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Accounting Policies of Kanoria Chemicals & Industries Ltd. Company

Mar 31, 2015

A. Accounting Convention:

These financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India under the historical cost convention, except for certain fixed assets which have been revalued. GAAP comprises mandatory accounting standards as prescribed under Companies Act, 2013 (Act''), the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued GAAP is initially adopted ora revision to an existing GAAP requires a change in the accounting policy hitherto in use.

b. Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

c. Revenue Recognition:

(i) Sales revenue is recognized on transfer of significant risk and rewards of the ownership of the goods to the buyer and stated at net of trade discounts and rebates. Other income is recognized on accrual basis. Dividend income on investments is accounted for when the right to receive the payment is established.

(ii) Renewable Energy Certificates (RECs) are recognized as accrued on the basis of notification issued by Central Electricity Regulatory Commission (CERC). Revenue from RECs is recognized on the basis of actual sale price on transferof certificates and on the basis of CERC prescribed floor price for RECs held by/accrued to the company.

(iii) Sale of Certified Emission Reductions (CERs) is recognized as Income on the delivery of the CERs to the buyer(s).

d. Fixed Assets:

(i) Tangible Assets, including modernization expenses incurred are stated at cost of acquisition, construction and improvement made, which is inclusive of freight, duties, taxes, incidental expenses, interest &fund raising cost and other pre-operative expenses apportioned and also includes revaluation amount.

(ii) Capital Work-in-Progress is stated at cost including interest and related expenses incurred during construction or pre-operative period.

(iii) Intangible Assets are stated at cost.

e. Depreciation & Amortization:

(i) Depreciation on tangible fixed assets, except leasehold land, is provided on the straight-line method over the useful lives of assets as prescribed in Schedule II to the Companies Act 2013 except for the following assets where the useful life is considered lowerthan that prescribed under Schedule II on the basis of internal technical assesment:

Depreciation for assets purchased/sold during the year is proportionately charged. Depreciation and amortisation method, useful live and residual values are reviewed periodically, including at each financial yearend.

(ii) Leasehold lands are amortized overthe period of lease on straight line basis.

(iii) Intangible Assets are amortized overtheirestimated useful lives on straight line basis,

f. Foreign CurrencyTransactions:

(i) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency monetary items are translated at the year end rates and the corresponding effect is given in the accounts excepting those transactions covered by the fixed forward contract for conversion of foreign currency loan in rupee loan which are stated at contracted amount. Transactions completed during the year are adjusted on actual basis.

(ii) In respect of transactions covered under forward foreign exchange contracts, the difference between the forward rate and exchange rate at the inception of contract is recognized as income orexpense overthe life of the contract.

(iii) Effects arising of interest swap contracts are being adjusted on the date of settlement. Year end liabilities/assets are recognized at the relevant rate prevailing on that date.

g. Inventories:

Inventories are valued as under:-

Stores & Spare Parts etc. At Cost or net realizable value whichever is lower

Raw Materials At Cost or net realizable value whichever is lower

Finished Goods At Cost or net realizable value, whichever is lower and in case of products, where cost cannot be ascertained, at net realizable value.

Work-in-Process At Raw Material Cost and/or at cost or net realizable value, whichever is lower

The Cost has been arrived at using Weighted Average method.

h. Investments:

Long term Investments are stated at cost less provision, if any, for diminution, which is considered as permanent in nature. Current Investments are stated atcostorfair value whichever is lower.

i. Employee Benefits:

Employee benefits of short-term nature are recognized as expenses as and when it accrues. Long-term employee benefits (e.g. long- service leave) and post employment benefits (e.g., gratuity), both unfunded, are recognized on expenses based on actuarial valuation at year end using projected unit credit method. Actuarial gain and losses are recognized immediately in the profit and loss account.

j. Taxes on Income:

(i) Provision for current Income tax is made in accordance with the Income Tax Act,1961. Deferred Tax is measured in accordance with Accounting Standard 22- ''Accounting for Taxes on Income'', as specified in the Companies (Accounting Standard) Rule, 2006 issued by Ministry of Corporate Affairs.

Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

(ii) Minimum Alternative Tax (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 minimum alternative tax credit becomes eligible to be recognized as an asset in accordance with the recommendation contained in guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of credit to Profit & Loss Account. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect thatthe Company will pay normal Income Tax during the specified period.

k. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalized up to the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

l. Impairment:

Impairment loss is recognized whereverthe carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expense in the statement of Profit and Loss and carrying amount of the assets is reduced to its recoverable amount. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exist or have decreased.

m. Commodity hedging contracts:

The realized gain or loss in respect of commodity hedging contracts, the pricing period of which has expired during the year are recognized in Profit and Loss Account. However, in respect of contracts, the pricing period of which extends beyond the Balance Sheet date, provisions for net loss on mark to market basis is made.

n. 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 there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes on Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.

o. Government Grants:

Government Grants are recognized when there is a reasonable assurance thatthe same will be received. Revenue grants are recognized in the Statement of Profit and Loss. Capital grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets. Other capital grants are credited to Capital Reserve.


Mar 31, 2014

A. Basis of Accounting

The Financial Statements are prepared under the historical cost convention, on an accrual basis and in accordance with the Generally Accepted Accounting Principles in India, the applicable mandatory Accounting Standards as notified by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

The financial statements has been prepared and presented as per the requirement of revised Schedule VI as notified under Companies Act 1956.

B. Use of Estimates

The preparation of financial statements require judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/materialized.

C. Tangible Assets & Capital work in Progress

Fixed Assets other than those which have been revalued, are stated at their original cost which includes expenditure incurred in the acquisition and construction/installation and other related expenses. In respect of qualifying assets, related pre-operational expenses including borrowing cost are also capitalised and included in the cost. Revalued assets are stated at the values determined on revaluation.

Capital Work in Progress is stated at cost which includes expenses incurred during construction period, interest on amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial production.

D. Intangible Assets

Intangible assets are recognized only when future economic benefit attributable to the assets will flow to the enterprise and cost can be measured reliably. Intangible assets are stated at cost. Cost includes any directly attributable expenditure on making the asset ready for its intended use.

E. Depreciation and Amortisation

a) Depreciation on Fixed Assets has been provided on straight-line method at the Rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 (as amended). Depreciation on revalued amount of fixed assets is adjusted by transferring the equivalent amount from Revaluation Reserve Account.

b) Intangible assets are amortised over their estimated useful life.

c) All the assets costing Rs. 5 or less are fully depreciated in the year of acquisition.

F. Impairment

Impairment loss is recognized wherever the carrying amount of an asset is in excess of its recoverable amount and the same is recognized as an expense in the statement of profit and loss and carrying amount of the asset is reduced to its recoverable amount.

Reversal of impairment losses recognized in prior years is adjusted when there is an indication that the Impairment losses recognized for the asset no longer exist or have decreased.

G. Investments

Long Term Investments are stated at Cost. Provision for diminution in value is made if the decline in value is other than temporary in the opinion of the management. Current Investments are stated at lower of cost and fair value.

H. Inventories

Basis of Valuation:

Stores, Spare Parts & Packing Materials : At Cost, based on weighted average method.

Raw Materials : At Cost, based on weighted average method or Net realizable value whichever is lower.

Work-in-progress : At Cost, based on weighted average method or Net realizable value whichever is lower.

Finished Goods : At Cost, based on standard cost duly adjusting the variance or Net realisable value, whichever is lower.

