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Accounting Policies of Indsil Hydro Power and Manganese Ltd. Company

Mar 31, 2018

1. Significant Accounting Policies

(a) Compliance with Ind AS:

The financial statements are prepared in accordance with Indian Accounting Standards (“Ind AS”), the provisions of the Companies Act, 2013 (“the Companies Act”), as applicable and guidelines issued by the Securities and Exchange Board of India (“SEBI”). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Accounting policies have been applied consistently to all periods presented in these financial statements.

The financial statements up to the previous year ended 31st March 2017 were prepared in accordance with the Accounting Standards [GAAP] notified under the Companies Act, 2013 and Companies (Accounting Standard) Rules, 2006.

These financial statements are t he first INDAS financial statements of the Company. The Company has adopted all the Indian Accounting Standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with April 1, 2016 as the transition date. Reconciliations and descriptions of the effect of the transition has been summarized in Note no 2.29.

The financial statements correspond to the classification provisions contained in Ind AS 1 - “Presentation of Financial Statements”. All amounts included in the IND AS financial statements are reported in crores of Indian rupees ( R crores) except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures. Previous year figures have been regrouped / re-arranged, wherever necessary.

First time adoption of Indian Accounting Standards -Overall principle, Mandatory and Optional exemptions

Overall Principle: The company has prepared the opening Balance Sheet (IND AS) on April 1, 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets and liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAF to Ind AS as required under Ind AS and applying Ind AS in measurement of recognised assets and liabilities.

Impairment of financial assets:

The Company has applied the impairment requirements of IND AS 109 retrospectively; however, as permitted by IND AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to IND AS, whether there have been significant increases in credit risk since initial recognition, as permitted by IND AS 101.

Deemed Cost of property, plant and equipment and intangible assets:

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

Determination of lease arrangements:

The Company has applied the principles of Appendix C of IND AS 17 in order to determine if an arrangement existing at the date transition date contains a lease on the basis of facts and circumstances existing at that date.

Equity investments at FVTOCI:

The Company has designated investment in all equity shares, except investment in subsidiaries, joint ventures and associates as at FVTOCI on the basis of facts and circumstances that existed at the transition date.

Accounting for Investment in Subsidiary, Joint Venture and Associate:

The Company has availed the optional exemption under “Ind AS 101 First time Adoption of Indian Accounting standards” with respect to Investments in subsidiaries, joint ventures and associates. Accordingly, the previous GAAP carrying amount of such investments as on transition date has been taken as deemed cost.

(b) Basis of preparation and presentation of financial statements

These IND AS financial statements have been prepared on the basis of historical cost of convention and on accrual basis of accounting except for the following items which have been measured at Fair Value as required by the relevant Ind AS:''

- Financial instruments classified as fair value through other comprehensive income or fair value through profit or loss; and

- The defined benefit asset/ (liability) are recognised as the present value of defined benefit obligation less fair value of plan assets.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

C) Use of Estimates & Judgements

The preparation of the financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the application of accounting policies of the Company with respect to the figures reported in the financial statements. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note. Such accounting estimates could change from period to period and the actual results may differ from such estimates. Differences between actual results and estimates and changes in estimates are recognised in the financial statements in the period in which the results are known/ materialized and their effects, if material are disclosed in the notes to financial statements.

The estimates and judgments used in the preparation of these IND AS financial statements are continuously reviewed by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances.

The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after the date but provide additional evidence about the conditions existing as on the reporting date.

Information about such estimates and judgments are included in the relevant notes together with the basis of calculation for relevant line item in the financial statements. Estimates and judgments are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

(d) Property, Plant & Equipment

Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the cost of acquisition of the asset. Cost includes related taxes, duties, freight, insurance etc., attributable to acquisition and installation of assets and borrowing cost incurred up to the date of commencing operations, but excludes duties and taxes that are recoverable from taxing authorities.

Subsequent expenditure relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

The cost of property, plant and equipment not available for use before such date are disclosed under capital work - inprogress.

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 determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss.

Upon transition to Ind AS, the Company has decided to continue with the carrying value of all its property, plant and equipment recognised as at f''April 2016 measures as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment. Refer Note 2.01 for detailed classification of the Company''s assets under various heads.

Depreciation:

The Company depreciates property, plant and equipment over the estimated useful life on a Straight-line basis from the date the assets are available for use.Straight line method has been adopted for providing depreciation on fixed assets. The assets are depreciated over the useful life as prescribed in Schedule II of The Companies Act, 2013. The useful lives have been determined based on Schedule II to the Companies Act, 2013.

