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Accounting Policies of Dhunseri Petrochem Ltd. Company

Mar 31, 2017

Background

Dhunseri Petrochem Limited is a company limited by shares and incorporated and domiciled in India. The Company was primarily engaged in the business of manufacturing and sale of PET Resin and Treasury Operations up to the year ended 31.03.2016. Consequent to the Scheme of Arrangement referred to in Note-30, the Company is now primarily engaged in Treasury Operations only. Equity Shares of the Company are listed on Bombay Stock Exchange Ltd and National Stock Exchange Ltd.

The Standalone Financial Statements were approved and authorized for issue with the resolution of the Board of Directors on May 22, 2017.

1. Significant Accounting Policies

This Note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements are the separate financial statements of the Company.

1.1 Compliance with Ind AS

The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The standalone financial statements up to year ended 31 March 2016 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) (Previous GAAP) and other relevant provisions of the Act.

These standalone financial statements are the first financial statements of the Company under IND AS. Refer Note 43 for an explanation of how the transition from Previous GAAP to Ind AS has impacted the Company''s financial position, financial performance and cash flows.

1.2 Historical Cost Convention

These standalone financial statements have been prepared on a historical cost basis, except for the following:

(a) Certain financial assets and liabilities (including derivative instruments) that is measured at fair value;

(b) Defined benefit plans - plan assets measured at fair value.

(c) Certain class of Property, Plant and Equipment measured at Fair Value on 1st April 2015 (Transition Date) and considered such value as deemed cost at that date.

1.3 Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade discounts, rebates, sales tax/ value added taxes and amounts collected on behalf of third parties.

The Company recognizes revenue when the amount of revenue can be reliably measured, it is possible that future economic benefits will flow to the company and specific criteria have been met for each of the Company''s activities as described below. The Company bases its estimates on historical results taking into consideration the type of customers, the type of transaction and specific of each arrangement.

Sale of PET Resin

Revenue from sale of PET Resin is recognized when the significant risks and rewards of the ownership of goods have passed to the buyer as per the terms of the Contract.

Other Operating Revenues

Export Entitlements (arising out of Duty drawback, Merchandise exports from India and Focused Market Schemes) are recognized when the right to receive credit as per the terms of the Scheme is established in respect of the exports made by the Company and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

Rent and Royalty Income

Rent and Royalty Income is recognized on an accrual basis in accordance with the substance of the relevant agreement.

Interest Income

Interest Income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.

Dividends

Dividends are recognized in the statement of profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the company, and the amount of the dividend can be measured reliably.

1.4 Property, Plant and Equipment

All items of property, plant and equipment are stated either at historical cost less accumulated depreciation, impairment loss, if any. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.

Transition to Ind AS

On transition to Ind AS, the Company has elected to measure certain classes of Property, plant and equipments at its fair value as at the transition date (i.e. 1st April, 2015) and considered such value as deemed cost at that date, while remaining classes of Property, plant and equipment are carried at historical cost less depreciation determined in accordance with retrospective application of Ind AS.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values on the basis of useful lives prescribed in Schedule II to the Companies Act, 2013, which are also supported by technical evaluation. Item of Property, plant and equipment for which related actual cost do not exceed Rs. 5000 are fully depreciated in the year of purchase. In respect of the following assets, useful lives different from Schedule II have been considered on the basis of technical evaluation, as under :-

- MotorVehicles:5years

- Mobile Phones : 2 years

The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Leasehold land is amortized over the period of lease.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other income/other expenses.

The cost of property, plant and equipment not ready to use are disclosed as capital work-in-progress.

1.5 Investment Property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as Investment Property. Investment Property is measured at its cost, including related transaction costs and where applicable borrowing costs less depreciation and impairment, if any. Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized. Depreciation on building is provided over its useful life using straight line method.

Useful life considered for calculation of depreciation for assets class are as follows-Non-Factory Building 60 years

1.6 Intangible Assets

Intangible assets (Computer Software and Technical know-how) has a finite useful life and are stated at cost less accumulated depreciation, impairment loss, if any.

Technical know-how primarily acquired from third party vendors, is capitalized.

Computer Software for internal use which is primarily acquired from third party vendors is capitalized. Subsequent costs associated with maintaining such software are recognized as expense as incurred. Cost of Software includes licenses fees and cost of implementation/system integration services where applicable.

Amortization methods and periods

The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:

- Computer software 5 Years

- Other Intangible Assets 10 Years Transition to Ind AS

On transition to Ind AS, the Company has elected to measure the intangible assets at its fair value as at the transition date and considered such value as deemed cost at that date.

