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Accounting Policies of Dhampur Sugar Mills Ltd. Company

Mar 31, 2015

A Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on mercantile system ofaccounting unless otherwise specifically stated.

B Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reported period.

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

C Fixed Assets

Fixed assets are stated at cost, net of recoverable taxes and includes amount added on revaluation, less accumulated depreciation, and impairment loss, if any. All costs, including financing costs attributable to construction or acquisition of fixed assets till commencement of commercial production, and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised.

D Depreciation and Amortisation

a) Depreciation on fixed asstes is provided for over the useful life of assets specified in the Schedule -II of Companies Act, 2013.

b) Depreciation on Plants and buildings acquired upto 31st March,1989 and other assets acquired upto 31st March, 2014 is provided on written down value method.

c) Depreciation on Plants and buildings acquired after 31st March, 1989 and other fixed assets acquired after 31st March, 2014 is provided on straight line method

E Foreign Exchange Transactions

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevaling on the date of the transaction or that approximates the actual rate at the date of the transaction.

b) Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of itmes which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

c) Non monetary foreign currency itmes are carried at cost.

d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

F Inventories

a) Raw material, process chemicals, stores and spares, packing material and traded goods are carried at weighted average cost.

b) Finished Goods except molasses are carried at lower of cost and net realisable value.

c) Stock of finished farm products, molasses and bagasse are carried at estimated selling price.

d) Standing cane and other crops are carried at cost.

e) Goods in process is carried at lower of cost and net realisable value.

f) Loose tools and instruments are carried at depreciated value.

g) Renewable Energy Certificate are carried at lower of cost and net realisable value.

G Excise Duty

Excise duty in respect of finished goods held in stock at the end of the period except in respect of those products which are being used for captive consumption, is provided for and is included in the value of closing stock.

H Employees Benefits

a) Defined contribution plan

Company''s contributions paid/payable during the year to provident fund and pension fund are recognised in the profit and loss account.

b) Defined Benefit Plan

Company''s liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognised immediately in the profit and loss account as income or expenses. Obligation measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheetdate or Government bonds where the currency and terms of the Government are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short term benefits (namely leave encashment) are provided for on accrual basis.

d) Employee seperation cost

Compensation to employee who have opted for retirement under the "Voluantary Retirement Scheme" of the company is charged to the profit and loss account in the year of retirement.

I Leases

(a) Lease rentals in respect ofoperating lease, if any,are expensed with reference to lease term,except for rentals pertaining to the period upto the date of commissioning of the assets which are capitalised.

(b) Income in respect of assets given on operating lease if any, is recognised on accrual basis with reference to lease terms.

J Investments:

a) Current investments are carried at lower of cost and net realisable value.

b) Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

K Revenue Recognition :

Revenue is recognised only when it can be reliably measured and is reasonable to expect ultimate collection. Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customers. Revenue includes excise duty and is net of sales tax, value added tax and applicable discounts and allowances. Dividend income is recognised when right to receive is established. Interest income is recognised when no significant uncertainty as to measurability or collectablity exists.

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.

L Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets till commencement of commercial production and/or put to use. All other borrowing costs are expensed in the period they occur.

M Provision for Current and Deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

N Impairment of Assets :

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment is charged to the profit and loss account in the year in which an asset is identified as imapired. Impairment losses recognised in prior accounting periods are reversed if there is any change in the estimate of the recoverable amount.

O Government Grants:

Government grants are recognised where there is reasonable assurance that the conditions attached to them will be complied and the grants will be received. Government grants are accounted for as under:

(i) Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of shareholders'' funds.

(ii) Government grants related to specific depreciable fixed assets are adjusted with the value of assets. Government grants related to specific non depreciable fixed assets are credited to capital reserve.

(iii) Government grants that are receivable as compensation for expenses or losses incurred or for the purpose of giving immediate financial support are either deducted from the expenditure in case these relate to specific expenditure and in other cases are treated as other income. These grants if available to the sugar industry in general are treated as ordinary items and if available only to the company are treated as an extraordinary item and disclosed accordingly.

P Provisions, Contingent Liabilities and Assets :

Provisions are 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.

Contingent assets are not recognised in the financial statements.


