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Accounting Policies of Andhra Cements Ltd. Company

Jun 30, 2015

A) Method of Accounting

The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP).These financial statements comply in all material aspects with the Accounting Standards (AS) specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013 ("the 2013 Act") / Companies Act 1956 ("the 1956 Act"), as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable.

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous year.

b) Use of Accounting Estimates

The preparation of financial statements in conformity with the Indian GAAP requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosures relating to contingent liabilities as of the date of the financial statements. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes different from the estimates. Difference between actual results and estimates are recognized in the period in which the results are known or materialize.

Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in the current and future periods.

c) Fixed Assets

Fixed assets (whether Tangible or Intangible) are stated at cost less accumulated depreciation/ amortization / impairment loss (if any), net of MODVAT / CENVAT (wherever claimed). The cost of fixed assets includes taxes, duties, freight, borrowing cost, if capitalization criteria are met and other incidental expenses incurred in relation to their acquisition/bringing the assets for their intended use.

Spares which can be used only in connection with a particular Plant and Equipment of the Company and use is expected to be irregular, are capitalized at cost, net of CENVAT / MODVAT (wherever claimed).

Fixed Assets held for disposal are stated at lower of net book value and net realizable value and disclosed separately in the financial statements under other current assets.

Losses arising from the retirement of, and gains / losses arising from disposal of fixed assets which are carried at cost are recognized in the Statement of Profit and Loss

d) Expenditure during construction period:

Expenditure/ Income, during construction period (including financing cost relating to borrowed funds for construction or acquisition of qualifying fixed assets) is included under Capital Work-in-Progress and the same is allocated to the respective fixed assets on the completion of their construction.

e) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.

Borrowing cost includes interest expense, amortization of discounts, ancillary costs incurred in connection with borrowing of funds and exchange difference arising from foreign currency borrowings to the extent they are regarded as an adjustment to the Interest cost.

f) Depreciation and Amortization

Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life and is provided on a straight-line basis over the useful lives as prescribed in Schedule II to the Companies Act, 2013.

The useful life of an asset is the period over which an asset is expected to be available for use by an entity, or the number of production or similar units expected to be obtained from the asset by the entity.

In case of certain class of assets, the Company uses different useful life than those prescribed in Schedule II to the Companies Act, 2013. The useful life has been assessed based on technical advice, taking into account the nature of the asset, the estimated usage of the asset on the basis of management's best estimation of getting economic benefits from those classes of assets. The Company uses its technical expertise along with historical and industry trends for arriving the economic life of an asset.

Depreciation on additions is provided on a pro-rata basis from the month of installation or acquisition and in case of Projects from the date of commencement of commercial production. Depreciation on deductions / disposals is provided on a pro-rata basis up to the month proceeding the month of deduction / disposal.

g) Impairment of Assets

The carrying amount of assets are reviewed at each balance sheet date, if there is an indication of impairment based on internal and external factors.

An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable amount. An asset's recoverable amount is the higher of an assets net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The discounting rate is a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the assets. Net selling price is the amount obtainable from sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

An impairment loss, if any, is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. Impairment loss recognized in prior years is reversed when there is an indication that impairment loss recognized for the asset no longer exists or has decreased.

i) Investments

(i) Presentation & disclosure

Investments which are readily realizable and are intended to be held for not more than one year are classified as current investments. All other investments are classified as long-term investments / non-current investments.

(ii) Recognition & measurement

Long-term investments are stated at cost after deducting provisions made, if any, for diminution in value of investments other than temporary, determined separately for each individual investment.

Current investments, except current maturities of Long- term investments, are stated at lower of cost and fair value determined for each category of investments.

(iii) Disposal

On disposal of an investment, the difference between the carrying amount and the disposal proceeds, net of expenses, is recognized in the Statement of Profit and Loss.

j) Foreign Currency Transactions:

(i) Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currency at the balance sheet date are translated at the year-end rates.

(ii) In respect of forward exchange contracts, premium or discount, being the difference between the forward exchange rate and the exchange rate at the inception of contract is recognized as expense or income over the life of the contract.