1.7 Impairment of non-financial assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash flows from other assets or group of assets (cash-generating units). Non financial assets other than goodwill, that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

1.8 Leases As a lessee

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

As a lessor

Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

1.9 Inventories

Raw Material and Stores, Work in progress, Traded and Finished Goods are stated at lower of cost and net realizable value. Cost of raw materials and stores and traded goods comprises cost of purchases. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Cost of Work in progress and Finished Goods comprises direct materials, direct labour and appropriate portion of variable and fixed overhead expenditure the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average method. Cost of purchase of inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

1.10 Investment in Subsidiaries

Investment in Subsidiaries are stated at cost less provision for impairment loss, ifany. Investments are tested for impairment wherever event or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of investments exceed its recoverable amount.

Transition to IND AS

On transition to Ind AS, the Company has elected to measure its investment in Subsidiaries at its previous GAAP carrying value as on transition date and consider that value as the deemed cost of such investments except in the case of its investments in Dhunseri Infrastructure Limited which has been measured at fair value as on transition date and such value is considered as deemed cost.

1.11 Investments and Other Financial Assets (Other than Investment in Subsidiaries)

1.11.1 Classification

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

- those measured at amortized cost

The classification depends on the company''s business model for managing the financial assets and the contractual terms of cash flows.

For assets measured at fair value, gains and losses will either be recorded in the statement of profit or loss or other comprehensive income. For investments in Debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies the debt investments when and only when the business model for managing those assets changes.

1.11.2 Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in statement of profit and loss.

(a) Debt instruments

Subsequent measurement of debt instruments depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the company classifies its debt instruments:

- Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized in the statement of profit and loss when the asset is derecognized or impaired.

- Fair value through other comprehensive income (FVOCI): Assets that are held for collections of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognized in the statement of profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other income.

- Fair value through profit or loss: Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss is recognized in profit or loss and presented on net basis in the statement of profit and loss within other income/other expenses in the period in which it arises.

(b) Equity instruments

The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss.

Changes in the fair value of financial assets at fair value through profit or loss are recognized in other income/other expenses in the statement of profit and loss.

1.11.3 Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

1.11.4 De-recognition of financial assets

A financial asset is derecognized only when

- The Company has transferred the rights to receive cash flows from the financial asset or

- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

Where the company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

1.12 Fair Value of Financial Instruments

In determining the fair value of financial instruments, the Company uses a variety of method and assumptions that are based on market conditions and risk existing at each reporting date. The methods used to determine fair value includes discounted cash flow analysis and available quoted market prices. All methods of assessing fair value result in general approximation of fair value and such value may never actually be realized.

1.13 Derivatives

The Company enters into certain derivative contracts to hedge risks which are not designated as hedges. Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period and the resultant gain/ loss is recognized through profit or loss.

1.14 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

1.15 Trade Receivable

Trade receivables are amount receivable from customers for goods sold in the ordinary course of business. Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

1.16 Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

1.17 Trade Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 1-180 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

1.18 Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

1.19 Borrowing Cost

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred.

1.20 Foreign Currency Translation

(a) Functional and presentation currency

Items included in the standalone financial statements of the Company are measured using the currency of the primary economic environment in which the company operates (''the functional currency''). The standalone financial statements are presented in Indian rupee (INR), which is the Company''s functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. At the year end, monetary assets and liabilities denominated in foreign currencies are restated at the yearend exchange rates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the statement of profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/other expense.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

1.21 Employee Benefits

(i) Short-term obligations

Liabilities for short term employee benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations payable in the balance sheet.

(ii) Post - employment benefits Defined Benefit Plans

The liability or asset recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefits obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the Projected Unit Credit Method at the year end.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligations.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in Employee Benefit Expense in the statement of profit and loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the statement of changes in Equity.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the profit or loss as past service cost.

Defined Contribution Plans

Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognized as expenses for the period in which the employee has rendered the service.

(iii) Other long term employee benefit obligations

The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured annually by actuaries as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in the statement of profit and loss.

1.22 Exceptional Item

Exceptional item is an item of income or expense within profit or loss, which is of such size, nature or incidence that its disclosure is relevant to explain the performance of the Company for the period. The nature and amount of such item is disclosed separately in the statement of profit or loss.

1.23 Income Tax

The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect of situation in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. However, deferred income tax is not accounted for, if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

1.24 Provision and Contingent Liabilities

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.

Provisions are measured at the present value of management''s best estimates of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.

Contingent liability is not considered. However, a disclosure for contingent liabilities is made when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources embodying economic benefits will be required to settle or a reliable estimate of the amount cannot be made.

1.25 Non-current assets (or disposal groups) held for sale and Discontinued Operations

Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered is highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefit, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of de-recognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognized.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinate plan to dispose of such a line of business or area of operations. The results of the discontinued operations are presented separately in the statement of profit and loss.

1.26 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.

1.27 Earnings per Share

1.27.1 Basic earnings per share

Basic earnings per share is calculated by dividing:

- The profit/ loss attributable to owners of the Company.

- By the weighted average number of equity shares outstanding during the financial year.

1.27.2 Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

1.28 Rounding of Amounts

All amounts disclosed in the standalone financial statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirement of Schedule III, unless otherwise stated.

