Home  »  Company  »  Balrampur Chini  »  Quotes  »  Accounting Policy
Enter the first few characters of Company and click 'Go'

Accounting Policies of Balrampur Chini Mills Ltd. Company

Mar 31, 2016

Notes:

1) The above Cash Flow Statement has been prepared under the ‘’Indirect Method‘’ as set out in the Accounting Standard - 3 on

Cash Flow Statement.

2) Interest expense is inclusive of, and additions to fixed assets are exclusive of, interest capitalized Rs,454.32 lacs (previous

year Nil). Further, other borrowing costs is inclusive of, and additions to fixed assets are exclusive of, other borrowing cost

capitalized Rs,42.55 lacs (previous year Nil).

3) Additions to fixed assets include movement of Capital work-in-progress during the year.

4) Proceeds/(repayment) of / from Commercial paper and other Short-term borrowings qualify for disclosure on net basis.

5) Cash and cash equivalents do not include any amount which is not available to the Company for its use.

6) Cash and cash equivalents as at the Balance Sheet date consists of:

7) Figure in brackets represent cash outflow from respective activities.

8) As breakup of Cash and cash equivalents is also available in Note No. 18, reconciliation of items of Cash and cash equivalents

as per Cash Flow Statement with the respective items reported in the Balance Sheet is not required and hence not provided.

1. Basis of preparation of financial statements

The Financial Statements of the Company are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) in

India.

The Financial Statements have been prepared on accrual basis and under the historical cost convention except for certain tangible

fixed assets which are carried at revalued amounts.

GAAP comprises applicable Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the

Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (ICAI), relevant

applicable provisions of the Companies Act, 1956, and Companies Act, 2013 to the extent applicable and the applicable guidelines

issued by the Securities and Exchange Board of India (SEBI).

Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a

revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use. All assets and

liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out

in Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of

current and non-current classification of assets and liabilities.

2. Use of estimates The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and

assumptions that affect the reported balances of assets, liabilities and disclosures relating to contingent liabilities as at the

date of the Financial Statements and reported amounts of revenue and expenses during the period. Actual results might differ from

the estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/

materialize.

3. Fixed assets and capital work-in-progress

a) Tangible fixed assets are stated at their original cost (net of accumulated depreciation and impairment) adjusted by

revaluation of certain assets. Cost, net of canvas, includes acquisition price, import duties, other non- refundable taxes and

levies, directly attributable expenses and pre-operational expenses including finance costs, wherever applicable for bringing the

asset to its working condition for the intended use.

b) Intangible assets acquired separately which are expected to provide future enduring economic benefits are stated at their

original cost (net of accumulated amortization and impairment, if any).

Cost, net of cenvat, includes acquisition price, license fees and costs of implementation/system integration services and any

directly attributable expenditure, wherever applicable for bringing the asset to its working condition for the intended use.

c) Expenditure during construction period: Directly attributable expenditure (including finance costs relating to borrowed funds

for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses

pending allocation to the assets and are shown under “Capital work-in-progress”. Capital work-in-progress is stated at the amount

expended up to the date of Balance Sheet for the cost of fixed assets that are not yet ready for their intended use.

4. Depreciation and amortization

a) Depreciation on tangible fixed assets is provided on straight line basis so as to charge the cost of the assets or the amount

substituted for costs in case of revalued assets less its residual value over the useful life of the respective asset as

prescribed under Part C of Schedule II to the Companies Act, 2013, other than Mobile Phones.

The management is of the view that the estimated useful life of Mobile Phones are three years. Hence, Mobile Phones are

depreciated over a period of three years on straight line basis.

Tangible fixed assets individually costing less than Rs,5000/- are depreciated over the period of one year from the date the assets

are available for use. Residual value has been considered as 5% of the cost of the respective asset.

b) Freehold land is not depreciated. Leasehold land are amortized over the period of the lease on straight line basis.

c) Computer Software (Acquired) are amortized on straight line basis over estimated useful lives of five years.

d) Depreciation/amortization on assets added, sold or discarded during the year is provided on pro-rata basis.

5. Investments

Investments are either classified as current or long-term based on Management’s intention at the time of acquisition.

Investments that are not readily realizable and are intended to be held for more than one year from the date, on which such

investments are made, are classified as non-current investments. All other investments are classified as current investments.