The residual values are not more than 5% of the original cost of the asset. The estimated useful life, residual value and depreciation method are reviewed at the end of each reporting period and the effects of changes in estimates if any are accounted at the end of each reporting period. Gains and Losses on disposal are determined by comparing proceeds with carrying amount and these are included in the Statement of Profit and loss.

(e) Intangible Assets:

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a 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 in the financial statements on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. An intangible asset is derecognised upon its sale or when no future economic benefits are expected to arise. Gains/ losses arising upon such derecognition are charged to the profit or loss account as a differential figure between net disposal value and carrying value in books. On transition to Ind AS, the Company has elected to continue with the carrying value of intangible assets recognised as at 1st April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of intangible assets.

(f) Business Combinations :

Business combinations have been accounted for using the method under the provisions of IND AS 103, Business Combinations.

Merger of Indsil Energy and Electro Chemicals Private Limited:

The Company on 01st April 2017, acquired by way of merger (business combination between entities under common control), the entire assets and liabilities of its group Company, Indsil Energy and Electrochemicals Private Limited and obtained approval of the National Company Law Tribunal vide order no CP/84/CAA/2018 dated 04.05.2018 & 08.05.2018. Accordingly, the financial statements for the year ended 31st March, 2018 presents the incomes, expenditures, assets and liabilities of the merged entity.

Attention is brought to the fact that, the Pooling of Interest method under IND AS 103 provides that where a business combination takes place after the date of transition, the prior period information shall be restated only from that date. Therefore, these Ind AS financial statements of the Company presents merged figures for the financial year 2017-18 while the comparatives for the previous years’ are exclusive of merger impact and therefore the financials are not comparable to that extent.

Business combination between entities under common control is accounted for at fair value. As provided in the IND AS 103 - for business combinations, the Company accounts for business combinations involving entities or businesses under common control using the pooling of interests method. The ‘Pooling of Interest’ method is considered to involve the following.

- The assets and liabilities of the combining entities are reflected at their carrying amounts.

- No adjustments are made to reflect fair values, or recognise any new assets or liabilities. The only adjustments that are made are to harmonise accounting policies.

- The financial information in the financial statements in respect of prior periods should be restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. However, if business combination had occurred after that date, the prior period information shall be restated only from that date.

The consideration for the business combination may consist of securities, cash or other assets. Securities shall be recorded at nominal value. In determining the value of the consideration, assets other than cash shall be considered at their fair values. The balance of the retained earnings appearing in the financial statements of the transferor is aggregated with the corresponding balance appearing in the financial statements of the transferee. Alternatively, it is transferred to General Reserve, if any. The identity of the reserves shall be preserved and shall appear in the financial statements of the transferee in the same form in which they appeared in the financial statements of the transferor. As a result of preserving the identity, reserves which are available for distribution as dividend before the business combination would also be available for distribution as dividend after the business combination. The difference, if any, between the amount recorded as share capital issued plus any additional consideration in the form of cash or other assets and the amount of share capital of the transferor shall be transferred to capital reserve and should be presented separately from other capital reserves with disclosure of its nature and purpose in the notes.

(g) Impairment of assets:

The Company, on a periodical basis reviews the carrying value of assets to check for indications of impairment in its tangible as well as intangible assets. An asset is treated as impaired when the carrying amount of the asset exceeds its estimated recoverable value. If any such indication exists, the recoverable amount of the asset is estimated and an impairment loss equal to the excess of the carrying amount over its recoverable value is recognised as an impairment loss.

(h) Financial Instruments:

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than Financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Non - Derivative financial instruments:

Non derivative financial instruments consist of financial assets, which include cash and cash equivalents, trade receivables, unbilled revenues, employee and other advances, investments in equity and debt securities and eligible current and non-current assets. Financial assets are derecognised when substantial risks and rewards of ownership of financial assets have been transferred or when the entity does not retain control over the financial asset. Financial liabilities includes long and short term loans and borrowings, bank overdrafts, trade payables, eligible current and non-current liabilities. Non - Derivative financial instruments are initially recognised at fair value. Subsequent recognition of financial instruments is as follows.

Cash & Cash Equivalents:

The Company''s cash and cash equivalents consist of cash on hand and in banks and demand deposits with banks, which can be withdrawn at any time, without prior notice or penalty on the principal. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company''s cash management system. In the Ind AS Balance Sheet, bank overdrafts are presented under borrowings within current liabilities.