1.29 Recent Accounting Pronouncements Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards)(Amendments) Rules, 2017, notifying amendment to Ind AS 7, ''Statement of Cash Flows''. This amendment is in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of Cash Flows''. The amendment is applicable to the Company from April 1, 2017.

Amendments to Ind AS 7

The amendments to IndAS7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.

2. Critical Estimates And Judgment

The preparation of financial statements require management to make judgments, estimates and assumptions, that impact the application of accounting policies and reported amounts of assets, liabilities, income, expense and disclosure of Contingent assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses for the years presented. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each Balance Sheet date. Revision to accounting estimates are recognized in the period in which the estimates is revised and future period impacted.

The note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements:-

The areas involving critical estimates of judgments are:

Employee Benefits (Estimation of defined benefit obligation)

Post-employment benefits represents obligation that will be settled in the future and require assumptions to project benefit obligations. Post-employment benefit accounting is intended to reflect the recognition of future benefit cost over the employee''s approximate service period, based on the terms of plans and the investment and funding decisions made. The accounting requires the company to make assumptions regarding variables such as discount rate, rate of compensation increase and future mortality rates. Changes in these key assumptions can have a significant impact on the defined benefit obligations, funding requirements and benefit costs incurred. (Refer Note 38).

Estimation of expected useful lives and residual values of Property, Plants and Equipment and Investment Property

Property, plant and equipment are depreciated at historical cost using straight-line method based on the estimated useful life, taken into account at residual value. The asset''s residual value and useful life are based on the Company''s best estimates and reviewed, and adjusted if required, at each Balance Sheet date. (Refer Notes 3 and 4).

Income Taxes

The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. (Refer Note 29).

Fair value measurement of Financial Instruments

When the fair value of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value in measured using valuation techniques, including the discounted cash flow model, which involve various judgments and assumptions. (Refer Note 36).

Contingent Liability

Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcomes. The cases and claims against the Company often raise difficult and complex factual and legal issues that are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law, in the normal course of business, the Company consults with legal counsel and certain other experts on matters related to litigations. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed. (Refer Note 17).


Mar 31, 2014

(a) Basis of preparation

These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India under the historical cost convention on accrual basis except for certain tangible fixed assets which are being carried at revalued amounts. Pursuant to circular 15/2013 dated 13th September, 2013 read with circular 08/2014 dated 4th April,2014, both issued by the Ministry of Corporate Affairs, Government of India, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under section 21K3C) [Companies (Accounting Standards) Rules 2006, as amended] and other relevant provisions of the Companies Act, 1956 (the Act).

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 Act.

(b) Fixed Assets

(i) Tangible Assets

Tangible assets are stated at cost/revalued amount net of accumulated depreciation and accumulated impairment losses if any.

Expenditure incurred towards estate development during the first year is capitalised and the expenses incurred thereafter in subsequent years and cost of replanting in existing areas are charged to revenue.

(ii) Intangible Assets

Intangible assets are stated at cost net of accumulated amortisation and net of accumulated impairment losses if any.

Intangible asset is recognised if it is probable that future economic benefits will flow to the Company. Such asset is initially recognised at cost. Subsequent expenditure on such asset is recognised as expense when incurred unless it is probable that the expenditure will enhance its future economic benefits.

(c) Depreciation and Amortisation

Leasehold land is amortised under the straight line method over the period of lease. Depreciation on assets is provided using the straight-line method at the rates and in the manner specified in Schedule XIV to the Act other than the following- With effect from 1st April, 2007 computer and its accessories and mobile phones are depreciated over a period of 3 years and 2 years respectively as per straight line method. Assets costing below Rs. 5,000/- are fully depreciated in the year of addition. Intangible assets are amortised under the straight line method over the best estimate of its useful life as given below :

Computer software is amortised over 5 years.

Other Intangible assets are amortised over 10 years.

(d) Impairment

An impairment loss is recognised, where applicable, when the recoverable amount of an asset( i.e. higher of the asset''s net selling price and value in use) is less than its carrying amount.

(e) Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision is recorded to recognise, any decline, other than temporary, in the carrying value of such investment. Investment acquired in exchange of another is carried at a cost determined with reference to the fair value of investment given up.

(f) Inventories

nventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value. Provision is made for obsolescence wherever considered necessary. Cost comprises all cost of purchase, cost of conversion and other costs ncurred in bringing the inventories to their present location and condition.

(g) Employee Benefits

(i) Short term Employee Benefits:

The undiscounted amount of Short-term Employee Benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

(ii) Post Employment Benefits Plans:

Contributions under Defined Contribution Plans payable in keeping with the related schemes are recognised as expenses for the year.

For Defined Benefit Plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on straight line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of any economic benefit available in the form of refunds from the plan or reductions in future contributions to the plan.

