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Accounting Policies of Gallantt Ispat Ltd. Company

Mar 31, 2023

Significant Accounting Policies

2.01 Property, Plant and Equipment (PPE)

Land, Buildings, Plant and Equipment, Furniture and
Fixtures and Vehicles held for use in the production
or supply of goods or services, or for administrative
purposes are stated at cost less accumulated
depreciation and accumulated impairment losses.
Freehold land is not depreciated. Cost includes
purchase cost of materials, including import duties
and non-refundable taxes, any directly attributable
costs of bringing an asset to the location and
condition of its intended use and borrowing costs
capitalised in accordance with the Company''s
accounting policy.

Properties in the course of construction for
production or supply of goods or services or for
administrative purposes are carried at cost, less any
recognised impairment losses

Depreciation is recognised so as to write off the cost
of assets (other than freehold land and properties
under construction) less their residual values over

the useful lives, using the straight-line method.
Depreciation of assets commences when the assets
are ready for their intended use. The estimated
useful lives, residual values and depreciation
method are reviewed at the end of each reporting
period, with the effect of any changes is accounted
as change in estimate on a prospective basis.

Estimated useful lives of the assets are as follows:

Buildings : 3 to 60 years

Plant and equipment : 10 to 40 years

Electrical Installation and equipments : 10 years

Furniture and Fixtures : 10 years

Office Equipments : 5 to 10 years

Computers : 3 years

Motor Vehicles : 8 to 10 years

Rolls : 1 year

An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset. Any gain or loss arising
on the disposal or retirement of an item of property,
plant and equipment is recognised in profit and
loss.

The Company has elected to continue with the
carrying value of all of its property, plant and
equipment recognised as of April 1, 2016 measured
as per the previous GAAP and use that carrying
value as its deemed cost as of the transition date.

2.02 Intangible Assets

Intangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and accumulated
impairment (ifany) losses. Amortisation is recognised
at straight-line basis over their estimated useful
lives. The estimated useful life and amortisation
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis.

Estimated useful lives of the assets are as follows:

Brand Value : 10 years

An intangible asset is derecognised upon disposal
or when no future economic benefits are expected
to arise from the continued use of the asset. Any
gain or loss arising on the disposal or retirement
of intangible assets is recognised in profit and
loss.

The Company has elected to continue with
the carrying value of all of its intangible assets
recognised as of April 1, 2016 measured as per the
previous GAAP and use that carrying value as its
deemed cost as of the transition date.

2.03 Impairment of tangible and intangible assets
other than goodwill

At the end of each reporting period, the Company
reviews the carrying amounts of its tangible
and intangible assets (Other than goodwill) to
determine whether there is any indication that
those assets have suffered any impairment loss. If
any such indication exists, the recoverable amount
of the asset is estimated in order to determine the
extent of the impairment loss (if any). When it is
not possible to estimate the recoverable amount
of an individual asset, the Company estimates the
recoverable amount of the cash generating unit to
which the asset belongs.

Intangible assets with indefinite useful lives and
intangible assets not yet available for use are tested
for impairment at least annually, and whenever
there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less
costs of disposal and value in use. In assessing value
in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and risks specific to the asset for
which the estimates of future cash flows have not
been adjusted.

If the recoverable amount of an asset or cash
generating unit is estimated to be less than the
carrying amount, the carrying amount of the asset
or cash generating unit is reduced to its recoverable
amount. An impairment loss is recognised
immediately in profit and loss.

When an impairment loss subsequently reverses, the
carrying value of the asset or cash generating unit is
increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss
been recognised for the asset or cash generating
unit in prior years. Any reversal of an impairment
loss is recognised immediately in profit and loss.

2.04 Investments in Subsidiaries and Associates

Investments in subsidiaries and associates are
carried at cost less accumulated impairment losses,

if any. Where an indication of impairment exists,
the carrying amount of the investment is assessed
and written down immediately to its recoverable
amount. On disposal of investments in subsidiaries
and associates the difference between net disposal
proceeds and the carrying amounts are recognized
in the Statement of Profit and Loss.

Upon first-time adoption of Ind AS, the Company has
elected to measure its investments in subsidiaries
and associates at the Previous GAAP carrying
amount as its deemed cost on the date of transition
to Ind AS i.e., April 01, 2016.

