1.1 BASIS OF ACCOUNTING:
 
 1.1.1 The financial statements are prepared under historical cost
 convention on accrual basis of according, in accordance with the
 generally accepted accounting principles, accounting standards issued
 by the institute of Chartered Accountants of india, and the relevant
 provisions of the companies Act, 1956.
 
 1.2 USE OF ESTIMATES:
 
 1.2.1 In preparing the financial statements in conformity with
 accounting principles generally accepted in India, the Company makes
 estimates and assumptions that affect the reported amount of assets and
 abilities and the disclosure of contingent liabilities as at the date
 of financial statements and the amount of expenses during the reported
 period. Actual result in some cases could differ from those estimates.
 Any revision of such estimates is recognized in the period in which the
 same is determined.
 
 1.3 FIXED ASSETS:
 
 1.3.1 All fixed assets are stated at historical cost less depreciation.
 Cost includes all direct expenditure of acquisition, attributable
 borrowing cost and net of CENVAT/VAT credit, wherever applicable.
 
 1.3.2 Expenditure on development of land including leasehold land is
 capitalized as part of cost of land. NPV and related payments made to
 Govt, authorities for bauxite mines are capitalized.
 
 1.3.4 Insurance spares valuing more than Rs. 1 lakh per unit are
 capitalized with the related fixed assets.
 
 1.3.5 Application Software package like ERP and application development
 tools like RDBMS are treated as intangible assets and amortized over a
 period of three years or the period of license whichever is earlier.
 
 1.3.6 Fixed assets retired from active use and held for disposal are
 stated at net book value and considered as current asset till the time
 of its disposal.
 
 1.4 INVESTMENTS:
 
 1.4.1 Long-term investments are carried at cost, after providing for
 diminution in value, if it is of a permanent nature. Current
 investments are carried at lower of cost and market value.
 
 1.5 INVENTORIES:
 
 1.5.1 Whenever the sale price of finished goods is more than the cost
 of materials, and other supplies incorporated in it, in line with
 Accounting Standard - 2 (Para 24), raw materials, stores and spares are
 valued at moving weighted average price on real time basis net of
 CENVAT/ VAT credit wherever applicable. Shortage of coal up to 1% of
 receipt quantity is treated as normal loss and beyond 1% is treated as
 abnormal loss.
 
 1.5.2 Work in process is valued at moving weighted average cost. Cost
 is ascertained at moving average price of material on real time basis,
 appropriate share of labour and related overheads.
 
 1.5.4 Semi-finished goods and intermediary products are valued at
 moving average price determined on moving average based on monthly
 production confirmation except for anode butts and rejects which are
 valued at lower of past realized value or 45% of direct material cost.
 
 1.5.5 Scraps of various nature internally generated is valued at
 estimated net realizable value and inventorised periodically.
 
 1.5.6 Stores and spares, other than insurance spares held not issued
 for more than 5 years are valued at 5% of the cost.
 
 1.5.7 Unabsorbed purchase overheads lying at the end of the year are
 charged to Profit & Loss Account at the year end.
 
 1.6 PROVISIONS:
 
 1.6.1 A provision is recognized when there is present obligation as a
 result of a past event and it is probable that an out flow of resources
 will be required to settle the obligation and in respect of which
 reliable estimate can be made. These are reviewed at end of each year
 
 1.6.2 Provision is made /written bTckTnTespect''ofValances on account of
 sums payable/receivable for more than 3 years, in respect of parties
 other than Govt. Dept./Companies. In case of Govt. Dept./ Companies the
 same is made on case to case basis depending upon the merit of the
 case.
 
 1.7.1 Monetary assets and liabilities related to foreign currency
 transactions remaining unsettled are translated at year-end exchange
 rates.
 
 1.7.2 The difference in translation of monetary assets and liabilities
 and realised gains and losses in foreign exchange transactions are
 recognised in the profit and loss account. In respect of transactions
 covered by forward exchange contracts, the difference between the
 contract rate and spot rate on the date of the transaction is
 recognised in the profit and loss account over the period of the
 contract.
 
 1.7.3 In all import cases, Bill of Lading/ Bill of Entry is considered
 as the date of transaction based on which Foreign Exchange liability is
 created in the books. Date on which amount is debited by Bank is
 considered as the settlement date. The exchange variation between sums
 of liability and settlement is charged to Profit & Loss Account.
 