Investments:

Financial instruments measured at amortised cost:

Debt instruments that meet the following criteria are measured at an amortised cost (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition):

- The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

- The contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Financial instruments measured at fair value through other comprehensive income (FVTOCI):

Debt instruments that meet the following criteria are measured at fair value through other comprehensive income (FVTOCI) (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition)

- the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial asset; and

- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

- Interest income is recognised in statement of profit and loss for FVTOCI debt instruments. Other changes in fair value of FVTOCI financial assets are recognised in other comprehensive income. When the investment is disposed - off, the cumulative gain or loss previously accumulated in reserves is transferred to statement of profit and loss.

Financial instruments measured at fair value through profit or loss (FVTPL):

Instruments that do not meet the amortised cost or FVTOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in statement of profit and loss. The gain or loss on disposal is recognised in statement of profit and loss.Interest income is recognised in statement of profit and loss for FVTPL debt instruments. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive dividend is established.

Investments in equity instruments designated to be classified as FVTOCI:

The Company carries investment in equity instruments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these instruments. Movements in fair value of these investments are recognised in other comprehensive income and the gain or loss is not reclassified to statement of profit and loss on disposal of these investments. Dividends from these investments are recognised in statement of profit and loss when the Company''s right to receive dividends is established.

Investments in subsidiaries:

Investments in subsidiaries are measured at cost less impairment. The Company has availed the optional exemption under “Ind AS 101 First time Adoption of Indian Accounting standards” with respect to Investments in subsidiaries, joint ventures and associates. Accordingly, the previous GAAP carrying amount of such investments as on transition date has been taken as deemed cost.

Other financial assets:

Other financial assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets.These are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any impairment losses. These comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets.

Trade and other payables:

Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short-term maturity of these instruments.

Derivative financial instruments:

The Company is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. The Company limits the effect of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into derivative financial instruments where the counter party is primarily a bank. Derivatives are recognised and measured at fair value. Attributable transaction costs are recognised in statement of profit and loss as cost. Subsequent to initial recognition, derivative financial instruments are measured as described below:

Cash Flow Hedges:

Changes in the fair value of a cash flow - derivative hedging instrument is recognised in other comprehensive income and held in cash flow hedging reserve, net of taxes, a component of equity, to the extent that the hedge is effective. Where the hedge is ineffective, changes in fair value are recognised in the statement of profit and loss and reported within foreign exchange gains/ (losses), net, within results from operating activities. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognised in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognised in the cash flow hedging reserve is transferred to the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, such cumulative balance is immediately recognised in the statement of profit and loss.

Others:

Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges are recognised in the statement of profit and loss and reported within foreign exchange gains/(losses), net within results from operating activities. Changes in fair value and gains/ (losses), net, on settlement of foreign Currency derivative instruments relating to borrowings, which have not been designated as hedges are recorded in finance expense.

Derecognition of financial instruments:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expires or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. If the Company retains substantially all the risks and rewards of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a borrowing for the proceeds received. A financial liability (or a part of a financial liability) is derecognised from the Company’s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

Foreign Exchange gains and losses:

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ‘Other income/ expenses’. The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.

Impairment of financial assets:

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months. If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12 - month expected credit losses.

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the group uses the change in the risk of a default occurring over the expected life of the financial Instrument instead of the change in the amount of expected credit losses. To make that assessment, the group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

(I) Valuation of Inventories:

Inventories such as raw materials and stores are valued at cost on a weighted average basis while the finished goods and work-in-progress are valued at costs (incl. overheads as apportioned) or net realizable value whichever is lower. In case of goods in transits, cost represents the cost incurred up to the stage at which the goods in transit. The cost of finished goods includes raw material costs, direct labour costs, proportionate fixed and variable overheads costs while the raw materials costs consists of the purchase costs. Note No. 2.22 to the statement of profit and loss presents details about the consumption of materials during the year and the closing balance of inventories as on 31 March 2018.

(j) Translation and Recognition of Foreign Currency Transactions:

The transactions entered into by the Company that are in a currency other than the entity''s functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates 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 differences on monetary items are recognised in profit or loss in the period in which they arise.

(k) Revenue Recognition:

- Revenue is measured at the fair value of the consideration received or receivable and Sales of goods are recognised when the risk and rewards of ownership are passed on to customers, which is generally on dispatch of goods. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances and rebates. The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities as described below.

- Accrual basis of accounting is followed by the Company for all regular sources of income and expenses.

- Dividend income from investments is recognised 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 the amount of income can be measured reliably.

- Dividend, Interest, Lease Rent other income are accounted on accrual basis except those items with significant uncertainties.

- Interest income from a financial asset is recognised 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, reference to 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 that asset''s net carrying amount on initial recognition.

