1. BASIS OF PREPARATION OF FINANCIAL STATEMENT
 
 (a) The financial statements are prepared according to the historical
 cost convention on accrual basis and in line with the fundamental
 accounting principles of prudence, consistency and materiality.
 
 (b) The financial statements are reported in Indian Rupee and all
 values are rounded to the nearest million unless otherwise stated.
 
 (c ) Statement of Compliance
 
 The financial statements are prepared on the basis of generally
 accepted accounting principles in India, accounting standards issued by
 the Institute of Chartered Accountants of India and the provisions of
 the Companies Act, 1956 as amended from time to time.
 
 2. PURCHASES AND SALES
 
 a) Purchases and sales are booked where the company has entered into
 purchase/sale contract/agreement with the sellers/buyers or received
 allocation letter from Government, on performance of the
 contract/agreement/allocation either wholly or partly.
 
 b) Gold/Silver sent by foreign suppliers on consignment basis:
 
 i) Purchases include gold/silver withdrawn from consignment stock on
 outright purchase basis for sale to exporters, as per the scheme of
 Exim Policy being operated by the Company as a nominated agency.
 
 ii) Purchase of Gold for domestic sale is accounted for on withdrawal
 from the consignment stock and fixation of price with the suppliers.
 
 iii) Gold/silver withdrawn on loan basis where from consignment stock,
 are shown as loan given to parties and shown under Loans and Advances.
 The corresponding liability towards the stocks received from foreign
 suppliers is shown under Sundry Creditors. Loan/Sundry Creditors are
 adjusted when purchase and sales are booked.
 
 iv) In the case of replenishment basis, gold/silver booked by exporter
 by paying margin money, purchase is booked after “fixing” the price
 with the foreign suppliers.  However, sale is booked when quantity is
 actually delivered after completion of exports.
 
 v) Consignment stocks held on behalf of foreign suppliers at the year
 end is suitably disclosed in the accounts. However, customs duty paid
 in respect of balance consignment stock is shown as prepaid expenses.
 
 c) In respect of exports of Iron Ore/Manganese Ore where final sale
 value is ascertained on the basis of destinational weight and analysis
 results and such results are awaited, provision towards DWA risk is
 made @ 1% on the provisional sale value.  In case of FOBT supplies
 where DWA risk on the purchase value is to the account of supplier
 provision @1% is made on the difference between sale value and purchase
 value.
 
 d) Pending settlements, certain expenses/ gain/loss like dispatch
 earned/ demurrage payable etc. are accounted for on provisional basis.
 
 3.  REVENUE RECOGNITION
 
 i) Revenue is recognized on accrual basis except in the following items
 which are accounted for on actual realization since relisability of
 such items is uncertain in accordance with the provisions of AS – 9
 issued by ICAI:- a) Tax credit, duty credit authorization under Target
 Plus scheme, REP/Advance Licenses, Service Tax refund, etc.
 
 b) Decrees pending for execution/contested dues and interest thereon,
 if any:
 
 c) Interest on overdue recoverables where realisability is uncertain.
 
 d) Liquidated damages on suppliers/underwriters, refund of custom duty
 on account of survey shortage, and refund of income-tax/sales-tax/VAT
 and interest thereon.
 
 Insurance claims are accounted for upon being accepted by the insurance
 company.
 
 ii) Claims are recognized in the Profit & Loss Account on accrual basis
 including receivables from Govt. towards subsidy, cash incentives,
 reimbursement of losses etc.  when it is not unreasonable to expect
 ultimate collection. Claims recognized but subsequently becoming
 doubtful are provided for through Profit & Loss Account.
 
 4. PREPAID EXPENSES
 
 Prepaid expenses upto Rs.10,000/- in each case are charged to revenue.
 Deposits upto Rs.5,000/- in each case with Government Department,
 Statutory Corporations, Electricity Boards and Local Bodies are also
 charged off to revenue.
 
