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Accounting Policies of Dhunseri Petrochem Ltd. Company

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.

 
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