(iii) Other Long-Term Employee Benefits (unfunded):

The cost of providing long term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(h) Foreign Currency Transactions

Transactions in foreign currency are recorded at daily exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are reinstated at the year-end at the exchange rate prevailing on the Balance Sheet date. Foreign currency non monetary items carried in terms of historical cost are reported using the exchange rate on the date of transactions. Exchange differences arising on reinstatement or settlement are recognised in the Statement of Profit and Loss except for exchange difference arising on reinstatement/settlement of long term foreign currency monetary items relating to acquisition of depreciable assets which are adjusted to the cost of the depreciable assets to be depreciated over the balance life of the assets and in other cases such differences are accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long term asset/liability with effect from 1st April, 2011.

(i) Revenue Recognition

Sales are recognised upon transfer of substantial risk and rewards of ownership in the goods to the buyers as per the terms of the contract and net of trade discounts, sales tax and excise duties, where applicable.

Other items of the revenue are accounted for on accrual basis.

(j) Other Income

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

Dividend income is recognised when the right to receive dividend is established. Other items are accounted for on accrual basis.

(k) Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets (i.e. assets that necessarily take substantial period of time to get ready for their intended use or sale) are added to the cost of those assets. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

(I) Taxes on Income

Current tax in respect of taxable income for the year is recognised based on applicable tax rates and laws.

Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable ncome and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognised only when it is virtually certain and in other cases where there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation. Current tax assets and current tax iabilities are offset when there is legally enforceable right to set off the recognised amounts and there is an intention to settle the

asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is legally enforceable right to set off assets and liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

(m) Leases

Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss.

(n) Government Grants

(i) Government grants of the nature of promoters'' contribution are credited to Capital Reserve.

(ii) Government grants related to specific fixed assets are deducted from gross values of related assets in arriving at their book values, (iii) Government grants related to revenue are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with their related costs.

(o) Provisions and Contingent Liabilities

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

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

(p) Derivative Instruments

The Company uses derivative financial instruments such as forward exchange contracts, interest rate swaps, etc. to hedge its risks associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments.

In respect of Forward Exchange Contracts entered into to hedge an existing asset/liability the premium or discount arising at the nception of such contracts is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

Derivative contracts (other than forward exchange contracts covered under Accounting Standard 11 on ''The Effects of Changes in Foreign Exchange Rates''), outstanding as at the Balance Sheet date on marked to market and losses, if any, are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the announcement of the Institute of Chartered Accountants of India on "Accounting of Derivatives" issued in March, 2008.

Any profit or loss arising on cancellation or renewal of derivative instruments are recognised as income or as expense in the Statement of Profit and Loss for the period.

(q) Use of Estimates

The preparation of financial statements requires use of estimates and assumptions to be made that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the period. Difference between actual amount and estimates are recognised in the period in which the results are known/materialized.

Nature of Security

(a) Loan Repayable on demand/Other Loans from Banks

(i) To the extent of Rs. 899.69 crores (Previous Year- Rs. 820.59 crores):

First charge by way of hypothecation ranking pari-passu over all present and future inventories, consumables, stores and spares, book debts and all other movables of Petrochem Division.

Secured/to be secured by joint mortgage on pari-passu second charge basis on all the immovable properties of the PET Plant I and II situated at JL-126, Mouza- Basudevpur, PS Durgachak & JL-145, Mouza-Paranchak, PS Bhabanipur, Haldia, Midnapore (East), West Bengal together with all the buildings and structures thereon including fixed plant and machinery and fixtures and fittings permanently fastened to the earth or fastened to anything attached to the earth.

(ii) To the extent of Rs. 8.01 crores (Previous Year- Rs. 19.80 crores):

Secured by a first hypothecation charge on the current assets of the Company''s Tea Division, viz. stock of raw materials, stock- n-process, semi finished and finished goods, stores and spares not relating to plant and machinery, bills receivable, book debts and all other movables, both present and future, wherever situated.

Secured by a first hypothecation charge on the movable fixed assets of the Tea Division of the Company and equitable mortgage over the immovable properties by deposit of title deeds of tea estates.

In addition, in the Previous Year there was a personal guarantee of the promoter director of the Company, second pari-passu charge on the immovable property of the Company viz. Land being no. IT15A within notified SEZ in JL-35, Mouza-Gangapur, KITP Basanti Highway within the jurisdiction of Kolkata Leather Complex Police Station.

(iii) To the extent of Rs. 49.00 crores (Previous Year- Rs. 95.75 crores):

Secured by way of lien against fixed deposit with bank.


Mar 31, 2013

(a) Basis of preparation

These financial statements have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act,1956 (the Act) and other relevant provisions of the Act.

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 Act.

(b) Fixed Assets

(i) Tangible Assets

Tangible assets are stated at cost/revalued amount net of accumulated depreciation and accumulated impairment losses if any.

Expenditure incurred towards estate development during the first year is capitalised and the expenses incurred thereafter in subsequent years and cost of replanting in existing areas are charged to revenue.

(ii) Intangible Assets

Intangible assets are stated at cost net of accumulated amortisation and net of accumulated impairment losses if any.

