i.  Basis of preparation
 
 The consolidated financial statement of Carborundum Universal Limited
 (the Company) with its Subsidiaries, interest in Joint ventures and
 Associate have been prepared under historical cost convention with the
 exception of Land and Buildings (which were revalued) on accrual basis
 and in accordance with Generally Accepted Accounting Principles in
 India (Indian GAAP). The said financial statements comply with the
 relevant provisions of the Companies Act, 1956 (the Act) and the
 mandatory Accounting Standards notified by the Central Government of
 India under Companies (Accounting Standards) Rules, 2006.
 
 ii. Basis of Consolidation
 
 (a) The financial statements of the Company and its Subsidiaries have
 been consolidated in accordance with the principles and procedures for
 the preparation and presentation of consolidated financial statements
 as laid down under Accounting Standard - 21, on a line-by-line basis by
 adding together the book values of the like items of assets,
 liabilities, income and expenses, after eliminating intra-group
 balances and the unrealized profits/losses on intra-group transactions,
 and are presented to the extent possible, in the same manner as the
 Companys independent financial statements.
 
 (b) Investments in Associate Company have been accounted for as per
 Accounting Standard - 23, by using equity method whereby investment is
 initially recorded at cost and the carrying amount is adjusted
 thereafter for post - acquisition change in the Companys share of net
 assets of the associate.
 
 (c) The Companys interest in Jointly Controlled Entities are
 consolidated as per Accounting Standard - 27, on a line-by-line basis
 by adding together the book values of assets, liabilities, income and
 expenses, after eliminating the unrealized profits/losses on intra
 group transactions.  Joint venture interests accounted as above are
 included in the segments to which they relate.
 
 (d) Consolidated financial statements are prepared using uniform
 accounting policies except as stated in (iv)
 
 (f), (vii)(b) & (c) and (xii)(b) & (d) of this Schedule, the
 adjustments arising out of the same are not considered material.
 
 (e) The overseas subsidiaries viz., CUMI Australia Pty Ltd, CUMI
 Abrasives & Ceramics Company Limited, CUMI International Limited and
 its subsidiaries Volzhsky Abrasives Works, Foskor Zirconia Pty Ltd,
 CUMI America Inc, CUMI Middle East FZE and CUMI Canada Inc, are
 classified as Non-Integral foreign operation. The financials were
 translated into Indian Currency as per the Accounting Standard - 11
 (Revised) and the exchange gains / (losses) arising on conversion are
 accumulated under Foreign Currency Translation Reserve”.
 
 iii. Use of Estimates
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Management
 believes that the estimates used in the preparation of financial
 statements are prudent and reasonable. Differences, if any, between the
 actual results and estimates are recognised in the period in which the
 result are known / materialised.
 
 iv. Fixed assets and depreciation/ amortisation
 
 (a) Fixed assets are stated at historical cost less accumulated
 depreciation except land and buildings added up to 31st August 1984
 which are shown as per the revaluation done in that year; and land and
 buildings of Sterling Abrasives Limited which are shown as per the
 revaluation done on 31st December 1993.
 
 (b) Cost comprises of direct cost, related taxes, duties, freight and
 attributable finance costs (Refer (vi) below) till such assets are
 ready for its intended use and net of CENVAT/ VAT wherever applicable.
 Subsidy received from State Government towards specific assets is
 reduced from the cost of fixed assets. Fixed Assets taken on finance
 lease are capitalised.
 
 (c) Capital work in progress is stated at the amount expended up to the
 Balance sheet date.
 
 (d) Machinery spares used in connection with a particular item of fixed
 asset and the use of which is irregular, are capitalized at cost net of
 CENVAT / VAT, as applicable.
 
 (e) Expenditure directly relating to new projects prior to commencement
 of commercial production is capitalised.  Indirect expenditure (net of
 income) attributable to the new projects or which are incidental
 thereto are also capitalised.
 
 (f) Depreciation on fixed assets has been provided on straight-line
 method at rates specified in Schedule XIV of the Companies Act 1956,
 except that :
 
 i. Leased vehicles which are depreciated over four years and Lease hold
 improvements are depreciated over six years, are higher than Schedule
 XIV rates.
 
 ii. In respect of Assets held by Indian Subsidiaries & Overseas
 Subsidiaries, Joint Ventures and Associate, depreciation is provided
 based on the estimated useful life of those assets as estimated by the
 respective Companies.
 
 iii. Assets held by Ciria India Ltd (Joint Venture) are depreciated at
 Schedule XIV rates on Written Down Value basis.
 
 iv The difference between the depreciation for the year on the revalued
 assets and depreciation calculated on the original cost is recouped
 from the fixed assets revaluation reserve.
 