I. Foreign Currency Transactions

i) Transactions in foreign currency are recorded at the rate of exchange prevailing on the date of transaction. Year end balance of foreign currency transactions is translated at the year end rates. Exchange differences arising on settlement of monetary items or on reporting of monetary items at rates different from those at which they were initially recorded during the period or reported in previous financial statements are recognized as income or expense in the period in which they arise.

ii) In respect of transactions covered by Forward Exchange contract (except for firm commitments and highly probable forecast transactions), the difference between the forward rate and exchange rate at the inception of the contract is recognized as income or expense over the life of the contract. Exchange differences between rate at the inception of such contracts and rate on the reporting date are recognized as income or expenses for the period.

iii) Outstanding forward contract for firm commitment and highly probable forecast transactions and derivative contracts, other than those stated, above are marked to market and the resulting loss, if any, is charged to the Profit & Loss Account. Gain, if any, on such marking to market is not recognized as a prudent accounting policy.

J. Recognition of Income and Expenditure

a) All Income and Expenditure are accounted for on accrual basis except as otherwise stated.

b) Sales are inclusive of transport & delivery charges realised less excise duty, cess, rebates & claims, sales returns and discounts etc, if any.

c) Export benefit entitlements to the Company under the EXIM/Foreign Trade Policy are recognised in the year of exports on accrual basis.

K. Borrowing Cost

Borrowing cost directly attributable to the acquisition or construction of qualifying assets is capitalised. Other borrowing costs are recognized as expenses in the year in which they are incurred.

L. Employee benefits

i) Employee benefits of short term nature are recognized as expense as and when it accrues.

ii) Employee benefits of long term nature are recognized as expenses based on actuarial valuation.

iii) Post employment benefits :

a) In the nature of Defined Contribution Plans are recognized as expenses as and when it accrues.

b) In the nature of Defined Benefit Plans in respect of employees on roll are recognized as expenses based on actuarial valuation.

iv) Actuarial gains and losses are recognized immediately in the Profit and Loss account as income and expense.

M. Taxes on Income

Current tax is determined as the amount of tax payable in respect of taxable income for the year in accordance with the Provisions of the Income Tax Act 1961.Deferred tax liabilities and assets are recognised at substantively enacted tax rates, subject to the consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in the year and are capable of reversal in one or more subsequent years.

N. Government Grants

Grants from Government are recognised on compliance of conditions and on reasonable assurance of the same being received. Grants received from Government Agencies against specific fixed assets are adjusted to the cost of the assets and Capital Grants for Project Capital Subsidy are credited to Capital Reserve. Revenue grants are recognized as other income or reduced from respective expenses.

O. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized where reliable estimate can be made for probable outflow of resources to settle the present obligation as a result of past event and the same is reviewed at each Balance Sheet date. Contingent liabilities are generally not provided for in the accounts and are shown separately in Notes on Accounts. Contingent assets are neither recognized nor disclosed in financial statement.


Mar 31, 2013

A. Accounting Convention:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, applicable Accounting Standards as prescribed by Companies (Accounting Standards) Rule, 2006 issued by Ministry of Corporate Affairs and the provisions of the Companies Act,1956, except for certain fixed assets which have been revalued.

All items of income and expenditure have been recognized on accrual basis. The accounting policies applied by the Company are consistent with those used in the previous years.

b. Use of Estimates:

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

c. Revenue Recognition:

(i) Sales revenue is recognized on transfer of significant risk and rewards of the ownership of the goods to the buyer and stated at net of trade discounts and rebates. Other income is recognized on accrual basis. Dividend income on investments is accounted for when the right to receive the payment is established.

(ii) Renewable Energy Certificates (RECs) are recognized as accrued on the basis of notification issued by Central Electricity Regulatory Commission (CERC). Revenue from RECs is recognized on the basis of actual sale price on transfer of certificates and on the basis of CERC prescribed floor price for RECs held by/accrued to the company.

(iii) Sale of Certified Emission Reductions (CERs) is recognized as Income on the delivery of the CERs to the buyer(s).

d. Fixed Assets:

(i) Fixed Assets, including modernization expenses incurred are stated at cost of acquisition, construction and improvement made, which is inclusive of freight, duties, taxes, incidental expenses, interest & fund raising cost and other pre-operative expenses apportioned and also includes revaluation amount.