Short term highly liquid investments with an original maturity of three months or less which carry insignificant risk of changes

in value are classified as cash and cash equivalents.

Long - term investments are carried at cost less provision for diminution recorded to recognize any decline, other than

temporary, in the carrying value of each investment.

Cost includes acquisition price and directly attributable acquisition charges such as brokerage, fee and duties.

6. Inventories

a) Inventories (other than By-products and Standing crop) are valued at lower of cost and net realizable value after providing

for obsolescence, if any.

Cost of inventory comprises of purchase price, cost of conversion and other directly attributable costs that have been incurred

in bringing the inventories to their respective present location and condition. Interest costs are not included in value of

inventories. The cost of Inventories is computed on weighted average basis.

b) By-products and Standing crop are valued at net realizable value.

7. Revenue recognition

a) Sale of goods is recognized at the time of transfer of substantial risk and rewards of ownership to the buyer for a

consideration.

b) Gross turnover includes excise duty and excludes sales tax/VAT, trade discounts and rebates.

c) Income from sale of Renewable Energy Certificates (RECs) is recognized on the delivery of the RECs to the customers’ account.

d) Dividend income is recognized when the Company’s right to receive dividend is established.

e) Interest income is recognized on time proportion basis taking into account the amount outstanding and the applicable interest

rate.

f) Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no

uncertainty in receiving the claims.

g) All other income are accounted for on accrual basis.

8. Expenses

All the expenses are accounted for on accrual basis.

9. Government grants

a) Grants and subsidies from the Government are recognized when there is reasonable assurance that the Company would comply with

the conditions attached with them and the grant/subsidy would be received.

b) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. Government grants in the

nature of promoter’s contribution i.e., grants received with reference to the total investment or by way of contribution towards

total capital outlay by the Company, are credited to Capital Reserve.

c) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific

expenditure, it is taken as income.

10. Provisions, contingent liabilities and contingent assets

A provision is recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet

date is considered probable as a result of a past event, and the Company has a present legal obligation that can be estimated

reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are

measured by best estimate of the outflow of economic benefits required to settle the obligation at the Balance Sheet date.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. Re-imbursement expected in

respect of expenditure to settle a provision is recognized only when it is virtually certain that the reimbursement will be

received.

A Contingent Asset is neither recognized nor disclosed in the Financial Statements.

11. Impairment of assets

An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable value.

The Company assesses at each Balance Sheet date whether there is an indication that an asset may be impaired.

Impairment loss, if any, is recognized to the extent, the carrying amount of the asset exceed its recoverable value being higher

of an asset’s net selling price and its value in use. Value in use is computed at net 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 Company also assesses at each Balance Sheet date whether there is an indication that the impairment losses recognized in

earlier years no longer exist or have decreased. If such indication is there, the impairment losses recognized in prior years are

reversed.

Such reversals are recognized as an increase in carrying amount of the assets to the extent that it does not exceed the carrying

amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized in previous

years.

12. Foreign currency transactions and translations

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year-end are translated

at the year-end rate.

Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at

the date of the transaction.

Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of

Profit and Loss.

c) In case of monetary assets and liabilities which are covered by forward exchange contracts, the difference between the

year-end rate and the rate on the date of the contract is recognized as exchange difference.

The premium or discount on forward exchange contracts is recognized over the period of the respective contract.

13. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of

the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is one that necessarily takes a

substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and

Loss in the period in which they are incurred.

14. Employee benefits

a) Short-term employee benefits Short-term employee benefits are recognized as an expense at the undiscounted amount in the

Statement of Profit and Loss for the year in which the related service is rendered.

b) Post-employment benefits Defined contribution plan Employee benefits in the form of Provident Fund, Employee State Insurance

and Labour Welfare Fund are considered as defined contribution plan.

The Company’s contributions to defined contribution plans are recognized in the Statement of Profit and Loss for the year as they

fall due.

