1.  HISTORY:
 
 Oil Country Tubular Limited (OCTL) is a unique integrated facility
 established in 1989 and is one of the leading Companies in the world,
 processing a wide range of Oil Country Tubular Goods viz., Drill Pipes,
 Heavy Weight Drill Pipes, Tubing, Casing, Drill Collars and other Oil
 Field Accessories required for the Oil Drilling and Exploration. The
 facility was setup in the State of Andhra Pradesh, India. The Company
 also commissioned End Finishing and Second Heat Treatment Plant, Wind
 Energy System with a capacity of 0.8 MW. With the addition of these
 facilities, the total capital outlay is ''2511 Million.
 
 2.  SIGNIFICANT ACCOUNTING POLICIES:
 
 A) Basis of Preparation of Financial Statements:
 
 The Financial Statements are prepared on going concern assumption and
 under the historical cost convention, except for certain fixed assets
 which are revalued in accordance with generally accepted Accounting
 principles in India and the provisions of the Companies Act, 1956.
 
 B) Use of Estimates:
 
 The preparation of financial statements requires certain estimates and
 assumption to be made that effect the reported amount of assets and
 liabilities as on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual results and estimates are recognised in the period
 in which the results are known/ materialised.
 
 C) Fixed Assets:
 
 Fixed assets are stated at cost net of canvas / value added tax and
 includes amounts added on revaluation, less accumulated depreciation,
 and impairment of loss, if any. All costs including financing costs
 till commencement of production, net changes on foreign exchange
 contracts and adjustments arising from exchange rate variations
 attributable to the fixed assets are capitalised.
 
 D) Investments:
 
 Investments in Un-Quoted Shares are stated at Cost.
 
 E) Depreciation:
 
 Depreciation on Buildings and Plant and Machinery is provided on
 straight-line method at the rates specified in Schedule - XIV of the
 Companies Act 1956. Depreciation on other fixed assets is provided on
 written down value method at the rates specified in Schedule - XIV of
 the Companies Act, 1956.
 
 F) Impairment of Asset:
 
 The Carrying amount of asset is reviewed at each balance sheet date to
 determine whether there is any indication of impairment. If any such
 indication exists, the recoverable amount of the asset is estimated.
 The recoverable amount is the greater of the asset''s net selling price
 and value in use, which is determined based on the estimated future
 cash flow discounted to their present values. An impairment loss is
 recognised whenever the carrying amount of an asset or its cash
 generating unit exceeds its recoverable amount. Impairment loss is
 reversed if there is change in the estimates used to determine the
 recoverable amount.
 
 G) Inventories:
 
 Items of inventories are valued at lower of cost or net realisable
 value after providing for obsolescence, if any.  Cost of inventories
 comprises of cost of purchase, cost of conversion and other costs
 incurred in bringing them to their respective present location and
 condition. Cost of raw material is determined on weighted average
 method. Scrap is valued at estimated realisable value.
 
 H) Foreign Currency Transactions:
 
 Foreign Currency Transactions are recorded at the exchange rates
 prevailing at the transaction date. Current Assets and Current
 Liabilities relating to Foreign Currency Transactions remaining
 unsettled at the Balance Sheet date are translated at the year- end
 rates. The result gain / loss, if any, is recognised in Profit & Loss
 Account. As per the Notification issued by MCA, the Exchange
 Fluctuation arising on reporting of Long Term Foreign Currency Monetary
 items which is related to Depreciable Assets is capitalised.
 
 I) Revenue Recognition:
 
 Sales are recognised on the basis of dispatch of goods. In respect of
 Export Sales, the revenue is recognised on the basis of Bill of Lading.
 Miscellaneous sales are recognised on the basis of dispatch of goods.
 Other income such as interest etc., are recognised on accrual basis.
 
 J) Employee Benefits:
 
 1.  Gratuity:
 
 The Company contributes towards Group Gratuity Fund (defined benefit
 retirement plan) administered by the Life Insurance Corporation of
 India, for eligible employees. Under this scheme, the settlement
 obligation remains with the Company, while the Life Insurance
 Corporation of India administers the scheme and determines the premium
 to be contributed by the Company. The plan provides for a lump-sum
 payment to the vested employees on retirement or termination of
 employment, based on the respective employees'' salary and the years of
 service with the Company. Liability with regard to gratuity fund is
 accrued, based on actuarial valuation conducted by an independent
 actuary, using the projected unit credit method as at March 31, every
 year.
 
 2.  Provident Fund:
 
 Retirement benefit in the form of Provident Fund is a defined
 contribution scheme and the contributions are charged off to the Profit
 and Loss account of the year when the contributions to the fund are
 due.  There are no other obligations other than the contributions to be
 remitted to the Provident Fund Authorities.
 
 3.  Leave Encashment:
 
 Provision for Leave Encashment is recognised in the books as per the
 actuarial valuation.
 
 K) Borrowing Cost:
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that takes necessarily
 substantial period of time to get ready for its intended use. All other
 borrowing costs are charged to revenue.
 
 L) Provision for Current and Deferred Tax:
 
 Provision for current tax is made after taking into consideration
 benefits admissible and applicability of Minimum Alternate Tax under
 the provisions of the Income tax Act, 1961. Deferred tax resulting from
 timing difference between taxable and accounting income is accounted
 for using the tax rates and laws that are enacted or substantively
 enacted as on the balance sheet date. Deferred tax asset is not
 recognised in the books as mater of prudence.
 
 M) Research and Development:
 
 Capital expenditure incurred has been disclosed under their natural
 heads of account and revenue expenditure incurred is charged off as a
 distinct item in the Profit and Loss account.
 
 N) Claims:
 
 Claims by and against the company, including liquidated damages, are
 recognised on acceptance basis.
 
 Disclosures
 
 The Company has no information as to whether any of its vendors
 constitute a Supplier within the meaning of Section 2 (n) of the
 Micro, Small and Medium Enterprises Development Act, 2006 as no
 declarations were received under the said Act from them.
 
 Disclosures:
 
 The company has made current tax provision for Minimum Alternate Tax
 (MAT) u/s 115 JB of the Income Tax Act, 1961. As per the provisions of
 Section 115JAA, MAT Credit receivable has been recognised in the books
 of account as an asset to the extent there is convincing evidence that
 the company will pay normal income tax during the specified period. MAT
 credit is recognised as an asset in accordance with the guidance note
 issued by the Institute of Chartered Accountants of India. The said
 asset is created by way of a credit to Statement of Profit And loss and
 shown as MAT Credit Entitlement. The company will review the same at
 each balance sheet date and write down the carrying amount of MAT
 Credit entitlement to the extent there is no longer convincing evidence
 to the effect that Company will pay normal Income tax during the
 specified period.