Mar 31, 2018
Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable of Directors has been considered in preparing these financial statements.
2.2 Basis of Preparation of Financial Statements
These financial statements are prepared on the accrual basis of accounting, under the historical cost convention except for the following:
i) Certain financial assets and financial liabilities measured at fair value and
ii) Defined benefits plan - plan assets measured at fair value.
There is no change in the system of accounting as being consistently followed from earlier years unless otherwise stated.
All assets and liabilities have been classified as current or non-current as per company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of operations and time between procurement of raw material and realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
2.3 Use of Estimates
The preparation of the Financial Statements in conformity with GAPP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenditure during the period. Management believes that the estimates made in the preparation of the financial statements are prudent and reliable. Actual results might differ from the estimates. Difference between the actual results and estimates are recognized in the period in which results are known/material.
i) Estimated useful life of Property, plant and equipment
PPE represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual value of the asset are determined by the management when the asset is acquired and reviewed periodically including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their lives, such as change in technology.
ii) Recognition of deferred tax assets for carried forward tax losses and unused tax credit
Deferred tax assets are recognized for unused losses (carry forward of prior years'' losses) and unused tax credit to the extent that it is probable that taxable profit would be
NOTES FORMING PART OF FINANCIALSTATEMENTS
1. Corporate Information
K.M Sugar Mills Limited is a public limited company incorporated and domiciled in India. The registered office of the Company is situated at 11, Moti Bhawan, Collector Ganj, Kanpur, Uttar Pradesh - 208001.
The Company''s shares are listed on the BSE Ltd and National Stock Exchange of India Ltd.
The Company is engaged in sugar manufacturing. The principal activity of the Company is manufacturing of sugar and the company is also engaged in power generation using baggase and in manufacturing of ethanol, SDS and using molasses.
2. Significant Accounting Policies
2.1 Statement of Compliance with Ind AS In accordance with the notification dated 16th February,
2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as "Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) with effect from 1st April, 2016 with restatement of previous year figures presented in this financial statements. Accordingly, the financial statements have been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, 2013 ("Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016.
The Company has adopted all the applicable Ind AS and the adoption was carried out in accordance with Ind AS- 101 - First time adoption of Indian Accounting Standards. The transition was carried out from Generally Accepted Accounting Principles in India, which comprised of applicable Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (ICAI), relevant applicable provisions of the Companies Act, 1956, and the Companies Act, 2013 to the extent applicable and the applicable guidelines issued by the Securities and Exchange Board of India (SEBI) ("Previous GAAP).
These financial statements for the year ended 31st March, 2018 are the first financial statements of the Company prepared in accordance with Ind AS. The date of transition to Ind AS is 1st April, 2016.
All the Ind AS issued and notified by the Ministry of Corporate Affairs under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) till the financial statements are approved for issue by the Board
The Property, plant and equipment (PPE) and Capital work-in-progress (CWIP) are stated at cost net of cenvat credit and/or at revalued price less accumulated depreciation and Accumulated Impairment.
Interest on borrowings used to finance the construction of qualifying assets are capitalized as part of the cost of the asset until such time that the asset is ready for its intended use.
Depreciation on Property, plant and equipment (PPE) is provided on written down value method as prescribed under Part C of Schedule II to the Companies Act, 2013. The additional depreciation, on increase in cost on account of revaluation, is transferred to Retained Earnings from Revaluation Reserve and is thus not charged to statement of Profit & Loss of the year.
Useful life of assets are considered on the base is of Schedule-II of Companies Act, 2013
Subsequent costs are included in the asset''s carrying amount only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.
All other repair and maintenance costs are recognized in the Statement of Profit and Loss as incurred.
Each item of PPE individually costing Rs.5,000 or less is depreciated fully in the year of their put to use. Depreciation/amortization on assets added, sold or discarded during the year is provided on pro-rata basis.
2.5 Intangible assets (Computer Software)
Transition to Ind AS:
The Company has elected to continue with carrying value of computer software under the previous GAAP, as deemed cost as at the transition date i.e. 1st April, 2016. Under the previous GAAP, computer software was stated at their original cost (net of accumulated amortization and accumulated impairment, if any).
Intangible assets expected to provide future enduring economic benefits are recorded at the consideration paid for acquisition of such assets and are carried at cost of acquisition less accumulated amortization and impairment, if any.
Intangible assets: Computer software is amortized over a period of four years.
