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Accounting Policies of Ellora Paper Mills Ltd. Company

Mar 31, 2014

A. Basis of preparation of financial statements

The Financial Statements are prepared on accrual basis under the historical cost convention, in conformity in all material aspects in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affects the reported amount of assets and 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 recognized in the period in which the results are known/materialised.

c. Inventories

(i) Raw material, stores & spare parts, chemicals, coal and rice husk are stated at cost of acquisition (including freight etc.) or market value whichever is lower.

(ii) Finished Goods are valued at cost or market value whichever is lower.

(iii) Work in Process is stated at cost.

d. Fixed Assets

i) Fixed Assets (other than land) are stated at cost less accumulated depreciation. Plant & Machinery are stated at book value, cost comprises of purchase price and freight, duties, levies and all other incidentals attributable to bringing the asset to its working condition for its intended use.

ii) The carrying amounts are reviewed at each balance sheet date when required to assess whether they are required to be recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.

iii) All project related expenditures viz. civil work, machine under erection, construction and erection materials, pre-operative expenditure incidental/attributable to construction of project, borrowing cost incurred prior to the date of commencement of commercial operation and trial run expenditure etc. are shown under Capital Work-in-Progress.

e. Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation / depletion. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

f. Impairment of Assets

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

g. Depreciation:

(i) The Company''s practice is to provide the depreciation of Building, Plant & Machinery and Water Works Distribution System added prior to 2nd April, 1987 on Straight Line Method pursuant to circular No.1.1/1986-CLV No.14(50) 84 L.L.VI dated 21st May, 1986 issued by the Department of Company Affairs and in accordance with the Provisions of Section 205(2) (b) of the Companies Act, 1956 at the rates corresponding to the rates applicable under Income Tax Rules in force from time to time.

(ii) On all the additions made after 1st April 1987 towards Building, Plant & Machinery and Water Distribution System, the depreciation is provided on Straight Line Method as per the rates specified, and in the manner specified in Schedule XIV of the Companies Act, 1956. Pursuant to revision in the rates vide notification No.GSR 756 (E) dated 16.12.93 issued by the Ministry of Law, Justice and Company affairs depreciation has been calculated at revised rates on all additions made after the said date.

(iii) On remaining assets, the depreciation is provided on Written Down Value method as per the rates specified and in the manner specified in Schedule XIV of the Companies Act, 1956.

h. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.

i. ) Revenue in relation to sale of goods is recognised on transfer of significant risks and rewards associated with ownership of the goods to the buyer for consideration.

ii. ) Interest income is recognised on the basis of its accrual as per the terms of the agreement.

iii. ) Dividend income is recognised when the right to receive the same is established.

iv. ) Other revenue is recognised when it is earned and no significant uncertainty exists as to its ultimate collection.

i. Investments

Current Investments are valued at lower of their cost and Net Realisable Value. Non-current investments are carried at cost. Provision for diminution in value of non-current investments is made only if such a decline is other than temporary in nature.

j. Employee Benefits

i. ) Short term employee benefits are recognized as an expenses at the undiscounted amount in the profit and loss/ preoperative expenses of the period in which related service is rendered.

ii. ) Post employment and long term employee benefits are recognized as an expense in the profit and loss/ pre- operative expenses for the period in which the employees has rendered services and other statutory requirements are met. The expense will be recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains or losses in respect of post employment and other long term benefits are charged to the profit and loss account/ pre-operative expenses. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The Scheme is unfunded.

iii. ) Classification of provision for employee benefits into current and non-current is made on the basis of actuarial valuation report.

k. Provision for Current and Deferred Tax

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

l. Foreign Exchange Transaction

i. The transactions of foreign exchange are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

ii. Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii. Non monetary foreign currency items are carried at cost.

m. Excise Duty and Sales Tax / Value Added Tax

Excise duty and Sales Tax / Value Added Tax in respect of goods manufactured by the Company and according to the method of accounting consistently followed, is accounted at the time of removal of goods from the factory for sale and captive consumption. This accounting practice, however, has no impact on the profit for the year.

n. Borrowing Costs

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

o. Prior Period And Extraordinary Items

Prior period and extraordinary items and changes in accounting policies having material impact on the financial affairs of the company are disclosed.

p. Provision, Contingent Liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

q. Segment Reporting

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

The Company operates in two segments, viz. Manufacturing of Paper and Rice Milling. The Company has chosen these business segments as its primary segments considering the dominant source and nature of risks and returns and the internal organization and management structure.

