Accounting Policies of Ispat Profiles India Ltd. Company

Jun 30, 2010

1. ACCOUNTING ASSUMPTION

a) The production process is inoperative since 22nd October 2000 and Companys plant is under Lockout since 6th November, 2000.

b) The Company has been declared a Sick Industrial Unit under the Sick Industrial Companies (Special Provision) Act, 1985, by the BIFR vide order deted 30/03/2006. Pursuant to the BIFR order declaring the Company sick, a Draft Rehabilitation Scheme (DRS) had been formulated and circulated by the BIFR to all the concerned agencies. BIFR has again directed the Company to submit the revised DRS to Operating agency (IFCI) based on negotiation with secured creditors & workers, against which the company has preferred an appeal before AAIFR.

c) The State Bank of India, SBBJ, Bank of India and IFCI has given notice,to the Company under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in 2003, which the Company has adequately replied. ARCIL has given notice to the Company under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) in 2010, which has also been replied.

d) In expectation of a positive response on the above the accounts have been prepared on "Going Concern" basis. This will hold good subject to the receipt of required support from the lenders, Promoters and related parties, and in case the going concern basis is vitiated necessary adjustment will be required in the value of Assets and Liabilities.

e) The Accounts of the Company have been prepared on accrual basis of accounting.

f) As the Companys plant is under lockout, physical verification of inventory and Fixed Assets has not been done.

2. FIXED ASSETS

a) Land, Buildings and Plant & Machinery are stated at revalued amounts as a result of their revaluation.

b) Other fixed assets are stated at cost.

3. CAPITAL WORK IN PROGRESS

Capital work in progress is stated at cost, which includes direct costs and interest.

4. DEPRECIATION AND AMORTISATION

a) Depreciation on original cost of fixed assets has been provided on Straight Line Method at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation on certain Plant & Machinery has been provided at the rates applicable to Continuous Process Plant as per technical expert opinion.

b) Depreciation in respect of revalued assets is provided on Straight-Line method at the rates prescribed in Schedule XIV to the Companies Act, 1956. The amount of depreciation as computed under 4 (a) is charged to the Profit & Loss Account and . balance is withdrawn from Revaluation Reserve.

c) The depreciation on revalued amount of Fixed Assets is charged to Profit & Loss A/c in the absence of balance in revaluation reserve account.

5. INVESTMENTS

Long term Investments are stated at cost.

6. INVENTORIES

a) Basis of valuation

Stores and Spare Parts etc. : At or under Cost

Raw Materials : At or under Cost

Finished goods : At cost or Net Realisable Value

whichever is lower Tools & Implements : At depreciated value

Own generated Skull : At estimated realisable value

Duty Free Import Licence (DEPB) : At estimating savings in Duty

Machinery Spare of irregu lar use : At depreciated value

b) Excise duty is accounted for on Production.

7. Items of income and expenditure are recognised on accrual basis, except in case of items where monetary value cannot be determined with certainty.

8. CONTINGENT LIABILITIES

Contingent Liabilities are not provided for in the accounts and are disclosed separately in Notes on Accounts.

9. RETIREMENT BENEFITS TO EMPLOYEES

i) Employee benefits of short term nature are recognized as expenses as and when it accrues.

ii) Employee benefits of long term nature are recognized as expenses based on actuarial valuation.

iii) Post employment benefits in the nature of Defined Contribution Plans are / recognized as expenses as and when it accrues and that in the nature of Defined benefit plans, the same are recognized as expenses based on actuarial valuation.

iv) Actuarial gains and losses are recognized immediately in the Profit and Loss Account as income and expenses.

10. FOREIGN CURRENCY TRANSACTIONS

foreign Currency transactions are translated at the Exchange Rate prevailing as on the date of the transaction. Foreign Currency transactions outstanding on the date of Balance Sheet are translated at the exchange rate prevailing as on that date with consequent adjustments to the related accounts.

11. TAXATION

Provision for current income tax is made in accordance with the Income Tax Act, 1961. Deferred tax liabilities and assets are recognised at substantively enacted tax rates, subject to the consideration of prudence, on timing difference, 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.

12. PROVISION

A provision is recognised when an enterprise has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to present value and are determined based on best estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.