Mar 31, 2014

A Corporate Information

Dhampur Sugar Mills Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act,1956. Its shares are listed on two stock exchanges in India namely, National Stock Exchange of India and Bombay Stock Exchange of India. The company is engaged in the manufacturing and selling of sugar, chemicals and co-generation of power.

B Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on mercantile system of accounting unless otherwise specifically stated.

C Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

D Fixed Assets

Fixed assets are stated at cost, net of recoverable taxes and includes amount added on revaluation, less accumulated depreciation, and impairment loss, if any. All costs, including financing costs attributable to construction or acquisition of fixed assets till commencement of commercial production, and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised.

E Depreciation and Amortisation

a) Depreciation on plants and buildings acquired after 31st March,1989 is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

b) Depreciation on other fixed assets is provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

F Foreign Exchange Transactions

a) Transactions denominated in foreign curriencies are recorded at the exchange rate prevaling on the date of the transaction or that approximates the actual rate at the date of the transaction.

b) Monetary items denominated in foreign curriencies at the year end are restated at year end rates. In case of itmes which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contracts is recognised over the life of the contract.

c) Non monetary foreign currency itmes are carried at cost.

d) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Profit and Loss account except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

G Inventories

a) Raw material, process chemicals, stores and spares, packing material and traded goods are carried at weighted average cost.

b) Finished Goods except molasses are carried at lower of cost and net realisable value.

c) Stock of finished farm products, molasses and bagasse are carried at estimated selling price.

d) Standing cane and other crops are carried at cost.

e) Goods in process is carried at lower of cost and net realisable value.

f) Loose tools and instruments are carried at depreciated value.

g) Renewable Energy Certificate are carried at lower of cost and net realisable value. H Excise Duty

Excise duty in respect of finished goods held in stock at the end of the period except in respect of those products which are being used for captive consumption, is provided for and is included in the value of closing stock.

I Employees Benefits

a) Defined contribution plan

Company''s contributions paid/payable during the year to provident fund and pension fund are recognised in the profit and loss account.

b) Defined Benefit Plan

Company''s liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognised immediately in the profit and loss account as income or expenses. Obligation measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date or Government bonds where the currency and terms of the Government are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short term benefits (namely leave encashment) are provided for on accrual basis.

d) Employee sepration cost

Compensation to employee who have opted for retirement under the "Voluantary Retirement Scheme" of the company is charged to the profit and loss account in the year of retirement. J Leases

(a) Lease rentals in respect of operating lease, if any, are expensed with reference to lease term, except for rentals pertaining to the period upto the date of commissioning of the assets which are capitalised.

(b) Income in respect of assets given on operating lease if any, is recognised on accrual basis with reference to lease terms. K Investments:

a) Current investments are carried at lower of cost and net realisable value.

b) Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

L Revenue Recognition :

Revenue is recognised only when it can be reliably measured and is reasonable to expect ultimate collection. Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customers. Revenue includes excise duty and is net of sales tax, value added tax and applicable discounts and allowances. Dividend income is recognised when right to receive is established. Interest income is recognised when no significant uncertainty as to measurability or collectablity exists.

M Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets till commencement of commercial production and/or put to use. All other borrowing costs are expensed in the period they occur.

N Provision for Current and Deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

O Impairment of Assets :

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment is charged to the profit and loss account in the year in which an asset is identified as imapired. Impairment losses recognised in prior accounting periods are reversed if there is any change in the estimate of the recoverable amount.

P Provisions, Contingent Liabilities and Assets :

Provisions are 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.

Contingent assets are not recognised in the financial statements. "1A. d" - Terms/right attached to equity shares

The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend if proposed by the Board of Directors, is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the shareholders of equity shares are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

"1A. e" - 33,08,960 Equity shares of Rs. 10 each and 18,01,817 8% Cumulative Redeemable Preference shares of Rs. 100 each were allotted during the year to the shareholders of J K Sugar Ltd pursuant to the scheme of amalgamation without payment being received in cash.

"1A. f" - Right attached to Preference shares

(i) The Preference shares will constitute direct, unconditional, un-subordinated and unsecured obligations of the company and will at all times rank pari passu and without any preference among them.

