NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
1. ACCOUNTING:
1.1 Basis of brparation:
The financial statements are brpared in accordance with Generally Accepted Accounting Principles in India (‘I-GAAP’) under the Historical Cost Convention on an accrual basis and are in conformity with mandatory Accounting Standards, as brscribed by the Companies (Accounting Standards) Rules, 2006, and the provisions of the Companies Act, 1956.
1.2 Use of estimates:
In brparing the financial statements in conformity with I-GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities as at the date of financial statements and the amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Any variation to such estimates is recognized in the period the same is determined.
2. FIXED ASSETS:
2.1 Fixed Assets are stated at historical cost less accumulated debrciation. Cost includes all expenditure involved in bringing them to usable condition.
2.2 Cost of Land is capitalized on taking possession, pending execution of formal deeds of lease, title or transfer.
2.3 Works completed have been capitalized on provisional basis, in respect of those works for which final bills are yet to be received.
2.4 Process Development Expenditure is recognized as an Internally Generated Intangible Asset.
2.5 Capital work in progress consists of costs incurred on projects and other capital works under feasibility/commissioning stage. Cost includes related incidental expenses.
3. DEbrCIATION:
3.1 Debrciation on Fixed Assets is provided on Straight Line Method as stipulated in Schedule XIV of the Companies Act, 1956, at respective rates brvailing at the time they are put to use, except in the case of following assets for which higher rates are charged based on their estimated useful life:
Sl No | Particulars | Rate of Debrciation |
| | | |
| | Charged | As per Sch-XIV |
| | | |
1 | Steel cord Conveyor Belts | 25.00% | 5.28% |
| | | |
2 | Vehicles | 16.67% | 9.50% |
| | | |
3 | Furniture, Fittings & Appliances | 16.67% | 6.33% |
| | | |
4 | Re-lining in Blast Furnace | 12.50% | 5.28% |
| | | |
3.2 Debrciation in respect of Assets whose actual cost does not exceed Rs.5,000/- each and Temporary Structures has been provided in full retaining a nominal value of Re 1/- per item.
3.3 Cost of Leasehold Land is amortized over the period of lease. Assets on leasehold land is debrciated over the useful life of the asset.
3.4 Debrciable assets under Mines and Plant at Kudremukh are debrciated in full on stoppage of mining operation, retaining a nominal value of Re 1/- against each asset except for Vehicles, Furniture & Fittings. Lakya Dam with associated spillway and tunnel are debrciated in full retaining a nominal value of Re 1/-each. Normal rates of debrciation have been adopted for other debrciable assets.
3.5 Plant, Machinery and other assets damaged or suspected to be damaged during transit, erection or commissioning are shown at cost and related insurance claims are accounted separately on realization.
3.6 Part replacement of Steel Cord Conveyor Belt is charged to consumption.
3.7 Process Development Expenditure is amortized equally over a period of three years from the year of incurring.
3. INVENTORIES :
1..1 Stock of finished goods namely, Pellets and Pig Iron (including stock with the Consignment Agents) is valued at lower of cost or net realisable value. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its location and includes wherever applicable, appropriate overheads based on normal level of activity. However, when the actual production is abnormally lower as compared to normal level, the expenditure of fixed nature is reduced in proportion to the shortfall.
1..2 Raw Materials, Stores & Spares, Consumables and Additives are valued at lower of Cost and net realizable value. The cost is computed on weighted average basis and the same is charged off to Revenue on its issue. Materials in Transit are valued at Cost.
1..3 Stock of residue products is valued at estimated net realizable value.
1..4 (a) Non-moving items of Stores, Spares and Consumables with value less than Rs.1,000 each at the end of the year are charged to consumption.
4.4 (b) In respect of other non-moving stores including Insurance spares full provision is made if not moved for five or more consecutive completed financial years.
4.5 Loose tools with individual value below Rs.1,000 are charged to consumption. Loose tools with individual value of Rs.1,000 each and above are accounted on issue at cost and charged to consumption over a period of three years. However, if the written down value of each tool is below Rs.1,000 at the end of the year, the remaining balance is charged to consumption.
4.6 Semi finished products are valued at lower of cost and net realizable value.
5. REVENUE RECOGNITION:
5.1 Sales include Excise Duty and Freight on Consignment Sales wherever applicable and is net of Sales Tax/Value Added Tax. Sales are recognized on dispatch of goods to the customers. In respect of sea shipments, issue of Bill of Lading is considered as dispatch.
5.2 Interest is recognized on accrual basis subject to certainty of realization.
5.3 Sale of scrap is accounted on lifting of scrap by the buyers.
5.4 Capital grants received for specific assets are deducted from the gross value of the assets. Revenue
grants are treated as income
6..6 Refunds of statutory duties and taxes, other than service tax, export duty and cess, are accounted on receipt.
6..7 Insurance, Railway claims and export incentives are accounted on receipt as income.
6. TAX ON INCOME:
6.1 Tax on income for the current period is determined based on taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961.
Deferred tax is recognized, subject to consideration of prudence on timing differences, rebrsenting the difference between the taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.
7. EMPLOYEE BENEFITS :
7.1 Liability with regard to Gratuity benefits payable in future is determined by actuarial valuation at each Balance Sheet date using the Projected Unit Credit Method. Liability on this account is covered under Group Gratuity Life Assurance Scheme of LIC of India. Premium paid on this Scheme is charged to expense as contribution to gratuity. Settlement, if any, in excess of the amount received under the scheme, is also recognized as an expense as and when incurred.
7.2 Provision for Leave Encashment Benefits and Leave Travel Concessions is made based on actuarial valuation as on the Balance Sheet date.
7.3 Provident Fund contributions are made to a Trust administered by the trustees nominated by the Company and charged as expenses during the year. Provision for Provident fund interest guarantee is made based on actuarial valuation as on the Balance sheet date.
8. FOREIGN CURRENCY TRANSLATIONS :
8.1 Amount recoverable and payable as at the close of the year in foreign currency is accounted for at the current rate of exchange brvailing on the Balance Sheet date.
8.2 Exchange variations arising out of translation of current assets and current liabilities at the end of the year are taken to Profit and Loss Account.
8.3 The Company had opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standard)(AS) Amendment Rules 2009 relating to Accounting Standard (AS)-11 notified by Govt. of India. Accordingly exchange difference relating to long term monetary items arising during the year, in so far as they relate to the acquisition of fixed assets are adjusted in the carrying cost of such assets.
9. OTHER EXPENSES
1..1 Preliminary expenses on account of new projects incurred prior to the approval of feasibility report/techno economic clearance are charged to revenue.
1..2 Transit and handling loss of raw material as per company norms are included in the cost of raw material.
…………………………………………………………………………………………………………..
For and on behalf of Board of Directors | | | |
| | | | | as per our report of even date | |
Malay Chatterjee | Laxminarayana | for M/s SUNDARAM & SRINIVASAN | |
| Chairman-cum-Managing Director | Director (Finance) | Chartered Accountants |
| | | | | (ICAI Regn No: 004207S) | |
Place: | New Delhi | S.K.Padhi | (P.MenakshiSundaram) | |
Date : 16th May, 2014 | Company Secretary | Partner | |
| | | | | Membership No:217914 | |