a) Accounting Assumptions
 
 The financial statements of Sagar Cements Ltd have been prepared and
 presented in accordance with Indian Generally Accepted Accounting
 Principles (GAAP) under the historical cost convention on the basis of
 a going concern and on an accrual basis. GAAP comprises accounting
 standards notified by the Central Government of India U/s.211 (3C) of
 the Companies Act, 1956, other pronouncements of Institute of Chartered
 Accountants of India, the provisions of Companies Act,1956 and
 guidelines issued by Securities Exchange Board of India. The financial
 statements are rounded off to the nearest Rupees millions.
 
 The company has prepared these financial statements as per the format
 prescribed by the Revised Schedule VI to the Companies Act, 1956 (''the
 schedule'') issued by Ministry of Corporate Affairs. Previous periods''
 figures have been recast/restated to conform to the classification
 required by the Revised Schedule VI.
 
 The adoption of Revised Schedule VI does not materially impact
 recognition and measurement principles followed for the preparation of
 financial statements. However, it impacts preparation and disclosures
 made in the financial statements, particularly in presentation of
 Balance Sheet.
 
 b) Fixed Assets and depreciation
 
 Fixed Assets are carried at the cost of acquisition or construction
 less accumulated depreciation. The cost of fixed assets includes non
 refundable taxes, duties, freight and other incidental expenses related
 to the acquisition and installation of the respective assets. Borrowing
 costs directly attributable to the acquisition or construction of those
 fixed assets which necessarily take a substantial period of time to get
 ready for their intended use are capitalized.
 
 Depreciation on plant and machinery is charged under straight line
 method and on other assets depreciation is charged under WDV method
 applying the rates worked out in accordance with Schedule XIV of the
 Companies Act, 1956.
 
 Freehold land is not depreciated. Depreciation is calculated on a pro-
 rata basis from the date of installation till the date the assets are
 sold or disposed. Individual assets costing less than Rs.5,000 are
 depreciated in full in the year of acquisition.
 
 c) Revenue recognition
 
 Sales are recognized on dispatch of goods to customers and include
 excise duty but exclude returns and taxes on sales collected from the
 customers on behalf of the government.
 
 Dividend income is recognized when the unconditional right to receive
 the income is established. Income from interest on deposits and loans
 is recognized on the time proportionate method.
 
 d) Investments
 
 Investments are either classified as current or long term. Current
 investments are carried at the lower of cost and market value. Long
 term investments are carried at cost less any permanent diminution in
 value, determined separately for each individual investment. The
 reduction in the carrying amount is reversed when there is a rise in
 the value of the investment or if the reasons for the reduction no
 longer exist.
 
 e) Inventories
 
 Inventories including work-in-progress are valued at lower of cost and
 net realizable value. Cost of inventory comprises all cost of purchase,
 cost of conversion and other costs incurred in bringing the inventories
 to their present location and condition.
 
 The cost of Raw Materials, Stores and Spares and Packing Materials is
 determined by using the Weighted Average Cost Method. The cost of
 Work-in-Progress and Finished Goods is determined by weighted average
 Cost Method and includes appropriate share of production overheads
 
 f) Employee Benefits Short term benefits
 
 Short term employee benefits are charged off at the undiscounted amount
 in the year in which the related services are rendered.
 
 Long term benefits
 
 Payments to the defined contribution retirement benefit schemes are
 charged as an expense as they fall due.  Gratuity
 
 Under defined benefit scheme, Company provides for gratuity, a defined
 benefit retirement plan (the Gratuity Plan) covering eligible
 employees. In accordance with the Payment of Gratuity Act, 1972, the
 Gratuity Plan provides a lump sum payment to vested employees at
 retirement, death, incapacitation or termination of employment, of an
 amount based on the respective employee''s salary and the tenure of
 employment. The company has taken master policy with Life Insurance
 Corporation of India under group gratuity scheme. Liabilities with
 regard to the Gratuity Plan are determined by actuarial valuation as of
 the balance sheet date, based upon which, the Company contributes all
 the ascertained liabilities to the Life Insurance Corporation of India.
 
 Employee Leave Encashment
 
 The leave encashment payable to the employees is provided based on the
 actuarial valuation carried out in accordance with the AS 15 and is not
 funded.
 
 Provident fund
 
 The company has defined contribution plan for Provident Fund under
 which the company contributes the fund to Regional Provident Fund
 Commissioner.
 
 Superannuation
 
 The company contributes to superannuation which is a defined
 contribution plan as per policy. The company fully contributes all
 ascertained liabilities to the superannuation fund maintained with Life
 Insurance Corporation of India.
 
 g) Income-Tax expense
 
 Income tax expense comprises current tax and deferred tax charge or
 credit.
 
 Current tax
 
 The current charge for income taxes is calculated in accordance with
 the relevant tax regulations applicable to the company.
 
 Deferred tax
 
 Deferred tax charge or credit reflects the tax effects timing
 differences between accounting income and taxable income for the
 period. The deferred tax charge or credit and the corresponding
 deferred tax liabilities or assets are recognized using the tax rates
 that have been enacted or substantially enacted by the balance sheet
 date. Deferred
 
 tax assets are recognized only to the extent there is reasonable
 certainty that assets can be realized in future; however, where there
 is unabsorbed depreciation or carry forward of losses, deferred tax
 assets are recognized only if there is a virtual certainty of
 realization of such assets. Deferred tax assets are reviewed at each
 balance sheet date and written down or written up to reflect the amount
 that is reasonably/virtually certain (as the case may be) to be
 realized.
 
 Minimum alternate tax credit
 
 MAT credit entitlement represents the amounts paid in a year under
 Section 115JB of the Income Tax Act 1961 (IT Act) which is in excess of
 the tax payable, computed on the basis of normal provisions of the IT
 Act. Such excess amount can be carried forward for set off in future
 periods in accordance with the relevant provisions of the IT Act.
 Since such credit represents a resource controlled by the Company as a
 result of past events and there is evidence as at the reporting date
 that the Company will pay normal income tax during the specified
 period, when such credit would be adjusted, the same has been disclosed
 as MAT credit entitlement, in the balance sheet with a corresponding
 credit to the profit and loss account, as a separate line item.
 
 h) Earnings per share
 
 The basic earnings per share (''EPS'') is computed by dividing the net
 profit after tax for the year by weighted average number of equity
 shares outstanding during the year. For the purpose of calculating
 diluted earnings per share, net profit after tax for the year and the
 weighted average number of shares outstanding during the year are
 adjusted for the effects of all dilutive potential equity shares.
 
 i) Provisions and contingent liabilities
 
 The Company creates a provision where there is a present obligation as
 a result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of the obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outflow of resources. Where there is possible obligation or
 a present obligation in respect of which the likelihood of outflow
 resources is remote, no provision or disclosure is made.
 
 j) Government Grants
 
 Government grants receivable under Industrial Investment Promotion
 Policy 2005-10 of Government of Andhra Pradesh are accounted based on
 verification and recommendation of the competent authority as per the
 policy of Government and in accordance with Accounting Standards 9 and
 12.