I) Basis of preparation of Accounts :
 
 The financial statements have been prepared to comply in all material
 respects with the Accounting Standards notified by the Companies
 (Accounting Standards) Rules, 2006 (as amended) and the relevant
 provisions of the Companies Act, 1956. The financial statements have
 been prepared under the historical cost convention on an accrual basis.
 Except otherwise mentioned, the accounting policies applied by the
 Company are consistent with those used in previous year.
 
 II) Use of Estimates :
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires the management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and disclosure of contingent liabilities at the date of
 the financial statements and the results of operations during the
 reporting period. Although these estimates are based upon the
 management''s best knowledge of current events and actions, actual
 results could differ from these estimates.
 
 III) Revenue Recognition :
 
 a) Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be
 reliably measured.
 
 b) Revenue from sale of goods is recognized upon passage title to the
 customers which generally coincides with delivery. Excise Duty deducted
 from turnover (gross) is the amount that is included in the amount of
 turnover (gross) and not the entire amount of liability arisen during
 the year. Sales exclude sales tax collected from customers.
 
 c) Insurance and other claims, to the extent considered recoverable,
 are accounted for in the year of claim. However, claims and refunds
 whose recovery cannot be ascertained with reasonable certainty, are
 accounted for on acceptance basis.
 
 d) Interest is recognized on a time proportion basis taking into
 account the amount outstanding and the rate applicable.
 
 e) Dividends are recognized when the shareholders'' right to receive
 payment is established by the balance sheet date. Dividends from
 subsidiaries are however, recognized even if the same are declared
 after the balance sheet date but pertain to the period on or before the
 date of balance sheet as per the requirement of Schedule VI of the
 Companies Act, 1956.
 
 IV) Fixed Assets :
 
 a) Fixed assets are stated at cost of acquisition less accumulated
 depreciation/ amortization and impairment if any. Cost comprises the
 purchase price inclusive of duties (net of Cenvat & VAT), taxes,
 incidental expenses, erection/commissioning expenses, etc. upto the
 date the asset is ready for its intended use.
 
 b) Machinery spares which can be used only in connection with an item
 of fixed assets and whose use as per technical assessment is expected
 to be irregular, are capitalized and depreciated over the residual
 useful life of the respective assets.
 
 c) Expenditure on new projects and substantial expansion:
 
 Expenditure directly relating to construction activity are capitalized.
 Indirect expenditure incurred during construction period are
 capitalized as part of the indirect construction cost to the extent to
 which the expenditure are related to construction activity or are
 incidental thereto. Other indirect expenditure (including borrowing
 costs) incurred during the construction period which are not related to
 the construction activity nor are incidental thereto are charged to the
 Profit & Loss Account. Income earned during construction period is
 deducted from the total of the indirect expenditure.
 
 All direct capital expenditure on expansion are capitalized. As regards
 indirect expenditure on expansion, only that portion is capitalized
 which represents the marginal increase in such expenditure involved as
 a result of capital expansion. Both direct and indirect expenditure are
 capitalized only if they increase the value of the asset beyond its
 original standard of performance.
 
 V) Depreciation:
 
 a) The classification of Plant and Machinery into continuous and
 non-continuous process is done as per technical certification and
 depreciation thereon is provided accordingly.
 
 b) Depreciation on Fixed Assets is provided on Straight Line Method at
 the rates and in the manner prescribed in Schedule XIV of the Companies
 Act, 1956 or at rates determined on the basis of the useful life of the
 assets estimated by the management, whichever is
 
 c) Depreciation includes the amount written off in respect of leasehold
 land over the respective lease period.
 
 d) Depreciation on fixed assets added / disposed off during the year,
 is provided on pro-rata basis with reference to the month of addition /
 disposal.
 
 e) Discarded Fixed Assets awaiting disposal are valued at estimated
 realisable value and disclosed separately.
 
 f) Depreciation on Insurance Spares / standby equipments is provided
 over the useful life of the respective mother assets.
 
 VI) Intangibles
 
 a) Acquired computer softwares and licenses are capitalized on the
 basis of costs incurred to bring the specific intangibles to its
 intended use. These costs are amortized on a straight line basis over
 their estimated useful life of three years.
 
 b) Net Present Value paid to the various State Governments for
 restoration of forest as a pre-condition of granting license for mining
 in non-broken forest area are capitalized and amortized on a straight
 line basis over the lease period of the said mines prospectively.
 
