The accounts of the company are prepared under the Historical cost
Convention using the accrual method of accounting.
b) Fixed Assets
Fixed Assets are carried at cost less depreciation. The cost of
fixed assets includes interest on specific borrowing obtained for the
purpose of acquiring fixed asses upto the date of commissioning of
the assets and other pre-operative expenses incurred upto the last
date of the trial run netted off by expenses/income arising out of
production during the said period.
- Depreciation on the fixed assets acquired and put to use during
the project implementation, calculated upto the last date of trial
run is included in pre-operative expenses.
c) Preliminary and Share Issue Expenses
Preliminary expenses in respect of completed project(s) are written
off in equal installments over a period of ten accounting
d) Debenture Issue Expenses
Expenditure on Debenture Issue is written off on pro-rata basis over
a period of seven years, on the expiry of which the debentures would
be fully redeemed.
e) Deferred Revenue Expenses
Expenditure incurred for acquisition of mines is written off on
pro-rata basis over a period of five years being the period of lease.
f) Capital work-In-progress
Projects under commissioning and other capital Work-in-Progress are
carried at cost comprising direct cost, interest on specific
borrowing, other pre-operative expenses pending capitalisation and
depreciation on assets used during/for acquisition of capital
Investments are recorded at cost.
The inventory is valued as follows
i) Raw material : At cost using FIFO method.
ii) Stores & Spares : At cost using FIFO method (excluding
CI moulds, CI Panbodies, tools
and tackles, which are valued at
estimated residual value)
iii)Finished Goods : At cost or estimated net realisable
& Work-in-process value, whichever is lower.
iv)Traded Goods : At cost or estimated net realisable
value, whichever is lower.
v) Work in process : At cost by using absorption costing method.
As per normal practice, Excise duty on finished goods not cleared is
neither provided for nor considered for valuation of closing stock.
However, this has no impact on the profits for the year.
I) Revenue Recognition
i) Sales : Sales are recognised at the time of despatch of goods. All
sales are shown inclusive of excise duty but net of return and amount
recovered towards sales tax.
ii) Other Income : Income from investments, technical consultancy fee
and others are accounted for on accrual basis.
J) Prior period Expenses/Income
The company follows the practice of making adjustments through prior
period Items in respect of all material transaction pertaining to the period prior to current accounting
k) Research & Development
Expenditure in respect of research and development, which are insignificant are charged to profit & loss
account in the year, in
which they are incurred.
Depreciation on Fixed Assets is provided on pro-rata basis using
straight line method and specified in schedule-XIV of the Companies
(Amendment) Act, 1988.
i) on Rolling Division of steel plant (Madhwas, Gujarat) on the basis
of single shift working (Previous period: single shift working).
ii) on Ingots Division of steel plant (Madhwas Gujarat) on the basis
of triple shift working (previous period triple shift working)
iii) on Ferro Alloys Division at Meghnagar (Madhya Pradesh) on Triple
Shift Working (Previous period triple shift working)
m) i) Sales Tax deferment loan sanctioned by government of Gujarat
against eligible investment of rolling mill is repayable between 31st
May, 1998 to 31st May, 2003.
ii) Sales Tax deferment loan sanctioned by Government of Gujarat
against Wind Energy Farm is repayable in six annual instalments
beginning from the next financial year from which the eligible amount
of Sales Tax deferment is exhausted.
n) Retirement Benefits : As adequate provision for Gratuity Liability
was provided during earlier years no provision for the same is
provided during the year.