2.05 Inventories

Inventories which comprise raw materials, work-in¬
progress and finished products are valued at lower
of cost and net realisable value after providing for
obsolescence and other losses, where considered
necessary. Cost includes purchase price, non
refundable taxes and duties and other directly
attributable costs incurred in bringing the goods
to the point of sale. Work-in-progress and finished
goods include appropriate proportion of overheads
and, where applicable.

Stores and spares are valued at cost comprising of
purchase price, non refundable taxes and duties and
other directly attributable costs after providing for
obsolescence and other losses, where considered
necessary.

Value of inventories are generally ascertained on
the "FIFO (First in First out)" basis.

2.06 Cash and Cash equivalents

Cash and cash equivalents in the balance sheet
comprise cash on hand, bank balances and short¬
term deposits with an original maturity of three
months or less, which are subject to an insignificant
risk of changes in value.

For the purpose of the Statement of cash flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts as they are considered an integral part of
the Company''s cash management.

2.07 Financial Assets

i) Initial recognition and measurement

Financial assets are recognised when the
Company becomes a party to the contractual
provisions of the instrument.

On initial recognition, a financial asset is

recognised at fair value, in case of financial
assets which are recognised at fair value
through profit and loss (FVTPL), its transaction
cost is recognised in the statement of profit
and loss. In other cases, the transaction cost
is attributed to the acquisition value of the
financial asset.

ii) Subsequent Measurement

Financial assets are subsequently / classified
and measured at:

• amortised cost

• fair value through profit and loss (FVTPL)

• fair value through other comprehensive
income (FVOCI)

Financial assets are not reclassified subsequent
to their recognition, except if and in the period
the Company changes its business model for
managing financial assets.

iii) Trade Receivables and Loans

Trade receivables are initially recognised at fair
value. Subsequently, these assets are held at
amortised cost, using the effective interest rate
(EIR) method net of any expected credit losses.
The EIR is the rate that discounts estimated
future cash income through the expected life
of financial instrument.

iv) Debt Instruments

(a) Debt instruments are initially measured
at amortised cost, fair value through
other comprehensive income (''FVOCI'') or
fair value through profit or loss (''FVTPL'')
till derecognition on the basis of (i) the
Company''s business model for managing
the financial assets and (ii) the contractual
cash flow characteristics of the financial
asset.

(b) Measured at amortised cost: Financial
assets that are held within a business model
whose objective is to hold financial assets
in order to collect contractual cash flows
that are solely payments of principal and
interest, are subsequently measured at
amortised cost using the effective interest
rate (''EIR'') method less impairment, if any.
The amortisation of EIR and loss arising
from impairment, if any is recognised in the
Statement of Profit and Loss.

(c) Financial assets at fair value through
other comprehensive income (FVTOCI):
A financial asset is measured at FVTOCI if
it is held within a business model whose
objective is achieved by both collecting
contractual cash flows and selling financial
assets and the contractual terms of the
financial asset give rise on specified dates
to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.

(d) Measured at fair value through profit or
loss: A financial asset not classified as either
amortised cost or FVOCI, is classified as
FVTPL. Such financial assets are measured
at fair value with all changes in fair value,
including interest income and dividend
income if any, recognised as ''Other Income''
in the Statement of Profit and Loss.

v) Equity Instruments

All investments in equity instruments classified
under financial assets are initially measured
at fair value, the Company may, on initial
recognition, irrevocably elect to measure the
same either at FVOCI or FVTPL.

The Company makes such election on an
instrument-by-instrument basis. Fair value
changes on an equity instrument is recognised
as other income in the Statement of Profit
and Loss unless the Company has elected
to measure such instrument at FVOCI. Fair
value changes excluding dividends, on an
equity instrument measured at FVOCI are
recognized in OCI. Amounts recognised in
OCI are not subsequently reclassified to the
Statement of Profit and Loss. Dividend income
on the investments in equity instruments are
recognised as ''other income'' in the Statement
of Profit and Loss.

vi) Derecognition

The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers
the contractual rights to receive the cash flows
from the asset.

vii) Impairment of Financial asset

Expected credit losses are recognized for
all financial assets subsequent to initial
recognition other than financial assets in FVTPL
category.