(iii) Exchange difference including premium or discount on forward exchange contracts, relating to borrowed funds, liabilities and commitments in foreign currency for acquisition of fixed assets, arising till the assets are ready for their intended use, are adjusted to cost of fixed assets. Any other exchange difference either on settlement or translation is recognized in the Statement of Profit and Loss.

k) Inventories

(i) Raw material, fuel, stores & spare parts and packing materials:

Valued at lower of cost and net realizable value (NRV). However, these items are considered to be realizable at cost, if the finished products, in which they will be used, are expected to be sold at or above cost. Cost is determined on weighted average basis.

(ii) Work-in- progress (WIP), finished goods, stock-in- trade and trial run inventories:

Valued at lower of cost and NRV. Finished goods and WIP cost includes cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is computed on weighted average basis.

(iii) Waste /Scrap:

Waste / Scrap inventory is valued at NRV.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

l) Employee Benefits

(i) Short term employee benefits:

Short term employee benefits are recognized as an expense on accrual basis.

(ii) Defend Contribution Plan:

Contributions payable to recognized provident fund which are substantially defined contribution plan are recognized as expense in the Statement of Profit and Loss, as they are incurred.

Contributions as specified by law are paid to the provident fund set up as irrevocable trust. The Company is generally liable for annual contribution and any shortfall in the fund assets based on the government specified minimum rates of return and recognizes such contribution and shortfall, if any, as an expense in the year incurred.

(iii) Defined Benefit Plan:

The obligation in respect of defined benefit plans, which cover Gratuity and Pension, are provided for on the basis of an actuarial valuation, using the projected unit credit method, at the end of each financial year. Actuarial gains/losses, if any, are recognized immediately in the Statement of Profit and Loss.

(iv) Other Long Term Benefits:

Long-term compensated absences are provided for on the basis of an actuarial valuation, using the projected unit credit method, at the end of each financial year. Actuarial gains /Losses, if any, are recognized immediately in the Statement of Profit and Loss.

(v) Presentation of Non-funded obligation of defined benefit plans and other long term benefits, as long term and short term liability is on the basis of actuary's report.

m) Income Taxes

Income Tax expenses comprise current tax and deferred tax charge or credit.

Current Tax is measured on the basis of estimated taxable income for the current accounting period in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.

Deferred Tax reflects the impact of timing difference between accounting income and taxable income during the current year and reversal of timing differences for the earlier years. Deferred tax charge or credit and corresponding deferred tax liabilities or assets are measured using the tax rates and laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that there is reasonable certainty, except for carried forward losses and unabsorbed depreciation and items relating to capital losses which are recognized based on virtual certainty, supported by continuing evidence that there will be sufficient future taxable income available to realize the asset.

Minimum Alternate Tax (MAT):

MAT is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in the Guidance Note issued by ICAI, the said asset is created by way of a credit to the Statement of Profit and Loss and is shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

n) Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefit will fow to the Company and the revenue can be reliably measured.

(i) Sales are recognized on transfer of significant risks and rewards of ownership of the goods to the buyer. Sales are net of Sales Tax, VAT, trade discounts, rebates and returns but include excise duty. Sales exclude self-consumption of finished goods.

(ii) Income from services is recognized (net of service tax as applicable) as they are rendered, based on agreement arrangement with the concerned parties.

(iii) Dividend income is accounted for when the right to receive the income is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. Income other than dividend and interest on Investments is recognized on maturity or sale.

(iv) Export incentives, insurance, railway and other claims, where quantum of accruals cannot be ascertained with reasonable certainty, are accounted on acceptance basis.

o) Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognized when there is a present obligation as a result of past events and it is probable that an outfow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each Balance Sheet date and adjusted to refect the current best estimate.

A present obligation that arises from past events where it is either not probable that an outfow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent Liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.

Claims against the Company where the possibility of any outfow of resources in settlement is remote, are not disclosed as Contingent Liabilities.