 (g) Intangible assets are amortised over the estimated useful life of
 the assets on straight line basis.
 
 v. Impairment of assets
 
 At each balance sheet date, the carrying values of the tangible and
 intangible assets are reviewed to determine whether there is any
 indication that those assets have suffered an impairment loss. If any
 such indication exists, the recoverable amount of the asset is
 estimated in order to determine the extent of the impairment loss (if
 any).
 
 Where there is an indication that there is a likely impairment loss for
 a group of assets, the company estimates the recoverable amount of the
 group of assets as a whole and the impairment loss is recognised.
 
 vi. Borrowing costs
 
 Borrowing costs are capitalised as part of qualifying fixed assets when
 it is possible that they will result in future economic benefits. Other
 borrowing costs are expensed.
 
 vii. Inventories
 
 (a) Inventories are valued at lower of cost and net realisable value.
 Cost includes all direct costs and applicable production overheads to
 bring the goods to the present location and condition. Excise duty on
 the finished goods is added to the cost.
 
 (b) In respect of Raw materials, accessories and stores and spares,
 cost is determined on weighted average basis which includes freight,
 taxes and duties net of CENVAT credit wherever applicable, except Ciria
 India Ltd (joint venture) where cost is determined on First in First
 out method. Customs duty payable on material in bond is added to cost.
 
 (c) In respect of Parent company, Trading stocks are valued at weighted
 average basis and in respect of others, Trading stocks are valued in
 First in First out method.
 
 (d) Work-in-process relating to construction contracts are valued
 
 at cost. Direct expenses identifiable to a specific job are debited to
 that job. Indirect expenses are not allocated but charged as period
 cost in the year it is incurred.
 
 viii. Investments
 
 Long term investments are stated at cost/valuation and provision for
 diminution is made if such diminution is other than temporary in
 nature.
 
 Short term investments are stated at lower of cost and market value.
 
 ix. Revenue recognition
 
 (i) Domestic sales are accounted on despatch of products to customers
 and export sales are accounted on the basis of Bill of Lading. Sales
 are accounted net of Sales Tax / VAT, Discounts and Returns as
 applicable.
 
 (ii) Service income is recognised on the basis of percentage of
 completion. Revenue for divisible contracts is recognised in respect of
 supplies as and when the supplies are completed and in respect of
 construction on the percentage completion method.
 
 Revenue from indivisible contracts is recognised on a percentage
 completion method based on the billing schedules agreed with customers.
 The relevant cost is recognised in Accounts in the year of recognition
 of revenue. Profit so recognised is adjusted to ensure that it does not
 exceed the estimated overall contract margin.  The total costs of the
 contracts are estimated based on technical and other estimates.
 Foreseeable loss, if any, is recognized when it becomes probable and
 could be estimated.
 
 (iii) Benefits on account of entitlement to import goods free of duty
 under Duty Entitlement Pass Book Scheme, are accounted in the year of
 export.
 
 (iv) Dividend income on investments is accounted for when the right to
 receive the payment is established.
 
 x. Research and Development
 
 All revenue expenditure related to research and development are charged
 to the respective heads on the Profit and Loss Account. Capital
 expenditure incurred on research and development is capitalised as
 fixed assets and depreciated in accordance with the depreciation policy
 of the Company.
 
 xi. Voluntary Retirement Compensation
 
 In the parent company compensation to employees who have retired under
 voluntary retirement scheme is written off to revenue.
 
 xii. Employee Benefits
 
 (a) Defined Contribution Plan
 
 Fixed contributions to the Superannuation Fund and recognized Provident
 Fund are absorbed in the accounts.
 
 (b) Defined Benefit Plan
 
 The liability for Gratuity to employees of the Parent and its domestic
 subsidiaries and domestic joint ventures, as at Balance Sheet date is
 determined on the basis of actuarial valuation using Projected Unit
 Credit Method and is funded to a Gratuity fund administered by the
 trustees and managed by Life Insurance Corporation of India & SBI Life
 Insurance Ltd and the contribution there of paid / payable is absorbed
 in the accounts. The actuarial gains / losses are recognised in the
 Profit and Loss account.
 