Intangible asset is recognised if it is probable that future economic benefits will flow to the Company. Such asset is initially recognised at cost. Subsequent expenditure on such asset is recognised as expense when incurred unless it is probable that the expenditure will enhance its future economic benefits.

(c) Depreciation and Amortisation

Leasehold land is amortised under the straight line method over the period of lease. Depreciation on assets is provided using the straight-line method at the rates and in the manner specified in Schedule XIV to the Act other than the following- With effect from 1st April, 2007 computer and its accessories and mobile phones are depreciated over a period of 3 years and 2 years respectively as per straight line method. Assets costing below Rs. 5,000/- each are fully depreciated in the year of addition. Intangible assets is amortised under the straight line method over the best estimate of its useful life as given below :

- Computer software is amortised over 5 years.

- Other Intangible assets are amortised over 10 years.

(d) Impairment

An impairment loss is recognised, where applicable, when the recoverable amount of an asset( i.e. higher of the asset''s net selling price and value in use) is less than its carrying amount.

(e) Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision is recorded to recognise, any decline, other than temporary, in the carrying value of such investment. Investment acquired in exchange of another is carried at a cost determined with reference to the fair value of investment given up.

(f) Inventories

Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value. Provision is made for obsolescence wherever considered necessary. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

(g) Employee Benefits

(i) Short term Employee Benefits:

The undiscounted amount of Short-term Employee Benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employee renders the service.

(ii) Post Employment Benefits Plans:

Contributions under Defined Contributions Plans payable in keeping with the related schemes are recognised as expenses for the year.

For Defined Benefits Plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on straight line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of any economic benefit available in the form of refunds from the plan or reductions in future contributions to the plan.

(iii) Other Long-Term Employee Benefits (unfunded):

The cost of providing long term employee benefits is determined using Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(h) Foreign Currency Transactions

Transactions in foreign currency are recorded at daily exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the year-end at the exchange rate prevailing on the Balance Sheet date. Foreign currency non monetary items carried in terms of historical cost are reported using the exchange rate on the date of transactions. Exchange differences arising on restatement or settlement are recognised in the Statement of Profit and Loss except for exchange difference arising on reinstatement/settlement of long term foreign currency monetary items relating to acquisition of depreciable assets which are adjusted to the cost of the depreciable assets to be depreciated over the balance life of the assets and in other cases such differences are accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long term asset/liability with effect from 01.04.2011.

(i) Revenue Recognition

Sales are recognised upon transfer of substantial risk and rewards of ownership in the goods to the buyers as per the terms of the contract and net of trade discounts,sales tax and excise duties, where applicable. Other items of the revenue are accounted for on accrual basis.

(j) Other Income

Interest income is recognised on time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognised when the right to receive dividend is established. Other items are accounted for on accrual basis.

(k) Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets (i.e assets that necessarily take substantial period or time to get ready for their intended use or sale) are added to the cost of those assets. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

(l) Taxes on Income

Current tax in respect of taxable income for the year is recognised based on applicable tax rate and laws. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognised only when it is virtually certain and in

other cases where there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation. Current tax assets and current tax liabilities are offset when there is legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is legally enforceable right to set off assets and liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

(m) Leases

Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss .

(n) Government Grants

(i) Government grants of the nature of promoters'' contribution are credited to Captital Reserve.

(ii) Government grants related to specific fixed assets are deducted from gross values of related assets in arriving at their book values.

(iii) Government grants related to revenue are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with their related costs.

(o) Provisions and Contingent Liabilities

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

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

(p) Derivative Instruments

The Company uses derivative financial instruments such as forward exchange contracts, interest rate swaps, etc. to hedge its risks associated with foreign currency fluctuations relating to the underlying transactions, highly probable forecast transactions and firm commitments.

In respect of Forward Exchange Contracts entered into to hedge an existing asset/liability the premium or discount arising at the inception of such contracts is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

Forward exchange contracts on acount of firm commitment/highly probable forecast transactions and other derivative instruments outstanding as at the year-end are marked to market and the losses, if any, are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Anouncement of the Institute of Chartered Acountants of India on ''Accounting for Derivatives'' issued in March,2008.

Any profit or loss arising on cancellation or renewal of derivative instruments are recognised as income or as expense in the Statement of Profit and Loss for the period.

(q) Use of Estimates

The preparation of financial statements requires use of estimates and assumptions to be made that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the period. Difference between actual amount and estimates are recognised in the period in which the results are known / materialized.


Mar 31, 2012

(a) Basis of preparation

These financial statements have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under Section 211 (3C) of the Companies Act,1956 and other relevant provisions of the said Act.

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.

(b) Fixed Assets

(i) Tangible Assets

Tangible assets are stated at cost/revalued amount net of accumulated depreciation and accumulated impairment losses, if any.

Expenditure incurred towards estate development during the first year is capitalized and the expenses incurred thereafter in subsequent years and cost of replanting in existing areas are charged to revenue.