(ii) Capital Work-in-Progress is stated at cost including interest and related expenses incurred during construction or pre-operative period.

(iii) Intangible Assets are stated at cost.

e. Depreciation & Amortization :

(i) Depreciation on Tangible Assets, except leasehold land, has been provided using Straight Line Method at the rates and manner prescribed under Schedule XIV of the Companies Act, 1956. Leasehold lands are amortized over the period of lease on straight line basis.

(ii) Depreciation on revalued amount of Fixed Assets has been calculated on pro-rata basis to their residual life and charged to Profit & Loss Account in absence of Revaluation Reserve.

(iii) Intangible Assets are amortized over their estimated useful lives on straight line basis.

f. Foreign Currency Transactions :

(i) Year end balance of foreign currency transactions is translated at the year end rates and the corresponding effect is given in the accounts excepting those transactions covered by the fixed forward contract for conversion of foreign currency loan in rupee loan which are stated at contracted amount. Transactions completed during the year are adjusted on actual basis.

(ii) In respect of transactions covered under forward foreign exchange contracts, the difference between the forward rate and exchange rate at the inception of contract is recognized as income or expense over the life of the contract.

(iii) Effects arising of interest swap contracts are being adjusted on the date of settlement. Year end liabilities/assets are recognized at the relevant rate prevailing on that date.

g. Inventories:

Inventories are valued as under:- Stores & Spare Parts etc.# At Cost or net realizable value whichever is lower Raw Materials # At Cost or net realizable value whichever is lower Finished Goods At Cost or net realizable value, whichever is lower and in case of products, where cost cannot be ascertained, at net realizable value. Work-in-Process At Raw Material Cost and/or at cost or net realizable value, whichever

is lower # The Cost has been arrived at using Weighted Average method.

h. Investments :

Long term Investments are stated at cost less provision, if any, for diminution, which is considered as permanent in nature. Current Investments are stated at cost or fair value whichever is lower.

i. Employee Benefits:

Employee benefits of short-term nature are recognized as expenses as and when it accrues. Long-term employee benefits (e.g. long- service leave) and post employment benefits (e.g., gratuity), both unfunded, are recognized on expenses based on actuarial valuation at year end using projected unit credit method. Actuarial gain and losses are recognized immediately in the profit and loss account.

j. Taxes on Income:

(i) Provision for current Income tax is made in accordance with the Income Tax Act,1961. Deferred Tax is measured in accordance with Accounting Standard 22- ''Accounting for Taxes on Income'', as specified in the Companies (Accounting Standard) Rule, 2006 issued by Ministry of Corporate Affairs.

Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

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

k. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalized up to the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

l. Impairment:

Impairment loss is recognized wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognized as an expense in the statement of Profit and Loss and carrying amount of the assets is reduced to its recoverable amount. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets no longer exist or have decreased.

m. Commodity hedging contracts :

The realized gain or loss in respect of commodity hedging contracts, the pricing period of which has expired during the year are recognized in Profit and Loss Account. However, in respect of contracts, the pricing period of which extends beyond the Balance Sheet date, provisions for net loss on mark to market basis is made.

n. 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 there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes on Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2012

A. Accounting Convention:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, applicable Accounting Standards as prescribed by Companies (Accounting Standards) Rule, 2006 issued by Ministry of Corporate Affairs and the provisions of the Companies Act,1956, except for certain fixed assets which have been revalued.

All items of income and expenditure have been recognised on accrual basis. The accounting policies applied by the Company are consistent with those used in the previous years.

b. Use of Estimates:

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

c. Revenue Recognition:

Sales revenue is recognised on transfer of significant risk and rewards of the ownership of the goods to the buyer and stated at net of trade discounts and rebates. Other income is recognised on accrual basis. Dividend income on investments is accounted for when the right to receive the payment is established.

