Accounting Policies of VBC Industries Ltd. Company

Mar 31, 2013

1.1 ACCOUNTING CONCEPTS:

Financial statemenss are prepared and presented in accordance with the Generally Accepted Accounting Principles (GAAP) in India under historical cost convention on accrual basis and comply all material aspects with the Accouniing Standards and the relevant provisions prescribed in the Companies Act, 1956, besides the pronouncements! guidelines of the Institute of Chartered Accountants of India and the Securities and Exchange Board of India.

1.2 USE OF ESTIMATES

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and reported amount of revenues and expenses during the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, the actual outcome may be different from the estimates. Difference between actual results and estimates are recognized in the period in which the results are known or materialize.

1.3 FIXED ASSETS:

Fixed Assets, other than Land, Building and Plant & Machinery are stated at cost less accumulated depreciation. Cost of acquisition of Fixed Assets is net of CENVATand inclusive of freight, duties, taxes, incidental expenses including interest on specific borrowing and preoperative expenses aiTallocated.

1.4 CLASSIFICATION OF ASSETS AND LIABILITIES AS CURRENT AND NON- CURRENT:

All assets and liabilities are classified as current and non-current as per the Company''s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, 12 months has been considered by the Company for the purpose of current - non-currett classification of assets and liabilities.

1.5 INVESTMENTS:

Investments are stated at cost, inclusive of all expenses relating to acquisition. Provision for diminution in the market value of long term investments is not made, if in the opinion of the Management such diminution is temporary in nature.

1.6 INVENTORIES:

a) Finished goods are valued at cost, inclusive of excise duty, or market value whichever is lower.

b) Stocks of raw materials, stores, spare parts, materials-in-transit etc are valued at cost after providing for cost of obsolescence. Cost includes expenses for procurement, excise and customs duty and is net of credits under CENVAT & VAT schemes.

c) Scrap, inclUding by products, is valued at estimated realisable value.

1.7 REVENUE RECOGNITION:

a) Sales are inclusive of excise duty, export incentives and net of trade and quanttty discounts and rebates.

b) Interest and Dividend income from investments is accounted on accrual basis.

c) Insurance and other claims/refunds and export incentives and accounted for as and when admitted by appropriate authorities.

1.8 EMPLOYEE BENEFITS: (i) Defined Contribution Plans

Employee Benefits in the form of Employee Provident and Pension Funds, Employee State Insurance plan and Superannuation are ¦considered as Defined Contribution Plans and the contributions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

(ii) Defined Benefit Plans

Retirement Benefit in the form of Gratuity is considered as Defined Benefit Obligation and is provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet.

(iii) Other Long Term Benefits

Long-Term Compensated Absences are provided on the basis of an actuarial valuation using the Projected Unit Credit Method as at the date of Balance Sheet. Actuarial gainllosses, if any, are immediately recognized in the Profit & Loss Account.

1.9 DEPRECIATION:

Depreciation is provided in accordance with the provisions of Schedule XIV of the Companies Act, 1956 in the following manner.

i) In respect of all the assets of Ferro Alloys Unit under Straight Line Method.

ii) In respect of all other assets underWritten Down Value Method.

1.10 FOREIGN CURRENCY TRANSACTIONS: Foreign currency assets and liabilities covered by forward contracts are stated at the forward contract rates while those not covered by forward contracts are restated at rates ruling at the year end.

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Mar 31, 2012

(i) General:

Financial Statements are prepared on accrual basis under the historical cost convention and in accordance with the Accounting Standards, specified in sub section (3C) of section 211 of the Companies Act, 1956. ,

II Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of Fixed Assets is net of credit under Cenvat scheme and inclusive of freight, duties, taxes, incidental expenses relating to the cost of acquisition, the cost of installation/erection as applicable and interest on related borrowings up to the date of acquisition/capitalization

III Investments:

Investments are stated at cost, inclusive of all expenses relating to acquisition. Provision for diminution in the market value of long-term investments is not made, if in the opinion of the management such diminution is temporary in nature. Interest and Dividend income from investments is accounted on accrual basis

IV Inventories :

(a) Finished goods are valued at cost, inclusive of excise duty, or market value whichever is lower.(b) Stocks of raw materials, stores, spare parts, materials- in-transit etc are valued at cost after providing for cost of obsolescence. Cost includes expenses for procurement, excise and customs duty and is net of credits under CENVAT and VAT schemes.(c) Scrap, including by products, is valued at estimated realizable value.

V Revenue recognition:

(a) Sales are inclusive of excise duty, export incentives and net of trade and quantity discounts and rebates.(b) Interest and Dividend income from investments is accounted on accrual basis.(c) Insurance and other claims/refunds and export incentives and accounted for as and when admitted by appropriate authorities.

VI Depreciation on Fixed Assets:Depreciation is provided in accordance with the provisions of Schedule XIV of the Companies Act, 1956 in the following manner.

i) In respect of all the assets of Ferro Alloys Unit under Straight LineMethod.ii)

In respect of all other assets under Written Down Value Method.

VII Employee Benefits:

(i) Defined Contribution Plans:

Employee Benefits in the form of Employee Provident & Pension Funds and Employee State Insurance Scheme are considered as Defined Contribution plans and the contributions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

(ii) Defined Benefit Plans:

Retirement Benefit in the form of Gratuity is considered as Defined Benefit Obligation and is provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet.

(iii) Other Long Term Benefits

Long-Term Compensated Absences are provided on the basis of an actuarial valuation using the Projected Unit Credit Method as at the date of Balance Sheet.