(ii) Intangible Assets

Intangible assets are stated at cost net of accumulated amortization and accumulated impairment losses, if any. Intangible asset is recognized if it is probable that future economic benefits will flow to the Company. Such asset is initially recognized at cost. Subsequent expenditure on such asset is recognized as expense when incurred unless it is probable that the expenditure will enhance its future economic benefits.

(c) Depreciation and Amortization

Leasehold land is amortized over the period of lease. Depreciation on assets is provided using the straight-line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 other than the following-

With effect from 1 st April, 2007 computer and its accessories and mobile phones are depreciated over a period of 3 years and 2 years respectively as per straight line method. The changes had been made perceiving their useful life. Assets costing below Rs 5,000/- each are fully depreciated in the year of addition.

Intangible assets is amortized on straight line method over the best estimate of its useful life as given below :

- Computer software is amortized over 5 years.

- Other Intangible assets are mortised over 10 years.

(d) Impairment

An impairment loss is recognized, where applicable, when the recoverable amount of an asset (i.e. higher of the assets net selling price and value in use) is less than its carrying amount.

(e) Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision is recorded to recognize, any decline, other than temporary, in the carrying value of such investment. Investment acquired in exchange of another is carried at a cost determined with reference to the fair value of investment given up.

(f) Inventories

Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realizable value. Provision is made for obsolescence wherever considered necessary. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

(g) Employee Benefits

Contributions to Defined Contribution Provident Fund scheme (administered by Government) and Defined Contribution Pension Fund scheme (maintained by the Company with Life Insurance Corporation of India, hereinafter referred to as "LICI") are made based on the current basic salary and are recognized in the Statement of Profit and Loss on accrual basis. The Pension Fund scheme is applicable to certain employees only. Contributions to the pension funds along with interest accumulated during the service period of such employee are utilized to buy pension annuity from the LICI.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity. Based on actuarial valuation carried out at the year-end by an independent actuary applying Projected Unit Credit Method (PUCM) , the Company makes annual contributions for part of Gratuity to a trust and LICI respectively. Balance liability remains unfunded.

The obligation for employee benefits, i.e., leave encashment is unfunded and calculated by an independent actuary applying PUCM at the year-end and provided for.

Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss .Short term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related service is rendered.

(h) Foreign Currency Transactions

Transactions in foreign currency are recorded at daily exchange rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the year-end at the exchange rate prevailing on the Balance Sheet date. Foreign currency non monetary items carried in terms of historical cost are reported using the exchange rate on the date of transactions. Exchange differences arising on restatement or settlement are recognized in the Statement of Profit and Loss except for exchange difference arising on reinstatement/settlement of long term foreign currency monetary items relating to acquisition of depreciable assets which are adjusted to the cost of the depreciable assets to be depreciated over the balance life of the assets and in other cases such differences are accumulated in a Foreign currency monetary item translation difference account, and mortised over the balance period of such long term asset/liability w.e.f from 01.04.2011 onwards. (Also Refer Note-38)

The Company uses forward contracts to hedge its exposure to movements in foreign exchange rates. In respect of contracts covered by AS-11, exchange differences arising on the settlement of transactions or on reporting at year end rates, are recognized as income or as expense in the period in which they arise. The premium or discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the contract.

Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period.

The foreign exchange losses, if any, arising on mark to market of forward exchange contract entered to hedge the foreign currency risks of a firm commitment or a highly probable forecast transaction are provided for in the Statement of Profit and Loss.

(i) Revenue Recognition

Sales are recognized upon transfer of substantial risk and rewards of ownership in the goods to the buyers as per the terms of the Contract and net of trade discounts and excise duties, where applicable.

Other items of the revenue are accounted for on accrual basis.

(j) Other Income

Interest income is recognized on time proportion basis taken into account the amount outstanding and the rate applicable. Dividend income is recognized when the right to dividend is established.

Other items are accounted for on accrual basis.

(k) Borrowing Costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred.

(I) Taxes on Income

Current tax in respect of taxable income for the year is recognized based on applicable tax rate and laws.

Deferred Tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred Tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognized only when it is virtually certain and in other cases where there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

(m) Leases

Lease payments under operating lease are recognized as an expense in the Statement of Profit and Loss .

(n) Grants and Subsidies

Quality Upgraded subsidy Irrigation and Transport subsidy received during the year under Tea Board Quality Up gradation & Product Diversification, Irrigation Subsidy Schemes and Plantation Development Scheme - creation of Transport Facility are adjusted against the cost of the respective assets.

Other subsidies are accounted for on accrual basis when the Company is reasonably certain of its receipt.

(o) Provisions and Contingent Liabilities

Provisions are recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

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

(p) Use of Estimates

The preparation of financial statements requires use of estimates and assumptions to be made that affect the reported amounts of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the period. Difference between actual amount and estimates are recognized in the period in which the results are known / materialized.


