i) These accounts are prepared under the historical cost convention on
accrual basis and comply with Accounting Standards referred to in
Section 211 (3C) of the Companies Act, 1956.
ii) Accounting policies not specifically referred to otherwise are
consistent and in consonance with generally accepted accounting
1.2 Revenue Recognition
a) Sales are recognized when the significant risks and rewards of
ownership of goods have been passed to the buyer. Sales are net of
sales tax and sales returns.
b) Inter Division Transfer represents transfer of finished /
semi-finished products within the Segment for further processing and
ii) Export Incentives
Export Incentives are recognized when right to receive credit as per
prevalent scheme is established in respect of the exports made and when
there is no significant uncertainty regarding realization of such
1.3 Fixed Assets
i) Fixed Assets are stated at their original cost of acquisition
including taxes, duties, freight, other incidental expenses related to
acquisition and installation of the concerned assets and excludes
refundable taxes and duties.
ii) All incidental expenses incurred during project implementation, for
the project as well as trial run expenses are treated as expenditure
during construction and are capitalized.
i) Leasehold land - Cost of leasehold land is amortised over lease
ii) Depreciation on Building and Plant & Machinery is provided on
straight line method in the manner and at the rates specified in
Schedule XIV of the Companies Act, 1956.
iii) Deprecation on Furniture & Fixtures, Office Equipment and vehicle
is provided on written down value method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
Intangible Assets are stated at costs less accumulated amortisation.
The cost relating to intangible assets are capitalised and amortised
over the period of 5 years which is based on their estimated useful
1.6 Leased Assets
i) Finance Lease
Lease rentals in respect of finance lease are segregated into cost of
the Assets and Finance Components by applying an implicit internal rate
of return. The cost component is amortized over the useful life of the
Asset and the Finance Component is recognized in the Statement of
Profit and Loss.
ii) Operating Lease
Lease rentals in respect of operating lease are charged to Statement of
Profit and Loss as per the terms of the lease agreement.
i) Classification: Scrap generated from Tube Segment is classified as
raw material as the same is mostly used by Steel Segment.
a) Raw Materials are valued at lower of cost or net realisable value.
Cost is determined on weighted average basis.
b) Semi finished and finished goods are valued at lower of cost or net
realisable value. The cost includes raw material, labour cost,
manufacturing expenses, production overheads and depreciation.
c) Stores and Spares are valued at cost determined on weighted average
basis except for those which have a longer usable life, which are
valued on the basis of their remaining useful life.
iii) Inventories include goods in transit under the appropriate heads.
1.8 Employee Benefits
i) Defined Contribution Plan
The Company makes defined contribution to Provident
Fund and Superannuation Schemes, which are recognized in the Statement
of Profit and Loss on accrual basis.
ii) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act (funded),
long term compensated absences are determined on the basis of actuarial
valuation made at the end of each financial year using the projected
unit credit method except for short term compensated absences, which
are provided on actual basis. Actuarial gain and losses are recognized
immediately in the Statement of Profit and Loss as income or expense.
Obligations is measured at the present value of estimated future cash
flows using a discounted rate that is determined by reference to market
yields at the Balance Sheet date on Government bonds where the currency
and terms of the Government bonds are consistent with the currency and
estimated terms of the defined benefit obligation.
1.9 Research & Development
Research and Development costs (other than costs of fixed assets
acquired) are charged to Statement of Profit and Loss in the year in
which they are incurred.
1.10 Long Term Investments
Long Term Investments are valued at cost of acquisition. Provision for
diminution in value of Long Term Investments is made only if such a
decline is other than temporary in the opinion of the Management.
1.11 Foreign Currency Transactions
i) All transactions in foreign currency are recorded by applying the
exchange rate prevailing at the time of the transaction.
ii) The Company designates borrowing in foreign currency other than
those utilized for capital expenditure and identified Long Term Loans
as hedge instrument to hedge its foreign currency risk of its firm
commitment and highly probable or forecasted revenue transaction to be
accounted as cash flow hedge. The unrealized exchange gains or losses
on transactions related to foreign currency borrowing which qualify as
effective hedge are recognized in the Hedging Reserve Account.
iii) Monetary foreign currency assets and liabilities (monetary items)
are reported at the exchange rate prevailing on the Balance Sheet date.
Pursuant to the notification of the Companies (Accounting Standards)
(Second Amendments) Rules, 2011 on December 29, 2011, which amended
Accounting Standard 11 on The Effects of Changes in Foreign Exchange
Rates, the exchange differences relating to long term monetary items
are dealt with in the following manner:
a) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to the acquisition of capital
asset are add to / deducted from the cost of the asset.
b) Exchange differences relating to long term monetary items, arising
during the year, in so far as they relate to identified Long Term
Loans, are accumulated in the Foreign Currency Monetary Item
Translation Difference Account and amortized to the Statement of Profit
and Loss over balance life of the long term monetary item, however the
period of amortization does not extend beyond March 31,2020.
iv) All other exchange differences are dealt with in the Statement
of Profit and Loss.
v) In respect of forward exchange contracts, the difference between the
forward rate and the spot rate is recognized income or expense over the
contract period. Gains or losses on cancellation or renewal of forward
exchange contracts are recognized as income or expenses.
vi) Non-monetary items such as investments are carried at the
historical cost using the exchange rate on the date of the transaction.
1.12 Miscellaneous Expenditure
i) Preliminary expenses in the nature of public issue expenses and
expenses in respect of increase in authorized capital are amortized
over a period of ten years.
ii) Loan Processing Fees are amortised over the Loan period.
1.13 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition of
qualifying assets are capitalized as a part of the cost of such assets.
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.
1.14 Income Tax
i) Tax expenses comprise of current and deferred tax.
ii) Provision for current income tax is made on the basis of relevant
provisions of the Income Tax Act, 1961 as applicable to the financial
iii) Deferred Tax on timing differences is measured based on the tax
rates and the tax laws enacted or substantively enacted at the Balance
Sheet date. Deferred Tax Assets are recognised only to the extent that
there is virtual certainty with convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realised.
iv) 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.
1.15 Government Incentives
Mega Project Incentives are recognized in the Statement of Profit and
Loss in accordance with the provisions of the Package Scheme of
Incentives 2007 and the eligibility certificate issued by the
Government of Maharashtra.
1.16 Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
1.17 Contingent Liabilities
Contingent Liabilities are not provided and are disclosed in Notes to
Accounts. A disclosure for a contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.