Sale of Certified Emission Reductions (CERs) is recognised as Income on the delivery of the CERs to the buyer(s).

d. Fixed Assets:

(i) Fixed Assets, including modernisation expenses incurred are stated at cost of acquisition, construction and improvement made, which is inclusive of freight, duties, taxes, incidental expenses, interest & fund raising cost and other pre-operative expenses apportioned and also includes revaluation amount.

(ii) Capital Work-in-Progress is stated at cost including interest and related expenses incurred during construction or pre-operative period.

(iii) Intangible Assets are stated at cost of acquisition less accumulated amortization.

e. Depreciation/Amortisation :

(i) Depreciation has been calculated on Straight Line Method (SLM) on the assets acquired/installed upto 30th June, 1986 at the rates prevailing at the time of acquisition or installation of the said assets. On the assets acquired thereafter upto 31st March, 1993 the specified period was recomputed according to the revised rates of depreciation as prescribed in Schedule XIV to the Companies Act, 1956 and the amount of depreciation on these assets has been calculated by allocating unamortised value over the remaining part of the recomputed specified period. Depreciation on subsequent additions has been calculated at SLM as per the rates prescribed in Schedule XIV to the Companies Act, 1956.

(ii) Lease hold land is being amortised over the period and/or remaining period of the lease.

(iii) Depreciation on revalued amount of Fixed Assets has been calculated on pro-rata basis to their residual life and charged to Profit & Loss Account in absence of Revaluation Reserve.

(iv) Intangible Assets consisting of Computer Software are amortised over a period of three years using Straight Line Method.

f. Foreign Currency Transaction :

(i) Year end balance of foreign currency transactions is translated at the year end rates and the corresponding effect is given in the accounts excepting those transactions covered by the fixed forward contract for conversion of foreign currency loan in rupee loan which are stated at contracted amount. Transactions completed during the year are adjusted on actual basis.

(ii) In respect of transactions covered under forward foreign exchange contracts, the difference between the forward rate and exchange rate at the inception of contract is recognised as income or expense over the life of the contract.

(iii) Effects arising of interest swap contracts are being adjusted on the date of settlement. Year end liabilities/assets are recognised at the relevant rate prevailing on that date.

g. Inventories:

Inventories are valued as under:-

Stores & Spare Parts etc.# At Cost or net realisable value whichever is lower Raw Materials # At Cost or net realisable value whichever is lower Finished Goods At Cost or net realisable value, whichever is lower and in case of products, where cost cannot be ascertained, at net realisable value. Work-in-Process At Raw Material Cost and/or at cost or net realisable value, whichever is lower

# The Cost has been arrived at using Weighted Average method.

h. Investments:

Long term Investments are stated at cost less provision, if any, for diminution, which is considered as permanent in nature. Current Investments are stated at cost or fair value whichever is lower

i. Employee Benefits:

Employee benefits of short-term nature are recognised as expenses as and when it accrues. Long-term employee benefits (e.g. long- service leave) and post employment benefits (e.g., gratuity), both unfunded, are recognised on expenses based on actuarial valuation at year end using projected unit credit method. Actuarial gain and losses are recognised immediately in the profit and loss account.

j. Taxation:

(i) Provision for current Income Tax is made in accordance with the Income Tax Act,1961. Deferred Tax is measured in accordance with Accounting Standard 22- 'Accounting for Taxes on Income', as specified in the Companies (Accounting Standard) Rule, 2006 issued by Ministry of Corporate Affairs. The deferred tax charge or credit is recognised, subject to consideration of prudence, using substantively enacted tax rates, for timing differences between book and tax profits that originate in one period and are capable of reversal in one or more subsequent periods.