The Company has no further obligations under these plans beyond its periodic contributions

Defined benefit plan

The Company provides for retirement benefits in the form of Gratuity which are in the nature of Defined Benefit Plans. Such

benefits are provided for on the basis of an independent actuarial valuation done at the year-end using Projected Unit Credit

Method. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial assumptions which

are recognized in the Statement of Profit and Loss in the year in which they arise.

c) Other long term employee benefits

The employees of the Company are also entitled for long-term benefits in the form of compensated absences as per policy of the

Company. The Company’s liability is actuarially determined (using Projected Unit Credit Method) at the end of each year.

Actuarial losses/gains are recognized in the statement of Profit and Loss in the year in which they arise.

d) Expenditure on voluntary retirement scheme is charged to the Statement of Profit and Loss in the year in which it is incurred.

15. Employee stock option scheme

In respect of employee stock options granted pursuant to the Company’s Employee Stock Option Scheme, the intrinsic value of the

options (excess of market price of the share on the date of grant over the exercise price of the option) is treated as discount

and amortized as employee compensation cost on a straight line basis over the vesting period in accordance with the Guidelines

announced by SEBI from time to time and the Guidance Note on Accounting of Employee Share Based Payments issued by ICAI.

16. Taxes on income

Tax expense for the period comprises of current income tax and deferred tax.

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act,

1961.

Deferred tax is recognized, subject to the consideration of prudence in respect of deferred tax assets, 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. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets

can be realized in future. However, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred

tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at

each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and

laws that have been enacted or substantively enacted as of the Balance Sheet date.

MAT credit 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 Minimum Alternate tax (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 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 the Company will pay normal Income Tax during the specified period.

17. Derivative instruments

The Company uses derivative contracts to hedge the interest rate and currency risks. The Company does not use these contracts for

trading or speculation purposes.

Derivative contracts outstanding at the Balance Sheet date for firm commitment or highly probable forecast transactions are

marked to market and the losses, if any, are recognized in the Statement of Profit and Loss and gains, if any, are ignored in

accordance with the announcement of ICAI on “Accounting of Derivatives” issued in March, 2008.

18. Segment reporting

Segments are identified based on the dominant source and nature of risks and returns and the internal organization and management

structure. The accounting policies adopted for segment reporting are in line with the accounting policies adopted for preparing

and presenting the Financial Statements of the Company as a whole. In addition, the following specific accounting policies have

been followed for segment reporting:

a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment

transfers. Inter segment transfers are accounted for based on the transaction price agreed to between the segments which is at

cost in case of transfer of Company’s intermediate and final products and estimated realizable value in case of by-products.

b) Revenue, expenses, assets and liabilities are identified to segments on the basis of their relationship to the operating

activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable

to segments on direct and/or on a reasonable basis, have been disclosed as “Unallowable”.

19. Earnings per share

Basic earnings per share are computed by dividing the net profit/(loss) after tax (including the post-tax effect of extraordinary

items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share are computed by dividing the net profit/(loss) after tax (including the post-tax effect of

extraordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per share and

also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity

shares. Dilutive potential equity shares are determined as at the end of each period presented.

20. Cash flow statement

Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of

a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses

associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company

are segregated.

21. Cash and cash equivalents

Cash and cash equivalents include cash on hand, cheques on hand, balance with banks on current accounts and short term highly

liquid investments with an original maturity of three months or less which carry insignificant risk of changes in value.

22. Commercial papers

Commercial papers are recognized as a liability at the face value at the time of issuance of instrument. The discount is

amortized as an interest cost over the period of commercial paper at the rate implicit in the transaction.

(d) The Company has only one class of equity shares. The Company declares and pays dividend in Indian rupees. The holders of

equity shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share.

(e) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the

Company, after distribution of all preferential dues. The distribution will be in proportion to the number of equity shares held

by the shareholders.

(f) Shareholders holding more than 5 % of the equity shares in the Company :

(g) The aggregate number of equity shares issued pursuant to contract, without payment being received in cash in immediately

preceding five years ended on 31st March, 2016 – 526894 equity shares (previous period of five years ended on 31st March, 2015 -

570942 equity shares).

(h) The aggregate number of equity shares bought back in immediately preceding five years ended on 31st March, 2016 - 11960988

equity shares (previous period of five years ended on 31st March, 2015 - 15410135 equity shares).

