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Accounting Policies of Ganesha Ecosphere Ltd. Company

Mar 31, 2014

1.1 Basis of Preparation of Financial Statements:

The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

Financial statements are prepared in accordance with the generally accepted accounting principles, as adopted consistently, and are based on historical cost and items of income and expenditure are recognized on accrual basis.

All the assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criterion set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

1.2 Use of Estimates:

The preparation of financial statements requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that may affect the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Revenue Recognition:

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

Sale of goods is recognized on transfer of significant risks and rewards of ownership which is generally on the dispatch of goods. Revenue from operations is disclosed inclusive of excise duty and net of sales tax / VAT, discounts and returns.

Benefits on account of entitlement to import goods free of duty, Duty Draw back Scheme, Focus Product Scheme, etc. are accounted for in the year of exports made and are included in revenue from operations.

1.4 Fixed Assets:

Fixed assets are stated at cost, net of Cenvat and VAT input credit availed, less accumulated depreciation, amortization and impairment loss, if any, except freehold land which is carried at cost. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

Foreign currency exchange differences to the extent covered under AS-11 are capitalized as per the policy stated in note 1.8. Expenditure during construction period (including borrowing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as Pre-operative expenses, pending allocation to the assets, and are included under "Capital work-in-progress." These expenses are apportioned to related fixed assets on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet.

The carrying amounts of fixed assets are reviewed at each balance sheet date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed their estimated recoverable amount, assets are written down to their recoverable amount.

1.5 Intangible Assets:

Intangible assets are stated at cost less accumulated amortization. Technical Knowhow and Software are amortized over a period of five years. Amortization is done on straight line basis.

1.6 Depreciation/Amortization:

Depreciation on fixed assets is provided on "Written Down Value Method (WDV)" at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, except in respect of Building and Plant & Machinery at Kanpur Unit and Spinning Division at Bilaspur where depreciation is provided on "Straight Line Method (SLM)".

In respect of power line payments made to Electricity Authorities, useful life is estimated at five years and expenditure is amortized accordingly on "Straight Line Method".

Continuous process plants, as specified in Schedule XIV to the Companies Act, 1956, are identified based on technical assessment and are depreciated at the specified rate. Individual assets, whose actual cost does not exceed H5,000, are depreciated fully within the year of acquisition.

Premium on Leasehold land is amortized over the period of the Lease.

1.7 Borrowing Costs:

Interest and other borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized 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. Other interests and borrowing costs are charged to Revenue.

1.8 Foreign Currency Transactions:

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction or that approximates the actual rate at the date of the transaction.

Monetary items denominated in foreign currencies, which are outstanding as at the year-end and not covered by forward contracts, are restated at year end rates. Resultant gain or loss, other than in relation to acquisition of fixed assets, is charged to revenue during the year. In case of items covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contracts is recognized as income/expense over the life of the contract. The exchange differences arising on such forward exchange contracts are recognized as income or expense along with the exchange differences on the underlying assets/liabilities. Profit or loss on cancellations/renewals of forward contracts is recognized during the year. Non-monetary foreign currency items are carried at cost.

In accordance with Accounting Standard (AS) 11, "Accounting for the effects of changes in foreign exchange rates", exchange difference arising in respect of long term foreign exchange liabilities, where they relate to acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and are depreciated over the balance useful life of the asset.

1.9 Inventories:

Items of Inventories are valued at lower of cost and net realizable value after providing for obsolescence, if any. Cost of inventories is ascertained on the ''weighted average'' basis. Inventory of Finished goods* and Work in progress is valued on full absorption cost in bringing the inventories to their present location and condition. Waste & Scrap are valued at net realizable value.

(*Excise duty, wherever applicable, is included in finished goods inventory valuation.)

