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Accounting Policies of Dwarikesh Sugar Industries Ltd. Company

Mar 31, 2015

1. basis of preparation of financial statements

The company prepares its accounts on accrual basis following the historical cost convention and on the basis of going concern in compliance with the provisions of Section 211 (3C) [ Companies (Accounting Standards) Rules,2006, as amended] and the other relevant provisions of the Companies Act, 1956 which, as per a clarification issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12 September 2013).The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. use of estimates

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

3. fixed assets

Fixed assets are capitalised at cost of acquisition including directly attributable costs such as freight, insurance and specific installation charges for bringing the assets to their working condition for intended use.

Emergency machinery spares of irregular use and critical insurance machinery spares are capitalised as part of relevant plant & machinery.

Pre-operative expenditure incurred upto the date of commencement of commercial production is capitalized as part of fixed assets.

4. investments

Current investments are stated at lower of cost and fair value. Long-term investments are stated at cost after providing for diminution in value where in the opinion of the management such diminution is not temporary in nature.

5. depreciation/amortisation

Depreciation is provided for on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except in respect of computers (including accessories,software and peripherals), which are depreciated fully in the year of addition. Depreciation on other additions/deletions is provided pro-rata from/upto the month of addition/deletion. Emergency machinery spares of irregular use and critical insurance spares are depreciated over the balance useful life of the parent asset.

All assets costing Rs. 5,000 or below are depreciated in full by way of a one time depreciation charge.

6. inventory valuation

Inventories are valued at lower of cost or net realisable value except in case of scrap which is taken at net realizable value. Cost for various items of inventory is determined as under:

a. Raw materials (including those in transit) : Purchase cost including incidental expenses on FIFO basis.

b. Chemicals, Packing material, other Stores and spares (including those in transit)

Purchase cost including incidental expenses on weighted average basis.

c. Work-in-process : At raw material cost including proportionate production overheads.

d. Finished goods i) Sugar

At raw material cost including proportionate production overheads.

ii) Molasses : At average net realisable price.

iii) Industrial Alcohol

At value of molasses as determined above plus proportionate production overheads in distillery.

iv) Traded goods : Purchase cost including incidental expenses on FIFO basis.

v) Renewable Energy Certificates

Cost incurred by the company at the time of application and other related expenses._

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

7. revenue recognition

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

Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty involved in ascertainment of final claim.

Sale of goods

Sales includes excise duty and is accounted for upon dispatch of goods from the factory when the risks and rewards of ownership are transferred to the buyer. Gross sales and net sales are disclosed separately in Statement of Profit & Loss. Power generated at co-gen plants is primarily consumed by the manufacturing units and excess power is sold to State Electricity Board (SEB) at rate stipulated by SEB's.

Carbon Credit Entitlement (CER's)/Renewable Energy Certificates (REC's)

In process of production, the Company also generates carbon emission reduction units which may be negotiated for price in international market under Clean Development Mechanism (CDM) subject to completing certain formalities and obtaining certificate of Carbon Emission Reduction (CER) as per Kyoto Protocol. Revenue from CER is recognized as and when the CER's are certified and it is probable that the economic benefits will flow to the Company.

Entitlement to Renewable Energy Certificates owing to generation of power are recognised to the extent sold. Entitlement remaining unsold at the year end are valued at lower of cost and net realisable value.

Late Payment Surcharge

Late payment surcharge on delayed payments is recognized as income in accordance with the terms of power purchase agreement (PPA) entered into with UPPCL and its associates.

Interest

Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividends

Revenue in respect of dividends is recognised when the Shareholders rights to receive payment is established by the balance sheet date.

8. contingencies and events occuring after the balance sheet date

Events occurring after the date of the Balance sheet, which provide further evidence of conditions that existed at the Balance Sheet date or that arose subsequently, are considered upto the date of approval of accounts by the Board of Directors, where material.

9. government grants

Grants relating to specific fixed assets are deducted from the original cost of specified assets.