(i) The Company has reserved 158200 (Previous year 213200) equity shares of par value Rs,1/- each for issue at a premium of Rs,44/-

each to eligible employees of the Company under Employee Stock Option Scheme. All these shares are vested and are exercisable at

any point of time. Refer Note No. 30(2) for terms of Employee Stock Option Scheme

* Represents adjustment as per transitional provisions of Schedule II to the Companies Act, 2013 in relation to assets where

useful life has already exhausted.


Mar 31, 2013

1. Basis of preparation of financial statements

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis except certain tangible fixed assets which are carried at revalued amount.

GAAP comprises mandatory Companies (Accounting Standards) Rules, 2006 notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956, other pronouncements of the Institute of Chartered Accountants of India, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI).

Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use.

All Assets and Liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of operations and time between the procurement of raw material and realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

2. Use of estimates

The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure during the period. Actual results might differ from the estimates. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

3. Fixed assets, intangible assets and capital work-in-progress

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and impairments) adjusted by revaluation of Land, Building, Plant & Machinery, Railway Siding and Tube well of the Balrampur Unit as at 30th June, 1988; Land, Building and Plant & Machinery of Tulsipur Unit as at 31st March, 1999. Cost, net of cenvat, includes acquisition price, import duties, other non- refundable taxes and levies, attributable expenses and pre-operational expenses including finance charges, wherever applicable.

b) Intangible assets expected to provide future enduring economic benefits are recorded at the consideration paid for acquisition of such assets and are carried at cost of acquisition less accumulated amortisation and impairment, if any.

c) Expenditure during construction period: Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under "Capital work-in-progress". Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet for the cost of fixed assets that are not yet ready for their intended use.

4. Depreciation and amortisation

a) Depreciation on Fixed Assets is provided on Straight Line method in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956 (as amended) other than on Power Transmission Lines and Mobile Phones. Power Transmission Lines are depreciated over a period of five years and Mobile Phones over a period of three years on straight line basis.

b) Depreciation/amortisation on assets added, sold or discarded during the year is provided on pro-rata basis.

c) Lease hold land in the nature of perpetual lease is not amortised. Other lease hold land are amortised over the period of the lease.

d) Computer Software (Acquired) are amortised on straight line basis over a period of five years.

5. Investments

Investments are either classified as current or long-term based on Management''s intention at the time of purchase. Long - term investments are carried at cost less provision for diminution recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current investments are carried at lower of cost and fair value, category wise. Cost for overseas investments comprises of the

Indian Rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Cost includes acquisition charges such as brokerage, fee and duties.

6. Inventories

a) Inventories (other than By-products and Standing crop) are valued at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventory comprises of purchase price, cost of conversion and other cost that have been incurred in bringing the inventories to their respective present location and condition. Interest costs are not included in value of inventories. The cost of Inventories is computed on weighted average basis.

b) Assets identified and technically evaluated as obsolete and held for disposal are valued at their estimated net realisable value.

c) By-products and Standing crop are valued at net realisable value.

7. Revenue recognition

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Gross turnover includes excise duty but excludes sales tax / VAT.

c) Dividend income is recognised when the Company''s right to receive dividend is established.

d) Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

e) All other income are accounted for on accrual basis.

8. Expenses

All the expenses are accounted for on accrual basis.

9. Government grants

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not related to a specific fixed asset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income.

10. Provisions, contingent liabilities and contingent assets

Provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

A provision is recognised if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the balance sheet date.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Re-imbursement expected in respect of expenditure to settle a provision is recognised only when it is virtually certain that the re- imbursement will be received.

A Contingent Asset is not recognised in the Accounts.

11. Impairment of assets

Impairment loss, if any, is recognised to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its 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.

Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amount of assets to the extent that it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in previous years.

After impairment, depreciation or amortisation on assets is provided on the revised carrying amount of the respective asset over its remaining useful life.

12. Foreign currency transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translated at the year end rate.

Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c) In case of items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference. The premium or discount on forward exchange contracts is recognized over the period of the respective contract.

d) Any income or expense on account of exchange difference either on settlement or on translation at the year end is recognised in the Statement of Profit and Loss.

13. Borrowing costs

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

14. Insurance claims

Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

15. Employee benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

b) Long-term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services. The expense is recognised at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect of such benefits are recognised in the Statement of Profit and Loss.