1.10 Lease Rentals:

Rental charges in respect of assets acquired under finance leases prior to 1st April, 2001 are amortized over the useful economic life of the asset and excess of lease rentals paid over the amount accrued are treated as prepaid lease rentals. No leased assets, except leasehold land, were acquired on or after 1st April, 2001.

1.11 Employee Benefits:

Defined contribution plans such as contributions to Provident Fund, Family Pension Fund and Employee''s State Insurance are made to the funds administered by the Govt. of India, and are recognized as an expense when employees have rendered service entitling them to the contributions. Defined benefit plans such as leave encashment and gratuity are determined using the Projected Unit Credit Method, on the basis of actuarial valuation carried out by independent actuaries at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the year in which they arise.

1.12 Taxation:

Tax expense comprises Current and Deferred Tax.

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income Tax Act, 1961.

Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred charge or credit resulting from timing difference is measured based on the current tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward to the extent there is a reasonable certainty that these assets can be realized in future against future taxable income.

Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing reasons that the company will pay normal income tax during the specified period. MAT credit entitlement is reviewed at each balance sheet date.

1.13 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligations. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.14 Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

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

1.15 Government Grants:

Grants received against specific fixed assets are adjusted to cost of assets and those in the nature of promoter''s contribution are credited to Capital Reserve. Revenue Grants are recognized in the Statement of Profit and Loss on a systematic basis to match them with related costs.

1.16 Application of Securities Premium Account:

Premium payable on redemption of Preference Shares are charged, first against available balance in Securities Premium Account.

2.3 Equity shares are having par value of H10/-per share. Each Shareholder is eligible for one vote per share. Equity shareholders are having the right of dividend, proposed by the Board of Directors subject to the approval of shareholders except in case of interim dividend.

In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their holding.

2.4 Preference Shareholders do not have the voting rights but are having the preferential rights over equity shareholders, for getting the fixed dividend on cumulative basis and also redemption of Capital in the event of liquidation. Preference Shares of Series I have been redeemed at a premium of H200/- each on 30.09.2013 along with accrued dividend.

2.6 The Company has neither issued shares for a consideration other than cash/ bonus shares nor bought back any shares during immediately preceding 5 years.

4.2 During the year, 1,015,000 Share Warrants were issued convertible into equal number of Equity Shares of H10/- each at a premium of H54/- per share.

Nature of Security and Terms of Repayment:

a) Rupee Term Loans from Banks & Financial Institution:

i) Rupee Term Loans and Foreign Currency Loan from Banks & FI, including Buyers credit from Banks, aggregating to H1,277,966,749 (Previous Year H1,029,670,446) are secured by way of first charge, on pari-passu basis among lending banks & FI, over entire fixed assets (present & future) (except the assets exclusively charged/ hypothecated against specific loan) including equitable mortgage of entire properties of the Company. These loans are further secured by way of extension of first charge on pari-passu basis, on current assets of the Company and personal guarantees of executive directors and others. These loans are repayable in monthly/ quarterly installments as per following maturity profile:

ii) Corporate term loan from bank of H Nil (Previous Year H17,500,000) is secured by way of extension of first charge, on pari-passu basis with other working capital lending banks, over entire current assets (present and future) of the company. Corporate loan is further secured by way of extension of first pari-passu charge over fixed assets, excluding assets specifically charged/ hypothecated for specific loan, of the company and personal guarantees of executive directors and others.

c) Repayment of Non Convertible Debentures of H33,750,000 (Previous Year H45,000,000) has been guaranteed by executive directors and others personally as well as by pledge of shares owned by them. These debentures are to be redeemed during April, 2015 along with premium.

a) Working capital loans from Banks except Buyers'' Credit arrangement of H96,379,566/- (Previous Year H55,824,266/-) are secured by hypothecation of current assets of the Company both present and future, ranking pari-passu inter-se. These loans are further secured by way of extension of pari-passu 1st charge on fixed assets (except the assets exclusively charged/ hypothecated against specific loan) of the Company and also guaranteed by the Executive Directors and others.

b) Buyers'' credit arrangement of H96,379,566/- (Previous Year H55,824,266/-) from banks is secured by way of pledge of fixed deposit receipts.