10. employees benefits

a) Provident Fund

Company's contribution to provident fund, being in the nature of defined contribution plan, are being charged to Statement of Profit & Loss in the period during which services are rendered by employees.

b) Gratuity & Leave Encashment

Provision for gratuity and leave encashment in the nature of defined benefit obligation is considered on the basis of Accounting Standard AS-15 on actuarial valuation using projected unit credit method. The discount rate and other financial assumptions are based on the parameters defined in the accounting standard.

c) Other Short term benefits

Expenses in respect of other short term benefits are recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

11. EXCISE DUTY

Excise duty in respect of finished goods (including molasses) is accounted for at the end of period and is included in the value of closing stock as per 'Guidance Note on Accounting Treatment of Excise Duty' issued by the Institute of Chartered Accountants of India.

12. INTANGIBLE ASSETS

Items of expenditure that meet the recognition criteria as mentioned in Accounting Standard are classified as intangible assets and are amortized over the period of economic benefits not exceeding ten years.

13. BORROWING COSTS

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

14. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are accounted for at the exchange rate prevailing on the date of transaction. Exchange differences arising on account of forward contracts are dealt with in the Statement of Profit & Loss over the period of the contracts. Monetary assets and liabilities relating to foreign currency transactions are converted at the year-end rate or at forward contract rate, as applicable. Gains or losses arising on cross currency forex swap transactions are accounted for over the period of contract.

15. TAXES ON INCOME

Tax on income for the current period is determined on the basis of taxable income & tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on expected outcome of assessments/ appeals.

Deferred Tax is recognized on timing differences between the accounting income and the taxable income for the year and reversal/adjustment of earlier year deferred tax assets / liabilities which are quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets on account of unabsorbed losses and depreciation are recognized and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed at each Balance Sheet date.

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

16. IMPAIRMENT OF ASSETS

Where the recoverable amount of the fixed asset is lower than its carrying amount, a provision is made for the impairment loss. Post impairment, depreciation is provided for on the revised carrying value of the asset over its remaining useful life. The impairment loss recognized in prior accounting period is reversed if there is a favorable change in the estimate of recoverable amount.

17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the financial statements. A provision is recognized when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

18. EARNING PER SHARE (EPS)

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

19. LEASES

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight- line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.

20. SEGMENT ACCOUNTING & REPORTING

Identification of segments

The company's operating business are organized and managed separately according to the nature of products manufactured and services provided , with each segment representing a strategic business unit that offers different products.

Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

Unallocated Items

Unallocable assets & liabilities represent the assets & liabilities not allocable to any segment as identified as per the Accounting Standard.

Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

21. cash & cash equivalents

Cash & Cash Equivalents includes cash in hand, demand deposit with banks, other short-term highly liquid investment with original maturities of three months or less.


Sep 30, 2013

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The company prepares its accounts on accrual basis following the historical cost convention and on the basis of going concern in compliance with the provisions of Section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956 which, as per a clarifcation issued by the Ministry of Corporate Affairs, continue to apply under section 133 of the Companies Act 2013 (which has superseded section 211(3C) of the Companies Act 1956 w.e.f 12 September 2013).

2. USE OF ESTIMATES

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

3. FIXED ASSETS

Fixed assets are capitalised at cost of acquisition including directly attributable costs such as freight, insurance and specifc installation charges for bringing the assets to their working condition for intended use.

Emergency machinery spares of irregular use and critical insurance machinery spares are capitalised as part of relevant plant & machinery.

Pre-operative expenditure incurred upto the date of commencement of commercial production is capitalized as part of fxed assets.

4. INVESTMENTS

Current investments are stated at lower of cost and fair value. Long-term investments are stated at cost after providing for diminution in value where in the opinion of the management such diminution is not temporary in nature.

5. DEPRECIATION

Depreciation is provided for on Straight Line Method at the rates and in the manner specifed in Schedule XIV of the Companies Act, 1956 except in respect of computers (including accessories and peripherals), which are depreciated fully in the year of addition. Depreciation on other additions/deletions is provided pro-rata from/ upto the month of addition/deletion.

Emergency machinery spares of irregular use and critical insurance spares are depreciated over the balance useful life of the parent asset.

All assets costing Rs.5,000 or below are depreciated in full by way of a onetime depreciation charge.

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

7. REVENUE RECOGNITION

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

Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty involved in ascertainment of fnal claim.

Sale of goods

Sales includes excise duty and is accounted for upon dispatch of goods from the factory when the risks and rewards of ownership are transferred to the buyer. Gross sales and net sales are disclosed separately in Statement of Proft & Loss.