16. Employee stock option scheme

In respect of employee stock options granted pursuant to the company''s Employee Stock Option Scheme, the intrinsic value of the option (excess of market price of the share on the date of grant over the exercise price of the option) is treated as discount and amortised as employee compensation cost on a straight line basis over the vesting period.

17. Taxes on income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future. However, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized.

MAT credit is recognised 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 Minimum Alternate tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and 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 the Company will pay normal Income Tax during the specified period.

18. Derivative contracts

The Company uses derivative contracts to hedge the interest rate and currency risks. The Company does not use these contracts for trading or speculation purposes.

19. Segment reporting

Segments are identified based on the dominant source and nature of risks and returns and the internal organisation and management structure.The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

a) Inter segment revenue is accounted for based on the transaction price agreed to between segments which is primarily market led.

b) Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been disclosed as "Unallocable".

20. Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of any extra ordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares.

21. Cash flow statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated.


Mar 31, 2012

1.1 Basis of preparation of financial statements

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis except certain tangible fixed assets which are carried at revalued amount.

GAAP comprises mandatory Companies (Accounting Standards) Rules, 2006 notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956, other pronouncements of the Institute of Chartered Accountants of India, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI).

Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use.

All Assets and Liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature of operations and time between the procurement of raw material and realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

1.2 Use of estimates

The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure during the period. Actual results might differ from the estimates. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

1.3 Fixed assets, intangible assets and capital work-in-progress

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and impairments) adjusted by revaluation of Land, Building, Plant & Machinery, Railway Siding and Tube well of the Balrampur Unit as at 30th June, 1988; Land, Building and Plant & Machinery of Tulsipur Unit as at 31st March, 1999. Cost, net of cenvat, includes acquisition price, import duties, other non-refundable taxes and levies, attributable expenses and pre-operational expenses including finance charges, wherever applicable.

b) Intangible assets expected to provide future enduring economic benefits are recorded at the consideration paid for acquisition of such assets and are carried at cost of acquisition less accumulated amortisation and impairment, if any.

c) Expenditure during construction period: Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under "Capital work-in-progress". Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet for the cost of fixed assets that are not yet ready for their intended use.

1.4 Depreciation and amortisation

a) Depreciation on Fixed Assets is provided on Straight Line method in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956 (as amended) other than on Power Transmission lines and Mobile Phones. Power Transmission Lines are depreciated over a period of five years and Mobile Phones over a period of three years on straight line basis.

b) Depreciation/amortisation on assets added, sold or discarded during the year has been provided on pro-rata basis.

c) Lease hold land in the nature of perpetual lease is not amortised. Other lease hold land are amortised over the period of the lease.

d) Computer Software (Acquired) are amortised on straight line basis over a period of five years.

1.5 Investments

Investments are either classified as current or long-term based on Management's intention at the time of purchase. Long-term investments are carried at cost less provisions for diminution recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current investments are carried at the lower of cost and fair value, category wise. Cost for overseas investments comprises of the Indian Rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Cost includes acquisition charges such as brokerage, fee and duties.

1.6 Inventories

a) Inventories (other than By-products and Standing crop) are valued at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventory comprises of purchase price, cost of conversion and other cost that have been incurred in bringing the inventories to their respective present location and condition. Interest costs are not included in value of inventories. The cost of Inventories is computed on weighted average basis.

b) Assets identified and technically evaluated as obsolete and held for disposal are valued at their estimated net realisable value.

c) By-products and Standing Crop are valued at net realisable value.

1.7 Revenue recognition

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Gross turnover includes excise duty but excludes sales tax / VAT.

c) Dividend income is recognised when the Company's right to receive dividend is established.

d) Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable.

e) All other income are accounted for on accrual basis.

1.8 Expenses

All the expenses are accounted for on accrual basis.

1.9 Government grants

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not related to a specific fixed asset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income.

1.10 Provisions, contingent liabilities and contingent assets

Provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

A provision is recognised if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the balance sheet date.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

Re-imbursement expected in respect of expenditure to settle a provision is recognised only when it is virtually certain that the re- imbursement will be received.

A Contingent Asset is not recognised in the Accounts.

1.11 Impairment of assets

Impairment loss, if any, is recognised to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset's net selling price and its 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.

Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amount of assets to the extent that it does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in previous years.