 5. FIXED ASSETS
 
 (a) All fixed assets are stated at historical cost less accumulated
 depreciation and any impairment in value.
 
 (b)The Company’s expenditure toward construction/development of assets
 on land owned by the Government/Semi Government Authorities, is
 capitalized under heading “Fixed Assets created on Land and neither the
 Fixed Assets nor the Land belongs to the Company”.
 
 6. DEPRECIATION
 
 Depreciation is provided on straight line method at the rates approved
 by the Board of Directors, which are equal to or higher than those
 provided under schedule XIV of the Companies Act, 1956. Depreciation on
 assets acquired/disposed during the year is provided from/upto the
 month the asset is acquired/disposed.  Depreciation
 
 E. Mobile handsets are directly charged to revenue in the year of
 purchase.
 
 7. INVESTMENTS
 
 (i) Long term investments are valued at cost less provision for
 permanent diminution in value.
 
 (ii) Current investments are valued at lower of cost and fair value.
 
 8. FOREIGN CURRENCY TRANSACTIONS
 
 a) Transactions with rupee payment countries in respect of
 non-convertible Indian currency are being treated as foreign exchange
 transactions.
 
 b) Foreign currency monetary items (except overdue recoverable where
 realisibility is uncertain) are converted using the closing rate as
 defined in the AS-11 issued by the Institute of Chartered Accountants
 of India. Non-monetary items are reported using the exchange rate at
 the date of the transaction. The exchange difference gain/loss is
 recognized in the Profit and Loss account.
 
 c) Liability in foreign currency relating to acquisition of fixed
 assets is converted using the closing rate as defined in AS 11 issued
 by the Institute of Chartered Accountants of India. The difference in
 exchange is recognized in the Profit & Loss Account.
 
 d) In respect of forward exchange contracts, the premium / discount and
 loss/gain will be recognized as under:- In respect of forward exchange
 contracts against existing underlying transactions, the premium /
 discount is recognized proportionately over the life of the contract.
 The loss/gain due to difference in exchange rate between (i) closing
 rate or the rate on the date of settlement if the transaction is
 settled during the year, and (ii) the exchange rate at later of the
 date of the inception of the forward contract or the last reporting
 date is recognised in the Profit & Loss Account for the year.
 
 In respect of forward contracts relating to firm commitments and highly
 probable forecast transactions, loss due to exchange difference is
 recognized in the Profit & Loss Account in the reporting period in
 which the exchange rate changes. Any profit or loss arising on renewal
 or cancellation of such contracts is recognized as income or expense
 for the period.
 
 e) Investments in subsidiary company outside India are translated at
 the rate of exchange prevailing on the date of acquisition.
 
 9.  SEGMENT REPORTING
 
 Primary Segment: The management evaluates the company’s performance and
 allocates the resources based on analysis of various performance
 indicators by the following business segments / Product segments i.e.
 
 1.  Minerals
 
 2.  Precious Metals
 
 3.  Metals
 
 4.  Agro Products
 
 5.  Coal & Hydrocarbon
 
 6.  Fertilizer
 
 7.  General Trade/others.
 
 Above Business Segments have been identified in line with AS-17
 “Segment Reporting” taking into account the company’s organizational
 structure as well as different risks and returns of these segments.
 
 Secondary Segment: Secondary Segments have been identified based on the
 geographical location of the customer of the company i.e.
 
 1.  Outside India
 
 2.  Within India
 
 10.  EMPLOYEE BENEFITS
 
 (i) Provision for gratuity, leave encashment/availment, post retirement
 medical benefit and long service benefits i.e. service award,
 compassionate gratuity and employees’ family benefit scheme is made on
 the basis of actuarial valuation as per AS-15(Revised) issued by The
 Institute of Chartered Accountants of India.
 
 (ii) Provident fund contribution is made to Provident Fund Trust on
 accrual basis.
 