(i) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment.

(ii) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocated expenditure".

(iii) Income, which relates to the Company, as a whole and not allocable to segments is included in "Unallocated Corporate Income".

(iv) Segment Assets and Liabilities include those directly identifiable with the respective segments. Unallocated corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise investments, unallocated loans and advances and, deferred revenue expenditure.


Mar 31, 2013

Note -1 : Corporate Information

Ellora Paper Mills Limited is a public Company domiciled in India and incorporated under the provision of the Companies Act, 1956. Its registered office is situated at 379, Pandit Jawaharlal Nehru Marg, Ashoka Vault Building, Sitabuldi, Nagpur- 440 012. Ellora Paper Mills Limited is engaged in the business of manufacture of paper products.

a. Basis of preparation of financial statements

The Financial Statements are prepared on accrual basis under the historical cost convention, in conformity in all material aspects in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of financial statements requires estimates and assumptions to be made that affects the reported amount of assets and 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 recognized in the period in which the results are known/materialised.

c. Inventories

(i) Raw material, stores & spare parts, chemicals, coal and rice husk are stated at cost of acquisition (including freight etc.) or market value whichever is lower.

(ii) Finished Goods are valued at cost or market value whichever is lower. (iii) Work in Process is stated at cost.

d. Fixed Assets

i) Fixed Assets (other than land) are stated at cost less accumulated depreciation. Plant & Machinery are stated at book value, cost comprises of purchase price and freight, duties, levies and all other incidentals attributable to bringing the asset to its working condition for its intended use.

ii) The carrying amounts are reviewed at each balance sheet date when required to assess whether they are required to be recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.

iii) All project related expenditures viz. civil work, machine under erection, construction and erection materials, pre-operative expenditure incidental/attributable to construction of project, borrowing cost incurred prior to the date of commencement of commercial operation and trial run expenditure etc. are shown under Capital Work-in-Progress.

e. Intangible Assets

Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortisation / depletion. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

f. Impairment of Assets

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

g. Depreciation:

(i) The Company''s practice is to provide the depreciation of Building, Plant & Machinery and Water Works Distribution System added prior to 2nd April, 1987 on Straight Line Method pursuant to circular No.1.1/1986-CLV No.14(50) 84 L.L.VI dated 21st May, 1986 issued by the Department of Company Affairs and in accordance with the Provisions of Section 205(2) (b) of the Companies Act, 1956 at the rates corresponding to the rates applicable under Income Tax Rules in force from time to time.

(ii) On all the additions made after 1st April 1987 towards Building, Plant & Machinery and Water Distribution System, the depreciation is provided on Straight Line Method as per the rates specified, and in the manner specified in Schedule XIV of the Companies Act, 1956. Pursuant to revision in the rates vide notification No.GSR 756 (E) dated 16.12.93 issued by the Ministry of Law, Justice and Company affairs depreciation has been calculated at revised rates on all additions made after the said date.

(iii) On remaining assets, the depreciation is provided on Written Down Value method as per the rates specified and in the manner specified in Schedule XIV of the Companies Act, 1956.

h. Revenue Recognition

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection.

i.) Revenue in relation to sale of goods is recognised on transfer of significant risks and rewards associated with ownership of the goods to the buyer for consideration.

ii.) Interest income is recognised on the basis of its accrual as per the terms of the agreement.

iii.) Dividend income is recognised when the right to receive the same is established.

iv.) Other revenue is recognised when it is earned and no significant uncertainty exists as to its ultimate collection.

i. Investments

Current Investments are valued at lower of their cost and Net Realisable Value. Non-current investments are carried at cost. Provision for diminution in value of non-current investments is made only if such a decline is other than temporary in nature.

j. Employee Benefits

i.) Short term employee benefits are recognized as an expenses at the undiscounted amount in the profit and loss/ preoperative expenses of the period in which related service is rendered.