2.6 Revenue Recognition and Expenses
(i) Revenue is recognized to the extent it is probable that economic benefits would flow to the Company and the revenue can be reliably measured, regardless of when the revenue proceeds is received from customers.
(ii) Revenue is measured at the fair value of the consideration received/receivable taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the Government.
(iii) Revenue from the sale of products is recognized when available against which the losses could be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
iii) Estimation of Defined benefit obligations
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each financial year end. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans, the actuary considers the interest rates of government bonds. The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
iv) Estimated fair value of unlisted securities
The fair values of financial instruments that are not traded in an active market and cannot be measured based on quoted prices in active markets is determined using valuation techniques including the discounted cash flow (DCF) model. The company uses its judgment to select a variety of method / methods and make assumptions that are mainly based on market conditions existing at the end of each financial year. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgment includes considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
2.4 Property, plant and equipment (PPE) and Capital work-in-progress (CWIP)
Transition to Ind AS
The Company has elected to continue with carrying value of all Property, plant and equipment and Capital work-in-progress (CWIP) under the previous GAAP as deemed cost as at the transition date i.e. 1st April, 2016.
Under the previous GAAP, Property, plant and equipment were stated at their original cost (net of accumulated depreciation and impairment) adjusted by revaluation of certain assets.
- In the principal market for the asset or liability; or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operations.
External valuers are involved for valuation of significant assets, such as properties. Involvement of external valuers is decided by the management after discussion with and approval by the Company''s management. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The management decides, after discussions with the Company''s external valuers, which valuation techniques and inputs to use for each case.
At each reporting date, the management analyses the the property in goods is transferred to the buyer for a consideration. Revenue from service transaction is recognized as the service is performed.
(iv) Insurance claims have been accounted for on cash basis as per past practice.
(v) Revenue from certified emission reductions (CERs) and renewable emission certificate (REC) is recognized on cash basis in the absence of reasonable assurance that future economic benefits will flow from the same to the company.
(vi) All other Incomes are accounted for on accrual basis.
2.7 Expenses
(i) All expenses are accounted for on accrual basis.
2.8 Inventory
a) Cost of inventory comprises of purchase price, cost of conversion and other cost that have been incurred in bringing the inventories to their respective present location and condition. Interest costs are not included in value of inventory.
Inventories are valued as under:
a) Raw Materials and Finished Goods (except molasses) are carried at lower of cost and net realizable value.
b) Stock of Molasses is carried at net realizable value.
c) Stores & Spares are carried at cost.
d) Goods in Process / WIP are carried at lower of cost and net realizable Value.
e) Banked power with UPPCL is carried at lower of cost and net realizable value.
Cost for the purpose of valuations of raw material and components, stores & spares are considered on following basis:
Manufacturing Units Basis
Sugar
- Raw Material First in First Out
- Stores & Spares and Weighted Average other components
- Trading Goods First in First Out Distillery
- Raw Material First in First Out
- Stores & Spares Weighted Average Other components
Co-generation
- Raw Material First in First Out
2.9 Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date.
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. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability I takes place either: on acquisition and fees or costs that are an integral part of the EIR.
Equity investments
All equity investments in the scope of Ind AS 109 are measured at fair value except in case of investment in subsidiary carried at deemed cost and associate carried at cost.
Deemed cost is the carrying amount under the previous GAAP as at the transition date i.e. 1st April, 2016. Equity instruments included within the FVTPL category, if any, are measured at fair value with all changes recognized in profit or loss. The Company may make an irrevocable election to present in OCI subsequent changes in the fair value.
The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in OCI.
There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. De-recognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.
2.11 Employees Benefits
(i) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short term employee benefits to be paid in exchange for employee services are recognized as an expense as the related service is rendered by employees.
(ii) Post-employment benefits Defined contribution plans:
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The company makes specified monthly contributions towards provident fund. The Company''s contribution is recognized as an expense in the statement of profit and loss during the period in which employee renders the related service.
Defined benefit plan:
The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is movements in the values of assets and liabilities, which are required to be premeasured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
2.10 Financial instruments
Financial assets and financial liabilities are recognized in the Balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value.
Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. The financial assets include equity and debt securities, trade and other receivables, loans and advances, cash and bank balances and derivative financial instruments.
Subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
1) At amortized cost,
2) At fair value through other comprehensive income (FVTOCI), and
3) At fair value through profit or loss (FVTPL).