For financial assets other than trade receivables,
as per Ind AS 109, the Company recognises 12
months expected credit losses for all originated
or acquired financial assets if at the reporting
date the credit risk of the financial asset has
not increased significantly since its initial
recognition. The expected credit losses are
measured as lifetime expected credit losses
if the credit risk on financial asset increases
significantly since its initial recognition. The
Company''s trade receivables do not contain
significant financing component and loss
allowance on trade receivables is measured at
an amount equal to life time expected losses
i.e. expected cash shortfall.

The impairment losses and reversals are
recognised in Statement of Profit and Loss.

2.08 Financial Liabilities

i) Initial recognition and measurement

Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. Financial liabilities
are initially measured at the amortised cost
unless at initial recognition, they are classified
as fair value through profit and loss. In case of
trade payables, they are initially recognised at
fair value and subsequently, these liabilities
are held at amortised cost, using the effective
interest method.

ii) Subsequent Measurement

Financial liabilities are subsequently measured
at amortised cost using the EIR method.
Financial liabilities carried at fair value through
profit or loss are measured at fair value with
all changes in fair value recognised in the
Statement of Profit and Loss.

iii) Derecognition

A financial liability is derecognised when
the obligation specified in the contract is
discharged, cancelled or expires.

2.09 Offseting of Financial instruments

Financial assets and financial liabilities are offset
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle
the liabilities simultaneously.

2.10 Derivative financial instruments

The Company uses derivative financial instruments,
such as forward currency contracts and interest
rate swaps, to hedge its foreign currency risks and
interest rate risks respectively. Such derivative
financial instruments are initially recognised at fair
value on the date on which a derivative contract is
entered into and are subsequently re-measured at
fair value at the end of each reporting period. The
accounting for subsequent changes in fair value
depends on whether the derivative is designated as
a hedging instrument, and if so, the nature of item
being hedged and the type of hedge relationship
designated.

Derivatives are carried as financial assets when the
fair value is positive and as financial liabilities when
the fair value is negative.


Mar 31, 2018

Note - 01 General information

1.01 Corporate information

Gallant Metal Limited ("the Company") is a public limited company domiciled in India incorporated under the provisions of the Company’s Act. The registered office of the company is located in Kolkata, West Bengal, India. The Company is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is engaged in manufacturing of Steel and Steel products with power plant and having its manufacturing unit at Village Samakhyali, Dist Kutch in the State of Gujarat.

1.02 Basis of preparation of financial statement

These financial statement have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention (except for certain financial instruments that are measured at fair values at the end of each reporting period) on accrual basis to comply in all material aspects with the Indian Accounting Standards (herein after referred to as the ''Ind AS'') as notified by Ministry of Corporate Affairs pursuant to section 133 of the Company’s Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment rules, 2016.

These financial statements for the year ended March 31, 2018 are the first the Company has prepared under Ind AS. For all periods up to and including the year ended March 31, 2017 , the Company prepared its financial statements in accordance with the accounting standards notified under the Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ''Previous GAAP'') used for its statutory reporting requirement in India immediately before adopting Ind AS. The financial statements for the year ended March 31, 2017 and the opening Balance Sheet as at April 01,

2016 have been restated in accordance with Ind AS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on the Company''s Equity, Total Comprehensive Income is provided in note 41.

The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at April 01, 2016 being the ''date of transition to Ind AS''. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as

12 months for the purpose of current or noncurrent classification of assets and liabilities.

The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorized for issue on May 21, 2018.

1.03 Basis of measurement

These financial statements are prepared under the historical cost convention otherwise indicated.

1.04 Functional and presentation currency

The functional currency and presentation currency of the Company is Indian Rupee ("^") which is the currency of the primary economic environment in which the Company operate. All amounts have been rounded to the nearest lakhs, unless otherwise indicated.

1.05 Key estimates and assumptions

The preparation of separate financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:

- Useful lives of Property, plant and equipment (Refer Note 2.01)

- Assets and obligations relating to employee benefits (Refer Note 2.15)

- Valuation and measurement of income taxes and deferred taxes (Refer Note 2.16)

- Provisions and Contingencies (Refer Note 2.11)

1.06 Measurement of fair values

The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.