ii.) Post employment and long term employee benefits are recognized as an expense in the profit and loss/ pre- operative expenses for the period in which the employees has rendered services and other statutory requirements are met. The expense will be recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains or losses in respect of post employment and other long term benefits are charged to the profit and loss account/ pre-operative expenses. The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The Scheme is unfunded.

iii.) Classification of provision for employee benefits into current and non-current is made on the basis of actuarial valuation report.

k. Provision for Current and Deferred Tax

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

I. Foreign Exchange Transaction

i. The transactions of foreign exchange are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction.

ii. Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii. Non monetary foreign currency items are carried at cost.

m. Excise Duty and Sales Tax / Value Added Tax

Excise duty and Sales Tax / Value Added Tax in respect of goods manufactured by the Company and according to the method of accounting consistently followed, is accounted at the time of removal of goods from the factory for sale and captive consumption. This accounting practice, however, has no impact on the profit for the year.

n. Borrowing Costs

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

o. Prior Period And Extraordinary Items

Prior period and extraordinary items and changes in accounting policies having material impact on the financial affairs of the company are disclosed.

p. Provision, Contingent Liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past event and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in the notes to accounts. Contingent Assets are neither recognised nor disclosed in the financial statements.

q. Segment Reporting

Segment accounting policies are in line with the accounting policies of the Company. However, the following specific accounting policies have been followed for segment reporting:

The Company operates in two segments, viz. Manufacturing of Paper and Rice Milling. The Company has chosen these business segments as its primary segments considering the dominant source and nature of risks and returns and the internal organization and management structure.

(i) Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment.

(ii) Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Result. The expenses which relate to the Company as a whole and not allocable to segments, are included under "Unallocated expenditure".

(iii) Income, which relates to the Company, as a whole and not allocable to segments is included in

"Unallocated Corporate Income".

(iv) Segment Assets and Liabilities include those directly Identifiable with the respective segments.

Unallocated corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise investments, unallocated loans and advances and, deferred revenue expenditure.

(B) Terms & conditions

(i) The company received an interest free sales tax loan of X 176.16 lacs from State Industrial and Investment Corporation of Maharashtra Limited during the period from 27.01.1981 to 15.03.1994.The loan is repayable after 18 years in three equal annual installments from the date of disbursement. All the outstanding installments of the said loan have been discounted @ 11 % p.a. The difference between the present value as of 31 st March 2013 and 31st March 2012 is debited to Profit and loss account and shown as interest expense of Rs. 2.14 lacs.

(ii) Sales tax amounting to Rs. 257.87 lacs was availed by the company during the period from April 2004 to April 2009 as Deferral. This liability is payable in installments over the period of time spanning from April-2011 to April-2024. In order to present a realistic picture of the liability, the said liability had been reviewed and discounted at 11% per annum. The difference between the present value as of 31st March 2013 and 31st March 2012 is debited to Profit and loss account and shown as interest expense of Rs. 10.41 lacs.

(C) Maturity profile and rate of interest-Rate of Interest 11%

* The Company has not received information from creditors regarding their status under the Micro, Small and Medium Enterprises Development Act,2006 and hence disclosure as required under the Companies Act, 1956 relating to amounts unpaid as at the end of the period together with interest paid/payable thereon has not been given.

"During the year ended on 31st March 2013, the Company has unpaid sale tax liabilities of * 40.94 lacs and excise

duty liability of 72.13 Lacs

** Includes statutory dues, security deposit employees dues and expenses accrued but not yet due


Mar 31, 2010

1. RECOGNITION OF INCOME AND EXPENDITURE

The Company generally follows the mercantile system of Accounting and recognises income and expenditure on accrual basis except those with significance uncertainties.

2. SALES

Sales are invoiced on the despatch of goods to the Customers. Sales include Excise Duty and exclude Sales Tax.

3. FIXEDASSETS

(i) Fixed Assets (otherthan land) are stated at cost less accumulated depreciation. Plant &

Machinery are stated at book value, cost comprises of purchase price and freight, duties, levies and all other incidentals attributable to bringing the asset to its working condition for its intended use. (ii) The carrying amounts are reviewed at each balance sheet date when required to assess whether they are required to be recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount.