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
1) The asset is held within a business model whose objective is to hold the asset for collecting contractual cash flows, and
2) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium
Borrowing costs attributable to the qualifying assets are capitalized up to the period such assets are ready for the intended use and commenced commercial production. All other borrowing cost is charged to the Statement of Profit & Loss in the period in which they are incurred. 2.13Government Grants
Government grants are recognized at fair value when there is reasonable assurance that the grant would be received and the Company would comply with all the conditions attached with them.
Government grants related to PPE are treated as deferred income (included under non-current liabilities with current portion considered under current liabilities) and are recognized and credited in the Statement of Profit and Loss on a systematic and rational basis over the estimated useful life of the related asset and included under "Other Income". The benefit of government loan at a below-market rate of interest is treated as a government grant. The Difference between the market rate of interest and actual rate of interest is treated as government grant.
First time Adopter shall classify all government loan received as financial liability or Equity as per Ind AS- 32. First time adopter shall apply the requirement in Ind AS -20 and Ind AS -109 to government loan existing at the date of transition to Ind AS and shall not recognized the corresponding benefit of government loan at below market rate of interest as government grant.
Government Grants in the nature of Government promoters'' contribution, i e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to retained earnings as related to the previous years.
2.14Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for on the date of their settlement and realized gain/loss in respect of settled contracts are recognized in the Statement of Profit & Loss, along with the underlying transactions.
2.15Foreign Currency Transactions and Translations
a) Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items denominated in foreign currency at the yearend are translated at year end rates.
b) Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
c) In respect of monetary items which are covered by forward exchange contracts, the difference between the year end and the rate on the date of contract is recognized as exchange difference and the premium on discounted to determine its present value, and the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.
When the calculation results in a benefit to the Company, the recognized asset is limited to the net total of any unrecognized actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Actuarial gains and losses are recognized in the other comprehensive income
(iii) Long term employment benefits
The Company''s net obligation in respect of long-term employment benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.
(iv)Compensated absences
The employees can carry-forward a portion of the unutilized accrued compensated absences and utilize it in future service periods or receive cash compensation on termination of employment. Since the compensated absences do not fall due wholly within twelve months after the end of the period in which the employees render the related service and are also not expected to be utilized wholly within twelve months after the end of such period, the benefit is classified as a long-term employee benefit. The Company records an obligation for such compensated absences in the period in which the employee renders the services that increase this entitlement. The obligation is measured on the basis of independent actuarial valuation using the projected unit credit method.
Short term employee benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss for the year in which the related service is rendered.
2.12Borrowing Costs
recoverable amount, costs of disposal and value in use.
(iii) For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or group of assets (cash generating units).
(iv) Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of the each reporting period.
2.18 Leases
Assets acquired as leases where a significant portion of the risks and rewards of the ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit & Loss on accrual basis.
2.19 Provisions, Contingent Liabilities and Contingent Assets
(i) Provision is recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable.
(ii) Provision is recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated.
(iii) Provisions are not recognized for future operating losses.
(iv) Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company.
(v) A contingent asset is not recognized in the financial statements.
(vi) Provisions and contingent liabilities are reviewed at each balance sheet date.
2.20 Investment Property
Investment property is property (land or a buildingâor part of a buildingâor both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for: (a) use in the production or supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business. Owner-occupied property is property held (by the owner or by the lessee under a finance lease) for use in the production or supply of goods or services or for administrative purposes. Investment properties are accounted for in the books at cost. However, fair value of such property is required to be disclosed only in accordance with Ind AS 40.
2.21Segment Reporting Primary Segment
Based on the guiding principles given in the Ind AS-108 "Segment Reporting" issued by ICAI, the Company''s such forward contracts is recognized over the life of the forward contract.
d) The exchange differences arising on settlement / translation are recognized in the Statement of Profit and Loss.
2.16 Taxes on Income
(a) Current Tax
Tax on income for the current period is determined on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which give future economic benefit in the form of adjustment to future income tax liability is considered as an asset to the extent there is convincing evidence that the company will pay normal income tax.
(b) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statement and the corresponding tax bases used in the computation of taxable profit.
Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition of an asset or liability in a transaction (other than a business combination) affects neither accounting profit nor taxable profit (tax loss).
Deferred tax assets are recognized for the carry forward of unused tax losses and unused tax credit to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities are generally recognized on all taxable temporary differences.
