Hira Ferro Alloys Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act,1956. Its shares are listed on three stock exchanges in India. The company is mainly engaged in manufacturing of Ferro Alloys Products,Generation of Electricity and Fly Ash Bricks.

2. Basis of preparation

i) The financial statements are prepared under the historical cost convention, on going concern concept and in compliance with the accounting standards as notified by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act,1956.

ii) The Company follows mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainities.

iii) The accounting policies have been consistently applied by the Company and except for the changes in accounting policies discussed below, are consistent with those used in the previous year.

3. Contingent Liabilities not provided for, are in respect of :-

I. Central Excise Duty Rs.5.75 lakhs (Previous Year Rs. 86.41 lakhs)

CST/VAT/Entry Tax Rs.60.23 lakhs (Previous Year Rs.20.05 lakhs)

Income Tax Rs.44.12 lakhs (Previous Year Rs.1.03 lakhs)

In respect of above demands the Company has preferred Appeals before higher authorities.

II. Corporate Guarantees issued in favour of the bank aggregating to Rs.104900 lacs (previous year Rs.104900 lacs) in respect of financing facilities granted to other bodies corporate.

III. Counter Guarantees given against the bank guarantees issued by the companies banker aggregating to Rs. 178.06 lacs (P.Y. 178.06 lacs).

IV. Disputed energy development cess demanded by the Chief Electrical Inspector. Govt of Chhattishgarh Rs.1034.63 Lacs (PY. Rs.884.43 Lacs). The Hon'ble High court of Chhattishgarh has held the levy of cess as unconstitutional vide its order dtd 20th June 2008. The state government has filed a special leave petition before Hon'ble Supereme Court, which is pending for final disposal.

4. Gratuity and other post-employment benefit plans : The Company has a defined benefit gratuity plan. Gratuity is computed as 15 days salary, for every completed year of service or part thereof in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employees after completion of 5 years of service. The Gratuity liability has not been externally funded. Company makes provision of such gratuity liability in the books of account on the basis of actuarial valuation as per the Projected unit credit method. The following tables summarise the components of net benefit expense recognized in the profit and loss account and the unfunded status and amounts recognized in the balance sheet for the Gratuity.

5. Segment-wise Revenue Results :

Basis of preparation :

i) Business segments of the company have been identified as distinguishable components that are engaged in a group of related product and that are subject to risks and returns different from other business segments. Accordingly Ferro Alloys and Power have been identified as the business segments.

ii) The geographic segments identified as secondary segments are "Domestic Market" and "Export Market". Since there is no Export Market Revenue, the same has not been disclosed. The entire capital employed is within India.

6. RELATED PARTY DISCLOSURE

a) Related parties and their relationship :

i) Holding Company

- Godawari Power & Ispat Ltd.

b) Subsudiary of Holding Company

- Krishna Gobal Minerals Ltd -Ardent Steel Ltd

c) Related Enterprises where control exist

- Active Chemical Pvt. Ltd.

- Hira Foundation

- Vrindavan Realcon LLP

- Vinay Green Energy LLP

- Kumar Eco Power LLP

- Dinesh Realcon LLP

d) Key Management Personnel

- Mr. N. P. Agrawal

- Mr. Arvind Dubey

Note : Related Party relationship is as identified by the company and relied upon by the Auditors.

7. Foreign Currency Exposure that are not hedged by derivative instruments or forward contracts as on 31.03.2013 amounts to Rs.591.65 Lacs (PY. Rs.1681.84 lacs)

8. In the opinion of the board, the value of realisation of long term loans and advances, other non current assets and current assets in the ordinary course of business will not be less than the amount at which they are stated in the balance sheet.