1.  Accounting convention:
 
 a. The annual accounts have been prepared on the historical cost basis
 and confirms to the statutory provisions of the Companies Act, 1956,
 the General accounting practices prevailing in the country and
 applicable accounting standards. All income and expenditure having a
 material bearing on the financial statements are recognized on accrual
 basis.
 
 2.  Fixed assets:
 
 a.  Fixed Assets are stated at cost of acquisition or construction less
 accumulated depreciation/ amortisation. All Costs relating to the
 acquisition, construction and installation of Fixed Assets are
 capitalized and include financing costs, if any, relating to borrowed
 funds attributable to construction or acquisition of Fixed Assets, up
 to the date the asset is ready for intended use, net of adjustments
 arising from exchange rate differences relating to specific borrowings,
 wherever applicable, attributable to those Fixed Assets.
 
 b.  Depreciation on fixed assets is provided on straight-line method
 basis at the rates and in the manner prescribed in Schedule XTV to the
 Companies Act, 1956. Depreciation on additions made during the year is
 provided for the period the assets were in use.
 
 3.  Borrowing cost:
 
 Borrowing costs attributable to acquisition and construction of
 qualifying assets are capitalised as a part of the cost of such asset
 up to the date when such asset is ready for its intended use.  Other
 borrowing costs are charged to the Profit & Loss Account.
 
 4.  Foreign currency transactions including futures and option
 contracts thereon: Transactions in foreign currencies are recorded at
 the exchange rates prevailing on the date of transaction. Foreign
 currency monetary assets and liabilities without forward foreign
 exchange contract are translated at year-end exchange rates. Foreign
 currency monetary assets and liabilities with forward foreign exchange
 contract are recorded at forward exchange rates. The resulting exchange
 gain/loss on settlement of transactions and translation of monetary
 items are recognized as income or expense in the year in which they
 arise in the profit and loss account. Exchange differences attributable
 to the acquisition of the fixed assets, if any, are adjusted to cost of
 the respective assets. Premium in respect of forward foreign exchange
 contract is charged to the Profit & Loss Account. Premium in respect of
 foreign exchange option contracts is charged to the Profit & Loss
 Account as and when the contacts are entered into but the gain on such
 option contracts, if any, is recognized only on maturity/cancellation
 of such option contracts.
 
 5.  Investments:
 
 Long-term investments are stated at cost after deducting provision, if
 any, made for permanent diminution in the values.
 
 Current investments are stated at lower of cost and market/fair value.
 
 6.  Revenue recognition:
 
 Sales are recorded net of trade discounts, rebates and value added tax,
 if any and are recorded at the realized foreign currency rates. Some of
 the goods have been imported on provisional basis without fixing the
 gold price. Some of the goods have also been exported on provisional
 basis without fixing the price of gold. All the provisional imports and
 exports have been accounted for as per the custom''s assessment of the
 goods. When the price of import shipment is fixed or when price of the
 export shipment is fixed, the final invoice is submitted to the
 customs; the differential is accounted for as purchase or sales.
 Making charges income is recognized on despatch of goods.
 
 Interest on bank deposits and other interest bearing loans is accounted
 on accrual basis. However, since previous financial year the company
 has adopted the''accounting policy with regard to accounting of interest
 income on interest bearing loans other than bank deposits to cash basis
 instead of accrual basis due to which the profit for the year has been
 understated by Rs.33,08,58,068/- Dividend income on investments is
 accounted for when the right to receive the payment is established.
 
 7.  Employees benefits:
 
 Retirement benefits in the form of Provident Fund and Superannuation
 Schemes are not applicable to the company at present.
 
 Gratuity liability for the year under the Payment of Gratuity Act is
 accounted on the basis of Actuarial valuation.
 
 The company does not provide leave encashment and carry forward of
 accumulated leave to next year to its employees.
 
 8.  Taxation:
 
 Provision for current tax is made on the basis of taxable income for
 the current accounting year determined in accordance with the Income
 Tax Act, 1961.
 
 Deferred tax is recognized; on timing differences, being the difference
 between taxable incomes and accounting income that originate in one
 period and are capable of reversal in one or more subsequent periods.
 The deferred tax is accounted for, using the tax rates and laws that
 have been substantively enacted as of the balance sheet date.
 
 Deferred tax assets in respect of unabsorbed depreciation and carry
 forward of losses are recognized only if there is virtual certainty
 that such deferred tax asset can be realized against future taxable
 profits.
 
 9.  Valuation of inventories:
 
 Stock in trade is valued at cost or net realisable value (International
 standard rate as on 31.03.2011), whichever is less for E.O.U, SEZ &
 SIDCUL units and in respect of other units at cost or net realisable
 value (Rate prevailing at Bangalore Market as on 31.03.2011), whichever
 is lower. The cost formula used for this purpose is first in first out
 (FIFO) method and includes direct cost incurred in bringing the items
 of inventory to their present location and condition.
 
 10.  Book debts and advances:
 
 Provision/Write-off of doubtful and unrecoverable book debts and
 advances have been made, wherever found necessary by the Management.
 
 11.  Cash flow statement:
 
 The cash flow statement is prepared by the indirect method set out in
 Accounting Standard 3 on Cash Flow Statement.
 
 12.  Business segments
 
 The company is mainly engaged in the business of gold and gold
 products. These, in the context of Accounting Standard 17 on Segment
 Reporting, issued by the Institute of Chartered Accountants of India,
 are considered to constitute one single primary segment.