 VII.  Foreign Currency Transactions
 
 a) Initial Recognition:
 
 Foreign currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate between
 the reporting currency and the foreign currency at the date of the
 transaction.
 
 b) Conversion:
 
 Foreign currency monetary items at the year end are reported using the
 closing rate. Non-monetary items which are carried in terms of
 historical cost denominated in a foreign currency are reported using
 the exchange rate at the date of transaction; and non-monetary items
 which are carried at fair value or other similar valuation denominated
 in a foreign currency are reported using the exchange rates that
 existed when the values were determined.
 
 c) Exchange differences :
 
 Exchange differences arising on the settlement of monetary items or on
 reporting of such monetary items at rates different from those at which
 they were initially recorded during the year or reported in previous
 financial statements are recognized as income or as expenses in the
 year in which they arise.
 
 d) Forward Exchange Contracts not intended for trading or speculation
 purposes:
 
 The premium or discount arising at the inception of forward exchange
 contracts is amortised as expense or income over the life of the
 contract. Exchange differences on such contracts are recognized in the
 statement of profit and loss in the year in which the exchange rates
 change. Any profit or loss arising on cancellation or renewal of
 forward exchange contract is recognized as income or as expense for the
 year.
 
 VIII.  Fixed Assets acquired under Lease
 
 a) Finance Lease :
 
 Assets acquired under finance leases, which effectively transfer to the
 Company substantially all the risks and benefits incidental to the
 ownership of the leased items, are capitalized at the lower of the fair
 value and present value of the minimum lease payments after discounting
 them at an interest rate implicit in the lease at the inception of the
 lease term and disclosed as leased assets. Lease payments are
 apportioned between the finance charges and reduction of the lease
 liability so as to achieve a constant rate of interest on the remaining
 balance of the liability. Finance charges are charged directly to
 expenses account.
 
 Leased assets capitalized are depreciated over the shorter of the
 estimated useful life of the asset or the lease term.
 
 b) Operating Lease:
 
 Leases where the lessor effectively retains substantially all the risks
 and rewards incidental to the ownership of the leased assets are
 classified as operating leases. Operating lease payments are recognized
 as an expense in the profit and loss account on straight line basis
 over the lease term.
 
 IX.  Investments
 
 Investments that are readily realizable and intended to be held for not
 more than a year are classified as current investments. All other
 investments are classified as Long-Term investments. Current
 Investments are stated at lower of cost or market rate on individual
 investment basis. Long Term Investments are considered at cost, unless
 there is other than temporary decline in value thereof, in which case
 adequate provision is made for diminution in the value of Investments.
 
 X.  Inventories
 
 Inventories are valued as follows:
 
 a) Raw materials, stores and spares, packing materials and trading
 goods are valued at lower of cost computed on moving weighted average
 basis and net realisable value. However, materials and other items held
 for use in the production of inventories are not written down below
 cost if the finished products in which they will be incorporated are
 expected to be sold at or above cost.
 
 b) Finished goods, work in progress and by products are valued at the
 lower of cost computed on weighted average basis and net realizable
 value. Cost includes direct materials and labour and a part of
 manufacturing overheads based on normal operating capacity.  Cost of
 finished goods includes excise duty.
 
 c) The Closing stock of materials inter-transferred from one unit to
 another is valued at cost of the transferor unit or net realizable
 value, whichever is lower.
 
 d) Net realizable value mentioned above is the estimated selling price
 in the ordinary course of business less estimated costs of completion
 and estimated cost necessary to make the sale.
 
 e) The recovery of ferro chrome and silico manganese from slag
 generated at the plant during the manufacturing operation is accounted
 for on ascertainment of quantity thereof, since it is not feasible to
 determine the quantum till the re-processing of such slag.
 
 XI.  Cash and Cash equivalents
 
 Cash and cash equivalents for the purposes of cash flow statement
 comprises of cash in hand (including cheques / drafts in hand) and at
 bank as well as short-term investments (fixed deposits with banks and
 post office) with an original maturity of three months or less.
 
 XII.  Excise and Custom Duty
 
 Excise Duty is accounted for at the point of manufacture of goods and
 accordingly, is considered for valuation of finished goods stock lying
 in the factories as on the balance sheet date. Similarly, custom duty
 on imported materials in transit / lying in bonded warehouse is
 accounted for at the time of import / bonding of materials.
 
 XIII.  Employee Benefits
 
 a) Retirement benefit in the form of Provident Fund is a defined
 contribution scheme and is charged to the Profit and Loss Account of
 the year when the contributions to the respective fund is due. The
 Company has no obligation other than the contribution payable to
 respective fund.
 
 b) Gratuity liability is a defined benefit obligation and is provided
 for on the basis of an actuarial valuation on Projected Unit Credit
 method made at the end of each financial year.
 
 c) Short term compensated absences are provided for based on estimates.
 Long term compensated absences are provided for based on actuarial
 valuation done as per Projected Unit Credit method.
 
 d) Actuarial gains/losses are immediately taken to profit & loss
 account and are not deferred.
 