Contingent Liabilities are not recognized but are disclosed and Contingent Assets are neither recognized nor disclosed, in the financial statements.

p) Earnings per Share:

The basic Earnings per Share ("EPS") is computed by dividing the net Profit / (loss) after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, net Profit/(loss) after tax for the year attributable to the equity shareholders divided by the weighted average number of equity shares outstanding during the year after adjusting for the effects of all dilutive potential equity shares.

q) Operating lease:

Leases where significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals thereon are charged to the Statement of Profit and Loss on a straight-line basis over the lease term.

r) Classification of Assets and Liabilities into Current/Non- current:

All assets and liabilities are presented as Current or Non- current as per the Company's normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization, the Company has ascertained its operating cycle as 12 months for the purpose of current / Non-current classification of assets and liabilities.


Mar 31, 2014

A) Method of Accounting

The financial statements are based on historical cost convention (except for revaluation of certain Fixed Assets) and prepared in accordance with Generally Accepted Accounting Principles prevalent in India (Indian GAAP) and in compliance with the mandatory Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act,1956 read together with General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate affairs in respect of section 133 of the Companies Act, 2013.

b) Use of Accounting Estimates

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans. Management periodically assesses whether there is an indication that an asset may be impaired and makes provision in the accounts for any impairment losses estimated. Actual results could differ from those estimates and are given effect to as and when determine.

c) Fixed Assets

Fixed Assets are stated at cost/revaluation less accumulated depreciation and amortisation. Direct costs inclusive of inward freight, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalised until the fixed assets are ready for its intended use.

Capital Work in Proress indicates the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

d) Investments

Long term Investments are stated at cost with appropriate provision for diminution in value and the carrying value is reduced accordingly. Current Investments are stated at lower of cost and fair value.

e) Revenue Recognition

i) Sales are inclusive of Excise duty, packing charges and freight recovered thereon and exclusive of sales tax, rebates and discounts.

ii) Income from interest is accounted for on time proportion basis when the right to receive income is established, taking into account the amount outstanding and the applicable rate of interest, when the collection is reasonably certain.

f) Foreign Exchange Transactions

A. Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

B. At each Balance Sheet date

i) Foreign currency monetary items are reported using the closing rate of exchange on the balance sheet date

ii) Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognized In respect of forward exchange contracts

iii) Premium or discount on the contract is amortized over the term of the contract

iv) Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

g) Depreciation:

Depreciation on fixed assets is provided at the rates specified in Schedule XIV of the Companies Act, 1956, as per the following method:

a) Under Straight line method in respect of all assets (excepting Transport vehicles, Furniture and office Equipment) at Visakha Cement Works (VCW), Durga Cement Works (DCW) and Assets acquired under modernisation scheme at Jayanthipuram Mines.

b) In respect of assets other than those mentioned above, under written down value method.

1. Depreciation on increase in value of fixed assets due to revaluation is provided under the straight line method at the rates prescribed in Schedule XIV and is transferred from Asset Revaluation Reserve to the Statement of Profit and Loss Account

2. Plant and Machineries have been considered as continuous process plant on the basis of technical assessment

3. In respect of inter unit transfer of assets, depreciation is computed on the same basis as in the Transferor unit.

h) Impairment of Assets

At the date of each Balance Sheet, the company evaluates internally, indications of the impairment if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realizable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognized.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent the carrying amount would have been determined (net of depreciation) had no impairment loss being recognized for the asset in prior year

i) Employees Benefits

(a) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, and short term compensated absences, etc., and the expected cost of bonus, ex-gratia is recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits:

1. Defined Contribution Plans: Contributions to Provident Fund Scheme is made to the Statutory Authorities/ fund administered by the management and Employees State Insurance Scheme which are in the nature of defined contribution plans are charged to the Statement of Profit and Loss account as and when incurred during the year in which the employee renders the related service.

2. Defined Benefit Plans:

Gratuity

The company provides for obligation towards Gratuity, a defined benefit plan, covering eligible employees on the basis of an actuarial valuation using the projected unit credit method as at the year end.