Carbon Credit Entitlement (CERs)

In process of production, the Company also generates carbon emission reduction units which may be negotiated for price in international market under Clean Development Mechanism (CDM) subject to completing certain formalities and obtaining certifcate of Carbon Emission Reduction (CER) as per Kyoto Protocol. Revenue from CER is recognized as and when the CER''s are certifed and it is probable that the economic benefts will fow to the Company.

Late Payment Surcharge

Late payment surcharge on delayed payments is recognized as income in accordance with the terms of power purchase agreement (PPA) entered into with UPPCL and its associates.

Interest

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

Dividends

Revenue in respect of dividends is recognised when the Shareholders rights to receive payment is established by the balance sheet date.

8. CONTINGENCIES AND EVENTS OCCURING AFTER THE BALANCE SHEET DATE

Events occurring after the date of the Balance sheet, which provide further evidence of conditions that existed at the Balance Sheet date or that arose subsequently, are considered upto the date of approval of accounts by the Board of Directors, where material.

9. GOVERNMENT GRANTS

Grants relating to specifc fxed assets are deducted from the original cost of specifed assets.

10. EMPLOYEES BENEFITS

a) Provident Fund

Company''s contribution to provident fund, being in the nature of defned contribution plan, are being charged to Statement of Proft & Loss in the period during which services are rendered by employees.

b) Gratuity & Leave Encashment

Provision for gratuity and leave encashment in the nature of defned beneft obligation is considered on the basis of Accounting Standard AS-15 on actuarial valuation using projected unit credit method. The discount rate and other fnancial assumptions are based on the parameters defned in the accounting standard.

c) Other Short term benefts

Expenses in respect of other short term benefts are recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

11. EXCISE DUTY

Excise duty in respect of fnished goods (including molasses) is accounted for at the end of period and is included in the value of closing stock as per ''Guidance Note on Accounting Treatment of Excise Duty'' issued by the Institute of Chartered Accountants of India.

12. INTANGIBLE ASSETS

Items of expenditure that meet the recognition criteria as mentioned in Accounting Standard are classifed as intangible assets and are amortized over the period of economic benefts not exceeding ten years.

13. BORROWING COSTS

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

14. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are accounted for at the exchange rate prevailing on the date of transaction. Exchange differences arising on account of forward contracts are dealt with in the Statement of Proft & Loss over the period of the contracts. Monetary assets and liabilities relating to foreign currency transactions are converted at the year end rate or at forward contract rate, as applicable. Gains or losses arising on cross currency forex swap transactions are accounted for over the period of contract.

15. TAXES ON INCOME

Tax on income for the current period is determined on the basis of taxable income & tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on expected outcome of assessments/ appeals.

Deferred Tax is recognized on timing differences between the accounting income and the taxable income for the year and reversal/adjustment of earlier year deferred tax assets / liabilities which are quantifed using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets on account of unabsorbed losses and depreciation are recognized and carried forward to the extent that there is a virtual certainty that suffcient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed at each Balance Sheet date.

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

16. IMPAIRMENT OF ASSETS

Where the recoverable amount of the fxed asset is lower than its carrying amount, a provision is made for the impairment loss. Post impairment, depreciation is provided for on the revised carrying value of the asset over its remaining useful life. The impairment loss recognized in prior accounting period is reversed if there is a favourable change in the estimate of recoverable amount.

17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the fnancial statements. A provision is recognized when an enterprise has a present obligation as a result of past event(s) and it is probable that an outfow of resources embodying economic benefts will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

18. EARNING PER SHARE (EPS)

Basic earnings per share are calculated by dividing the net proft or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting year.

For the purpose of calculating diluted earnings per share, the net proft or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

19. LEASES

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefts of ownership of the leased item, are classifed as operating leases. Operating lease payments are recognized as an expense in the Statement of Proft and Loss on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fxed assets. Lease income is recognised in the Statement of Proft and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Statement of Proft and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Proft and Loss.

20. SEGMENT ACCOUNTING & REPORTING

Identifcation of segments

The company''s operating business are organized and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products.

Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

Unallocated Items

Unallocable assets & liabilities represent the assets & liabilities not allocable to any segment as identifed as per the Accounting Standard.

Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the fnancial statements of the company as a whole.

21. CASH & CASH EQUIVALENTS

Cash & Cash Equivalents comprise cash at bank and cash/cheque in hand and term deposits with banks.