The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Note -02 Significant Accounting Policies

2.01 Property, Plant and Equipment (PPE)

Land, Buildings, Plant and Equipment, Furniture and Fixtures and Vehicles held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated. Cost includes purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs of bringing an asset to the location and condition of its intended use and borrowing costs capitalized in accordance with the Company''s accounting policy.

Properties in the course of construction for production or supply of goods or services or for administrative purposes are carried at cost, less any recognzed impairment losses.

Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over the useful lives, using the straight-line method. Depreciation of assets commences when the assets are ready for their intended use. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes is accounted as change in estimate on a prospective basis.

Estimated useful lives of the assets are as follows:

Buildings : 3 to 60 years

Plant and equipment : 10 to 25 years

Furniture and Fixtures : 10 years

Office Equipment’s : 5 to 10 years

Computers : 3 years

Motor Vehicles : 8 to 10 years

Rolls : 1year

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognized in profit and loss.

The Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as of April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

2.02 Intangible Assets

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment (if any) losses. Amortization is recognized at straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible asset is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is recognized in profit and loss.

The Company has elected to continue with the carrying value of all of its intangible assets recognized as of April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

2.03 Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets (Other than goodwill) to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and risks specific to the asset for which the estimates of future cash flows have not be adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in profit and loss.

When an impairment loss subsequently reverses, the carrying value of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash generating unit in prior years. Any reversal of an impairment loss is recognized immediately in profit and loss.

2.04 Investments in Subsidiaries and Associates

Investments in subsidiaries and associates are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries and associates the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.

Upon first-time adoption of Ind AS, the Company has elected to measure its investments in subsidiaries and associates at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., April 01, 2016.

2.05 Inventories

Raw materials, work-in-progress and finished products are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, nonrefundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.

Stores and spares are valued at cost comprising of purchase price, nonrefundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.

Value of inventories are generally ascertained on the "FIFO (First in First out)" basis.

2.06 Cash and Cash equivalents

Cash and cash equivalents in the balance sheet comprise cash on hand, bank balances and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

2.07 Financial Assets

i) Initial recognition and measurement

Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset is recognized at fair value, in case of Financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction cost is recognized in the statement of profit and loss. In other cases, the transaction cost is attributed to the acquisition value of the financial asset.

ii) Subsequent Measurement

Financial assets are subsequently / classified and measured at:

amortized cost fair value through profit and loss (FVTPL)

fair value through other comprehensive income (FVOCI)

Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.

iii) Trade Receivables and Loans

Trade receivables are initially recognized at fair value. Subsequently, these assets are held at amortized cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.

iv) Debt Instruments

(a) Debt instruments are initially measured at amortized cost, fair value through other comprehensive income (''FVOCI'') or fair value through profit or loss (''FVTPL'') till derecognition on the basis of (i) the Company''s business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.

(b) Measured at amortized cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortized cost using the effective interest rate (''EIR'') method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.

(c) Financial assets at fair value through other comprehensive income (FVTOCI): A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(d) Measured at fair value through profit or loss: A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as ''Other Income'' in the Statement of Profit and Loss.

v) Equity Instruments

All investments in equity instruments classified under financial assets are initially measured at fair value, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

The Company makes such election on an instrument-by-instrument basis.Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognized as ''other income'' in the Statement of Profit and Loss.

vi) Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

vii) Impairment of Financial asset

Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.

For financial assets other than trade receivables, as per Ind AS 109, the Company recognizes 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Company''s trade receivables do not contain significant financing component and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall.

The impairment losses and reversals are recognized in Statement of Profit and Loss.

2.08 Financial Liabilities

i) Initial recognition and measurement

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortized cost unless at initial recognition, they are classified as fair value through profit and loss. In case of trade payables, they are initially recognized at fair value and subsequently, these liabilities are held at amortized cost, using the effective interest method.

ii) Subsequent Measurement

Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.

iii) Derecognition

A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.

2.09 Offsetting of Financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

2.10 Derivative financial instruments

The Company uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and interest rate risks respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of item being hedged and the type of hedge relationship designated.

Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

2.11 Provisions and Contingent Liabilities

Provisions are recognized when the Company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. The expenses relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognized as finance cost.

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 a reliable estimate of the amount cannot be made.

A contingent asset is not recognized but disclosed in the financial statements where an inflow of economic benefit is probable.

Commitments includes the amount of purchase orders (net of advance) issued to parties for acquisition of assets.

Provisions, contingent assets, contingent liabilities and commitments are reviewed at each balance sheet date.

2.12 Revenue recognition

Revenue is measured at fair value of the consideration received or receivable and is reduced by rebates, allowances and taxes and duties collected on behalf of the government. The Company has assumed the recovery of excise duty flows to the Company on its own account, for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Accordingly revenue includes excise duty for the year ended March 31, 2017 and for the period from April 1, 2017 to June 30,2017. From July 1, 2017 the revenue excludes Goods and Service Tax (GST) collected from customers.

i) Sale of goods

Sales are recognized when goods are supplied and significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of contract and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Dividend and Interest income

Dividend income is recognized when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the asset''s net carrying amount on initial recognition.

iii) Insurance Claims

Insurance claims are accounted for on acceptance and when there is a reasonable certainty of receiving the same, on ground of prudence.

2.13 Foreign Currencies Transactions

The financial statements of the Company are presented in Indian Rupee (INR), which is Company''s functional and presentation currency.

Transactions in currencies other than entity''s functional currency (foreign currency) are recorded at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies (other than derivative contracts) remaining unsettled at the end of the each reporting period are premeasured at the rates of exchange prevailing at that date. Non-monetary items carried at fair value that at denominated in foreign currency are retranslated at the rate prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange difference on monetary items are recognized in profit and loss in the period.

2.14 Borrowing costs

Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate applicable to the respective borrowing. Borrowing costs that are directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of that asset till the date it is put to use. Other borrowing costs are recognized as an expense in the period in which they are incurred.

2.15 Employee Benefits

i) Short-term benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, performance incentives, etc., are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the employee renders the related service.

ii) Post Employment Benefit

(a) Defined Contribution Plans

Payments made to a defined contribution plan such as Provident Fund and Family Pension maintained with Regional Provident Fund Office are charged as an expense in the Statement of Profit and Loss as they fall due.

(b) Defined Benefit Plans

The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, after discounting the same. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. Re-measurement of the net defined benefit liability, which comprise actuarial gains and losses are recognized immediately in Other Comprehensive Income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in Statement of Profit and Loss.

2.16 Taxes on Income

i) Current tax

Current tax is payable based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the Standalone statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

ii) Deferred tax

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying value of assets and liabilities in the Standalone financial statements and the corresponding tax bases used in the computation of taxable profits and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are only recognized on deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.

iii) Minimum alternate tax

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is recognized as a deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the Company will pay normal income tax during the specified period and it is probable that future economic benefit associated with it will flow to the Company.

iv) Current and deferred tax are recognized in profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

2.17 Earning Per Share

Basic Earnings per share is calculated by dividing the net profit / (loss) for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit / (loss) for the period attributable to the equity shareholders

and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.


Mar 31, 2014

(I) Basis of Preparation

The financial statements of the comapny have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard ) Rule, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, sales tax but exclusive of sales return and turnover discounts.

(b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than ''Freehold Load'' where no depreciation is charged ). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments

Investments are classified into current and Long -term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

(VII) Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

(VIII) Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories

Inventories of Raw Materials, work -in -Progress, Stores and Spares, Goods in transit, Finished Goods are stated ''at cost or net realisable value, whichever is lower''.Cost comprises all cost of purchase, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First -in -First -out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts, except the contracts which are long -term foreign currancy monetary items, are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII) Taxation

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act, 1961, Deffered tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the" ICAI", the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV) Employee Benefits

(a) The company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. The company has no obligation, other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.using projected unit credit method.Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation.These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI) Segment Reporting

(a) 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.

(b) Inter -division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2013

(I) Basis of Preparation

The financial statements of the comapny have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard) Rule'' 2006 (as amended) and the relevant provisions of the Companies Act'' 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty'' sales tax but exclusive of sales return and turnover discounts.