Leave Encashment

Liability for leave encashment is provided on the basis of actuarial valuation using the projected unit credit method as on the Balance Sheet date. Actuarial Gain/Losses, if any, are immediately recognized in the Statement of Profit and Loss account.

j) Taxes on Income

Tax Expenses for the year comprises both current tax and deferred tax. Current tax is determined as the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and quantified using the tax rates and law enacted or substantively enacted by the reporting date. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realisation in future. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each balance sheet date.

k) Borrowing Costs

Borrowing costs incurred in connection with the funds borrowed for acquisition/erection of assets that necessarily take a substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

l) Earnings per Share

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive. Dilutive earnings per share include the dilutive effect of potential equity shares under Stock options.

m) Provisions, Contingencies and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events, and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are not provided for and are disclosed by way of notes after a careful evaluation of the concerned facts and issues involved thereon.

n) Lease Rentals

i) Operating Leases: Rentals are expensed with reference to lease terms.

ii) Finance Leases: The lower of the fair value of the assets or present value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as the lease liability. The principal component in the lease rental is adjusted against the lease liability and the interest component is charged to the Statement of Profit and Loss.


Mar 31, 2012

A) GENERAL

Method of Accounting

The financial statements are based on historical cost convention (except for revaluation of certain Fixed Assets) and prepared in accordance with Generally Accepted Accounting Principles prevalent in India (Indian GAAP) and in compliance with the mandatory Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

Use of Accounting Estimates

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans. Management periodically assesses whether there is an indication that an asset may be impaired and makes provision in the accounts for any impairment losses estimated. Actual results could differ from those estimates and are given effect to as and when determine.

b) FIXED ASSETS

Fixed Assets are stated at cost/valuation less accumulated depreciation and amortisation. Direct costs inclusive of inward freight, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalised until fixed assets are ready for its intended use. Capital Work in Progress indicates the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

c) INVESTMENTS

Long term Investments are stated at cost with appropriate provision for diminution in value and the carrying value is reduced accordingly. Current Investments are stated at lower of cost and fair value.

d) SALES

Sales are inclusive of Excise duty, packing charges and freight recovered thereon and exclusive of sales tax, rebates and discounts.

e) FOREIGN EXCHANGE TRANSACTIONS

A. Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

B. At each Balance Sheet date

i) Foreign currency monetary items are reported using the closing rate of exchange on the balance sheet date

ii) Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognized

In respect of forward exchange contracts

iii) Premium or discount on the contract is amortised over the term of the contract

iv) Exchange differences on the contract are recognized as profit or loss in the period in which they arise

f) DEPRECIATION:

A. Depreciation on fixed assets is provided at the rates specified in Schedule XIV of the Companies Act, 1956, as per the following method:

a) Under Straight line method in respect of

All assets (excepting Transport vehicles, Furniture and office Equipment) at Visakha Cement Works (VCW), Durga Cement Works (DCW) and Assets acquired under modernisation scheme at Jayanthipuram Mines.

b) In tespect of assets other than those mentioned above, under written down value method.

B. Depreciation on increase in value of fixed assets due to revaluation is provided under the straight line method at the rates prescribed in Schedule XIV and is transferred from Asset Revaluation Reserve to the Profit and Loss Account

C. Plant and Machineries have been considered as continuous process plant on the basis of technical assessment

D. In respect of inter unit transfer of assets, depreciation is computed on the same basis as in the Transferor unit.

g) IMPAIRMENT OF ASSETS

At the date of each Balance Sheet, the company evaluates internally, indications of the impairment if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realizable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognized.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent the carrying amount would have been determined (net of depreciation) had no impairment loss being recognized for the asset in prior years.

h) EMPLOYEES BENEFITS

(a) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wage's, short term compensated absences, etc., and the expected cost of bonus, ex-gratia ate recognized in the period in which the employee renders the related service.

(b) Post-Employment Benefits:

1. Defined Contribution Plans: Contributions to Provident Fund Scheme and Employees State Insurance Scheme which are in the nature of defined contribution plans are charged to the Profit and Loss account as and when incurred during the year in which the employee renders the related service.