4. DEPRECIATION ON FIXEDASSETS

(i) The Companys practice is to provide the depreciation of Building, Plant & Machinery and Water Works Distribution System added prior to 2n" April, 1987 on Straight Line Method pursuant to circular No.1,1/1986-CLV No.14(50) 84 L.L.VI dated 21 * May, 1986 issued by the Department of Company Affairs and in accordance with the Provisions of Section 205(2) (b) of the Companies Act, 19o6 at the rates corresponding to the rates applicable under Income Tax Rules in force from time to time.

(ii) On all the additions made after 1" April 1987 towards Building, Plant & Machinery and Water Distribution System, the depreciation is provided on Straight Line Method as per the rates specified, and in the manner specified in Schedule XIV of the Companies Act, 1956. Pursuant to revision in the rates vide notification No.GSR 756 (E) dated 16.12.93 issued by the Ministry of Law, Justice and Company affairs depreciation has been calculated at revised rates on all additions made after the said date.

(iii) On remaining assets, the depreciation is provided on Written Down Value method as per the rates specified and in the manner specified in Schedule XIVoftheCompaniesAct, 1956.

5. INVESTMENT

Investments are stated at cost of acquisition.

Earnings from investments, where appropriate are accused or taken into renewe in full on declaration on receipts.

6. VALUATION OF INVENTORIES

(i) Raw material, stores & spare parts, chemicals, coal and rice husk are stated at cost of acquisition (including freight etc) or market value whichever is lower. (ii) Finished Goods are valued at cost or market value whichever is lower. (iii) Work in Process is stated at cost.

7. EMPLOYEE RETIREMENT BENEFITS

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets agratuity on departure at 15 day salary (last drawn salary) for each completed year of service. The Scheme is unfunded.

Thefollowing table summarises the components of net benefit expense recognized in the profit and loss account and the amounts recognized in the balance sheet..

8. ACCOUNTING OF MODVAT CREDIT

Modvat credit is accounted only when utilised for clearance of excisable goods during the year.

9. FOREIGN EXCHANGE TRANSACTIONS

The transactions of foreign exchange are recorded at the exchange rate prevailing on the date of the transaction.

10. LEASE RENT

In respect of leased assets acquired prior to 01.04.2001, rerital and all other expenses are treated as revenue expenses. The Company has not taken / given any asset on lease on or after 01.04.2001.

11. PRIOR PERIOD AND EXTRAORDINARY ITEMS:

Prior period and extraordinary items and changes in accounting policies having material impact on the financial affairs of the company are disclosed.

12. MATERIAL EVENTS:

Material events occurring after Balance Sheet date, if any, are taken into cognisance. Subsequent to Balance Sheet date, a major fire broke in the factory premises at Tumsar. The loss of stock, building, machinery etc. due to fire is estimated at 11.00 Crores. All these assets are covered by an appropriate Insurance Policy. The survey relating to the above stated fire is in process after completion of which the exact loss would be determined.

13. PROVISIONS AND CONTIGNMENT LIABILITIES:

The company recognizes a provisions where there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation as a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation as a present obligation and the likelyhood of outflow of resources is remote, no provision or disclosure for contingent liability is made.

14. TAXATION

(a) Current Tax is determined as the amount of tax payable with respect to the taxable income for the current year.

(b) Deferred Tax, with respect to deferred tax assets /liabilities, is recognized at the current rate of tax, on the basis of timing differences between taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

15. BORROWING COSTS

Interest and other borrowing costs on specific borrowings relating to qualifying assets are capitalized. Other interest and borrowing costs are charged to revenue.

16 RELATED PARTY INFORMATION (i) Relationships

(a) Key Management Personnel

Shri C.P.Goenka, Managing Director Shri SudhirGoenka, Executive Director

(b) Relatives & enterprises of key management personnel where transactions have taken place

Smt.KusumGoenka Smt.Archana Goenka Smt. SavitriDeviGoenka ShriAshokDalmia AshokDalmiaHUF Shri Parikshit Dalmia Sudhir Goenka HUF Ms.Twisha Goenka Ms. Megha Goenka Shri.Shashank Goenka Shri Sandeep Goenka

(c) Enterprises where control exists Ellora Plantations Limited Brajeshwari Paper Traders


Mar 31, 2009

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