Pursuant to the Companies (Accounting Standards) Amendment Rules, 2011, Company has exercised the option of capitalizing the exchange differences arising on foreign currency long term loans for purchase of depreciable capital assets, in respect of accounting periods commencing from 1st April, 2011, which were hitherto recognized as income or expense in the period in which they arose. Accordingly, loss on account of foreign exchange fluctuations amounting to H1,611,426 (Previous Year H6,553,599) has been adjusted with the cost of capital assets, to be depreciated over the balance useful life of respective assets.


Mar 31, 2013

1.1 Basis of Preparation of Financial Statements:

The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

Financial statements are prepared in accordance with the generally accepted accounting principles, as adopted consistently, and are based on historical cost and items of income and expenditure are recognized on accrual basis except those with significant uncertainties.

All the assets and liabilities have been classified as current or non current as per the Company''s normal operating cycle and other criterion set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

1.2 Use of Estimates:

The preparation of financial statements requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that may affect the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Revenue Recognition:

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

Sale of goods is recognized on transfer of significant risks and rewards of ownership which is generally on the dispatch of goods. Revenue from operations is disclosed inclusive of excise duty and net of sales tax / VAT, discounts and returns. Benefits on account of entitlement to import goods free of duty are accounted for in the year of exports made and are included in revenue from operations.

1.4 Fixed Assets:

Fixed assets are stated at cost, net of Cenvat and VAT input credit availed, less accumulated depreciation, amortization and impairment loss, if any, except freehold land which is carried at cost. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

Foreign currency exchange differences to the extent covered under AS-11 are capitalized as per the policy stated in note 1.8.

Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as Pre-operative expenses, pending allocation to the assets, and are included under "Capital work-in-progress." These expenses are apportioned to related fixed assets on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet.

The carrying amounts of fixed assets are reviewed at each balance sheet date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed their estimated recoverable amount, assets are written down to their recoverable amount.

1.5 Intangible Assets:

Intangible assets are stated at cost less accumulated amortization. Technical Knowhow and Software are amortized over a period of five years. Amortization is done on straight line basis.

1.6 Depreciation/Amortization:

Depreciation on fixed assets is provided on "Written Down Value Method (WDV)" at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, except in respect of Building and Plant & Machinery at Kanpur Unit where depreciation is provided on "Straight Line Method (SLM)".

In respect of power line payments made to Electricity Authorities, useful life is estimated at five years and expenditure is amortized accordingly on "Straight Line Method".

Continuous process plants, as specified in Schedule XIV to the Companies Act, 1956, are identified based on technical assessment and are depreciated at the specified rate. Individual assets, whose actual cost does not exceed Rs.5000, are depreciated fully within the year of acquisition.

Premium on Leasehold land is amortized over the period of the Lease.

1.7 Borrowing Costs:

Borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized 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 Statement of Profit and Loss.

1.8 Foreign Currency Transactions:

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction or that approximates the actual rate at the date of the transaction.

Monetary items denominated in foreign currencies, which are outstanding as at the year-end and not covered by forward contracts, are restated at year end rates. Resultant gain or loss, other than in relation to acquisition of fixed assets, is charged to revenue during the year. In case of items covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contracts is recognized as income/expense over the life of the contract. The exchange differences arising on such forward exchange contracts are recognized as income or expense along with the exchange differences on the underlying assets/liabilities. Profit or loss on cancellations/renewals of forward contracts is recognized during the year. Non-monetary foreign currency items are carried at cost.

In accordance with Accounting Standard (AS) 11, "Accounting for the effects of changes in foreign exchange rates", exchange difference arising in respect of long term foreign exchange liabilities, where they relate to acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and are depreciated over the balance useful life of the asset.