2. Defined Benefit Plans:

(i) Provident Fund contributions are also made by the company to a Trust under a defined benefit plan. The amount of contribution by the company and the employees, together with interest thereon at a rate not lower than the rate fixed by the Government on similar funds administered by it, is payable to the employees on cessation of their service with the company. The contribution to be made by the company is determined each year based on the Fund available and the liability at each Balance Sheet date as per the calculations made by an independent Actuary. Such contribution is accounted on accrual accordingly.

(ii) The company also provides for retirement/post-retirement benefits in the form of gratuity and leave encashment. Such benefits are provided for based on valuations, as at the Balance Sheet date, made by independent actuaries. Termination benefits are recognized as an expense as and when incurred. Actuarial gains and losses are recognized immediately in Profit and Loss Account as income or expense. i) TAXES ON INCOME

a) Provision for current tax is made on estimated taxable income using the applicable tax rates and the provisions specified under the Income Tax Act, 1961.

b) The deferred tax arising on account of timing differences between the taxable income and accounting income which are capable of reversal in one or more subsequent periods is recognised using the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date.

c) Deferred tax asset is recognised to the extent there is reasonable certainty that these would be realised in future against sufficient future taxable income.

d) In case of unabsorbed depreciation and carried forward tax losses, deferred tax asset is recognised only if there is virtually certainty that such deferred tax asset can be realized against future taxable profits.

j) BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition/ erection of assets that necessarily take a substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

k) PROVISIONS, CONTINGENCIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events, and it is probable that there will be an outflow of resources and a reliable estimate can be made of the amount of the obligation. Contingent assets are neither recognized nor disclosed in the financial statements. Contingent liabilities are not provided for and are disclosed by way of notes after a careful evaluation of the concerned facts and issues involved thereon.

4.1 OCD-A, OCD-B, NCD and Term Loan are secured by first charge by way of mortage, on immovable properties and hypothecation of all movable properties, machinery, machinery spares, tools and accesseries, present and future, and second charge on current assets including inventories, stores and spares, book debts, operating cash flow receivables etc., Further secured by first charge on Trust and Retention Account, Debt Service reserve Account and other reserve relating to the project, and personal guarantee of the erstwhile Chairman Mr.GRGoenka.

4.2 Terms of redemption/conversion of OCD-A, OCD-B and NCD :

The holders have the right to convert, the whole or part of the OCDs into fully paid-up equity shares of the Company at any time before expiry of 18 months from the date of allotment i.e., from 9th September,2009 and now as the option stands expired all the OCDs and NCDs shall be redeemed in 24 Quarterly installments commencing from April 15, 2012.

The holders have the right to convert, in the event of default committed by the Company, at its option the whole or part of the any unconverted OCDs/NCD into fully paid-up equity shares of the Company, at a price per equity share determined in accordance with the appropriate Regulatory framework (SEBI regulations) extant at the time of such default.

4.3 Interest @11.50% p.a. is payable on OCD-A, OCD-B and NCDs as on March 31, 2012 ' 6.1 Working Capital Loans are secured by first charge by way of hypothecation of inventories and book debts and second charge on fixed assets of the Company. Further secured by Corporate Guarantee of Duncan Industries Limited (Erswhile promoter Company) and personal guarantee of the erstwhile Chairman, Mr.GP.Goenka.

4.1 OCD-A, OCD-B, NCD and Term Loan are secured by first charge by way of mortage, on immovable properties and hypothecation of all movable properties, machinery, machinery spares, tools and accesseries, present and future, and second charge on current assets including inventories, stores and spares, book debts, operating cash flow receivables etc., Further secured by first charge on Trust and Retention Account, Debt Service reserve Account and other reserve relating to the project, and personal guarantee of the erstwhile Chairman Mr.GP.Goenka.

4.2 Terms of redemption/conversion of OCD-A, OCD-B and NCD :

The holders have the right to convert, the whole or part of the OCDs into fully paid-up equity shares of the Company at any time before expiry of 18 months from the date of allotment i.e., from 9th September,2009 and now as the option stands expired all the OCDs and NCDs shall be redeemed in 24 Quarterly installments commencing from April 15, 2012.