(ii) Minimum Alternative Tax (MAT) credit is recognised 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 minimum alternative tax credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of credit to Profit & Loss Account. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

k. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

Premium on redemption of Bonds/Debentures to the extent they are related/attributed to acquisition/ construction of qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use. Thereafter, Premium on redemption of Bonds/Debentures, net of tax impact, are adjusted against Securities Premium Account.

l. Impairment:

Impairment loss is recognised wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognised as an expense in the statement of Profit and Loss and carrying amount of the assets is reduced to its recoverable amount. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

m. Commodity hedging contracts :

The realized gain or loss in respect of commodity hedging contracts, the pricing period of which has expired during the year are recognized in Profit and Loss Account. However, in respect of contracts, the pricing period of which extends beyond the Balance Sheet date, provisions for net loss on mark to market basis is made.

n. 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 there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes on Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2011

1. Accounting Convention:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, applicable Accounting Standards as prescribed by Companies (Accounting Standards) Rule, 2006 issued by Ministry of Corporate Affairs and the provisions of the Companies Act, 1956, except for certain fixed assets which have been revalued.

All items of income and expenditure have been recognised on accrual basis. The accounting policies applied by the Company are consistent with those used in the previous years.

2. Use of Estimates:

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

3. Revenue Recognition:

Sales revenue is recognised on transfer of significant risk and rewards of the ownership of the goods to the buyer and stated at net of trade discounts and rebates. Other income is recognised on accrual basis. Dividend income on investments is accounted for when the right to receive the payment is established.

Sale of Certified Emission Reductions (CERs) is recognised as Income on the delivery of the CERs to the buyer(s).

4. Fixed Assets:

(i) Fixed Assets, including modernisation expenses incurred are stated at cost of acquisition, construction and improvement made, which is inclusive of freight, duties, taxes, incidental expenses, interest & fund raising cost and other pre-operative expenses apportioned and also includes revaluation amount.

(ii) Capital Work-in-Progress is stated at cost including project advances, interest and related expenses incurred during construction or pre- operative period.

(iii) Intangible Assets are stated at cost of acquisition less accumulated amortization.

5. Depreciation/Amortisation:

(i) Depreciation has been calculated on Straight Line Method (SLM) on the assets acquired/installed upto 30th June, 1986 at the rates prevailing at the time of acquisition or installation of the said assets. On the assets acquired thereafter upto 31st March, 1993 the specified period was recomputed according to the revised rates of depreciation as prescribed in Schedule XIV to the Companies Act, 1956 and the amount of depreciation on these assets has been calculated by allocating unamortised value over the remaining part of the recomputed specified period. Depreciation on subsequent additions has been calculated at SLM as per the rates prescribed in Schedule XIV to the Companies Act, 1956.

(ii) Lease hold land is being amortised over the period and/or remaining period of the lease.

(iii) Depreciation on revalued amount of Fixed Assets has been calculated on pro-rata basis to their residual life and charged to Profit & Loss Account in absence of Revaluation Reserve.

(iv) Intangible Assets consisting of Computer Software are amortised over a period of three years using Straight Line Method.

6. Foreign Currency Transaction:

(i) Year end balance of foreign currency transactions is translated at the year end rates and the corresponding effect is given in the accounts excepting those transactions covered by the fixed forward contract for conversion of foreign currency loan in rupee loan which are stated at contracted amount. Transactions completed during the year are adjusted on actual basis.

(ii) In respect of transactions covered under forward foreign exchange contracts, the difference between the forward rate and exchange rate at the inception of contract is recognised as income or expense over the life of the contract.

(iii) Effects arising of interest swap contracts are being adjusted on the date of settlement. Year end liabilities/assets are recognised at the relevant rate prevailing on that date.

7. Inventories:

Inventories are valued as under:-

Stores & Spare Parts etc.# At Cost or net realisable value whichever is lower

Raw Materials # At Cost or net realisable value whichever is lower

Coal & Fuel at Power Plant # At Cost or net realisable value whichever is lower

Machinery Spares of Irregular Use * At Written Down Value

Finished Goods At Cost or net realisable value, whichever is lower and in case of products, where cost cannot be ascertained, at net realisable value.

Work-in-Process At Raw Material Cost and/or at cost or net realisable value, whichever is lower

Power Banked At Cost

* Written off over the remaining useful life of the respective machinery.