- Export incentives are recognised when the right to receive payment / credit is established and no significant uncertainty as to measurability or collectability exists. Revenue from carbon credits/ REC entitlements are recognised on delivery thereof or sale of rights therein, as the case may be, in terms of the contract with the respective buyer

(l) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

(m) Dividends

Liability for interim dividend is recorded as a liability on the date of declaration by the Company''s Board of Directors. Final dividend on shares is recorded as a liability on the date of approval by the share holders at the annual general meeting.

(n) Earnings per share

Basic Earnings per share is calculated by dividing the Net Profit after tax attributable to the equity shareholders by the weighted average number of Equity Shares outstanding during the year.

Diluted Earnings per share is calculated by dividing the Net Profit after tax attributable to the equity share holders by the weighted average number of equity shares including potential equity shares.

(o) Finance Costs:

Finance cost comprise interest cost on borrowings, gain or losses arising on re-measurement of financial assets at FVTPL, gains/ (losses) on translation or settlement of foreign currency borrowings and changes in fair value and gains/ (losses) on settlement of related derivative instruments. Borrowing costs that are not directly attributable to a qualifying asset are recognised in the statement of profit and loss using the effective interest method.

(p) Other Income:

Other income comprises interest income on deposits, dividend income and gains / (losses), net, on disposal of investments. Interest income is recognised using the effective interest method. Dividend income is recognised when the right to receive payment is established.

(q) Employee Benefits:

- Short term employees benefits:

For benefits accruing to employees in respect of wages and salaries, annual leave and other short term benefits, the liability is recognised in the period in which the related service is rendered and when such benefits accrue to the employees in exchange of that service.

Post - Employment and pension plans:

- The Company participates in various employee benefit plans. Pensions and other post-employment benefits are classified as either defined contribution plans or defined benefit plans. The expenditure for defined contribution plans is recognised as an expense during the period when the employee provides service. Under a defined benefit plan, it is the Company''s obligation to provide agreed benefits to the employees. The present value of the defined benefit obligations is calculated by an independent actuary using the projected unit credit method.

- Actuarial gains or losses are immediately recognised in other comprehensive income, net of taxes and permanently excluded from profit or loss. Further, the profit or loss will no longer include an expected return on plan assets. Instead net interest recognised in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognised as part of re-measurement of net defined liability or asset through other comprehensive Income, net of taxes.

The Company has the following employee benefit plans: Provident Fund:

Employees receive benefits from a provident fund, which is a defined benefit plan. The employer and employees each make periodic contributions to the plan. A portion of the contribution is made to the approved provident fund trust managed by the Company while the remainder of the contribution is made to the government administered pension fund. The contributions to the trust managed by the Company is accounted for as a defined benefit plan as the Company is liable for any shortfall in the fund assets based on the government specified minimum rates of return.

Gratuity:

In accordance with the Payment of Gratuity Act, 1972, applicable for Indian companies, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity fund is managed by the third-party fund managers. The Company''s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method. The Company recognises actuarial gains and losses in other comprehensive income, net of taxes.

- Termination Benefits:

Termination benefits are expensed when the Company can no longer withdraw the offer of those benefits.

(r) Taxes on Income:

Income tax comprises current and deferred tax. Income tax expense is recognised in the statement of profit and loss except to the extent it relates to a business combination, or items directly recognised in equity or in other comprehensive income.

- Current tax on income:

Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting date. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full financial year.

- Deferred tax:

Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in the financial statements, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction.

Deferred income tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences that is expected to reverse within the tax holiday period, taxable temporary differences associated with investments in subsidiaries, associates and foreign branches where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

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

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

The Company offsets deferred income tax assets and liabilities, where it has a legally enforceable right to offset current tax assets against current tax liabilities, and they relate to taxes levied by the same taxation authority on either the same taxable entity, or on different taxable entities where there is an intention to settle the current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

(s) Provisions, contingent liabilities and contingent assets:

Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes to financial statements. Contingent assets are not recognised but disclosed in the financial statements when an inflow of economic benefits is probable. Provisions, contingent liabilities are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Present obligations, legal or constructive, arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Provisions for the expected cost of warranty obligations are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s obligation.

(t) Statement of cash flows and cash & cash equivalents:

Cash Flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transaction of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. For the purpose of presentation of statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short - term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(u) Segment Reporting:

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM), to make decisions about resources to be allocated to the segments and assess their performance. Information reported to the CODM for the purpose of resource allocation and assessment of segment performance focuses on the type of goods or services delivered or provided.

The Company has two reportable segments, namely Smelter and Power.These business units offer different products and services, and are managed separately because they require different technology and marketing strategies. Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Company''s CODM. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on arm''s length basis.