The holders have the right to convert, in the event of default committed by the Company, at its option the whole or part of the any unconverted OCDs/NCD into fully paid-up equity shares of the Company, at a price per equity share determined in accordance with the appropriate Regulatory framework (SEBI regulations) extant at the time of such default.

4.3 Interest @11.50% p.a. is payable on OCD-A, OCD-B and NCDs as on March 31, 2012 '6.1 Working Capital Loans are secured by first charge by way of hypothecation of inventories and book debts and second charge on fixed assets of the Company. Further secured by Corporate Guarantee of Duncan Industries Limited (Erswhile promoter Company) and personal guarantee of the erstwhile Chairman, Mr.GP.Goenka.

7.1 Unpaid matured Debentures are secured to the extent of Rs.195.31 lacs against deposil in a separate bank account with lien thereon in favour of Debenture Trustees. As per Modified Scheme 2008 (MS-08), Principal amount is payable as and when claimec ¦ by the Debenture Holders after adjusting the repayments made earlier, if any.

9.1 Transport vehicle includes 6 nos. of cars which are not in possession of the Company, and the ownership of these cars is not verifiable.

9.2 Gross block includes increase in value of land, building, plant and machniery, electrical installations, and railway siding conse- quent to revaluation by an approved valuer as on March 31,1998 at the then replacement values aggregating to Rs. 20834 Lakhs. Depriciation for the period amounting to Rs.468.62 Lakhs (Rs.781.04 lakhs) on the revalued depriciable assets has been with- drawn from the Asset. Revaluation Reserve and reduced from the depriciation charged to the Statement of Profit and Loss. Further, revaluation reserve in respect of the assets sold/ discarded during the period has been adjusted approprietly in the above schedule to the extent of Rs. Nil (Rs. Nil) against WDV of Plant & Machinery


Mar 31, 2010

A) GENERAL

Method of Accounting

The financial statements are based on historical.cost convention (except for revaluation of certain Fixed Assets) and prepared in accordance with Generally Accepted Accounting Principles (Indian GAAP) and in compliance with the Accounting Standards notified in Section 21.1 (3C) of the Companies Act, 1956, and the provisions of the Companies Act, 1956.

Use of Accounting Estimates

The preparation of the financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to contingent liabilities as at the reporting date of the financial statements and amounts of income and expenses during the year of account. Examples of such estimates include provision for doubtful debts, income taxes and future obligations under employee retirement benefit plans. Management periodically assesses whether there is an indication that an asset may be impaired and makes provision in the accounts for any impairment losses estimated. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reasonably estimated. Actual results could differ from those estimates.

b) FIXED ASSETS

Fixed Assets are stated at cost/valuation less accumulated depreciation and amortisation. Direct costs inclusive of inward freight, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalised until fixed assets are ready for its intended use. Capital Work in Progress indicates the cost of fixed assets not ready for their intended use as at the reporting date of the financial statements.

c) INVESTMENTS

Long term Investments are stated at cost with appropriate provision for diminution in value and the carrying value is reduced accordingly. Current Investments are stated at lower of cost and fair value.

d) INVENTORIES

. Finished goods are valued at lower of the Cost or estimated Net Rea- lisable Value and include appropriate portion of the overheads and excise duty wherever applicable.

. Work in progress is valued at Cost and includes appropriate portion of the overheads.

. Raw materials, Stores and spares are valued at cost using weighted average method.

# Machinery spares which can be used only in connection with an item of fixed assets and whose use is expected to be irregular are amortised over the life of the principal assets.

. Scrap is valued at estimated net realisable value.

e) CONTINGENT LIABILITIES

Contingent liabilities are not recognized in the accounts, but are disclosed after a careful evaluation of the concerned facts and legal issues involved.

f) SALES

Sales are inclusive of Excise duty, packing charges and freight recovered thereon and exclusive of sales tax, rebates and discounts.

g) FOREIGN EXCHANGE TRANSACTIONS

A. Transactions in foreign currency are initially accounted at the exchange rate prevailing on the date of the transaction, and adjusted appropriately, with the difference in the rate of exchange arising on actual receipt/payment during the year.