(b) Insurance'' duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than ''Freehold Load'' where no depreciation is charged ). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring'' erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are

shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act'' 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments

Investments are classified into current and Long-term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision'' if any'' for diminution in value considered to be other than temporary in nature.

(VII) Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount

(VIII)Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories

Inventories of Raw Materials'' work-in-Progress'' Stores and Spares'' Goods in transit'' Finished Goods are stated ''at cost or net realisable value'' whichever is lower''. Cost comprises all cost of purchasse'' cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First-in-First-out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts'' except the contracts which are long -term foreign currancy monetary items'' are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII)Taxation

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act'' 1961'' Deffered tax resulting from "timing difference" between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the" ICAI"'' the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV)Employee Benefits

(a) The company contributes to the employee''s provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. The company has no obligation'' other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.using projected unit credit method.Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions'' Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event'' that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation.These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI)Segment Reporting

(a) 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.

(b) Inter-division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2012

(I) Basis of Preparation

The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statement to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard ) Rule, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statement have been prepared on an accural basis and under the historical cost convention.

(II) Revenue Recognition :

(a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, sales tax but exclusive of sales return and turnover discounts.

(b) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

(III) Use of estimates

The preparation of financial statements in confirmity with generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Differences between actual results and estimates are recognised in the period in which the results are known / materialised.

(IV) Fixed Assets:

(a) Fixed Assets are stated at cost of acquisition/installation less accumulated depreciation (other than 'Freehold Loand' where no depreciation is charged). The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

(b) All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under "Capital Work in Progress. The advance given for acquiring fixed assets is also shown along with the "Capital Work in Progress".

(V) Depreciation and Amortisation:

(a) Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

(b) Preliminary expenses are amortized over a period of 5 years from the date of transaction.

(VI) Investments:

Investments are classified into current and Long -term investment. Current Investments are stated at lower of cost and fair market value. Long Term Investments are stated at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

(VII) Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Statement of Profit and Loss in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

(VIII)Earning per share :

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

(IX) Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

(X) Valuation of Inventories :

Inventories of Raw Materials, work-in-Progress, Stores and Spares, Goods in transit, Finished Goods are stated 'at cost or net realisable value, whichever is lower'.Cost comprises all cost of purchasse, cost of conversion and other cost incurred in bringing the inventories to their present location and condition. The excise duty in respect of closing inventory of finished goods is included as part of finished goods. Cost formula used are First -in -First -out.

(XI) Excise Duty & Custom Duty

Excise duty in respect of finished goods lying in the factory premises and Custom duty on goods lying in customs bonded warehouse are provided for and included in the valuation of inventory.

(XII) Foreign Currency Transaction :

(a) All transactions in foreign currency are recorded at the rate of exchange prevailing on the date when the relevant transaction take place.

(b) Monetary items denominated in foreign currency at the year end are restated at the year end rates. Any income or expenses on account of exchange differences either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

(c) The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expenses / income over the life of the contract. Exchange differences on such contracts, except the contracts which are long -term foreign currancy monetary items, are recognized in the statement of profit and loss in the period in which the exchange rate change. Any gain / loss arising on forward contracts which relate to acquisition of fixed assets is recognized to the carrying cost of such assets.

(XIII)Taxation :

(a) Provision for current tax is made after taking in to consideration benefits admissible under the provisions of the Income Tax Act, 1961, Deffered tax resulting from "timing difference"between taxable and accounting income is accounted for using the tax rates and law that are enacted or substantively enected as on the balance sheet date. Defferd tax assets is recognised and carried forward only to the extent that there is virtual certainty that the assets will be realised in future.

(b) Minimum Alternate Tax (MAT) is recognised as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the company recognises MAT credit as an asset in accordance with the Guidance Note issued by the"ICAI", the said asset is created by way of credit to the Profit & Loss Account and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement"asset at each reporting date and writes down the asset to the extent company does not have convincing evidence that it will pay normal tax during the specified period.

(XIV) Employee Benefits:

(a) The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Statement of Profit & Loss. The company has no obligation, other than the contribution payable to the provident fund.

(b) The company operates defined benefit plan for gratuity for its employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end. using projected unit credit method. Actuarial gain and losses is recognized in the period in which they occur in the statement of profit and loss.