2.17Impairment of Non-financial Assets
(i) Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
(ii) An impairment loss is recognized for the amount by which the assets'' carrying amount exceeds its share and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares.
2.23 Cash and Cash Equivalents
Cash and cash equivalents Cash and cash equivalents in the Balance sheet comprise cash on hand, cheques on hand, balance with banks on current accounts and short term, highly liquid investments with an original maturity of three months or less and which carry insignificant risk of changes in value.
For the purpose of the Cash Flow Statement, Cash and cash equivalents consist of Cash and cash equivalents, as defined above and net of outstanding book overdrafts as they are considered an integral part of the Company''s cash management
2.24 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payment and item of income or expenses associated with investing or financing flows. The cash flows operating, investing and financing activities of the company are segregated.
segments are Sugar, Power Generation and Distillery. Revenue and expenses have been accounted for on the basis of their relationship to the operating activities of the respective segment.
Segment Identification
Business segments have been identified on the basis of the nature of products/ services, the risk return profile of individual business, the organizational structure and the internal reporting system of the company.
The operating segments are reported after taken into consideration of Aggregation criteria and Quantitative threshold as mentioned in Para 12 and 13 of Ind AS 108. Excise duty in respect of finished goods held in stock has been accounted for at the end of the year and is included in the value of closing stock.
2.22 Earning Per Share
Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post-tax effect of extra ordinary items, if any) by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit/ (loss) after tax (including the post-tax effect of extra ordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per
i i ) Rights, preferences and restrictions attached to the equity shares
The Company has only one class of Issued, subscribed and paid up equity shares having a par value of INR 2/- each per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Summary of short term borrowings
Secured borrowings
Nature of Securities
1. Working capital loans from State Bank of India is secured by way of hypothecation and first pari passu charge on stocks of sugar, molasses, consumable stores / spares, industrial alcohal, book debts and other current assets of the company, second pari passu charge with other working capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of three Directors, pledge of shares and corporate guarantee of KM Plantation Pvt. Ltd.
2. Working capital loan from Punjab National Bank is secured by pledge of stock of Crystal sugar, second pari passu charge with other working capital capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of two Directors, pledge of shares and corporate guarantee of KM Plantation Pvt. Ltd.
3. Working capital loans from The Federal Bank Ltd. is secured by way of hypothecation and first pari passu charge on stocks of sugar, molasses, consumable stores / spares, industrial alcohal, book debts and other current assets of the company, second pari passu charge with other working capital lenders on entire fixed assets and all other movable and immovable assets of the company (existing & future), personal guarantee of two Directors, pledge of shares and corporate guarantee of KM Plantation Pvt. Ltd.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
These financial statements are prepared on the accrual basis of
accounting, under the historical cost convention except for revaluation
of certain Fixed Assets, in accordance with the Companies Act, 1956 and
the applicable Accounting Standards issued by the Institute of
Chartered Accountants of India. There is no change in the system of
accounting as being consistently followed from earlier years unless
otherwise stated.
All assets and liabilities have been classified as current or non-
current as per company's normal operating cycle and other criteria set
out in the Schedule VI to the Companies Act, 1956. Based on the nature
of operations and time between procurement of raw material and
realization in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current and
non-current classification of assets and liabilities.
1.2 Use of Estimates
The preparation of the Financial Statements in conformity with GAPP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenditure during the period.
Management believes that the estimates made in the preparation of the
financial statements are prudent and reliable. Actual results might
differ from the estimates. Difference between the actual results and
estimates are recognized in the period in which results are
known/materialized.
1.3 Significant Accounting Policies
a) Fixed Assets
i) Tangible Fixed Assets are stated at cost net of cenvat credit and/or
at revalued price less accumulated depreciation. All costs including
financing costs relating to borrowing till commencement of commercial
production attributable to the fixed assets are capitalized.
ii) Depreciation on fixed assets is provided on written down value
method at the rates and the manner prescribed in Schedule XIV of the
Companies Act, 1956. The additional depreciation, on increase in cost
on account of revaluation, is transferred to statement of Profit & Loss
from Revaluation Reserve and is thus not charged to statement of Profit
& Loss of the year.
iii) Tangible Fixed Assets costing up to Rs.5,000/- are being
depreciated fully in the year of their put to use.
iv) Depreciation/amortization on assets added, sold or discarded during
the year is provided on pro-rata basis.
v) Intangible assets expected to provide future enduring economic
benefits are recorded at the consideration paid for acquisition of such
assets and are carried at cost of acquisition less accumulated
amortization and impairment, if any.