1.9 Inventories:

Items of Inventories are valued at lower of cost and net realizable value. Cost of inventories is ascertained on the ''weighted average'' basis. Inventory of Finished goods* and Work in progress is valued on full absorption cost in bringing the inventories to their present location and condition. Waste & Scrap are valued at net realizable value.

(*Excise duty, wherever applicable, is included in finished goods inventory valuation.)

1.10 Lease Rentals:

Rental charges in respect of assets acquired under finance leases prior to 1st April, 2001 are amortized over the useful economic life of the asset and excess of lease rentals paid over the amount accrued are treated as prepaid lease rentals. No leased assets, except leasehold land, were acquired on or after 1st April, 2001.

1.11 Employee Benefits:

Defined contribution plans such as contributions to Provident Fund, Family Pension Fund and Employee''s State Insurance are made to the funds administered by the Govt. of India, and are recognized as an expense when employees have rendered service entitling them to the contributions. Defined benefit plans such as leave encashment and gratuity are determined using the Projected Unit Credit Method, on the basis of actuarial valuation carried out by independent actuaries at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the year in which they arise.

1.12 Taxation:

Tax expense comprises Current and Deferred Tax.

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income Tax Act, 1961.

Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred charge or credit resulting from timing difference is measured based on the current tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward to the extent there is a reasonable certainty that these assets can be realized in future against future taxable income.

Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing reasons that the company will pay normal income tax during the specified period. MAT credit entitlement is reviewed at each balance sheet date.

1.13 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligations. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.14 Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

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

1.15 Government Grants:

Grants in the nature of promoter''s contribution are credited to Capital Reserve. Revenue Grants are recognized in the Statement of Profit and Loss on a systematic basis to match them with related costs.


Mar 31, 2012

1.1 Basis of Preparation of Financial Statements:

The financial statements have been prepared in compliance with all material aspects with the notified Accounting Standards by Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

Financial statements are prepared in accordance with the generally accepted accounting principles, as adopted consistently, and are based on historical cost and items of income and expenditure are recognized on accrual basis except those with significant uncertainties.

All the assets and liabilities have been classified as current or non current as per the Company's normal operating cycle and other criterion set out in Schedule VI to the Companies Act, 1956. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be less than 12 months.

1.2 Use of Estimates:

The preparation of financial statements requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that may affect the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Revenue Recognition:

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

Sale of goods is recognized on transfer of significant risks and rewards of ownership which is generally on the dispatch of goods. Revenue from operations is disclosed inclusive of excise duty and net of sales tax / VAT, discounts and returns.

Benefits on account of entitlement to import goods free of duty are accounted for in the year of exports made and are included in revenue from operations.

1.4 Fixed Assets:

Fixed assets are stated at cost, net of Cenvat and VAT input credit availed, less accumulated depreciation, amortization and impairment loss, if any, except freehold land which is carried at cost. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.

Foreign currency exchange differences to the extent covered under AS-11 are capitalized as per the policy stated in note 1.8.

Expenditure during construction period (including financing cost relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as Pre-operative expenses, pending allocation to the assets, and are included under "Capital work-in-progress." These expenses are apportioned to related fixed assets on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet.

The carrying amounts of fixed assets are reviewed at each balance sheet date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed their estimated recoverable amount, assets are written down to their recoverable amount.

1.5. Intangible Assets:

Intangible assets are stated at cost less accumulated amortization. Technical Knowhow and Software are amortized over a period of five years. Amortization is done on straight line basis.

1.6 Depreciation/Amortization:

Depreciation on fixed assets is provided on "Straight Line Method (SLM)" at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956, except in respect of Vehicles, Furniture/ Fixtures and Office Equipments at Kanpur Unit where depreciation is provided on "Written Down Value Method (WDV)"; in respect of entire fixed assets of Rudrapur and Bilaspur Units where depreciation is provided on "Written Down Value Method (WDV)''. In respect of power line payments made to Electricity Authorities, useful life is estimated at five years and expenditure is amortized accordingly on "Straight Line Method".