(XV) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when there is a present obligation as a result of past event, that probably requires an outflow of resources and a reliable estimate can be made to settle the amount of obligation. These are reviewed at each year end and adjusted to reflect the best current estimates. Contingent liabilities are not recognised but disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

(XVI) Segment Reporting

(a) 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.

(b) Inter-division transfer of power generated by Power Plant unit is transferred to other unit at approximate prevailing market price at which other unit purchase power from Paschim Gujarat Vij. Company Limited (A Government of Gujarat Enterprise).


Mar 31, 2011

A. Basis of Preparation of Financial Statement:

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis.

B. Revenue Recognition:

a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, Sales Tax but exclusive of Sales Returns and turnover discount.

b) Revenue from Sale of electrical energy is accounted for at the rates in accordance with the provision of Power Sale Agreement executed between the Company and M/s Gujrat Urza Vikash Nigam Limited (undertaking of Government of Gujarat).

c) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets:

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress:

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure and incidental expenditures incurred during the implementation of the project are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation:

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

E. Preliminary Expenses:

Preliminary expenses are amortized over a period of 5 years from the date of transaction.

F. Investments:

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair market value.

G. Impairment:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earning per share:

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost:

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories:

a) Raw materials, Stores & Spares and material in transit are valued at lower of cost and net realizable value. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads upto the stage of completion.

c) Finished Goods are valued at lower of cost and net realizable value.

K. Inter-Division Transfers:

Inter-division transfer of Power generated by Power Plant Unit is transferred to other unit at approximate prevailing market price. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing & others. This accounting treatment has no impact on the profits of the company.

Inter- divisional transfer of materials to fixed assets or vice versa is at prevailing market price.

L. Excise Duty, Sales Tax & Custom Duty:

i) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head "Loans and Advances".

ii) The Company has the remission scheme on Sales Tax charged on sales for a period of ten years or total accumulated sales tax collected and refund of VAT claimed on material purchased upto Rs. 91.09 crore, whichever is earlier starting from the financial year 2005-06.

iii) Excise duty on closing stock of Finished Goods is considered for valuation of stocks of finished goods lying in the factories as on the Balance Sheet date.

iv) In terms of scheme provided by the Department of Central Excise, the Company has got the remission of excise duty by way of refund of the excise duty paid and the same is credited to the Profit & Loss Account as income of the Company.

v) Provision is made in the books of account for Custom Duty on Imported Items on arrival and lying in bonded warehouse and awaiting clearance.

M. Taxation:

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets arE recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

N. Foreign Currency Transaction:

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement/ conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

b) The company uses foreign currency option/forward contract to hedge for managing its risk associated with foreign currency fluctuations relating to certain firm commitments. Transactions covered by option/forward contracts are settled on future dates are being adjusted on the date of settlement. Premium paid for hedging the Foreign Exchange Option contract is recognized as expense over the life of the contract.

0. Employee Benefits:

The company contributes to the employee's provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard -15.

P. Prior Period Items:

Prior period items are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

0. Contingent Liabilities:

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.


Mar 31, 2010

A. Basis of Preparation of Financial Statement

a) The financial statements have been prepared in compliance with all material aspects of the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI) and relevant provision of the Companies Act, 1956 and in accordance with the generally accepted accounting principles in India.

b) The financial statements are based on historical cost and are prepared on accrual basis.

B. Revenue Recognition

a) Sale of goods is recognized when they are invoiced to customers and are inclusive of excise duty, Sales Tax but exclusive of Sales Returns and turnover discount.

b) Revenue from Sale of electrical energy is accounted for at the rates in accordance with the provision of Power Sale Agreement executed between the Company and M/s Gujrat Urza Vikash Nigam Limited (undertaking of Government of Gujarat).

c) Insurance, duty drawback and other claims are accounted for on receipt basis or as acknowledged by the appropriate authorities.

C. Fixed Assets

a) Fixed Assets are stated at their original cost of acquisition/installation less accumulated depreciation. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use.

b) Capital work in progress

All expenses incurred for acquiring, erecting and commissioning of the fixed assets including interest on loan utilized for meeting capital expenditure are shown under capital work in progress. The advance given for acquiring fixed assets is also shown along with capital work in progress.