Mar 31, 2011

(a) Basis for preparation of Accounts

The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable Accounting Standards notified under section 211(3C) of the Companies Act, 1956 and other relevant provisions of the said Act.

(b) Fixed Assets Amortisation and Depreciation Tangible fixed assets other than those revalued are stated at cost less accumulated depreciation. In respect of revalued assets, depreciation on the amount added on revaluation is recouped from the Revaluation Reserve to the extent available and balance is charged to Profit and Loss Account. Leasehold land is amortised over the period of lease. Depreciation on assets is provided using the straight-line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 to charge off the cost of assets over their estimated useful lives. With effect from 1st April 2007 computer and its accessories and mobile phones are written off over a period of 3 years and 2 years respectively as per straight line method. The changes have been made perceiving their useful life. Assets costing below Rs. 5,000/- each are fully depreciated in the year of addition. Expenditure incurred towards estate development during the first year is capitalised and the expenses incurred thereafter in subsequent years and cost of replanting in existing areas are charged to revenue. Intangible asset is recognised if it is probable that future economic benefits will flow to the Company. Such asset is initially recognised at cost. Subsequent expenditure on such asset is recognised as expense when incurred unless it is probable that the expenditure will enhance its future economic benefits. Depreciable amount of an intangible asset is allocated on straight line method over the best estimate of its useful life as given below: Computer software is amortised over 5 years. Other Intangible assets are amortised over 10 years. An impairment loss is recognised, where applicable, when the recoverable amount of an asset is less than its carrying amount.

(c) Investments

Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost and provision is recorded to recognise, any decline, other than temporary, in the carrying value of such investment. Investment acquired in exchange of another is carried at a cost determined with reference to the fair value of investment given up.

(d) Inventories

Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realisable value. Provision is made for obsolescence wherever considered necessary. Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

(e) Employee Benefits

Contributions to Defined Contribution Provident Fund scheme (administered by Government) and Defined Contribution Pension Fund scheme (maintained by the company with Life Insurance Corporation of India, hereinafter referred to as "LICI") are made based on the current basic salary and are recognised in the Profit and Loss account on accrual basis. The Pension Fund scheme is applicable to certain employees only. Contributions to the pension funds along with interest accumulated during the service period of such employee are utilised to buy pension annuity from the LICI. The Company also provides for retirement benefits with defined benefits in the form of Gratuity. Based on actuarial valuation carried out every year by an independent actuary,the company makes annual contributions for part of Gratuity to a trust and LICI respectively. Balance liability remains unfunded.

The obligation for employee benefits, i.e., leave encashment is unfunded and calculated by an independent actuary at the year-end and provided for. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss account. Short term employee benefits are recognised as an expense in the Profit and Loss account of the year in which the related service is rendered.

(f) Foreign currency transactions

Transactions in foreign currency are recorded at daily exchange rates prevailing on the date of the transaction. Year end balances of foreign currency transactions are translated at the year end rates. Exchange differences arising on restatement or settlement is charged to Profit and Loss account. The Company uses forward contracts to hedge its exposure to movements in foreign exchange rates. Forward Exchange Contracts are recorded at the contract rate. In respect of contracts covered by AS-11, exchange differences arising on the settlement of transactions or on reporting at the year end rates, are recognised as income or as expense in the period in which they arise. The premium or discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period. The foreign exchange losses, if any, arising on marking to market forward exchange contract entered to hedge the foreign currency risks of a firm commitment or a highly probable forecast transaction are provided for in the Profit and Loss account.

(g) Revenue recognition

Sale is recognised upon passing of title of goods to the customers and is net of trade discounts and excise duties, where applicable. Other income, together with related tax credits & expenditure, are accounted for on accrual basis.

(h) Borrowing costs

Borrowing costs attributable to qualifying assets are capitalised upto the date when such assets are ready for their intended use. Other borrowing costs are recognised as expense in the period in which they are incurred.

(i) Taxes on income

Current tax represents the amount that would be payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961. Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognised only when it is virtually certain and in other cases where there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(j) Leases

Lease payments under operating lease are recognised as an expense in the Profit and Loss account.

(k) Grants and Subsidies

Quality Upgraded subsidy, Irrigation and Transport subsidy received during the year under Tea Board Quality Upgradation & Product Diversification, Irrigation Subsidy Schemes and Plantation Development Scheme - creation of Transport Facility has been adjusted against the cost of the respective assets. Other subsidies are accounted for on accrual basis when the company is reasonably certain of its receipt.

(l) Provisions

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made.

(m) Use of Estimates

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


Mar 31, 2010

The Company has changed its name from Dhunseri Tea & Industries Limited to DHUNSERI PETROCHEM & TEA LIMITED with effect from 01-July- 2010. All the formalities/procedures with regard to the same have been complied with.

a) Basis for preparation of Accounts

The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the applicable accounting standards notified under section 211(3C) of the Companies Act’1956 and other relevant provisions of the said Act.

b) Fixed Assets Amortisation and Depreciation

Tangible fixed assets other than those revalued are stated at cost less accumulated depreciation. In respect of revalued assets, depreciation on the amount added on revaluation is recouped from the Revaluation Reserve to the extent available and balance is charged to Profit and Loss Account.