(v) Leases:

As a lessee: Leases where significant risks and rewards of ownership are not transferred to the Company are called Operating leases. Payments for operating leases (net of any incentives received by the lessor) are charged to the profit or loss on a straight - line basis over the period of the lease as per the lease arrangement.


Mar 31, 2016

i) TERMS/RIGHTS ATTACHED TO EQUITY SHARES:

The Company has only one class of issued shares referred to as equity shares having a par value of ''10 each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

ECB Loan of 93,750 USD outstanding in Standard Chartered Bank is repayable in one quarterly installments of USD 93,750 each . Interest is payable at LIBOR plus 300 BPS on a quarterly basis. The loan is secured by way of first pari passu charge on the fixed assets of the Company and second pari passu charge on the current assets of the Company . The loan has been repaid on 28th April, 2016.

The Company has availed 5 Crores Rupee term loan from Export Import Bank of India repayable in 16 equal quarterly installments. The Loan is secured by way of pari passu charge on the movable and immovable assets of the Company and second pari passu charge on the entire current assets of the Company.

The Company has availed 5 Crores Rupee term loan from Yes Bank during the year 2014 repayable in 12 equal quarterly installments. The Loan is secured by way of pari passu charge on entire fixed assets and second pari passu charge on the current assets of the Company.

Working capital facilities from State Bank of Travancore, IDBI Bank Ltd, Standard Chartered Bank and Yes Bank Ltd have pari passu first charge on the entire current assets of the Company and pari passu second charge on entire fixed assets of the Company. Working capital facilities from State Bank of Travancore, Standard Chartered Bank and Yes Bank Ltd are further guaranteed by the personal guarantee of Sri. Vinod Narsiman, Managing Director to the extent of limit sanctioned.

Working Capital facilities from Banks are repayable on demand and carries interest rates varying from 10% to 14% p.a. Packing Credit in Foreign Currency is repayable on demand and carries interest LIBOR plus 250 BPS. to LIBOR plus 300 BPS. For Buyers Credit in Foreign Currency is repayable on demand and carries interest LIBOR plus 60 BPS to LIBOR plus 150 BPS.

The Company has initiated the process of obtaining confirmation from suppliers who have registered themselves under the "Micro, Small and Medium Enterprises Development Act, 2006". Based on the information and evidence available with the Company, there are no dues / interest payable to micro, small and medium enterprises.

I. SIGNIFICANT ACCOUNTING POLICIES a) Accounting Convention :

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting and in accordance with the requirements of Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 2013, to the extent applicable.

b) Use of Estimates

The preparation of financial statements requires the management of the Company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure for the year Actual results may differ from those estimates. Any revision to such estimates is recognized prospectively.

c) Fixed assets and Depreciation

i) Fixed assets are stated at original cost net of tax / duty credits availed if any, less accumulated depreciation. Cost include pre-operative expenses and all expenses related to acquisition and installation of the concerned assets.

ii) Depreciation on fixed assets is provided on Straight Line Method in accordance with the rates specified under Schedule II of the Companies Act, 2013, except the useful life of the Plant and Machinery based on the technical evaluation. As per the technical evaluation, such useful life has been taken as 20 years.

d) Investments

Long term investments held by the Company are stated at cost. Provision for diminution, if any, in the value of long-term investments is made, if the diminution is other than temporary. Current investments are stated at lower of cost or net realizable value.

e) Inventories

Raw Materials and Stores & Spares are valued at cost on Weighted Average basis. Finished goods and Work-in-Progress are valued at lower of the cost including related overheads or estimated net realizable value.

f) Foreign Currency Transactions

i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Foreign currency assets and liabilities at the yearend are realigned at the exchange rate prevailing at the year end and difference on realignment is recognized in the Statement of Profit & Loss.

g) Revenue Recognition

i) The Company generally follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

ii) Sale of goods is recognized when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

iii) Dividend, interest, export incentives and other income are accounted on accrual basis except those items with significant uncertainties.

h) Taxes on Income

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

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

iii) Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

i) Retirement Benefits

i) Defined Contribution Plans:

Employee benefits in the form of Employee Provident and Pension Funds and Employee State Insurance plan are considered as Defined Contribution Plans and the contributions are charged to the Statement of Profit & Loss of the year when the contributions to the said funds are due.

ii) Defined Benefit Plans:

Retirement benefits are considered as Defined Benefit Plans and are provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet. Actuarial gain/losses, if any, are immediately recognized in the Statement of Profit & Loss as income and expense.

j) In respect of Employees Stock Options, the excess of market price on the date of grant over the exercise price is recognized as deferred compensation cost and amortized over the vesting period.

k) Impairment of Fixed assets

As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine;

i) the provision for impairment loss, if any, required or;

ii) the reversal, if any, required of impairment loss recognized in previous periods. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

l) Borrowing Cost

i) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All other borrowing costs are charged to revenue.