22. Trade Receivable/Payables and Loans and Advances balances are subject to confrmation and reconciliation.

23. Aggrieved by the Order of the Directorate of Sugar, Government of India, converting un-lifted quantity of non- levy sugar of 1,77,403 quintals into levy, the company fled a writ petition with the Hon''ble Allahabad High Court. Hon''ble High Court upheld the Order of the Directorate of Sugar. The company fled SLP with the Hon''ble Supreme Court of India and the order of the Directorate of Sugar in the interim was stayed. On 31.10.2013, vide its order No. 3-1/2012-E&V the Directorateof Sugar rescinded its earlier orders converting undelivered/undispatched non- levy sugar into levy sugar. Due to this development, the company does not have any liability on this account. Pursuant to the said development, on 19.11.2013, the company fled an application for withdrawal of the SLP and the SLP would therefore be, dismissed as withdrawn.

24. The Company has accounted for late payment surcharge on dues recoverable from UPPCL, on account of power supply from its co-generation units, of Rs. 3,51,23,452 during the year (clubbed with other operating revenues) and Rs. 4,52,31,715 upto the end of previous year. The company had approached the State Electricity Regulatory Commission to formally stake its claim. The petition has since been withdrawn.In view of the withdrawal of petition, the outstanding late payment surcharge amounting to Rs. 8,03,55,167 including Rs. 3,51,23,452 for the current year has been written off as bad debt.

25. As per the Accounting Standard AS-28 ''Impairment of Assets'', the company has tested impairment to identify the impairment loss, if any. Based on the assessment of the existing assets, the realizable amount for all the units is higher than the carrying values of such units. Accordingly no impairment is required to be recognized during the period.

26. The company has not taken/given any assets on fnance/ operating lease. Accordingly, Accounting Standard AS- 19 on leases is not applicable. The company has taken various offce/ residential premises and offce equipments on cancellable leases which are renewable on expiry of the respective lease period.

27. Derivative instruments and foreign currency exposures:

(a) There is no foreign currency exposure outstanding as at the Balance Sheet date (Previous year Rs. Nil).

(b) Particulars of un-hedged foreign currency exposures as at the Balance Sheet date are Rs. NIL (Previous year Rs. Nil).

28. There are no present obligations requiring provision in accordance with the guiding principles as enunciated in Accounting Standard AS-29 as it is not probable that an outfow of resources embodying economic beneft will be required.

29. Figures for the previous year have been regrouped / reclassifed, wherever necessary.


Sep 30, 2012

1. (a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The company prepares its accounts on accrual basis following the historical cost convention and on the basis of going concern in compliance with the provisions of Section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956.

(b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS

During the year ended 31st March, 2012 the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company for preparation and presentation of financial statements. The adoption of revised schedule VI does not impact recognition and measurement principles followed for preparation of these financial statements. However it has significant impact on presentation and disclosures made in the financial statements.

2. USE OF ESTIMATES

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

3. FIXED ASSETS

Fixed assets are capitalised at cost of acquisition including directly attributable costs such as freight, insurance and specific installation charges for bringing the assets to their working condition for intended use.

Emergency machinery spares of irregular use and critical insurance machinery spares are capitalised as part of relevant plant & machinery.

Pre-operative expenditure incurred upto the date of commencement of commercial production is capitalized as part of fixed assets.

4. INVESTMENTS

Current investments are stated at lower of cost and fair value. Long-term investments are stated at cost after providing for diminution in value where in the opinion of the management such diminution is not temporary in nature.

5. DEPRECIATION

Depreciation is provided for on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956 except in respect of computers (including accessories and peripherals), which are depreciated fully in the year of addition. Depreciation on other additions/deletions is provided pro-rata from/ upto the month of addition/deletion.

Emergency machinery spares of irregular use and critical insurance spares are depreciated over the balance useful life of the parent asset.

All assets costing Rs. 5,000 or below are depreciated in full by way of a one time depreciation charge.

6. INVENTORY VALUATION

Inventories are valued at lower of cost or net realisable value except in case of scrap which is taken at net realizable value. Cost for various items of inventory is determined as under:

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

7. REVENUE RECOGNITION

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

Sale of goods

Sales includes excise duty and is accounted for upon dispatch of goods from the factory. Gross sales and net sales are disclosed separately in Statement of Profit & Loss.

Carbon Credit Entitlement (CERs)

Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty involved in ascertainment of final claim.