After impairment, depreciation or amortisation on assets is provided on the revised carrying amount of the respective asset over its remaining useful life.

1.12 Foreign currency transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translated at the year end rate.

Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c) In case of items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference. The premium or discount on forward exchange contracts is recognised over the period of the respective contract.

d) Any income or expense on account of exchange difference either on settlement or on translation at the year end is recognised in the Statement of Profit and Loss.

1.13 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset is capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss in the period in which they are incurred.

1.14 Insurance claims

Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

1.15 Employee benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered.

b) Long-term employee benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the employees have rendered services. The expense is recognised at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect of such benefits are recognised in the Statement of Profit and Loss.

1.16 Employee stock option scheme

In respect of employee stock options granted pursuant to the Company's Employee Stock Option Scheme, the intrinsic value of the option (excess of market price of the share on the date of grant over the exercise price of the option) is treated as discount and amortised as employee compensation cost on a straight line basis over the vesting period.

1.17 Taxes on income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however, when there is a brought forward loss or unabsorbed depreciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realised.

MAT credit is recognised 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 Minimum Alternate tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and 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 the Company will pay normal Income Tax during the specified period.

1.18 Derivative contracts

The Company uses derivative contracts to hedge the interest rate and currency risks. The Company does not use these contracts for trading or speculation purposes.

1.19 Segment reporting

Segments are identified based on the dominant source and nature of risks and returns and the internal organisation and management structure.The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:

a) Inter segment revenue is accounted for based on the transaction price agreed to between segments which is primarily market led.

b) Revenue and expenses are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not allocable to segments on a reasonable basis, have been disclosed as "Unallocable".

1.20 Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the profit/(loss) after tax (including the post tax effect of any extra ordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares.

1.21 Cash flow statement

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated.

d) The Company has only one class of equity shares. The Company declares and pays dividend in Indian rupees. The holders of equity shares are entitled to receive dividend as declared from time to time and are entitled to one vote per share.

e) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential dues. The distribution will be in proportion to the number of equity shares held by the shareholders.

g) The Company has issued an aggregate of 44048 upto 31.03.2012 (previous period 44048 upto 31.03.2011) fully paid up equity shares of par value Rs 1/- each without payment being received in cash in the last 5 years immediately preceding the balance sheet date.

h) The Company has bought back an aggregate of 15410135 upto 31.03.2012 (Previous period 4678678 upto 31.03.2011) equity shares in the last 5 years immediately preceding the balance sheet date. 1229531 equity shares bought back during the previous period but not extinguished as on 31.03.2011, were extinguished during the year [Refer note no. 2.29(4)].


Mar 31, 2011

1. Basis of preparation of Financial Statements

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis except certain fixed assets which are carried at revalued amount. GAAP comprises mandatory Companies (Accounting Standard) Rules, 2006 notified by the Central Government of India under Section 211(3C) of the Companies Act, 1956, other pronouncements of the Institute of Chartered Accountants of India, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI).

Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use.

2. Use of Estimates

The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure during the period.

3. Fixed Assets, Intangible Assets and Capital Work-in-Progress

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and impairments) adjusted by revaluation of Land, Building, Plant & Machinery, Railway Siding and Tube well of the Balrampur Unit as at 30th June, 1988; Land, Building and Plant & Machinery of Tulsipur Unit as at 31st March, 1999 and Land, Building and Plant & Machinery of Maizapur unit as at 30th September, 2008. Cost, net of cenvat, includes acquisition price, import duties, other non-refundable taxes and levies, attributable expenses and pre-operational expenses including finance charges, wherever applicable.

b) Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost of acquisition less accumulated amortisation and impairment, if any.

c) Expenditure during construction period: Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under "Capital Work-in-Progress". Capital Work-in-Progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

4. Depreciation and Amortization

a) Depreciation on Fixed Assets is provided on Straight Line method in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956 (as amended) other than on Power Transmission lines and Mobile Phones. Power Transmission Lines are depreciated over a period of five years and Mobile Phones over a period of three years on straight line basis.

b) Depreciation/amortisation on assets added, sold or discarded during the year has been provided on pro-rata basis.

c) Lease hold land in the nature of perpetual lease is not amortised. Other lease hold land are amortised over the period of the lease.

d) Computer Software (Acquired) are amortised over a period of five years. Amortisation is done on straight line basis.