 (iii) Payment of Ex-gratia and Notice pay on Voluntary Retirement are
 charged to revenue in the year incurred.
 
 11.  PHYSICAL VERIFICATION OF STOCKS
 
 Physical verification of stocks is undertaken once in a year and
 balances are arrived at after necessary adjustments till the end of the
 year. The stocks as physically verified are adopted as closing stocks
 and shortages/excesses suitably dealt with.
 
 In some of the cases where stocks are lying with Handling
 Agent/SWC/CWC/Private Parties the stocks have been adopted on the basis
 of certificate given by the respective agencies.
 
 12.  VALUATION OF STOCKS
 
 Inventories including Goods-in-Transit are valued at lower of the cost
 or realisable value as on 31st March.  In case of back to back
 transactions, net realizable value is ascertained on the basis of cost
 plus profit margin.  The method of valuation is as under:
 
 a) EXPORTS
 
 Cost of export stocks is arrived at after including direct expenses
 incurred upto the point at which the stocks are lying. Similarly the
 realisable value is derived by deducting from the market price the
 expenses to be incurred from that point to the stage where they are
 sold.
 
 MINERAL ORES
 
 The realisable value of ores is worked out at the minimum of the Fe/Mn
 contents of the grade of the ore as per export contract and is compared
 with the weighted average cost at weighted average Fe/Mn
 contents/weighted average moisture contents of the ore. The embedded
 stocks of Iron ore are excluded from inventory and hence not valued.
 
 (b) IMPORTS
 
 The cost of imported stocks is arrived at by working out the yearly
 regional weighted average cost except for Non-ferrous Metals where
 weighted average cost of remaining stock after including all expenses
 incurred upto the point at which they are lying is considered. However
 where stocks are specifically identifiable, actual cost of the material
 including all expenses incurred up to the point at which they are lying
 is considered.
 
 In case of cut & polished stones, medallions and jewellery
 (finished/semi finished) cost includes wastages and other direct
 manufacturing cost.
 
 Gold/Silver purchased from foreign suppliers against booking by
 exporters under replenishment option and not delivered at the year end
 are shown as stocks of company and valued at cost.
 
 (c) DOMESTIC
 
 Packing material is valued at lower of the cost or realisable value as
 on 31st March.
 
 (d) STOCK ON LOAN/FABRICATION
 
 Stocks with fabricators are taken as the stocks of the company, till
 adjustments.
 
 13.  PRIOR PERIOD ADJUSTMENTS
 
 Expenditure/income relating to previous year is shown in the accounts
 under the head “Prior Period Adjustment Account” as per the provisions
 of AS-5 (Net Profit or Loss for the period, Prior Period Items and
 Changes in Accounting Policies) issued by Institute of Chartered
 Accountants of India.
 
 14.  BORROWING COSTS
 
 (i) Borrowing cost in ordinary course of business are recognized as an
 expense in the period in which these are incurred.
 
 (ii) Borrowing costs that are attributable to the acquisition,
 construction of qualifying assets are capitalised as part of cost of
 such asset upto the date the assets are ready for their intended use.
 All other borrowing costs are recognised as an expense in the year in
 which they have been incurred.
 
 15.  DEFERRED TAX
 
 Deferred tax is recognized, subject to consideration of prudence on
 timing differences representing the difference between the Taxable
 income 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 tax rates and the tax laws
 that have been enacted or substantively enacted by the Balance Sheet
 date.
 
 16.  IMPAIRMENT OF ASSETS
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value and impairment loss is charged to Profit
 and Loss account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting periods is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 17.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 (I) Provisions
 
 (a) Provisions for Doubtful Debts/Advances/Claims:
 
 Provision for doubtful debts/advances/claims is made where there is
 uncertainty of realization irrespective of the period of its dues. For
 outstanding over three years (except Government dues) full provision is
 made unless the amount is considered recoverable. Debts/advances/claims
 are written off when unrealisability is almost established.