In process of production, the Company also generates carbon emission reduction units which may be negotiated for price in international market under Clean Development Mechanism (CDM) subject to completing certain formalities and obtaining certificate of Carbon Emission Reduction (CER) as per Kyoto Protocol. Revenue from CER is recognized as and when the CER''s are certified and it is probable that the economic benefits will flow to the Company.

Late Payment Surcharge

Late payment surcharge on delayed payments is recognized as income in accordance with the terms of power purchase agreement (PPA) entered into with UPPCL and its associates.

Interest

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

Dividends

Revenue in respect of dividends is recognised when the Shareholders rights to receive payment is established by the balance sheet date.

8. CONTINGENCIES AND EVENTS OCCURING AFTER THE BALANCE SHEET DATE

Events occurring after the date of the Balance sheet, which provide further evidence of conditions that existed at the Balance Sheet date or that arose subsequently, are considered upto the date of approval of accounts by the Board of Directors, where material.

9. GOVERNMENT GRANTS

Grants relating to specific fixed assets are deducted from the original cost of specified assets.

10. EMPLOYEES BENEFITS

a) Provident Fund

Company''s contribution to provident fund, being in the nature of defined contribution plan, are being charged to Statement of Profit & Loss in the period during which services are rendered by employees.

b) Gratuity & Leave Encashment

Provision for gratuity and leave encashment in the nature of defined benefit obligation is considered on the basis of Accounting Standard AS-15 on actuarial valuation using projected unit credit method. The discount rate and other financial assumptions are based on the parameters defined in the accounting standard.

c) Other Short term benefits

Expenses in respect of other short term benefits are recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

11. EXCISE DUTY

Excise duty in respect of finished goods (including molasses) is accounted for at the end of period and is included in the value of closing stock as per ''Guidance Note on Accounting Treatment of Excise Duty'' issued by the Institute of Chartered Accountants of India.

12. INTANGIBLE ASSETS

Items of expenditure that meet the recognition criteria as mentioned in Accounting Standard are classified as intangible assets and are amortized over the period of economic benefits not exceeding ten years.

13. BORROWING COSTS

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

14. FOREIGN CURRENCY TRANSACTIONS

Transactions denominated in foreign currency are accounted for at the exchange rate prevailing on the date of transaction. Exchange differences arising on account of forward contracts are dealt with in the Statement of Profit & Loss over the period of the contracts. Monetary assets and liabilities relating to foreign currency transactions are converted at the year end rate or at forward contract rate, as applicable. Gains or losses arising on cross currency forex swap transactions are accounted for over the period of contract.

15. TAXES ON INCOME

Tax on income for the current period is determined on the basis of taxable income & tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on expected outcome of assessments/ appeals.

Deferred Tax is recognized on timing differences between the accounting income and the taxable income for the year and reversal/adjustment of earlier year deferred tax assets / liabilities which are quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets on account of unabsorbed losses and depreciation are recognized and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed at each Balance Sheet date.

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

16. IMPAIRMENT OF ASSETS

Where the recoverable amount of the fixed asset is lower than its carrying amount, a provision is made for the impairment loss. Post impairment, depreciation is provided for on the revised carrying value of the asset over its remaining useful life. The impairment loss recognized in prior accounting period is reversed if there is a favourable change in the estimate of recoverable amount.

17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the financial statements. A provision is recognized when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.

18. EARNING PER SHARE (EPS)

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

19. LEASES

Where the Company is the lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

Where the Company is the lessor

Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including depreciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss.

20. SEGMENT ACCOUNTING & REPORTING Identification of segments

The company''s operating business are organized and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products.

Allocation of common costs

Common allocable costs are allocated to each segment on reasonable basis.

Unallocated Items

Unallocable assets & liabilities represents the assets & liabilities not allocable to any segment as identified as per the Accounting Standard.

Segment Policies

The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.

21 CASH & CASH EQUIVALENTS

Cash & Cash Equivalents comprise cash at bank and cash/cheque in hand and term deposits with banks.


Sep 30, 2009

1. BASIS OF PRESENTATION:

The company prepares its accounts on accrual basis following the historical cost convention and on the basis of going concern in compliance with the provisions of Section 211 (3C) and the other relevant provisions of the Companies Act, 1956.

