Accounting Policies of Haryana Steel & Alloys Ltd. Company

Mar 31, 2009

1. GENERAL:

The financial statements have been prepared on historical cost convention basis (except for revaluation of certain fixed assets and providing for depreciation on revalued amount). The generally accepted accounting principle & standards as formulated by the Institute of Chartered Accountants of India have been adopted by the Company and disclosures made in accordance with the requirements of Schedules VI of the Companies Act, 1956 & the Indian Accounting Standards.

2. REVENUE RECOGNITION:

a. Sale affected from the factory are accounted for on despatch of goods except for consignment sale, where sales are accounted for on receipt of advice of sales made by the consignment agents. Sales are inclusive of excise duty and exclusive of sales tax.

b. As regards other income, revenue is not recognised when there are uncertainties of their realisation (including the financial conditions of the persons from whom the same is to be realised.)

3. INVENTORIES VALUATION:

a. Stock of raw-material and stores & spares are valued at lower of cost or the net realisable value on the First in First Out (FIFO) basis except for rolls when discarded (intended to be disposed off) are valued at estimated net realisable value.

b. Moulds issued for use are charged to revenue and such moulds are treated as scrap at the year end and valued at estimated net realisable value.

c. Finished Goods are valued at lower of the cost or the net realisable value. Cost of conversion is included on absorption costing basis.

d. Value of semi-finished goods is arrived at by deducing from the value of finished goods, processing cost yet to be incurred.

e. Loose tools are valued at cost and depreciated at the rate of 20% on the written down value.

4. FIXED ASSETS :

a. Fixed assets are stated at cost or replacement cost in case of revaluation, less accumulated depreciation.

b. Depreciation on original cost is provided for under Straight Line Method (SLM) at the rates specified in Schedule XIV ofthe Companies Act, 1956.

c. Depreciation on additions due to revaluation is on straight line basis over the remaining useful life of the asset. The enhanced depreciation necessitated by revaluation is met by a transfer of an equal amount from the revaluation reserve to the Profit & Loss account. *

d. Interest on term loans upto the commissioning of corresponding assets is capitalised

5. INVESTMENTS :

a. Quoted investments are valued at the lower of cost or market value.

b. Unquoted investments are valued on the basis of net worth of the Company.

6. Staff remuneration attributable to repairs & maintenance of Plant & Machinery are charged to Salaries and Wages account.

7. RESEARCH & DEVELOPMENT COSTS:

Research & development costs (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred.

8. RETIREMENT BENEFITS:

a. Contribution to Provident Fund is accounted for on accrual basis.

b. Gratuity is charged to Profit & Loss Account through a provision for accruing liability based on the certificate issued by an independent actuary.

9. Income Tax are computed using the tax effect accounting method where taxes are accrued in the same period, as the related revenue and expenses to which they relate. The differences that result between profit offered for income tax and the profit as per financial statements are identified and thereafter a deferred tax asset or_ deferred tax liability is recorded for timing difference, namely differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount being considered. Deferred tax assets and liabilities are measured using tax rates and tax laws enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognised only if there is reasonable / virtual cetrainty that they will be realised and are reviewed for the appropriateness of their respective carrying values at each balance sheet date. In case of matters under appeal, if any, due to disallowances or otherwise, full provision is made when the said liabilities are accepted by the Company.

b) Foreign currency transactions remaining unsettled at the end of the year are translated at closing rates when not covered by forward contracts.

10. Liabilities though contingent are provided for, if there are reasonable prospects of their maturity. Other contingent liabilities except frivolous claims are disclosed.