# The Cost has been arrived at using Weighted Average method.

8. Investments:

Long term Investments are stated at cost less provision, if any, for diminution, which is considered as permanent in nature. Current Investments are stated at cost or fair value whichever is lower.

9. Employee Benefits:

Employee benefits of short-term nature are recognised as expenses as and when it accrues. Long-term employee benefits (e.g. long- service leave) and post employment benefits (e.g., gratuity), both unfunded, are recognised on expenses based on actuarial valuation at year end using projected unit credit method. Actuarial gain and losses are recognised immediately in the profit and loss account.

10. Taxation:

(i) Provision for current Income Tax is made in accordance with the Income Tax Act,1961. Deferred Tax is measured in accordance with Accounting Standard 22- 'Accounting for Taxes on Income', as specified in the Companies (Accounting Standard) Rule, 2006 issued by Ministry of Corporate Affairs. The deferred tax charge or credit is recognised, subject to consideration of prudence, using substantively enacted tax rates, for timing differences between book and tax profits that originate in one period and are capable of reversal in one or more subsequent periods.

(ii) Minimum Alternative Tax (MAT) credit is recognised 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 minimum alternative tax credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of credit to Profit & Loss Account. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

11. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

Premium on redemption of Bonds/Debentures to the extent they are related/attributed to acquisition/ construction of qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use. Thereafter, Premium on redemption of Bonds/Debentures, net of tax impact, are adjusted against Securities Premium Account.

12. Impairment:

Impairment loss is recognised wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognised as an expense in the statement of Profit and Loss and carrying amount of the assets is reduced to its recoverable amount. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

13. Commodity hedging contracts:

The realized gain or loss in respect of commodity hedging contracts, the pricing period of which has expired during the year are recognized in Profit and Loss Account. However, in respect of contracts, the pricing period of which extends beyond the Balance Sheet date, provisions for net loss on mark to market basis is made.

14. 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 there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the Notes on Accounts. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

1. Accounting Convention:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles in India, applicable Accounting Standards as prescribed by Companies (Accounting Standards) Rule, 2006 issued by Ministry of Corporate Affairs and the provisions of the Companies Act, 1956, except for certain fixed assets which have been revalued. ,

All items of income and expenditure have been recognised on accrual basis, The accounting policies applied by the Company are consistent with those used in the previous years.

2. Use of Estimates:

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

3. Revenue Recognition:

Sales revenue is recognised on transfer of significant risk and rewards of the ownership of the goods to the buyer and stated at net of trade discounts and rebates. Other income is recognised on accrual basis. Dividend income on investments is accounted for when the right to receive the payment is established.

4. Fixed Assets:

(i) Fixed Assets, including modernisation expenses incurred are stated at cost of acquisition, construction and improvement made, which is inclusive of freight, duties, taxes, incidental expenses, interest & fund raising cost and other pre-operative expenses apportioned and also includes revaluation amount.

(ii) Capital Work-in-Progress is stated at cost including project advances, interest and related expenses incurred during construction or pre- operative period.

(iii) Intangible Assets are stated at cost of acquisition less accumulated amortization.

5. Depreciation/Amortisation:

(i) Depreciation has been calculated on Straight Line Method (SLM) on the assets acquired/installed upto 30th June, 1986 at the rates prevailing at the time of acquisition or installation of the said assets. On the assets acquired thereafter upto 31 st March, 1993 the specified period was recomputed according to the revised rates of depreciation as prescribed in Schedule XIV to the Companies Act, 1956 and the amount of depreciation on these assets has been calculated by allocating unamortised value over the remaining part of the recomputed specified period. Depreciation on subsequent additions has been calculated at SLM as per the rates prescribed in Schedule XIV to the Companies Act, 1956.

(ii) Lease hold land is being amortised over the period and/or remaining period of the lease.

(iii) Depreciation on revalued amount of Fixed Assets has been calculated on pro-rata basis to their residual life and charged to Profit & Loss Account in absence of Revaluation Reserve.