D. Depreciation

Depreciation on fixed assets has been provided on straight line method (SLM) at the rates and manner prescribed under Schedule XIV to the Companies Act, 1956 of India.

E. Preliminary Expenses

Preliminary expenses are amortized over a period of 5 years from the date of transaction.

F. Investments

a) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

b) Current Investments are stated at lower of cost and fair value.

G. Impairment

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value being higher of value in use and net selling price. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is impaired. The impairment loss recognized in prior accounting period is reversed if there has been an improvement in recoverable amount.

H. Earning per share

Basic and Diluted Earnings per shares are calculated by dividing the net profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

I. Borrowing Cost

Borrowing Costs that are directly attributable to the acquisition or construction of Qualifying Assets are capitalized as part of cost of such assets. Other Borrowing Costs are charged as expense in the year in which these are incurred.

J. Valuation of Inventories

a) Raw materials, Stores & Spares and material in transit are valued at lower of cost and net realizable value. Costs of Inventories are ascertained on FIFO basis.

b) Work-in-progress is valued at cost which includes cost of inputs and other overheads upto the stage of completion.

c) Finished Goods are valued at lower of cost* and net realizable value.

* In the current year, Cost of finished goods does not include interest on borrowed fund charged to revenue, in conformity with the Accounting Standard – 2, whereas in the preceding years the same was included in cost of the Finished goods for the purpose of the valuation of inventories.

K. Inter-Division Transfers

Inter-division transfer of Power generated by Power Plant Unit is transferred to other unit at approximate prevailing market price. The value of such inter-divisional transfer is netted off from sales and operational income and expenses under materials, manufacturing & others. This accounting treatment has no impact on the profits of the company.

Inter- divisional transfer of materials to fixed assets or vice versa is at prevailing market price.

L. Excise Duty, Sales Tax & Custom Duty

i) The CENVAT credit available on purchase of raw materials and other eligible inputs is adjusted against excise duty payable on clearance of goods produced. The unadjusted CENVAT credit is shown under the head “Loans and Advances”.

ii) The Company has the remission scheme on Sales Tax charged on sales for a period of ten years or total accumulated sales tax collected and refund of VAT claimed on material purchased upto Rs. 91.09 crore, whichever is earlier starting from the financial year 2005-06.

iii) Excise duty on closing stock of Finished Goods is considered for valuation of stocks of finished goods lying in the factories as on the Balance Sheet date.

iv) In terms of scheme provided by the Department of Central Excise, the Company has got the remission of excise duty by way of refund of the excise duty paid and the same is credited to the Profit & Loss Account as income of the Company.

v) Provision is made in the books of account for Custom Duty on Imported Items on arrival and lying in bonded warehouse and awaiting clearance.

M. Taxation

a) Provision for current income tax is determined on the basis of the amount of tax payable on taxable Income for the year.

b) In accordance with Accounting Standard 22 on “Accounting for Taxes on Income” issued by the Institute of Chartered Accountants of India, deferred tax liabilities and assets are recognized at substantively enacted tax rate, subject to the consideration of prudence, on timing difference, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. At each balance sheet date the Company re-assesses unrecognized deferred tax assets.

N. Foreign Currency Transaction

a) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transaction is translated at the year end rates. Exchange differences arising on settlement / conversion of monetary items are recognized as income or expense in the year in which they arise except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

b) The company uses foreign currency option to hedge to manage its risk associated with foreign currency fluctuations relating to certain firm commitments. Transactions covered by option contracts are settled on future dates are being adjusted on the date of settlement. Premium paid for hedging the Foreign Exchange Option contract is recognized as expense over the life of the contract.

O. Employee Benefits

The company contributes to the employees provident fund maintained under the Employees Provident Fund Scheme of the Central Government and the same is charged to the Profit & Loss Account. Provision for gratuity is made on the basis of actuarial valuation at the year end in conformity with the Accounting Standard - 15.

P. Prior Period Items

Prior period items are included in respective heads of accounts and material items are disclosed by way of notes on accounts.

Q. Contingent Liabilities

Contingent Liabilities are determined on the basis of available information and which are not provided for is disclosed by way of notes to the Accounts.

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