 The Parent Company and its employees make monthly fixed contributions
 to Carborundum Universal Limited Employees Provident Fund Trust, equal
 to a specified percentage of the covered employees salary. In respect
 of domestic subsidiaries, the contribution is made to the Recognised
 Provident Fund. The interest rate payable by the Trust to the
 beneficiaries is being notified by the Government every year. The
 Parent Company has an obligation to make good the shortfall, if any,
 between the return from the investments of the trust and the notified
 interest rate.
 
 (c) Long term Compensated absences
 
 In respect of long term portion of compensated absences [Leave
 benefits], the liability is determined on the basis of actuarial
 valuation and is provided for.
 
 (d) Short term employee benefits
 
 Short term employee benefits determined as per companys policy/scheme
 are recognised as expense based on expected obligation on undiscounted
 basis in the case of parent company and other Indian subsidiaries and
 joint ventures except in the case of Southern Energy Development
 Corporation Limited, an Indian subsidiary, where leave encashment
 benefit on retirement to eligible employees is ascertained on actual
 basis and provided for.
 
 With respect to overseas Subsidiaries & Joint Ventures the Company has
 provided for employee benefits as per the local regulations.
 
 (e) Employee Stock Option Scheme
 
 Stock options granted to the employees under the stock option scheme by
 Parent company are evaluated as per the accounting treatment prescribed
 by the Employee Stock Option Scheme and Employee Stock Purchase Scheme
 Guidelines, 1999 issued by Securities Exchange Board of India. The
 Parent Company follows the intrinsic value method of accounting for the
 options and accordingly, the excess of market value of the stock
 options as on date of grant, if any, over the exercise price of the
 options is recognized as deferred employee compensation and is charged
 to the Profit and Loss Account on graded vesting basis over the vesting
 period of the options.
 
 xiii. Foreign Currency Transaction
 
 (a) Foreign currency transactions are recorded at the rates of exchange
 prevailing on the date of transactions.  Monetary assets & liabilities
 outstanding at the year-end are translated at the rate of exchange
 prevailing at the year-end and profit or loss is recognised in the
 profit and loss account.
 
 (b) Exchange differences arising on actual payments / realisations and
 year end restatements are dealt with in the Profit & Loss Account.
 
 (c) The premium or discount arising at the inception of forward
 exchange contracts (other than those relating to a firm commitment or a
 highly probable forecast) are amortized as expense or income over the
 life of the contract.
 
 xiv. Government Grants
 
 Lump sum capital subsidies, not relating to any specific fixed asset,
 received from State Governments for setting up new projects are
 accounted as capital reserve.
 
 xv. Excise Duty / Service Tax
 
 CENVAT credit on materials purchased/ services availed for
 production/input services are taken into account at the time of
 purchase and CENVAT credit on purchase of capital items wherever
 applicable are taken into account as and when the assets are acquired.
 The CENVAT credits so taken are utilised for payment of excise duty on
 goods manufactured / service tax on output services. The unutilised
 CENVAT credit is carried forward in the books.
 
 xvi. Segment reporting
 
 (a) The accounting policies adopted for Segment reporting are in line
 with the accounting policies of the Group with the following additional
 policies.
 
 (b) Inter-segment revenues have been accounted on the basis of prices
 charged to external customers.
 
 (c) Revenue and expenses have been identified to segments on the basis
 of their relationship to the operating activities of the Segment.
 Revenue and expenses, which relate to the enterprise as a whole and are
 not allocable to Segments on a reasonable basis have been included
 under Un-allocated Corporate expenses”.
 
 xvii. Income Tax
 
 (i) Current Tax is determined on income for the year chargeable to tax
 in accordance with the Tax laws in force in the country of
 incorporation of the respective companies into consolidation.
 
 (ii) Deferred tax is recognised for all the timing differences.
 Deferred Tax assets in respect of unabsorbed depreciation and carry
 forward of losses are recognized if there is virtual certainty that
 there will be sufficient future taxable income available to realize
 such losses. Other deferred tax assets are recognized if there is
 reasonable certainty that there will be sufficient future taxable
 income available to realise such assets.
 
 xviii. Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions are recognised only when there is a present obligation as a
 result of past events and when a reliable estimate of the amount of
 obligation can be made. Contingent liability is disclosed for (i)
 Possible obligation which will be confirmed only by future events not
 wholly within the control of the Company or (ii) Present obligations
 arising from past events where it is not probable that an outflow of
 resources will be required to settle the obligation or a reliable
 estimate of the amount of the obligation cannot be made. Contingent
 assets are not recognised in the financial statements.