Intangible assets: Computer software is amortized over a period of four
years.
b) Revenue Recognition and Expenses
i. Revenue from the sale of products is recognized when the property in
goods is transferred to the buyer for a consideration. Revenue from
service transaction is recognized as the service is performed.
ii. Insurance claims have been accounted for on cash basis as per past
practice.
iii. Revenue from certified emission reductions (CERs) and renewable
emission certificate (REC) is recognized on cash basis in the absence
of reasonable assurance that future economic benefits will flow from
the same to the company.
iv. All the expenses are accounted for on accrual basis.
c) Inventories are valued as under:
i. Raw Materials and Finished Goods (except molasses) are carried at
lower of cost or net realizable value.
ii. Stock of Molasses are carried at net realizable value.
iii. Stores & Spares are carried at cost.
iv. Goods in Process / WIP is carried at lower of cost or net
realizable Value.
v. Banked power with UPPCL is carried at lower of cost or net
realizable value.
Cost of inventory comprises of purchase price, cost of conversion and
other cost that have been incurred in bringing the inventories to their
respective present location and condition. Interest cost are not
included in value of inventory.
Cost for the purpose of valuations of raw material and components,
stores & spares are considered on following basis:
Manufacturing Units Basis
Sugar
- Raw Material First in First Out
- Stores & Spares and other components Weighted monthly average
- Trading Goods First in First Out
Distillery
- Raw Material First in First Out
- Stores & Spares Other components Weighted monthly average
Co-generation
- Raw Material First in First Out
d) Investments
Long term Investments are carried at cost. However, provision for
diminution is made to recognize decline, other than temporary, in the
value of investment, if any. Current Investment is carried at cost or
market value, whichever is lower.
e) Employees Benefits
(i) Short term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short term employee benefits to be paid in
exchange for employee services are recognized as an expense as the
related service is rendered by employees.
(ii) Post employment benefits
Defined contribution plans :
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The company makes
specified monthly contributions towards provident fund. The Company's
contribution is recognized as an expense in the statement of profit and
loss during the period in which employee renders the related service.
Defined benefit plan :
The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan, are based on the market
yields on Government securities as at the balance sheet date.
When the calculation results in a benefit to the Company, the
recognized asset is limited to the net total of any unrecognized
actuarial losses and past service costs and the present value of any
future refunds from the plan or reductions in future contributions to
the plan.
Actuarial gains and losses are recognized immediately in the statement
of profit and loss.
(iii) Long term employment benefits
The Company's net obligation in respect of long-term employment
benefits is the amount of future benefit that employees have earned in
return for their service in the current and prior periods. The
obligation is calculated using the projected unit credit method and is
discounted to its present value and the fair value of any related
assets is deducted. The discount rates used for determining the present
value of the obligation under defined benefit plan, are based on the
market yields on Government securities as at the balance sheet date.
(iv) Compensated absences
The employees can carry-forward a portion of the unutilized accrued
compensated absences and utilize it in future service periods or
receive cash compensation on termination of employment. Since the
compensated absences do not fall due wholly within twelve months after
the end of the period in which the employees render the related service
and are also not expected to be utilized wholly within twelve months
after the end of such period, the benefit is classified as a long-term
employee benefit. The Company records an obligation for such
compensated absences in the period in which the employee renders the
services that increase this entitlement. The obligation is measured on
the basis of independent actuarial valuation using the projected unit
credit method.
Short term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit & Loss for the year in
which the related service is rendered.
f) Borrowing Costs
Borrowing costs attributable to the qualifying assets are capitalized
up to the period such assets are ready for the intended use and
commenced commercial production. All other borrowing cost is charged to
the Statement of Profit & Loss in the period in which they are
incurred.
g) Government Grants
Government Grants in the nature of Government promoters' contribution,
i e. which have reference to the total investment in an undertaking or
by way of contribution towards total capital outlay, are credited to
capital reserve.
h) Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for
on the date of their settlement and realized gain/loss in respect of
settled contracts are recognized in the Statement of Profit & Loss,
along with the underlying transactions.
i) Foreign Currency Transactions
a) Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates.