(iv) Intangible Assets consisting of Computer Software are amortised over a period of three years using Straight Line Method.

6. Foreign Currency Transaction:

(i) Year end balance of foreign currency transactions is translated at the year end rates and the corresponding effect is given in the accounts excepting those transactions covered by the fixed forward contract for conversion of foreign currency loan in rupee loan which are stated at contracted amount. Transactions completed during the year are adjusted on actual basis.

(ii) In respect of transactions covered under forward foreign exchange contracts, the difference between the forward rate and exchange rate at the inception of contract is recognised as income or expense over the life of the contract.

(iii) Effects arising of interest swap contracts are being adjusted on the date of settlement. Year end liabilities/assets are recognised at the relevant rate prevailing on that date.

7. Inventories:

Inventories are valued as under:-

Stores & Spare Parts etc.# At Cost or net realisable value whichever is lower

Raw Materials # At Cost or net realisable value whichever is lower

Coal & Fuel at Power Plant # At Cost or net realisable value whichever is lower

Machinery Spares of Irregular Use * At Written Down Value

Finished Goods At Cost or net realisable value, whichever is lower and in case of products,

where cost cannot be ascertained, at net realisable value.

Work-in-Process At Raw Material Cost and/or at cost or net realisable value, whichever is lower

Power Banked At Cost

* Written off over the remaining useful life of the respective machinery.

# The Cost at Chloro Chemicals has been arrived at using FIFO method and at Alco Chemicals using Weighted Average method.

8. Investments:

Long term Investments are stated at cost less provision, if any, for diminution, which is considered as permanent in nature.

9. Employee Benefits:

Employee benefits of short-term nature are recognised as expenses as and when it accrues. Long-term employee benefits (e.g. long- service leave) and post employment benefits (e.g. gratuity), both unfunded, are recognised on expenses based on actuarial valuation at year end using projected unit credit method. Actuarial gain and losses are recognised immediately in the profit and loss account.

10. Taxation:

(i) Provision for current Income Tax is made in accordance with the Income Tax Act,1961. Deferred Tax is measured in accordance with Accounting Standard 22- Accounting for Taxes on Income, as specified in the Companies (Accounting Standard) Rule, 2006 issued by Ministry of Corporate Affairs. The deferred tax charge or credit is recognised, subject to consideration of prudence, using substantively enacted tax rates, for timing differences between book and tax profits that originate in one period and are capable of reversal in one or more subsequent periods.

(ii) Minimum Alternative Tax (MAT) credit is recognised 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 minimum alternative tax credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in guidance note issued by The Institute of Chartered Accountants of India, the said asset is created by way of credit to Profit & Loss Account. The Company reviews the same at each Balance Sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.

11. Borrowing Cost:

Interest and other costs in connection with the borrowing of the funds to the extent related/attributed to the acquisition/construction of qualifying fixed assets are capitalised upto the date when such assets are ready for its intended use and other borrowing costs are charged to Profit & Loss Account.

Premium on redemption of Bonds/Debentures to the extent they are related/attributed to acquisition/ construction of qualifying fixed assets are capitalized upto the date when such assets are ready for its intended use. Thereafter, Premium on redemption of Bonds/Debentures, net of tax impact, are adjusted against Securities Premium Account.

12. Impairment:

Impairment loss is recognised wherever the carrying amount of an assets is in excess of its recoverable amount and the same is recognised as an expense in the statement of Profit and Loss and carrying amount of the assets is reduced to its recoverable amount. Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased.

13. Commodity hedging contracts:

The realized gain or loss in respect of commodity hedging contracts, the pricing period of which has expired during the year are recognized in Profit and Loss Account. However, in respect of contracts, the pricing period of which extends beyond the Balance Sheet date, provisions for net loss on mark to market basis is made.

14. Contingent Liabilities:

Contingent Liabilities are not provided for and are separately disclosed by way of a note in this Schedule.