Continuous process plants, as specified in Schedule XIV to the Companies Act, 1956, are identified based on technical assessment and are depreciated at the specified rate. Individual assets, whose actual cost does not exceed Rs. 5000, are depreciated fully within the year of acquisition.

Premium on Leasehold land is amortized over the period of the Lease.

1.7 Borrowing Costs:

Borrowing costs that are attributable to acquisition or construction of qualifying assets are capitalized 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 Statement of Profit and Loss.

1.8 Foreign Currency Transactions:

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transaction or that approximates the actual rate at the date of the transaction.

Monetary items denominated in foreign currencies, which are outstanding as at the year-end and not covered by forward contracts, are restated at year end rates. Resultant gain or loss, other than in relation to acquisition of fixed assets, is charged to revenue during the year. In case of items covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contracts is recognized as income/expense over the life of the contract. The exchange differences arising on such forward exchange contracts are recognized as income or expense along with the exchange differences on the underlying assets/liabilities. Profit or loss on cancellations/renewals of forward contracts is recognized during the year. Non-monetary foreign currency items are carried at cost.

In accordance with Accounting Standard (AS) 11, "Accounting for the effects of changes in foreign exchange rates", exchange difference arising in respect of long term foreign exchange liabilities, where they relate to acquisition of depreciable fixed assets, are adjusted to the carrying cost of such assets and are depreciated over the balance useful life of the asset.

1.9 Inventories:

Items of Inventories are valued at lower of cost and net realizable value. Cost of inventories is ascertained on the 'weighted average' basis. Inventory of Finished goods* and Work in progress is valued on full absorption cost in bringing the inventories to their present location and condition. Waste Et Scrap are valued at net realizable value.

(*Excise duty, wherever applicable, is included in finished goods inventory valuation.)

1.10Lease Rentals:

Rental charges in respect of assets acquired under finance leases prior to 1'st April 2001 are amortized over the useful economic life of the asset and excess of lease rentals paid over the amount accrued are treated as prepaid lease rentals. No leased assets, except leasehold land, were acquired on or after 1'st April 2001.

1.11 Employee Benefits:

Defined contribution plans such as contributions to Provident Fund, Family Pension Fund and Employee's State Insurance are made to the funds administered by the Govt, of India, and are recognized as an expense when employees have rendered service entitling them to the contributions. Defined benefit plans such as leave encashment and gratuity are determined using the Projected Unit Credit Method, on the basis of actuarial valuation carried out by independent actuaries at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the year in which they arise.

1.12Taxation:

Tax expense comprises Current and Deferred Tax.

Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income Tax Act, 1961.

Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred charge or credit resulting from timing difference is measured based on the current tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward to the extent there is a reasonable certainty that these assets can be realized in future against future taxable income.

Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing reasons that the company will pay normal income tax during the specified period. MAT credit entitlement is reviewed at each balance sheet date.

1.13Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources will be required to settle the obligations. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

1.14 Earnings per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

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

1.15 Government Grants:

Grants in the nature of promoter's contribution are credited to Capital Reserve. Revenue Grants are recognized in the Statement of Profit and Loss on a systematic basis to match them with related costs.


Mar 31, 2010

A. System of Accounting:

The financial statements have been prepared under the historical cost convention, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956, as adopted consistently by the Company.

The Company, generally, follows mercantile system of accounting and recognizes significant items of income and expenditure on accrual basis except those with significant uncertainties.

b. Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. In case of sale of goods, revenue is recognized, net of Value Added Tax, when the significant risks and rewards of ownership of goods have been passed to the buyer, which generally coincides with delivery.

Benefits on account of entitlement to import goods free of duty are accounted for in the year of exports made and are included in Sales.

c. Fixed Assets:

Fixed assets are stated at cost comprising of its purchase price and directly attributable cost of bringing the asset to working condition for its intended use less accumulated depreciation and amortization.