(ii) No premature redemption option to the company, nor to the shareholders of Cumulative Redeemable Preference shares and no option to the shareholders to seek redemption in case of non-payment of dividend. "1A. g" - Terms of redemption of Preference shares

(i) 4,13,940 - 6% Cumulative Redeemable Preference Shares of Rs. 100 each are redeemable in 3 equal yearly installments commencing from December, 2013.

(ii) 4,69,013 - 1% Cumulative Redeemable Preference Shares of Rs. 100 each are redeemable in 12 equal quarterly installments commencing from December, 2012.

(iii) 18,01,817 - 8% Cumulative Redeemable Preference Shares of Rs. 100 each are redeemable in 3 equal yearly installments commencing from April 01, 2014.

"1B. a" - Terms of share warrants issue:

1. The holder(s) of each warrant shall have an option to apply for and be allotted One equity share of Rs. 10 each at premium of Rs. 23 per share i.e. Rs. 33 per share at any time within 18 months from the date of allotment of warrant. i.e. 26th March 2014.

2. Application money of Rs. 8.25 per warrant shall be adjusted against the price payable subsequently for acquiring by exercising the option. Application money of Rs. 8.25 per warrant shall be forfeited if the option to acquire shares is not exercised.

3. The Equity shares issued and allotted upon exercise of option will be fully paid and will rank pari-passu with the existing equity shares.

"3.a" - Nature of security

Term loans (excise) from banks of Rs. 109.53 crores under the Government sponsored subvention scheme for extending Financial assistance to Sugar Undertakings, 2014 (SEFASU, 2014) will be secured by third parri passu charge on all movable and immovable asstes of the company and guarantee of promoters directors. Term loans from bank of Rs. 1.25 crores are secured by subservient sixth charge on all movable and immovable assets of the company.

Term loans from Sugar Development Fund are secured by exclusive second charge on all movable and immovable assets excluding current assets of the company. All other term loans from financial institutions and banks (Zero coupon loans) are secured by first parri passu charge on all movable and immovable assets except book debts, stock-in-trade, raw materials, spare parts and other assets and personal guarantee of promoters directors.

"6.a" - Nature of security

All Cash credit limits from banks other than District Co-operative Banks of Rs. 467.38 Crores are secured by pledge of stocks of sugar and hypothecation of consumable stores and spare parts, chemicals, molasses etc. and by parri passu third charge over the fixed assets of the company and personal guarantee of promoter directors.

Cash credit accounts from District Co-operatice Banks of Rs. 96.09 Crores are secured by pledge of stocks of sugar. Rupee loans from banks of Rs. 49.76 Crores are secured by pledge of stock of sugar and personal guarantee of promoter directors and Rs. 30 Crores by subservient charge on Fixed assets & Current Assets of the company. "9. A." - Revaluation of Tangible Assets:

The Company has revalued the land of its "Meerganj Unit" as on 07.10.2013 on the basis of replacement value, valued by an independent certified valuer. Accordingly a sum of Rs. 35.69 Crores (included as addition of land in Note No. -9) being the excess of the current replacement value of Rs. 42.22 Crores over the existing book value of Rs. 6.53 Crores has been credited to revaluation reserve.


Mar 31, 2013

A Corpoarte Information

Dhampur sugar Mills Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act,1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacturing and selling of sugar, chemicals and co-generation of power.

B Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention on mercantile system of accounting unless otherwise specifically stated.

C Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reported period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

D Fixed Assets

Fixed assets are stated at cost, net of recoverable taxes and includes amount added on revaluation, less accumulated depreciation, and impairment loss, if any. All costs, including financing costs attributable to construction or acquisition of fixed assets till commencement of commercial production,net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalised.

E Depreciation and Amortisation

a) Depreciation on plants and buildings acquired after 31st March,1989 is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

b) Depreciation on other fixed assets is provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

F Foreign Exchange Transactions

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at the closing rate.

The difference in translation of long term monetary assets and liabilities and realised gains and losses on such foreign exchange transactions are recognised in the respective capital asset. In respect of transactions covered by forward exchange contracts, the difference between contract rate and the rate on the date of transaction is charged to the profit and loss account over the period of the contract.