ii) A qualifying asset is an asset that necessarily requires substantial period of time to get ready for its intended use or sale.

m) Cash and Cash Equivalents

Cash flow are reported using the indirect method, where by net profit before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow comprises regular revenue generating, investing and financing activities of the Company. Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

n) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to the reflect the current best estimates.

o) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share (after deducting preference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares, if any. 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.

p) MAT Credit Entitlement

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

q) Leases

"Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalized. Leases where the less or effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating leases payments are recognized as an expense in the statement of Profit and Loss on a straight line basis over the lease term".

d) In the past, the Kerala State Electricity Board has raised certain demands on the Company relating to payment of electricity charges and other charges on account of working of the hydro electric power division of the Company. These charges were more than that warranted for, when specifically considering the working agreement between the Company and KSEB for operation of the hydro electric power plant. These demands remain in dispute and have been challenged by the Company in various fora including the Hon’ble High Court of Kerala. Such matters remain sub - judice and in some cases, where necessary, pending judgment, adequate provisions have been made. The Company is confident of positive redressal by the appropriate fora where no provisions have been made and in cases where the Company has deposited sums/advances, pending judgments, it is expected that those sums would be refunded.

* Sale and Purchase of Raw materials and Finished goods is carried out between related entities at arm’s length basis adopting fair Accounting Standards with prior approval of the Audit Committee


Jun 30, 2015

A) Accounting Convention :

The financial statements have been prepared under the historical cost convention on the accrual basis of accounting and in accordance with the requirements of Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 2013, to the extent applicable.

b) Use of Estimates

The preparation of financial statements requires the management of the Company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure for the year. Actual results may differ from those estimates. Any revision to such estimates is recognised prospectively.

c) Fixed assets and Depreciation

i) Fixed assets are stated at original cost net of tax / duty credits availed if any, less accumulated depreciation.

Cost include pre-operative expenses and all expenses related to acquisition and installation of the concerned assets.

ii) Depreciation on fixed assets is provided on Straight Line Method in accordance with the rates specified under Schedule II of the Companies Act, 2013, except the useful life of the Plant and Machinery based on the technical evaluation. As per the technical evaluation, such useful life has been taken as 20 years.

d) Investments

Long term investments held by the Company are stated at cost. Provision for diminution, if any, in the value of long- term investments is made, if the diminution is other than temporary. Current investments are stated at lower of cost or net realisable value.

e) Inventories

Raw Materials and Stores & Spares are valued at cost on Weighted Average basis. Finished goods and Work-in- Progress are valued at lower of the cost including related overheads or estimated net realisable value.

f) Foreign Currency Transactions

i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Foreign currency assets and liabilities at the year end are realigned at the exchange rate prevailing at the year end and difference on realignment is recognised in the Statement of Profit & Loss.

g) Revenue Recognition:

i) The Company generally follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainities.

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on despatch of goods.

iii) Dividend, interest, export incentives and other income are accounted on accrual basis except those items with significant uncertainities.

h) Taxes on Income

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

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

iii) Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

i) Retirement Benefits

i) Defined Contribution Plans:

Employee benefits in the form of Employee Provident and Pension Funds and Employee State Insurance plan are considered as Defined Contribution Plans and the contributions are charged to the Statement of Profit & Loss of the year when the contributions to the said funds are due.

ii) Defined Benefit Plans:

Retirement benefits are considered as Defined Benefit Plans and are provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit & Loss as income and expense.

j) In respect of Employees Stock Options, the excess of market price on the date of grant over the exercise price is recognised as deferred compensation cost and amortized over the vesting period.

k) Impairment of Fixed assets

As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine;

i) the provision for impairment loss, if any, required or;

ii) the reversal, if any, required of impairment loss recognised in previous periods. Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

l) Borrowing Cost

i) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of such assets. All other borrowing costs are charged to revenue.

ii) A qualifying asset is an asset that necessarily requires substantial period of time to get ready for its intended use or sale.

m) Cash and Cash Equivalents

Cash flow are reported using the indirect method, where by net profit before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow comprises regular revenue generating, investing and financing activities of the Company. Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

n) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to the reflect the current best estimates.

o) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share (after deducting preference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares, if any. 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.

p) MAT Credit Entitlement

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

q) Leases

"Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalized. Leases where the lessor effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating leases payments are recognized as an expense in the statement of Profit and Loss on a straight line basis over the lease term".

d) In the past, the Kerala State Electricity Board has raised certain demands on the Company relating to payment of electricity charges and other charges on account of working of the hydroelectric power division of the Company. These charges were more than that warranted for, when specifically considering the working agreement between the Company and KSEB for operation of the hydro electric power plant. These demands remain in dispute and have been challenged by the Company in various fora including the Hon'ble High Court of Kerala.Such matters remain sub - judice and in some cases, where necessary, pending judgement, adequate provisions have been made.The Company is confident of positive redressal by the appropriate fora where no provisions have been made and in cases where the Company has deposited sums/advances, pending judgements, it is expected that those sums would be refunded.


