KAMDHENU ISPAT LIMITED - Securities and Exchange Board of India

Annexure - III
Significant Accounting Policies:
A. ACCOUNTING POLICES
The accounts are prepared and complied with the accounting standards issued by The Institute of chartered
Accountants of India and requirement of the companies Act, 1956. the significant accounting policies followed by the
company are below:
a) Valuation of Inventories
1. Raw Material, stores &Spares, Packing Material, Fuel, Stock in process are valued at cost
2. Finished goods are valued at cost or realizable value whichever is less.
3. Waste & scrap and Runner &Riser are valued at realizable value.
b) Sales
Sales are stated net of sales returns.
c) Fixed Assets :
1. Fixed Assets are stated at cost .Cost includes installations and expenditure during construction period wherever
applicable.
2. Depreciation on fixed assets has been provided on straight-line method at the rate prescribed under Schedule
XIV of the companies Act.1956 on pro-rata & actual shift working basis. The amount of deprecation on fixed
assets of Orissa project under implementation has been charged to Pre-operative Expenses. However the
company was charging depreciation on written down value method up to financial year 31.03.2003, thereafter
it has changed the method of depreciation from Written Down Value to Straight Line Method. The amount of
depreciation has been restated as per Straight Line Method in the respective effective years.
d) Misc. Expenditure
1. Preliminary expenses incurred up to 31.03.1998 are being written off over a period of 10years.
2. Expenses for increasing of authorized share capital incurred after 31.03.1998 are being written off over a
period of 5 years.
3. Preliminary &Pre-operative expenses incurred during the year for the new project at Orissa will be written off/
allocated to fixed assets after commencement of commercial production.
e) Investments are valued at cost. Profit &Loss is being accounted for on actual realization.
f) CENVAT
Cenvat claimed on Plant & Machinery is reduced from the cost of Plant& Machinery. Cenvat claimed on purchases
of raw materials and other materials reduced from the cost of such materials.
g) PROVISION FOR CURRENT AND DEFFERED TAX
Provision for current tax is made after taking into consideration benefits admissible under the provision of income
tax Act, 1961. Deferred tax resulting from “timing difference” between book profit and taxable profit is accounted
for using the tax rates and laws that have been enacted or substantively enacted as on the dare of balance
sheet. The deferred tax liability is recognized and carried forward only to the extent that there is a reasonable
certainty that the same will be realized in future.
Annexure - IV
B. NOTES ON THE ACCOUNTS
1 The Loan from ICICI are secured against hypothecation of cars.
2 Working capital Loan from State Bank of Bikaner & Jaipur is secured against hypothecation of goods & Debtors
and Second charge over Land, Building and Plant & Machinery mortgaged with RIICO Limited as first charge
and personal guarantee of the Directors. It is also secured against first charge by way of equitable mortgage of
Land & Building at plot noA-1112, R.I.A. Bhiwadi and two residential flats of the company.
3 Term Loan are secured against first charge by way of equitable mortgage of land &building at plot no-1114,R.I.A.
Bhiwadi and by hypothecation of all other moveable assets machinery and all other moveable assets(save
except book debts)present and future and personal guarantee of Directors.
4 Stores & Spares and salary and wage incurred during the year of repairs and maintenance of Plant & Machinery
etc. has been charged to the former accounts and not has been shown separately.
5 Balance of Sundry Debtors , creditors, advances and unsecured loan as on are subject to confirmation. The
balance of sundry debtors and creditors are arrived after netting of advances from debtors and advance to
creditors respectively.
6 Contingent Liabilities not provided for as on 31.03.2005.
(i) On account of pending appeals of the Income Tax, Excise Duty, Sales Tax assessment Rs.47.10Lac.
(ii) On account of estimated accrued amount of gratuity to the employees who have not completed qualifying
period of service as on 31.03.2005 is worked out of Rs. 0.66 lac.
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