G Inventories

a) Raw material at cost and finished goods including in transit (except molasses) are carried at lower of cost and net realisable value.

b) Stock of finished farm products, molasses and bagasse are carried at estimated selling price.

c) Packing materials, stores, spares, standing cane and other crops are carried at cost.

d) Goods in process/work in progress is carried at estimated cost.

e) Loose tools and instruments are carried at depreciated value.

H Excise Duty

Excise duty in respect of finished goods held in stock except in respect of those products which are being used for captive consumption, has been accounted for at the end of the period and is included in the value of closing stock.

I Employees Benefits

a) Defined contribution plan

Company''s contributions paid/payable during the year to provident fund and pension fund are recognised in the profit and loss account.

b) Defined Benefit Plan

Company''s liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognised immediately in the profit and loss account as income or expenses. Obligation measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date or Government bonds where the currency and terms of the Government are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short term benefits (namely leave encashment) are provided for on accrual basis.

d) Employee sepration cost

Compensation to employee who have opted for retirement under the "Voluantary Retirement Scheme" of the company is charged to the profit and loss account in the year of retirement.

J Leases

a) In respect of assets taken on lease upto 31.03.2001 and in respect of operating lease taken there after, if any, lease rentals are expensed with reference to lease term, except for rentals pertaining to the period upto the date of commissioning of the assets which are capitalised.

b) Income in respect of assets given on lease if any, is recognised on accrual basis with reference to lease terms.

K Investments:

a) Current investments are carried at lower of cost and quoted/fair value.

b) Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

L Revenue Recognition :

Revenue is recognised only when it can be reliably measured and is reasonable to expect ultimate collection. Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customers. Revenue includes excise duty and is net of sales tax, value added tax and applicable discounts and allowances. Dividend income is recognised when right to receive is established. Interest income is recognised when no significant uncertainty as to measurability or collectablity exists.

M Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets till commencement of commercial production and/or put to use. All other borrowing costs are expensed in the period they occur.

N Provision for Current and Deferred Tax :

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

O Impairment of Assets :

The carrying amount of assets are reviewed at each balance sheet date, if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment is charged to the profit and loss account in the year in which an asset is identified as imapired. Impairment losses recognised in prior accounting periods are reversed if there is any change in the estimate of the recoverable amount.

P Provisions, Contingent Liabilities and Assets :

Provisions are 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.

Contingent assets are not recognised in the financial statements.


Mar 31, 2011

A. Basis of Preparation of Financial Statements

The financial statements nave been prepared under the historical cost convention on mercantile system of accounting unless otherwise specifically stated.

B. Fixed Assets

(a) Fixed assets are stated at cost, net of CENVAT and/or at revalued price, less accumulated depreciation, all costs, including financing costs relating to borrowed funds attributable to construction or acquisition of fixed assets till commencement of commercial production and/or put to use.

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

C. Depreciation

a) Depreciation on plants and buildings acquired after 31st March,1989 is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

b) Depreciation on other fixed assets is provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

D. Foreign Exchange Transactions

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at the dosing rate.

The difference in translation of long term monetary assets and liabilities and realised gains and losses on such foreign exchange transactions are recognised in the respective capital asset in respect of transactions covered by forward exchange contracts, the difference between contract rate and the rate on the date of transaction is charged to the Profit and Loss Account over the period of the contract

E. Inventories

a) flaw material at cost and finished goods including in transit (except molasses) are carried at lower of cost and net realisable value.

b) Stock of finished farm products, molasses and bagasse are carried at estimated selling price.

c) Packing materials, stores, spares, standing cane and other crops are carried at cost

d) Goodsin process/work in progress is carried at estimated cost.

e) Loose tools and instruments are carried at depreciated value.

F. Excise Duty

Excise duty in respect of finished goods held in stock except in respect of those products which are being used for captive consumption, has been accounted for at the end of the period and is Included in the value of closing stock.

G. Employees Benefits

a) Defined Contribution Plan

Companys contributions paid/payable during the year to provident fund and pension fund are recognised in the Profit and Loss Account

b) Defined Benefit Plan

Comparys liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognised immediately in the profit and loss account as income or

expenses. Obligation measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date or government bonds where the currency and terms of the government are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short term benefits (namely leave encashment) are provided for on accrual basis.

