rolled (C.R.) Coils Production excludes C.R. baby coils produced.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Commodity Hedging Transactions:

In respect of commodity hedging transactions, the gain / (loss) on settlement and provisions for gain / (loss) at year end are appropriately accounted along with material cost in Profit and Loss Account.

1.19 Inter Unit transactions are eliminated to the extent possible.

1) 11.25 % Non Convertible Redeemable Debentures are secured by first pari passu Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machinery spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

2) Term Loan from Banks and Financial Institutions namely Axis Bank, Bank of Baroda, Dena Bank, Exim Bank of India, Oriental Bank of Commerce, Punjab National Bank, State Bank of India, Syndicate Bank, State Bank of Hyderabad,IDFC and ICICI Bank Limited are secured by mortgage and the lenders have pari passu charge on all the present and future movable and immovable assets of the Company except Packing Machine supplied by PESMEL Finland but not limited to plant and machinery, machinery spares, tools and accessories in possession or not, stored, or to be brought in companies premises or lying at any other place of the companies representative affiliates and all the intangible assets of the company. The above security will rank pari passu amongst the lenders.

3) ECB Loan from ICICI Bank Limited are secured by Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machineries spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

4) ECA from Nordea Bank is secured by hypothecation of Packing Machine supplied by PESMEL Finland.

5) Term Loan from ICICI Bank Limited, IFCI, LIC, GIC, and UII ranking pari pasu are secured by Mortgage of all immovable property and hypothecation of all movable properties including movable machineries, machineries spares, tools and accessories both present and future except packing machine supplied by PESMEL Finland.

25,02,500 Equity Shares (Previous Year 25,02,500 equity shares) held by Promoters are pledged against term loan of Rs 9.55 Crores availed from ICICI Bank Limited.

Working Capital Loans from Banks on Cash Credit (CC) & Packing Credit (PC) Accounts are Secured by Hypothecation of all Tangible, Moveable assets such as Raw Material, WIP, Finished Goods, Stock in Transit and Book Debts etc. and the second charge on fixed assets of the Company except Packing Machine supplied by PESMEL, Finland.

# Sales includes Rs 832.09 Crores ( Previous Year Nil )towards sales from trial run/stabilisation of Production, of 4 Hi Skin Pass Mill

* GP Sales includes Rs 698.75 Crores ( Previous Year Nil ) towards sales during stabilisation of Super Galvanising Line (SGL)

** Sales of surplus generated Power includes Rs 66.92 Crores towards sales during stabilisation of Captive Power Plant (CPP) *** Sale of Manufactured Goods includes Export Sales Rs 1066.96 Crores (Previous Year Rs 932.97 Crores).

The Company has provided for Unclaimed Leave Encashment Benefits as at 31st March, 2012 to the tune of Rs 5.99 Crores.

Liability for employee benefits in respect of gratuity has been determined by an actuary, appointed for the purpose, in conformity with the principles set out in the Accounting Standard 15 (Revised) the details of which are as follows:


Mar 31, 2011

(a) Basis of Accounting :

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates :

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition :

The Company recognizes revenue on the sale of products when the products are despatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans/Transactions:

(a) Import Transactions :

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (as per revised AS - 11).

(ii) Import contracts covered by ‘foreign exchange cover' with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved / date of execution are treated as part of purchase cost.

(b) Export Transactions :

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments.

Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange ‘cover' with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved/date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts (of advances) is treated as relevant exchange rate (for exports).

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans (balances) are accounted at Exchange Rate prevailing at the year end; and such gain / loss is considered as finance cost.

(d) Such gain / loss in transactions referred in para (c) above, and other foreign currency contracts and / or derivative contracts and relevant exchange gain/loss there to, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits :

A. Short Term Employee Benefits :

All employee benefits payable / available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the Profit & Loss Account in the period in which the employee renders the related services.

B. Long Term Employee Benefits :

(i) The Company has taken Group Gratuity Policy with the Life Insurance Corporation of India (LIC) for future payment of Gratuities.

Any deficit in Plan Assets managed by LIC and as compared to the Actuarial Liability is recognized as a liability immediately.

(ii) Leave Encashment benefit shall be accrued at the year end.

1.05 The Treatment of Expenditure during Construction Period :

(a) Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in- progress Pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is ‘Put to Use'. Interest includes exchange fluctuation on Foreign Currency Term Loans.

It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted / reimbursements.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation :

(a) Fixed assets are carried at cost less accumulated depreciation.

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

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December, 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is ‘Put to Use'.

1.06 A. Impairment of Assets :

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment :

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain / (Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories :

(a) Inventories are valued as under after providing for obsolescence :

(i) Raw Materials — At Cost (Moving Weighted Average Method)

(ii) Work-in-Process — At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods — At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores spares etc.— At Cost (v) Arisings — At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses .

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees. (iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation :

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act. Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning per Share :

The Company reports basic and diluted earning per share in accordance with AS-20 ‘Earning per Share' issued by the ICAI. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets :

(a) In conformity with AS-29, ‘Provisions, Contingent Liabilities and Contingent Assets', issued by the Institute of Chartered Accountants of India. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for :

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations :

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales : Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to ‘Accounting Standard 9 on Revenue Recognition', (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of despatch to customers/ endorsement of documents and includes Central

Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 C. R. Coils Production excludes C.R. baby coils produced.

1.16 Customs Duty :

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax :

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion / exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Commodity Hedging Transactions :

In respect of commodity hedging transactions, the gain / loss on settlement and provisions for gain / losses at year end are appropriately accounted along with material cost.

1.19 Inter Unit transactions are eliminated to the extent possible B.


Mar 31, 2010

1.01 (a) Basis of Accounting:

The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the generally accepted accounting principles, on going concern basis, and in line with accounting standards issued by the Institute of Chartered Accountants of India, as applicable, and the provisions of the Companies Act, 1956.

(b) Use of Estimates:

The Preparation of financial statements in conformity GAAP requires that the Management of the Company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the assumptions relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of tangible and intangible fixed assets, provision for doubtful debts/advances, future obligation in respect of retirement benefit plans, etc. Difference, if any, between the actual results and estimates is recognized in the period in which the results are known.

(c) Revenue Recognition:

The Company recognizes revenue on the sale of products when the products are despatched to the customer or when delivered to the ocean carrier for export sales, which is when risks and rewards of ownership are passed to the customer.

1.02 Foreign Currency Loans/Transactions:

(a) Import Transactions:

(i) Material imports are accounted at the custom exchange rates prevailing at the time of receipts. In case foreign exchange is covered, the exchange rate contracted is recognized as a part of purchase cost. Exchange Fluctuations, if any, at the time of retirement, are appropriately accounted as a part of material (purchase) cost. Similarly Bills Payable (balances) at year end are accounted at exchange rate prevailing at year end (as per revised AS - 11).

(ii) Import contracts covered by foreign exchange cover with banks are booked at contracted rates. Income / Expenditure incurred in cancellation of forward cover contracts, mainly due to variation in the bank involved/ date of execution are treated as part of purchase cost.

(b) Export Transactions:

(i) Export transactions are accounted at the custom exchange rates prevailing at the time of shipments.

Exchange fluctuations, if any, at the time of realisation are appropriately accounted.

(ii) Exports, contracts covered by foreign exchange cover with banks, are booked at contracted rates. Income / expenditure incurred in case of cancellation of forward cover contracts, mainly due to variation in bank involved/date of execution are treated as export realisation.

(iii) In case receipt of Export Advances, exchange rates prevailing on date of receipts (of advances) is treated as relevant exchange rate (for exports).

(c) (i) Foreign Currency Term Loan Contracts, covered by Foreign Exchange Swaps are booked at contracted rates.

(ii) Other Foreign Currency Term Loans (balances) are accounted at Exchange Rate prevailing at the year end; and such gain / loss is considered as finance cost.

(d) Such gain/loss in transactions referred in para (c) above, and other foreign currency contracts and/or derivative contracts and relevant exchange gain/loss there to, are considered as finance cost.

1.03 Interest on Term Loans, Premium on redemption of Debentures / Debts:

(i) Pursuant to the Reschedule / Realignment Scheme, interest payable during 2000-2009 financial years is lower than the average interest rate during 2000-2014 financial years. The company is treating interest payable (yearly rate) as interest accrued.

(ii) On reschedulement and realignment of term debts, financial cost incurred is treated as accrued on date of realignment of realigned term debts and provided in the relevant financial year.

1.04 Employee Benefits:

A. Short Term Employee Benefits

All employee benefits payable/available within 12 months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus etc, are recognized in the P&L account in the period in which the employee renders the related services.

B. Long Term Employee Benefits

(i) The Company has taken Group Gratuity Policy with the Life Insurance Corporation of

India (LIC) for future payment of Gratuities.

Any deficit in Plan Assets managed by LIC and as compared to the Actuarial Liability is recognized as a liability immediately.

(ii) Leave Encashment benefit shall be accrued at the year end.

1.05 The Treatment of Expenditure during Construction Period:

(a) The Company accounts for expenditure during construction period as per the “Guidance Note on Treatment of Expenditure during Construction Period” - issued by Institute of Chartered Accountants of India. Expenditure directly related to particular fixed assets is capitalized to those fixed assets. All indirect expenses are apportioned to various fixed assets on a reasonable basis. This is done once the construction and erection work is completed, pending which the accumulated amount is disclosed as Capital Work-in-progress Pending capitalization under fixed asset.

(b) Interest on Loans are capitalised upto the date on which the asset is Put to Use. Interest includes exchange fluctuation on Foreign Currency Term Loans.

It is in line with Accounting Standards on Borrowing Cost and long term foreign currency debts and Accounting Standards on Fluctuation on Foreign Exchange currency.

(c) The Income and Expenditure during trial runs is included in the Profit & Loss Account. Excess of expenditure over income is capitalised.