 1.8 DEPRECIATION AND AMORTISATION:
 
 1.8.1 Depreciation on fixed assets is provided on straight-line method
 at the rates and in the manner prescribed under Schedule XIV to the
 Companies Act, 1956 except in case of certain assets where depreciation
 at higher rates is provided based on their estimated remaining useful
 life, evaluated on the basis of technical estimate made annually in
 respect of the following assets.
 
 Earth work portion of:
 
 a) Red mud pond at Alumina Refinery
 
 b) Ash pond at Alumina Refinery
 
 c) Ash ponds at Captive Power Plant
 
 1.8.2 Certain assets at Port Facilities are depreciated at rates
 calculated on the basis of balance lease period of land belonging to
 the Port Authority on which these assets are installed.
 
 1.8.3 Assets costing Rs. 5,000/- or less individually are depreciated
 fully in the year in which they are put to use.
 
 1.8.4 Assets on land not owned by the Company are depreciated over a
 period of five years.
 
 1.8.5 Cost of leasehold land including development expenses thereon is
 amortized over the period of lease. However, where lease agreement is
 yet to be signed, such expenses are amortized over a period of 20 years
 commencing from the year of commercial operation.
 
 The NPV and related payments to Govt, authorities at the time of
 renewal of mining lease is amortized over a period of 20 years from the
 date of payment or due date of renewal which ever is earlier on the
 basis of probable use.
 
 1.8.6 Classification of plant and machinery into continuous and
 non-continuous is made on the basis of technical opinion and
 depreciation provided accordingly.
 
 1.9 IMPAIRMENT
 
 1.9.1 The Company reviews the carrying amount of its fixed assets,
 whenever circumstances indicate that the carrying amount of the asset
 may not be recoverable. The company then estimates the future estimated
 discounted future cash flows expected to result from the CGU. If the
 estimated discounted future cash flow expected to result from use of
 the asset is less than its carrying amount, the asset is deemed to be
 impaired. The impairment loss is measured as the difference between the
 carrying amount and recoverable amount.
 
 1.10 PRIOR PERIOD INCOME/ EXPENDITURE & PRE-PAID EXPENSES:
 
 1.10.1 Income/ Expenditure relating to prior period and pre-paid
 expenses not exceeding Rs. 1 lakh in each case is treated as income/
 expenditure for the current year.
 
 1.11 RECOGNITION OF REVENUE:
 
 1.11.1 Sales include excise duty and are net of rebates and price
 concessions. Sales in the domestic market are recognised at the time of
 despatch of materials to the buyers. Export sales are recognized on
 issue of bill of lading.
 
 1.11.2 Claims and interest receivables are accounted for in the Profit
 and Loss Account based on certainty of their realisation.
 
 1.11.3 Export incentives in the form of duty credit on exports made
 during the year, under Duty Entitlement Pass Book (DEPB) scheme, are
 accounted for on accrual basis after providing for expected shortfall
 in realization based on last sale.
 
 1.12 REPAIRS AND REPLACEMENTS:
 
 1.12.1 Pot relining expenses are charged to Profit & Loss Account as
 and when incurred.
 
 1.13 EMPLOYEE BENEFITS:
 
 1.13.1 Contribution to Provident Fund and Pension Scheme, defined
 contribution schemes, are charged to Profit & Loss Account on the basis
 of actual liability.
 
 1.13.2 Liabilities towards Gratuity, leave encashment, post retirement
 medical facilities, retirement benefits, leave travel benefits (for non
 executives only), family rehabilitation scheme and long service reward
 are provided for on the basis of actuarial valuation.
 
 1.14 RESEARCH & DEVELOPMENT EXPENDITURE:
 
 1.14.1 Research expenditure is charged to Profit & Loss Account in the
 year in which incurred. Development expenditure except of capital
 nature is charged to Profit & Loss Account in the year incurred after
 setting off of incidental income, if any
 
 1.15 BORROWING COST:
 
 1.15.1 Borrowing costs attributable to the acquisition or construction
 of a qualifying asset are capitalised as part of the cost of that
 asset.  Other borrowing costs are recognised as expenses in the period
 in which these are incurred
 
 1.16 DEFFERED TAXATION:
 
 1.16.1 Deferred Tax expense or benefit is recognized on timing
 difference being the difference between 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 the tax rates and tax laws that have been enacted or
 substantively enacted by the Balance Sheet date.
 
 1.17 BUSINESS DEVELOPMENT EXPENSES:
 
 1.17.1 Expenses on account of new potential projects incurred till
 investment approval are charged to revenue. Expenditure incurred
 thereafter in case of successful projects are accounted for under
 Capital Work-in-Progress and capitalized subsequently.