H. Leases

a) In respect of assets taken on lease upto 31.03.2001 and in respect of operating lease taken there after, if any, lease rentals are expensed with reference to lease term, except for rentals pertaining to the period upto the date of commissioning of the assets which are capitalised.

b) Income in respect of assets given on lease if any, is recognised on accrual basis with reference to lease terms.

I. Investments:

a) Current investments are stated at lower of cost or fair market value.

b) Long term investments are stated at cost less provision for diminution and written-off.

J. Interest Revenue:

Revenue arising from the use by others of enterprise resources yielding interest and dividends etc. are recognised when no significant uncertainty as to measurability or collectability exists.

K. Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet Date. The deferred tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

L. Impairment of Assets:

The carrying amount of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. Impairment losses recognised in prior accounting periods are reversed if there is any change in the estimate of the recoverable amount.

M. Provisions, Contingent Liabilities and Assets:

Provisions are 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.


Sep 30, 2009

A. Basis of Preparation of Financial Statements

The financial statements have been prepared under the historical cost convention, on mercantile system of accounting unless otherwise specifically stated.

B. Fixed assets

(a) Fixed assets are stated at cost, net of CENVAT and/or at revalued price, less accumulated depreciation, all costs, including financing costs relating to borrowed funds attributable to construction or acquisition of fixed assets till commencement of commercial production and/or put to use.

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

C. Depreciation

a) Depreciation on plants and buildings acquired after 31st March,1989 is provided on straight line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

b) Depreciation on other fixed assets is provided on written down value method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

D. Foreign exchange transactions

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at the closing rate. The difference in translation of long term monetary assets and liabilities and realised gains and losses on such foreign exchange transactions are recognised in the respective capital asset. In respect of transactions covered by forward exchange contracts, the difference between contract rate and the rate on the date of transaction is charged to the Profit and Loss Account over the period of the contract.

E. Inventories

a) Raw material at cost and finished goods including in transit (except molasses) are carried at lower of cost and net realisable value.

b) Stock of finished farm products, molasses and bagasse are carried at estimated selling price.

c) Packing materials, stores, spares, standing cane and other crops are carried at cost.

d) Goods in process/work in progress is carried at estimated cost.

e) Loose tools and instruments are carried at depreciated value.

F. Excise duty

Excise duty in respect of finished goods held in stock except in respect of those products which are being used for captive consumption, has been accounted for at the end of the period and is included in the value of closing stock.

G. Employees benefits

a) Defined Contribution Plan

Companys contributions paid/payable during the year to Provident Fund, Superannuation Fund and ESIC are recognised in the profit and loss account.

b) Defined Benefit Plan

Companys liabilities towards gratuity are determined using the projected unit credit method which considers each period of service as giving rise to additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognised immediately in the profit and loss account as income or expenses.

Obligation measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet Date or government bonds where the currency and terms of the government are consistent with the currency and estimated terms of the defined benefit obligation.

c) Short term benefits (namely leave encashment) are provided for on accrual basis.

H. Leases

a) In respect of assets taken on lease upto 31.03.2001 and in respect of operating lease taken there after lease rental are expensed with reference to lease term, except for rentals pertaining to the period upto the date of commissioning of the assets which are capitalised.

b) Income in respect of assets given on lease if any, is recognised on accrual basis with reference to lease terms.

I. Investments

a) Current investments are stated at lower of cost or fair market value.

b) Long term investments are stated at cost less provision for diminution and written-off.

J. Interest Revenue

Revenue arising from the use by others of enterprise resources yielding interest and dividends etc. are recognised when no significant uncertainty as to measurability or collectability exists.

K. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between taxable income and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet Date. The deferred tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

L. Impairment of Assets :

The carrying amount of assets are reviewed at each Balance Sheet Date, if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. Impairment losses recognised in prior accounting periods are reversed if there is any change in the estimate of the recoverable amount.

M. Provisions, Contingent Liabilities and Assets

Provisions are 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. Contingent assets are not recognised in the accounts.

 
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