B..At each Balance Sheet date

i) Foreign currency monetary items are reported using the rate of exchange on the date.

ii) Foreign currency non-monetary items are reported using the exchange rate at which they were initially recognized.

C. In respect of forward exchange contracts in the nature of hedges

i) Premium or discount on the contract is amortised over the term of the contract.

ii) Exchange differences on the contract are recognized as profit or loss in the period in which they arise.

h) DEPRECIATION:

A. Depreciation is provided at the rates specified in Schedule XIV of the Companies Act, 1956, on the original cost of the fixed assets.

a) Under Straight line method in respect of

All assets (excepting Transport vehicles, Furniture and office Equipment) at Visakhapatnam Unit, Durgapuram Unit and Assets acquired under modernisation scheme at Jayanthipuram Mines.

-b) In respect of assets other- than those mentioned above, under written down value method.

B. Depreciation on increase in value of fixed assets due to revaluation is provided under the straight line method at the rates prescribed in Schedule XIV and is transferred from Asset Revaluation Reserve to the Profit and Loss Account.

C. Plant and Machinery have been considered as continuous process plant on the basis of technical assessment.

D. In respect of inter unit transfer of assets, Depreciation is computed on the same basis as in the Transferor unit.

i) IMPAIRMENT OF ASSETS

At the date of each Balance Sheet, the company evaluates internally, indications of the impairment if any, to the carrying amount of its fixed and other assets. If any indication does exist, the recoverable amount is estimated at the higher of the realizable value and value in use, as considered appropriate. If the estimated recoverable amount is less than the carrying amount, an impairment loss is recognized.

Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent which does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss being recognized for the asset in prior years.

j) EMPLOYEES BENEFITS

(a)Short Term Employee Benefits:.

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages,

short term compensated absences, etc., and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.

(b)Post-Employment Benefits:

1 Defined Contribution Plans: Contributions to Provident Fund Scheme and Employees State Insurance Scheme which are in the nature of defined contribution plans are charged to the Profit and Loss account as and when incurred during the year in which the employee renders the related service.

2. Defined Benefit Plans:

(i) Provident Fund contributions are also made by the company to a Trust under a defined benefit plan. The amount of contribution by the company and the employees, together with interest thereon at a rate not lower than the rate fixed by the Government on similar funds administered by it, is payable to the employees on cessation of their service with the company. The contribution to be made by the company is determined each year based on the Fund available and the liability at each Balance Sheet date as per the calculations made by an independent Actuary. Such contribution is accounted on accrual accordingly.

(ii) The company also provides for retirement/post-retirement benefits in the form of gratuity and leave encashment. Such benefits are provided for based on valuations, as at the Balance Sheet date, made by independent actuaries. Termination benefits are recognized as an expense as and when incurred.

k) TAXES ON INCOME

a) Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.

b) The deferred tax for timing differences between the book and tax profits for the years accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date.

c) Deferred tax asset arising from timing differences is recognised to the extent there is reasonable -certainty that these would be realised in future.

d) Deferred tax asset is recognised on unabsorbed business losses only if there is virtually certainty that such deferred tax asset can be realized against future taxable profits.

I) BORROWING COSTS

Borrowing costs incurred in connection with the funds borrowed for acquisition/ erection of assets that necessarily take a substantial period of time to get ready for intended use are capitalized as part of cost of such assets. All other borrowing costs are charged to revenue.

m) EARNINGS PER SHARE (EPS)

In arriving at the EPS, the Companys net profit after tax, computed in terms of the Indian GAAP, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived at is known as Basic EPS To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares, as computed above and the weighted average number of equity shares that could have been issued on conversion of shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number of potential equity shares.

(iii) Probable liability, if any, that may arise as a result of non-compliance with the requirements of Jute Packaging Materials (Compulsory Use of Packaging Commodities) Act, 1987 upto the Jute Year 1997-98, consequent on differing divergent decisions of different courts and also the representations of industry before the Government, as the same is not ascertainable at this stage.

 
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