5. Investments

Trade investments are the investments made for or to enhance the Companys business interest. Investments are either classified as current or long-term based on Managements intention at the time of purchase. Long - term investments are carried at cost less provisions for diminution recorded to recognize any decline, other than temporary, in the carrying value of each investment. Current investments are carried at the lower of cost and fair value, category wise. Cost for overseas investments comprises of the Indian Rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Cost includes acquisition charges such as brokerage, fee and duties.

6. Inventories

a) Inventories (other than By-products, Scrap and Standing crop) are valued at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventory comprises of purchase price, cost of conversion and other cost that have been incurred in bringing the inventories to their respective present location and condition. Interest costs are not included in value of inventories. The cost of Inventories is computed on weighted average basis.

b) Assets identified and technically evaluated as obsolete and held for disposal are valued at their estimated net realisable value.

c) By-products (Molasses, Bagasse & Press mud), Scrap and Standing Crop are valued at net realisable value.

d) Inter-unit transfer of By-products include the cost of transportation, duties, etc.

7. Share Issue Expenses

These are equally amortised over a period of five years.

8. Revenue Recognition

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Gross turnover includes excise duty but excludes sales tax / VAT.

c) Dividend income is accounted for in the year it is declared.

d) All other income are accounted for on accrual basis.

9. Expenses

All the expenses are accounted for on accrual basis.

10. Government Grants

a) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. If not related to a specific fixed asset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income.

11. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable.

Re-imbursement expected in respect of expenditure to settle a provision is recognized only when it is virtually certain that the re-imbursement will be received.

A Contingent Asset is not recognized in the Accounts.

12. Impairment of Assets

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in previous accounting period is reversed if there has been a change in the estimate of recoverable amount.

13. Foreign Currency Transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translated at the year end rate.

c) In case of items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognized as exchange difference. The premium or discount on forward exchange contracts is recognized over the period of the respective contract.

d) Any income or expense on account of exchange difference either on settlement or on translation at the year end is recognized in the Profit & Loss Account.

e) Transactions covered by cross currency swap contracts are marked to market at the Balance Sheet date and the gain or loss is taken to Profit & Loss Account.

14. Borrowing Costs

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

15. Insurance Claims

Accounted for on settlement of claims.

16. Employee Benefits

a) Short-term employee benefits are recognized as an expense at the undiscounted amount in the Profit & Loss Account for the year in which the related service is rendered.

b) Long-term employee benefits are recognized as an expense in the Profit & Loss Account for the year in which the employees have rendered services. The expense is recognized at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect of such benefits are recognized in the Profit & Loss Account.

17. Employee Stock Option Scheme

In respect of employee stock options granted pursuant to the companys Employee Stock Option Scheme, the intrinsic value of the option (excess of market price of the share on the date of grant over the exercise price of the option) is treated as discount and amortised for as employee compensation cost on a straight line basis over the vesting period.

18. Taxes on Income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred tax is recognized, subject to the consideration of prudence in respect of deferred tax assets, 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.

MAT credit is recognised 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 Minimum Alternate tax (MAT) credit becomes eligible to be recognised as an asset in

accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit & Loss Account and 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 the Company will pay normal Income Tax during the specified period.


Sep 30, 2009

1. Basis of preparation of Financial Statements

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention on accrual basis. GAAP comprises mandatory Accounting Standards as prescribed by the Companies (Accounting Standard) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use.

2. Use of Estimates

The preparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates generally include future obligations under employee retirement benefit plans and income taxes.