Jun 30, 2014

A) Accounting Convention

i) The Financial statements have been prepared under the historical cost convention on the accrual basis of accounting and in accordance with the requirements of Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable.

b) Use of Estimates

i) The preparation of financial statements requires the management of the Company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure for the year. Actual results may differ from those estimates. Any revision to such estimates is recognised prospectively.

c) Fixed assets and Depreciation

i) Fixed assets are stated at original cost net of tax / duty credits availed if any, less accumulated depreciation. Cost include pre-operative expenses and all expenses related to acquisition and installation of the concerned assets.

ii) Depreciation on Fixed assets is provided on straight line method in accordance with the rates specified under Schedule XIV of the Companies Act, 1956. Individual assets costing Rs.5,000/- or less are depreciated fully in the year of purchase.

d) Investments

Long term investments held by the Company are stated at cost. Provision for diminution, if any, in the value of long- term investments is made, if the diminution is other than temporary. Current investments are stated at lower of cost

or net realisable value.

e) Inventories

Raw Materials and Stores & Spares are valued at cost on Weighted Average basis. Finished goods and Work-in- Progress are valued at lower of the cost including related overheads and estimated net realisable value.

f) Foreign Currency Transactions

i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Foreign Currency assets and liabilities at the year end are realigned at the exchange rate prevailing at the year end and difference on realignment is recognised in the Statement of Profit & Loss.

g) Revenue Recognition:

i) The Company generally follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on despatch of goods.

iii) Dividend, interest, export incentives and other income are accounted on accrual basis except those items with significant uncertainities.

h) Taxes on Income

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

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

c) Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainity that sufficient future income will be available against which such deferred tax assets can be realised.

i) Retirement Benefits

i) Defined Contribution Plans:

Employee benefits in the form of Employee Provident and Pension Funds and Employee State Insurance plan are considered as Defined Contribution Plans and the contributions are charged to the Statement of Profit & Loss of the year when the contributions to the said funds are due.

ii) Defined Benefit Plans:

Retirement benefits are considered as Defined Benefit Plans and are provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit & Loss as income and expense.

j) Employee Stock Option Plan

In respect of Employees Stock Options, the excess of market price on the date of grant over the exercise price is recognised as deferred compensation cost and amortised over the vesting period.

k) Impairment of Fixed assets

As at each balance sheet date, the carrying amount of assets is tested for impairment so as to determine;

i) the provision for impairment loss, if any, required or;

ii) the reversal, if any, required of impairment loss recognised in previous periods.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

l) Borrowing Cost

i) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of such assets. All other borrowing costs are charged to revenue.

ii) A qualifying asset is an asset that necessarily requires substantial period of time to get ready for its intended use or sale.

m) Cash and Cash Equivalents

Cash flow are reported using the indirect method, where by net profit before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow comprises regular revenue generating, investing and financing activities of the Company. Cash and cash equivalents in the Balance Sheet comprise of cash at bank and in hand and short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

n) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

o) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share (after deducting preference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares if any. 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.

p) MAT Credit Entitlement

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

q) Leases

"Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalized. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of Profit and Loss on a straight-line basis over the lease term."


Jun 30, 2011

A) Accounting Convention :

i) The Financial statements have been prepared under the historical cost convention on the accrual basis of accounting and in accordance with the requirements of Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable.

ii) The preparation of financial statements requires the management of the Company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure for the year. Actual results may differ from those estimates. Any revision to such estimates is recognised prospectively in the year in which it is revised.

b) Fixed assets and Depreciation

i) Fixed assets are stated at original cost net of tax / duty credits availed if any, less accumulated depreciation. Cost include pre-operative expenses and all expenses related to acquisition and installation of the concerned assets.

ii) Depreciation on Fixed assets is provided on straight line method in accordance with the rates specified under Schedule XIV of the Companies Act, 1956. It is provided on prorata basis on additions made during the year.

c) Investments

Long-term investments held by the Company are stated at cost. Provision for diminution, if any, in the value of long-term investments is made, if the diminution is other than temporary. Current investments are stated at lower of cost or net realisable value.