(d) Temporary surplus in short term i.e. liabilities over assets are used for Capital Work In Progress. Interest and consequential cost is appropriately accounted / reimbursements.

(e) Upfront Expenses incurred on mobilisation of term debts is treated as a part of Capital Cost of relevant project.

1.06 Fixed Assets and Depreciation:

(a) Fixed assets are carried at cost less accumulated depreciation.

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

(c) Depreciation on fixed assets has been provided on straight line method at the rates specified, in the Schedule XIV of the Companies Act, 1956, in Line with Notification No. GSR/756(E) dated, 16th December 1993.

(d) Depreciation on assets acquired during the year has been provided on pro-rata basis; from the date on which it is Put to Use.

1.06 (a) Impairment of Assets:

Fixed Assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognised is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

1.07 Investment:

The company does not provide for temporary diminution in value of long term investments, if any. Exchange Gain/(Loss) on Investments in Foreign Currency has been provided at the year end.

1.08 Inventories:

(a) Inventories are valued as under after providing for obsolescence:

(i) Raw Materials - At Cost (Moving Weighted Average Method)

(ii) Work-in-Progress - At Material Cost plus labour and other appropriate portion of production and administrative overheads and depreciation.

(iii) Finished Goods - At lower of cost or realisable value. Cost is inclusive of any taxes and duties incurred.

(iv) Stores spares etc.- At Cost

(v) Arisings - At realisable value

(b) (i) Raw-materials include stock-in-transit and goods lying in Bonded Warehouses.

(ii) Finished goods include stock-in-transit at Docks awaiting Shipment and stocks with consignees.

(iii) Inventory includes goods lying with third party / job workers / consignees.

1.09 Provision for Taxation

Income tax expense is the aggregate amount of Current tax, Wealth Tax & Deferred Tax. Current year taxes are determined in accordance with the provisions of Income Tax Act, 1961 and Wealth Tax Act.

Deferred tax charged or credit reflects the tax effect of timing differences between accounting income and taxable income for the period. The deferred tax charged or credit and the corresponding deferred tax liability or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet dates.

1.10 Earning per Share:

The Company reports basic and diluted earning per share in accordance with AS-20 Earning per Share issued by the ICAI. Basic earning per share is computed by dividing the net profit after tax by the weighted average number of shares outstanding for the year.

1.11 Accounting for Provisions, Contingent liabilities and Contingent Assets

(a) In conformity with AS-29, Provisions, Contingent Liabilities and Contingent Assets, issued by the Institute of Chartered Accountants of India. The Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

(b) No provision is recognised for:

(i) Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or

(ii) Any present obligation that arises from past events but is not recognised because:

(1) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(2) A reliable estimate of the amount of obligation cannot be made.

Such obligations are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

(iii) Contingent Assets are not recognised in the financial statements as this may result in the recognition of income that may never be realised.

1.12 Export entitlements / obligations:

(a) Duty free import of raw materials under Advance Authorisation (DEEC) for imports as per import and export policy are matched with exports made / produced. Benefit / Obligation are accounted by making suitable adjustments in raw material consumption.

(b) The benefits accrued under the Duty Entitlement Pass Book Scheme (DEPB) and Duty Free Import Authorisation (DFIA) as per the relevant import and export policies during the year are included under the head:

(i) Sales: Export incentives

(ii) Raw material consumed

(iii) Stores & Rolls consumed

(c) Export incentives receivable on export performance are recognised in pursuance to Accounting Standard 9 on Revenue Recognition, (AS-9) with reference to certainty of collectability of such export incentives.

1.13 (a) Sales are recognised at the time of despatch to customers/ endorsement of documents and includes Central Excise Duty; as may be applicable.

(b) Finished goods captively consumed as packing materials are excluded from sales. Transfer Price, as taken in Central Excise Duty records, is treated as the packing material cost.

1.14 Deferred sales tax incentive available to the Company under Maharashtra Value Added Tax (MVAT) is recognised as sales in case Net present value (NPV) is duly paid to the designated authority before the approval of annual accounts.

1.15 C.R. Coils Production excludes C.R. baby coils produced.

1.16 Customs Duty:

The Company has been accounting for custom duty liability, as may be applicable, in respect of imported raw material lying in bonded warehouse as and when they are ex-bonded.

1.17 Central Excise Duty and Service Tax:

(a) The Company is accounting liability for excise duty on finished goods as and when goods are cleared as per consistent practice, in pursuance to the accepted practice of the Excise authorities.

(i) Inventory valuation

(1) Finished goods in the plant at the close of the year are valued inclusive of excise duty.

(2) Raw materials and work in process are valued exclusive of Cenvat claimed.

(ii) Profit / Loss for the year remain unaffected by inclusion/exclusion of Excise Duty in inventory valuation referred in clauses (1) and (2) above.

(b) The Company is accounting liability for Service Tax for services purchased, at the time of payment. The credit for Input Services Tax is claimed as per appropriate laws, rules and regulations.

1.18 Inter Unit transactions are eliminated to the extent possible.

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