The carrying amounts of fixed assets are reviewed at each balance sheet date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed their estimated recoverable amount, assets are written down to their recoverable amount.

Revenue expenses incurred in connection with project implementation and expansion of existing units in so far as such expenses (net of income) relate to the period prior to the commencement of commercial production are treated as project cost and allocated to the relevant fixed assets on a pro-rata basis.

d. Intangible Assets:

Intangible assets are stated at cost less accumulated amortization. Technical Know how and Computer Softwares are amortized over a period of five years. Amortization is done on straight line basis.

e. Depreciation/Amortization:

Depreciation on fixed assets is provided on straight line method (SLM) at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except: in respect of vehicles at Kanpur Unit where depreciation is provided on written down value method (WDV); in respect of fixed assets of Rudrapur and Bilaspur Units where depreciation is provided on written down value method (WDV); in respect of power line payments made to Electricity Authorities, useful life has been estimated as five years. Continuous process plants as defined therein have been taken on technical assessment and depreciation is provided accordingly. Individual assets, whose actual cost does not exceed Rs. 5000, are depreciated fully within the year of acquisition. Cost of Leasehold land is amortized over the period of the Lease.

f. Valuation of Inventories:

Inventories are valued at lower of cost, computed on a weighted average basis, and net realizable value. Finished goods and Goods-in-process include cost of conversion and other costs (full absorption cost) in bringing the inventories to their present location and condition. Waste & Scrap are valued at net realizable value.

g. Lease Rentals:

Rental charges in respect of assets acquired under finance leases prior to 1st April 2001 are amortized over the useful economic life of the asset and excess of lease rentals paid over the amount accrued are treated as prepaid lease rentals. No leased assets, except leasehold land, were acquired on or after 1st April 2001.

h. Foreign Currency Transactions: -

Transactions denominated in foreign currency are recorded at the exchange rate prevailing on the date of transactions. Exchange differences arising on foreign exchange transactions settled during the period are recognized in the Profit & Loss Account of the period.

Monetary assets and liabilities in foreign currency which are outstanding as at the year-end and not covered by forward contracts, are translated at the year-end at the closing exchange rate and the resultant exchange differences are recognized in the Profit & Loss Account. Non-monetary foreign currency items are carried at cost.

In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the forward exchange contracts is recognized as income/expense over the life of the contract. Exchange differences on forward exchange contracts are recognized as income or expense along with the exchange differences on the underlying assets/liabilities. Profit or loss on cancellations/renewals of forward contracts is recognized during the year.

i. Employee Benefits:

Short Term Employee benefits (benefits which are payable within twelve months after the end of the period in which the employees render service) are measured at cost. Long term employee benefits (benefits which are payable after the end of twelve months from the end of the month in which the employee render service) and post employment benefits (Benefits which are payable after completion of employment) are measured on a discounted benefits by the Projected Unit Credit method on the basis of annual third party actuarial valuations.

Contribution to Provident Fund, Family Pension Fund and Employees State Insurance, a defined contribution plan are made to the funds administered by the Govt. of India, and are recognized as an expense when employees have rendered service entitling them to the contributions. The cost of providing leave encashment and gratuity, defined benefit plans, are determined using the Projected Unit Credit Method, on the basis of actuarial valuation carried out by third party actuaries at each balance sheet date. Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

j. Borrowing Costs:

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

k. Taxation:

Tax expense comprises Current, Deferred and Fringe Benefit Tax.

Current Income Tax and Fringe Benefit Tax are measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961.

Deferred tax charge or credit resulting from timing difference is recognized using current tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognized and carried forward to the extent there is a reasonable certainty that these assets can be realized in future.

Deferred tax assets/liabilities are reviewed at each Balance Sheet date.

l. Provisions and Contingent Liabilities:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes

 
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