3. Fixed Assets, Intangible Assets and Capital Work-in-Progress

a) Fixed Assets are stated at their original cost (net of accumulated depreciation and impairments) adjusted by revaluation of Land, Building, Plant & Machinery, Railway Siding and Tube well of the Balrampur Unit as at 30th June, 1988 and Land, Building and Plant & Machinery of Tulsipur Unit as at 31st March, 1999. Cost, net of cenvat, includes acquisition price, import duties, other non- refundable taxes and levies, attributable expenses and pre operational expenses including finance charges, wherever applicable. _

b) Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation and impairment, if any.

c) Expenditure during construction period: Expenditure (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under "Capital Work-in-Progress". Capital Work-in-Progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

4. Depreciation and Amortization

a) Depreciation on Fixed Assets is provided on Straight Line method in accordance with the rates as specified in Schedule XIV to the Companies Act, 1956 (as amended) other than on Power Transmission lines and Mobile Phones. Power Transmission Lines are amortised/depreciated over a period of five years and Mobile Phones over a period of three years on straight line basis.

b) Depreciation/amortisation on assets added, sold or discarded during the year has been provided on pro-rata basis.

c) Lease hold land in the nature of perpetual lease are not amortized. Other lease hold land are amortised over the period of the lease.

d) Computer Software (Acquired) are amortised over a period of five years. Amortisation is done on straight line basis.

5. Investments

Trade investments are the investments made to enhance the Companys business interest. Investments are either classified as current or long- term based on Managements intention at the time of purchase. Long-term investments are carried at cost less provisions recorded to recognise any decline, other than temporary, in the carrying value of each investment. Current investments are carried at the lower of cost and fair value, category wise. Cost for overseas investments comprises of the Indian Rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Cost includes acquisition charges such as brokerage, fee and duties.

6. Inventories

a) Inventories (other than By-products, Scrap and Standing crop) are valued at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventory comprises of purchase price, cost of conversion and other cost incurred in bringing the Inventories to their respective present location and condition. The cost of Inventories is computed on weighted average basis.

b) Assets identified and technically evaluated as obsolete and held for disposal are valued at their estimated net realisable value.

c) By-products (Molasses & Bagasse), Scrap and Standing Crop are valued at net realisable value.

d) Inter-unit transfer of By-products include the cost of transportation, duties, etc.

7. Share Issue Expenses

These are equally amortised over a period of five years.

8. Revenue Recognition

a) Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration.

b) Gross turnover includes excise duty but excludes sales tax / VAT.

c) Dividend income is accounted for in the year it is declared.

d) All other income are accounted for on accrual basis.

9. Expenses

All the expenses are accounted for on accrual basis.

10. Government Grants & Subsidies

a) Government grants related to specific fixed assets arc adjusted with the value of the fixed asset. If not related lo a specific fixed asset, it is credited to Capital Reserve.

b) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income.

11. Provisions, Contingent Liabilities and Contingent Assets

Provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.

Contingent Liabilities are shown by way of notes to the Accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable.

Re-imbursement expected in respect of expenditure to settle a provision is recognised only when it is virtually certain that the re- imbursement will be received.

A Contingent Asset is not recognised in the Accounts.

12. Impairment of Assets

Impairment losses, if any, are recognised in accordance with the Accounting Standard notified under the Companies (Accounting Standard) Rules, 2006.

13. Foreign Currency Transactions

a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out.

b) Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year end are translated at the year end rate.

c) In case of items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference. The premium or discount on forward exchange contracts is amortised over the period of the respective contract.

d) Any income or expense on account of exchange difference either on settlement or on translation at the year end is recognised in the Profit & Loss Account.

e) Transactions covered by cross currency swap contracts are marked to market at the Balance Sheet date and the gain or loss is taken to Profit & Loss Account.

14. Borrowing Costs

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

15. Insurance Claims

Accounted for on settlement of claims.

16. Employee Benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Profit & Loss Account for the year in which the related service is rendered.

b) Long-term employee benefits are recognised as an expense in the Profit & Loss Account for the year in which the employees have rendered services. The expense is recognised at the present value of the amount payable as per actuarial valuations. Actuarial gains and losses in respect of such benefits are recognised in the Profit & Loss Account.

17. Employee Stock Option Scheme

In respect of stock options granted pursuant to the Companys Employee Stock Option Scheme, the intrinsic value of the option (excess of market price of the share over the exercise price of the option) is treated as discount and accounted for as employee compensation cost over the vesting period.

18. Taxes on Income

Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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.

MAT Credit is recognised 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 Minimum Alternate Tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit & Loss Account and shown as MAT Credit Entitlement. The Company reviews the same at each Balance Sheet date and writes clown the carrying amount of MAT Credit Entitlement lo the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

 
Subscribe now to get personal finance updates in your inbox!