b) Non-monetary items which are carried at historical cost denominated
in a foreign currency are reported using the exchange rate at the date
of the transaction.
c) In respect of monetary items which are covered by forward exchange
contracts, the difference between the year end and the rate on the date
of contract is recognized as exchange difference and the premium on
such forward contracts is recognized over the life of the forward
contract.
d) The exchange differences arising on settlement / translation are
recognized in the Statement of Profit and Loss.
j) Taxes on Income
i. Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the Income
Tax Act, 1961.
ii. Deferred Tax is recognized on timing differences between accounting
income and taxable income for the period, and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date.
iii. Deferred Tax Assets are recognized only to the extent there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred Tax Assets in respect to brought forward losses/unabsorbed
depreciation is recognized only to the extent that there is a virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
k) Impairment of Assets
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) are identified using
external and internal sources of information and impairment loss if
any, is determined and recognized in accordance with the Accounting
Standard 28 issued in this regard by the Institute of Chartered
Accountants of India.
l) Leases
Assets acquired as leases where a significant portion of the risks and
rewards of the ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of Profit
& Loss on accrual basis.
m) Provisions, Contingent Liabilities and Contingent Assets
i. Provision is recognized in respect of obligations where, based on
the evidence available, their existence at the Balance Sheet date is
considered probable.
ii. Provision is recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
iii. Contingent Liabilities are disclosed in respect of possible
obligations that arise from past events but their existence is
confirmed by the occurrence or non occurrence of one or more uncertain
future events not wholly within the control of the Company.
iv. A contingent asset is not recognized in the financial statements.
v. Provisions and contingent liabilities are reviewed at each balance
sheet date.
n) Segment Reporting
Primary Segment
Based on the guiding principles given in the Accounting Standard- 17
"Segment Reporting" issued by ICAI, the Company's segments are Sugar,
Power Generation and Distillery.
Revenue and expenses have been accounted for on the basis of their
relationship to the operating activities of the respective segment.
Segment Identification
Business segments have been identified on the basis of the nature of
products/ services, the risk return profile of individual business, the
organizational structure and the internal reporting system of the
company.
o) Excise duty in respect of finished goods held in stock has been
accounted for at the end of the year and is included in the value of
closing stock.
p) Earning Per Share
Basic earnings per share is computed by dividing the profit/(loss)
after tax (including the post tax effect of extra ordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
Diluted earnings per share is computed by dividing the profit/(loss)
after tax (including the post tax effect of extra ordinary items, if
any) by the weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted average number
of equity shares which could be issued on the conversion of all
dilutive potential equity shares.
q) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payment and item of income or expenses associated with
investing or financing flows. The cash flows operating, investing and
financing activities of the company are segregated.
Sep 30, 2013
1.1 Basis of Preparation of Financial Statements
These financial statements are prepared on the accrual basis of
accounting, under the historical cost convention except for revaluation
of certain Fixed Assets, in accordance with the Companies Act, 1956 and
the applicable Accounting Standards issued by the Institute of
Chartered Accountants of India. There is no change in the system of
accounting as being consistently followed from earlier years unless
otherwise stated.
All assets and liabilities have been classified as current or non-
current as per company''s normal operating cycle and other criteria set
out in the Schedule VI to the Companies Act, 1956. Based on the nature
of operations and time between procurement of raw material and
realization in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current and
non-current classification of assets and liabilities.
1.2 Use of Estimates
The preparation of the Financial Statements in conformity with GAPP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenditure during the period. Actual
results might differ from the estimates. Difference between the actual
results and estimates are recognized in the period in which results are
known/materialized.
1.3 Significant Accounting Policies
I a) Fixed Assets
i) Tangible Fixed Assets are stated at cost net of cenvat credit and/or
at revalued price less accumulated depreciation. All costs including
financing costs relating to borrowing till commencement of commercial
production attributable to the fixed assets are capitalized.
ii) Depreciation on fixed assets is provided on written down value
method at the rates and the manner prescribed in Schedule XIV of the
Companies Act, 1956. The additional depreciation, on increase in cost
on account of revaluation, is transferred to statement of Profit & Loss
from Revaluation Reserve and is thus not charged to statement of Profit
& Loss of the year.
iii) Tangible Fixed Assets costing up to Rs.5,0007- are being
depreciated fully in the year of their put to use.
iv) Depreciation/amortization on assets added, sold or discarded during
the year is provided on pro-rata basis.
v) Intangible assets expected to provide future enduring economic
benefits are recorded at the consideration paid for acquisition of such
assets and are carried at cost of acquisition less accumulated
amortization and impairment, if any.