2. FIXED ASSETS:

Fixed assets are capitalised at cost of acquisition including directly attributable costs such as freight, insurance and specific installation charges for bringing the assets to their working condition for intended use.

Emergency machinery spares of irregular use and critical insurance machinery spares are capitalised as part of plant & machinery.

Pre-operative expenditure incurred upto the date of commencement of commercial production is capitalized as part of fixed assets.

3. INVESTMENTS:

Long-term investments are stated at cost after providing for diminution in value where in the opinion of the management such diminution is not temporary in nature.

4. DEPRECIATION:

Depreciation is provided for on Straight Line Method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1 956 except in respect of computers (including accessories and peripherals), which are depreciated fully in the year of addition. Depreciation on other additions/deletions is provided pro-rata from/upto the month of addition/deletion.

Depreciation on emergency machinery spares of irregular use and critical insurance spares are depreciated over the balance useful life of the parent asset.

5. INVENTORY VALUATION:

Inventories are valued at lower of cost or net realizable value except in case of scrap which is taken at net realizable value. Cost for various items of inventory is determined as under:

a. Raw materials (including those in transit)

Purchase cost including state taxes and incidental expenses on FIFO basis.

b. Chemicals, Packing material, other Stores and spares (including those in transit) Purchase cost including state taxes and incidental expenses on weighted average basis.

c. Work-in-process

At raw material cost including proportionate production overheads.

d. Finished goods

i) Sugar

At raw material cost including proportionate production overheads.

ii) Molasses

At average net realisable price.

iii) Industrial Alcohol

At value of molasses as determined above plus proportionate production overheads in distillery.

iv) Traded goods

Purchase cost including incidental expenses on FIFO basis.

6. REVENUE RECOGNITION-.

Sales includes excise duty and is accounted for upon despatch of goods from the factory. Gross sales and net sales are disclosed separately in Profit & Loss Account. Income from carbon credit is accounted for in respect of projects registered with UNFCCC only on issuance of Carbon Emission Reductions (CERs). These CERs are valued based on the prevailing rates as on the balance sheet date. Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty involved in ascertainment of final claim.

7. CONTINGENCIES AND EVENTS OCCURRING AFTER THE BALANCE SHEET DATE:

Events occurring after the date of the Balance Sheet, which provide further evidence of conditions that existed at the Balance Sheet date or that arose subsequently, are considered upto the date of approval of accounts by the Board of Directors, where material.

8. GOVERNMENT GRANTS:

Grants relating to specific fixed assets are deducted from the original cost of specified assets.

9. RETIREMENT BENEFITS:

Provident Fund

Companys contribution to Provident Fund being in the nature of defined contribution plan are being charged to profit & loss account.

Gratuity & Leave Encashment

Provision for gratuity and leave encashment in the nature of defined benefit obligation is considered on the basis of revised AS-15 on actuarial valuation. The discount rate and other financial assumptions are based on the parameters defined in the accounting standard.

10. EXCISE DUTY:

Excise duty in respect of finished goods (including molasses) is accounted for at the end of period and is included in the value of closing stock as per Guidance Note on Accounting Treatment of Excise Duty issued by the Institute of Chartered Accountants of India.

11. INTANGIBLE ASSETS:

Items of expenditure that meet the recognition criteria as mentioned in Accounting Standard are classified as intangible assets and are amortized over the period of economic benefits.

12. BORROWING COSTS:

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

13. FOREIGN CURRENCY TRANSACTIONS:

Exchange differences arising on account of forward contract are dealt with in the profit & loss account over the period of the contracts. Foreign currency loan is converted at the year end rate or at forward contract rate, as applicable. Gains or losses arising on cross currency forex swap transactions are accounted for over the period of contract.

14. TAXES ON INCOME:

Tax oh income for the current period is determined on the basis of taxable income & tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on expected outcome of assessments/ appeals.

Deferred Tax is recognized on timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets on account of unabsorbed losses and depreciation are recognized and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

15. IMPAIRMENT:

Where the recoverable amount of the fixed asset is lower than its carrying amount, a provision is made for the impairment loss. Post impairment, depreciation is provided for on the revised carrying value of the asset over its remaining useful life. The impairment loss recognized in prior accounting period is reversed if there is a change in the estimate of recoverable amount.

16. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:

Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the financial statements. A provision is recognized when an enterprise has a present obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation.



 
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