Actuarial gain/losses, if any, are immediately recognized in the Profit & Loss Account.

There are no dues as at the end of the year (as at the end of previous year also )to Micro, Small and Medium Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 based on the information available with the Company.

Note : # Includes 84,86,000 ( P.Y. 84,86,000) shares acquired, the title in respect of which is in the process of transfer, 283.86 Lakhs Equity shares of Konaseema Gas Power Ltd have been pledged with various financial institutions as a collateral security against the term loans sanctioned to the said company.

$ 1,45,94,723 Equity shares of Orissa Power Consortium Ltd have been pledged with various financial institutions as a collateral security against the term loans sanctioned to the said company.

Defined Benefit Plans:

A. The employees' gratuity fund scheme managed by a Trust is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for compensated absences is recognized in the same manner as gratuity.

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Mar 31, 2011

(i) General:

Financial Statements are prepared on accrual basis under the historical cost convention and in accordance with the Accounting Standards, specified in sub section (3C) of section 211 of the Companies Act, 1956.

(ii) Fixed Assets:

Fixed Assets are stated at cost less ac- cumulated depreciation. Cost of acqui- sition of Fixed Assets is net of credit under Cenvat scheme and inclusive of freight, duties, taxes, incidental expenses relating to the cost of acquisition, the cost of installation/erection as applicable and interest on related borrowings up to the date of acquisition/capitalization

(iii) Investments:

Investments are stated at cost, inclusive of all expenses relating to acquisition. Provision for diminution in the market value of long-term investments is not made. if in the opinion of the management such diminution is temporary in nature. Interest and Dividend income from investments is accounted on accrual basis

(iv) Inventories :

(a) Finished goods are valued at cost, inclusive of excise duty, or market value whichever is lower.(b) Stocks of raw materials, stores, spare parts, materials-in-transit etc are valued at cost after providing for cost of ob- solescence. Cost includes expenses for procurement, excise and cus- toms duty and is net of credits under CENVAT and VAT schemes.(c) Scrap, including by products, is valued at estimated realizable value.

(v) Revenue recognition:

(a) Sales are inclusive of excise duty, export incentives and net of trade and quantity discounts, and rebates.

(b) Interest and Dividend income from investments is accounted on accrual basis.

(c) Insurance and other claims/refunds and export incentives and accounted for as and when admitted by appropriate authorities.

(vi) Depreciation on Fixed Assets:

(a) Depreciation is provided in accord- ance with the provisions of Schedule XIV of the Companies Act, 1956 in the following manner.

i) In respect of all the assets of

Ferro Alloys Unit under Straight LineMethod.

ii) In respect of all other assets under Written Down Value Method.

(vii)Employee Benefits:

(i) Defined Contribution Plans:

Employee Benefits in the form of Employee Provident & Pension Funds and Employee State Insurance Scheme are considered as Defined Contribution plans and the contri- butions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

(ii) Defined Benefit Plans:

Retirement Benefit in the form of Gratuity is considered as Defined Benefit Obligation and is provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet.

(iii) Other Long Term Benefits

Long-Term Compensated Absences are provided on the basis of an actuarial valuation using the Projected Unit Credit Method as at the date of Balance Sheet.

Actuarial gain/losses, if any, are im- mediately recognized in the Profit & Loss Account,

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Mar 31, 2010

I General:

Financial Statements are prepared on accrual basis under the historical cost convention and in accordance with the Accounting Standards, specified in sub section (3C) of section 211 of the Companies Act; 1956.

II Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation. Cost of acquisition of Fixed Assets is net of credit under Cenvat scheme and inclusive of freight, duties, taxes, incidental expenses relating to the cost of acquisition, the cost of installation/erection as applicable and interest on related borrowings up to the date of acquisition/ capitalization.

III Investments:

Investments are stated at cost, inclusive of all expenses relating to acquisition. Provision for diminution in the market value of long-term investments is not made, if in the opinion of the management such diminution is temporary in nature. Interest and Dividend income from investments is accounted on accrual basis.

IV Inventories :

(a) Finished goods are valued at cost, inclusive of excise duty, or market value whichever is lower.

(b) Stocks of raw materials, stores, spare parts, materials-in-transit etc are valued at cost after providing for cost of obsolescence. Cost includes expenses for procurement, excise and customs duty and is net of credits under CENVAT and VAT schemes.

(c) Scrap, including by-products, is valued at estimated realizable value.

V Revenue recognition:

(a) Sales are inclusive of excise duty, export incentives and net of trade ad quantity discounts and rebates.

(b) Interest and Dividend income from investments is accounted on accrual basis.

(c) Insurance and other claims/refunds and export incentives and. accounted for as and when admitted by appropriate authorities.

VI Depreciation on Fixed Assets:

(a) Depreciation is charged under straight

line method applying the rates specified in Schedule XIV of the Companies Act, 1956.

(b) Value of appreciation on account of

revaluation of fixed assets is charged as depreciation on straight line method under the Companies Act, 1956.

VII Employee Benefits:

(i) Defined Contribution Plans:

Employee Benefits in the form of Employee Provident & Pension Funds and Employee State Insurance Scheme are considered as Defined Contribution plans and the contributions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

(ii) Defined Benefit Plans:

Retirement Benefit in the form of Gratuity is considered as Defined Benefit Obligation and is provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet.

(iii) Other Long Term Benefits:

Long-Term Compensated Absences are provided on the basis of an actuarial valuation using the Projected Unit Credit Method as at the date of Balance Sheet.

Actuarial gain/losses, if any, are immediately recognized in the Profit & Loss Account.