Intangible assets: Computer software is amortized over a period of
fouryears.
b) Revenue Recognition and Expenses
i. Revenue from the sale of products is recognized when the property in
goods is transferred to the buyer for a consideration. Revenue from
service transaction is recognized as the service is performed.
ii. Insurance claims have been accounted for on cash basis as per past
practice.
iii. All the expenses are accounted for on accrual basis.
c) Inventories are valued as under:
i. Raw Materials and Finished Goods (except molasses) are carried at
lower of cost or net realizable value.
ii. Stock of Molasses are carried at net realizable value.
iii. Stores & Spares are carried at cost.
iv. Goods in Process / WtP is carried at lower of cost or net
realizable Value.
v. Banked power with UPPCL is carried at lower of cost or net
realizable value.
Cost of inventory comprises of purchase price, cost of conversion and
other cost that have been incurred in bringing the inventories to their
respective present location and condition. Interest cost are not
included in value of inventory.
Cost for the purpose of valuations of raw material and components,
stores & spares are considered on following basis:
Manufacturing Units Basis
Sugar
Raw Material First in First Out
Stores & Spares and other components Weighted monthly average
Trading Goods First in First Out
Distillery
Raw Material First in First Out
Stores & Spares Other components Weighted monthly average
Co-generation
Raw Material First in First Out
d) Investments
Long term Investments are carried at cost. However, provision for
diminution is made to recognize decline, other than temporary, in the
value of investment, if any. Current Investment is carried at cost or
market value, whichever is lower.
e) Employees Benefits
Long term employee benefits in respect of Gravity and Leave Encashment
benefits payable to the employees is recognized on the basis of
actuarial valuation done by the competent authority as at 30th
September of every accounting year as an expense in the Statement of
Profit & Loss for the year in which the employees have rendered the
services.
Short term employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit & Loss for the year in
which the related service is rendered.
f) Borrowing Costs
Borrowing costs attributable to the qualifying assets are capitalized
up to the period such assets are ready for the intended use and
commenced commercial production. All other borrowing cost is charged to
the Statement of Profit & Loss in the period in which they are
incurred.
g) Government Grants
Government Grants in the nature of Government promoters''contribution, i
e. which have reference to the total investment in an undertaking or by
way of contribution towards total capital outlay, are credited to
capital reserve.
h) Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for
on the date of their settlement and realized gain/loss in respect of
settled contracts are recognized in the Statement of Profit & Loss,
along with the underlying transactions.
i) Foreign Currency Transactions
a) Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates.
b) Non-monetary items which are carried at historical cost denominated
in a foreign currency are reported using the exchange rate at the date
of the transaction.
c) In respect of monetary items which are covered by forward exchange
contracts, the difference between the year end and the rate on the date
of contract is recognized as exchange difference and the premium on
such forward contracts is recognized over the life of the forward
contract.
d) The exchange differences arising on settlement / translation are
recognized in the Statement of Profit and Loss.
j) Taxes on Income
i. Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the Income
Tax Act, 1961.
ii. Deferred Tax is recognized on timing differences between accounting
income and taxable income for the period, and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date.
iii. Deferred Tax Assets are recognized only to the extent there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred Tax Assets in respect to brought forward losses/unabsorbed
depreciation is recognized only to the extent that there is a virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
k) Impairment of Assets
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) are identified using
external and internal sources of information and impairment loss if
any, is determined and recognized in accordance with the Accounting
Standard 28 issued in this regard by the Institute of Chartered
Accountants of India.
I) Leases
Assets acquired as leases where a significant portion of the risks and
rewards of the ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of Profit
& Loss on accrual basis.
m) Provisions, Contingent Liabilities and Contingent Assets
i. Provision is recognized in respect of obligations where, based on
the evidence available, their existence at the Balance Sheet date is
considered probable.
ii. Provision is recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
iii. Contingent Liabilities are disclosed in respect of possible
obligations that arise from past events but their existence is
confirmed by the occurrence or non occurrence of one or more uncertain
future events not wholly within the control of the Company.
iv. A contingent asset is not recognized in the financial statements.
v. Provisions and contingent liabilities are reviewed at each balance
sheet date.
n) Segment Reporting
Primary Segment
Based on the guiding principles given in the Accounting Standard-17
"Segment Reporting" issued by ICAI, the Company''s segments are Sugar,
Power Generation and Distillery.