 XIV.  Borrowing Costs
 
 Borrowing costs that are directly attributable to the acquisition or
 construction of qualifying assets are capitalized until the time all
 substantial activities necessary to prepare the qualifying assets for
 their intended use are complete. A qualifying asset is one that
 necessarily takes substantial period of time to get ready for its
 intended use. All other borrowing costs are charged to revenue.
 
 XV.  Provisions
 
 A provision is recognized when the Company has a present obligation as
 a result of past event and it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made.
 
 Provisions made in terms of Accounting Standard 29 are not discounted
 to its present value and are determined based on best estimate required
 to settle the obligation at the balance sheet date. These are viewed at
 each balance sheet date and adjusted to reflect the current best
 management estimates.
 
 XVI.  Taxation
 
 a) Tax expense comprises of Current and Deferred Tax. Current income
 tax is measured at the amount expected to be paid to the tax
 authorities in accordance with the provisions of the Indian Income Tax
 Act, 1961.
 
 b) Deferred income taxes reflect the impact of current year timing
 differences between taxable income and accounting income for the year
 and reversal of timing differences of earlier years. Deferred tax is
 measured using income tax rates enacted or substantively enacted at the
 Balance Sheet date. Deferred tax assets are recognised only to the
 extent that there is reasonable certainty that sufficient future
 taxable income will be available against which such deferred tax assets
 can be realised. In situations where the Company has unabsorbed
 
 depreciation or carry forward tax losses, all deferred tax assets are
 recognised only if there is virtual certainty supported by convincing
 evidence that they can be realised against future taxable profits.
 
 c) The carrying amounts of deferred tax assets are reviewed at each
 balance sheet date. The Company writes-down the carrying amount of
 deferred tax asset to the extent that it is no longer reasonable
 certain or virtually certain, as the case may be, that sufficient
 future taxable income will be available against which deferred tax
 asset can be realized. Any such write-down is reversed to the extent
 that it becomes reasonable certain or virtually certain, as the case
 may be that sufficient future taxable income will be available.
 
 d) Minimum Alternative tax (MAT) credit is recognised as an asset only
 when and to the extent there is convincing evidence that the company
 will pay normal income tax during the specified period. In the year in
 which the MAT credit becomes eligible to be recognised as an asset in
 accordance with the recommendations contained in guidance note issued
 by the Institute of Chartered Accountants of India, the said asset is
 created by way of a credit to the profit and loss account and shown as
 MAT Credit Entitlement. The company reviews the same at each balance
 sheet date and writes down the carrying amount of MAT Credit
 Entitlement to the extent there is no longer convincing evidence to the
 effect that the company will pay normal income tax during the specified
 period.
 
 XVII.  Impairment of Assets
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 to determine if there is any indication of impairment based on
 external/internal factors. An impairment loss is recognized wherever
 the carrying amount of an asset exceeds its recoverable amount which
 represents the greater of the net selling price and ''Value in use'' of
 the assets. The estimated future cash flows considered for determining
 the value in use, are discounted to their present value at the pre tax
 discount rate that reflects current market assessments of the time
 value of money and risks specific to the asset.
 
 After impairment, depreciation is provided on the revised carrying
 amount of the assets over its remaining useful life.
 
 XVIII. Derivative Instrument :
 
 As per ICAI announcement, accounting for derivative contracts, other
 than those covered under Accounting Standard -11 are marked to market
 on a portfolio basis and the net loss after considering the offsetting
 effects of the underlying hedge item, is charged to the profit and loss
 account. Net gains are ignored as a matter of prudence.
 
 XIX.  Segment Reporting :
 
 The Company has identified Iron & Steel products as its sole operating
 segment and the same has been treated as primary segment. The Company''s
 secondary geographical segments have been identified based on the
 location of customers and then demarcated into Indian and overseas
 revenue earnings.
 
 The company prepares its segment information in conformity with the
 accounting policy adopted for preparing and presenting the financial
 statement of the company as a whole.
 
 XX.  Earnings per Share
 
 Basic earnings per share is calculated by dividing the net profit or
 loss for the year attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the year.
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the year attributable to equity shareholders and the
 weighted average number of shares outstanding during the year are
 adjusted for the effects of all dilutive potential equity shares.
 
 XXI.  Contingencies
 
 Liabilities, which are material and whose future outcome cannot be
 ascertained with reasonable certainty, are treated as contingent and
 disclosed by way of notes on accounts.