d) Inventories

Raw Materials and Stores & Spares are valued at cost on FIFO basis, finished goods at lower of cost or net realisable value on weighted average basis and Work-in-Progress at average cost.

e) Foreign Currency Transactions

i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Monetary Foreign currency assets/liabilities at the end of the year are re-aligned at the exchange rate prevailing at the year end and the difference on re-alignment is recognised in the Profit & Loss account.

f) Recognition of revenue and expenditure:

i) The Company generally follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on despatch of goods. Gross sales include excise duty but exclude value added tax / central sales tax.

iii) Purchases are net of value added tax set off and cenvat wherever applicable and include freight inward and exchange differences arising out of purchase transactions, if any.

g) Taxes on Income

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals. Deferred tax is recognised on timing differences between the accounting Income and the taxable income and quantified using the tax rates and loss enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

NOTES FORMING PART OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET AS ON 30th JUNE 2011

h) Retirement Benefits

i) Defined Contribution Plans:

Employee benefits in the form of Employee Provident and Pension Funds and Employee State Insurance plan are considered as Defined Contribution Plans and the contributions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

ii) Defined Benefit Plans:

Retirement benefits in the form of Gratuity and Encashment of earned leave are considered as Defined Benefit Plans and are provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Profit & Loss Account as income and expense.

i) In respect of Employees stock Options the excess of market price on the date of grant over the exercise price is recognised as deferred compensation cost and amortised over the vesting period.

j) Dividend as recommended by the Board of Directors is provided for in the accounts pending shareholders' approval.

k) The management has carried out the assessment of impairment of assets and no impairment loss has been recognised during the year other than the assets discarded / dismantled and written off to Profit & Loss account.

l) Contingent Liabilities

All Liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value in the notes to accounts.


Jun 30, 2010

A) Accounting Convention :

i) The Financial statements are prepared under the historical cost convention on the accrual basis of accounting and in accordance with the requirements of Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956, to the extent applicable.

ii) The preparation of financial statements requires the management of the Company to make certain estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure for the year. Actual results may differ from those estimates. Any revision to such estimates is recognised prospectively in the year in which it is revised.

b) Fixed assets and Depreciation

i) Fixed assets are stated at original cost net of tax/duty credits availed if any, less accumulated depreciation. Cost includes pre-operative expenses and all expenses related to acquisition and installation of the concerned assets.

ii) Depreciation on fixed assets is provided on straight line method in accordance with the rates specified under Schedule XIV to the Companies Act, 1956. It is provided on prorata basis on additions made during the year.

c) Investments

Long-term investments held by the Company are stated at cost. Provision for diminution, if any, in the value of long-term investments is made, if the diminution is other than temporary. Current investments are stated at lower of cost or net realisable value.

d) Inventories

Raw materials and Stores & Spares are valued at cost on FIFO basis, finished goods at lower of cost or net realisable value on weighted average basis and Work-in-Progress at average cost.

e) Foreign currency transactions

i) Foreign currency transactions are recorded at exchange rates prevailing on the date of such transactions.

ii) Monetary foreign currency assets/liabilities at the end of the year are re-aligned at the exchange rate prevailing at the year end and the difference on re-alignment is recognised in the Profit & Loss account.

f) Recognition of revenue and expenditure:

i) The Company generally follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on despatch of goods. Gross sales include excise duty but exclude value added tax / central sales tax.

iii) Purchases are net of value added tax set off and cenvat wherever applicable and include freight inward and exchange differences arising out of purchase transactions, if any.

g) Taxes on Income

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on the expected outcome of assessments / appeals. Deferred tax is recognised on timing differences between the accounting income and the taxable income and quantified using the tax rates enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forwad to the extent there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

h) Retirement Benefits

i) Defined Contribution Plans:

Employee benefits in the form of Employee Provident and Pension Funds and Employee State Insurance Plan are considered as Defined Contribution Plans and the contributions are charged to the Profit & Loss Account of the year when the contributions to the said funds are due.

ii) Defined Benefit Plans:

Retirement benefits in the form of Gratuity and encashment of earned leave are considered as Defined Benefit Plans and are provided for on the basis of an actuarial valuation using the projected unit credit method as at the date of Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Profit & Loss Account as income and expense.

i) In respect of Employees stock Options the excess of market price on the date of grant over the exercise price is recognised as deferred compensation cost and amortised over the vesting period.

j) Dividend as recommended by the Board of Directors is provided for in the accounts pending shareholders approval.

k) The management has carried out the assessment of impairment of assets and no impairment of loss has been recognised during the year other than the assets discarded / dismantled and written off to Profit & Loss account.

l) Contingent Liabilities

All liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value in the notes to accounts.

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