Leasehold land is amortised over the period of lease. Depreciation on assets is provided on the straight-line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. With effect from 1st April, 2007 computer and its accessories and mobile phones are written off over a period of 3 years and 2 years respectively as per straight line method. The changes have been made perceiving their useful life. Assets costing below Rs.5,000/ - each are fully depreciated in the year of addition.

Expenditure incurred towards estate development during the first year is capitalised and the expenses incurred thereafter in subsequent years and cost of replanting in existing areas are charged to revenue.

Intangible asset is recognized if it is probable that future economic benefits will flow to the Company. Such asset is initially recognized at cost. Subsequent expenditure on such asset is recognized as expense when incurred unless it is probable that the expenditure will enhance its future economic benefits. Depreciable amount of an intangible asset is allocated on straight line method over the best estimate of its useful life as given below: Computer software is amortised over 5 years. Other Intangible assets are amortised over 10 years.

An impairment loss is recognized, where applicable, when the recoverable amount of an asset is less than its carrying amount.

c) Investments

Current investments are carried at the lower of cost and fair value. Long -term investments are carried at cost and provision is recorded to recognize, any decline, other than temporary, in the carrying value of such investment. Investment acquired in exchange of another is carried at a cost determined with reference to the fair value of investment given up.

d) Inventories

Inventories are valued at the lower of cost, computed on a weighted average basis, and estimated net realizable value. Provision is made for obsolescence wherever considered necessary. Finished goods and work-in-progress include cost of conversion and other costs incurred in bringing the inventories to their present location and condition.

e) Employee Benefits

Contributions to Defined Contribution Provident Fund scheme (administered by Government) and Defined Contribution Pension Fund scheme (maintained by the company with Life Insurance Corporation of India, hereinafter LICI) are made based on the current basic salary and is recognised in the Profit and Loss account on accrual basis. The Pension Fund scheme is applicable to certain employees only.

Contributions to the pension funds along with interest accumulated during the service period of such employee are utilised to buy pension annuity from the LICI.

The Company also provides for retirement benefits with defined benefits in the form of Gratuity. Based on actuarial valuation carried out every year by an independent actuary, the company makes annual contributions for part of Gratuity to a trust and Life Insurance Corporation of India (LICI) respectively. Balance liability remains unfunded. The obligation for employee benefits, i.e., leave encashment is unfunded and calculated by an independent actuary at the year -end and provided for. Actuarial gains and losses are recognised immediately in the statement of Profit and Loss Account. Short term employee benefits are recognised as an expense in the profit and loss account of the year in which the related service is rendered.

f) Foreign currency transactions

Transactions in foreign currency are recorded at daily exchange rates prevailing on the date of the transaction. Year end balances of foreign currency transactions is translated at the year end rates. Exchange difference arising on restatement or settlement is charged to profit and loss account.

Forward Exchange Contracts are recorded at the contract rate.

Exchange differences arising on the settlement of transactions or on reporting at year end rates, are recognized as income or as expense in the period in which they arise.

The Company uses forward contracts to hedge its exposure to movements in foreign exchange rates. The premium or discount arising at the inception of a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period. The foreign exchange losses, if any, arising on marking to market forward exchange contract entered to hedge the foreign currency risks of a firm commitment or a highly probable forecast transaction are provided for in the profit and loss account.

g) Revenue recognition

Sale is recognized upon passing of title of goods to the customers and is net of trade discounts and excise duties, where applicable.

Other income, together with related tax credits & expenditure, are accounted for on accrual basis.

h) Borrowing costs

Borrowing costs attributable to qualifying assets are capitalized upto the date when such assets are ready for their intended use. Other borrowing costs are recognized as expense in the period in which they are incurred.

i) Taxes on income

Current tax represents the amount that would be payable based on computation of tax as per prevailing taxation laws under the Income Tax Act, 1961.

Deferred Tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets in respect of carried forward losses and/or unabsorbed depreciation are recognized only when it is virtually certain and in other cases where there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

j) Leases

Assets acquired on finance lease/ hire purchase are capitalized at the fair value of the leased asset. Equated monthly payments are apportioned between the finance charge and repayment of principal amount. Lease payments under operating lease are recognised as an expense in the profit and loss account on a straight line basis over the lease term.

k) Grants and Subsidies

Quality Upgraded subsidy, Irrigation and Transport subidy received during the year under Tea Board Quality Upgraderation & Product Diversifiacation, Irrigation Subsidy Schemes and Plantation Development Scheme - creation of Transport Facility has been adjusted against the cost of the respective assets.

Other subsidies are accounted for on accrual basis when the company is reasonably certain of its receipt.

l) Provisions

A provision is recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made .

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