Revenue and expenses have been accounted for on the basis of their
relationship to the operating activities of the respective segment.
Segment Identification
Business segments have been identified on the basis of the nature of
products/ services, the risk return profile of individual business, the
organizational structure and the internal reporting system of the
company.
o) Excise duty in respect of finished goods held in stock has been
accounted for at the end of the year and is included in the value of
closing stock.
p) Earning Per Share
Basic earnings per share is computed by dividing the profit/(loss)
after tax (including the post tax effect of extra ordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
Diluted earnings per share is computed by dividing the profit/(loss)
after tax (including the post tax effect of extra ordinary items, if
any) by the weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted average number
of equity shares which could be issued on the conversion of all
dilutive potential equity shares.
q) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payment and item of income or expenses associated with
investing or financing flows. The cash flows operating, investing and
financing activities of the company are segregated.
2.29 Other Disclosures:
1. Contingent liabilities and commitments (to the extent not provided
for and as certified by the management) (a) Contingent liabilities
(i) Claims against the Company not acknowledged as debts in respect of
pending cases of employees under labour laws - Rs. 128.72 lacs
(Previous Year- Rs. 113.56 lacs).
(ii) Claims against the company not acknowledged as debts in respect of
criminal and Civil Cases Rs.31.17 lacs (Previous Year -Rs.43.43 lacs).
(iii) Bank guarantees given to the Central Government, Excise
Department and Indian Oil Corporation Ltd., aggregating to Rs.132.96
lacs (Previous Year Rs.25.26 lacs).
(iv) Company has given guarantee to the banks, which provided vehicle
loans to the employees of the company, outstanding loan as on
30.09.2013 Rs.0.42 lacs (PreviousYear Rs. 0.41 lacs).
(v) Disputed sales tax, income tax and excise duty cases under appeal -
Rs.8935.20 lacs (Previous Year Rs.6484.84 lacs)
The amount shown above represent the best possible estimates arrived at
on the basis of available information. The uncertainties and timing of
the cash flows are dependent on the outcome of different legal
processes which have been invoked by the company or the claimants as
the case may be and therefore cannot be ascertained accurately. The
company does not expect any reimbursements in respect of above
contingent liabilities.
In the opinion of the management, no provision is considered necessary
for the disputes mentioned above on the grounds that there are fair
chances of successful outcome of appeals filed by the company.
(b) Commitments:
(i) Estimated amount of contracts remaining to be executed on capital
account and not provided for-Rs.211.33 lacs (Previous Year- Rs. Nil).
(ii) Advances paid against above- Rs.96.38 lacs (Previous Year-Rs.
Nil).
2. Employee Benefits:
As per Accounting Standard -15 ''Employees Benefits'' the disclosure of
Employee Benefits as defined in the Accounting Standard are as follow:
a. Defined contribution plans :
Employee benefits in the form of Provident Fund are considered as
defined contribution plan. The contribution to defined contribution
plan, recognized the following amounts in the Statement of Profit &
Loss :
b. Defined benefits plans
Long term employee benefits in the form of gratuity and leave
encashment are considered as defined benefit plan. The present value of
obligation is determined based on actuarial valuation using projected
unit credit method as at the balance sheet date. The amount of defined
benefits recognized in the balance sheet represent the present value of
obligation as adjusted for unrecognized past service cost as reduced by
the fair value of plan assets.
Sep 30, 2012
A) Fixed Assets
i) Tangible Fixed Assets are stated at cost net of cenvat credit and/or
at revalued price less accumulated depreciation. All costs including
financing costs relating to borrowing till commencement of commercial
production attributable to the fixed assets are capitalized.
ii) Depreciation on fixed assets is provided on written down value
method at the rates and the manner prescribed in Schedule XIV of the
Companies Act, 1956. The additional depreciation, on increase in cost
on account of revaluation, is transferred to the Profit & Loss account
from Revaluation Reserve and is thus not charged to statement of Profit
& Loss of the year.
iii) Tangible Fixed Assets costing upto Rs.5,000/- are being
depreciated fully in the year of their put to use.
iv) Intangible Fixed Assets: - Computer software is amortized over a
period of four years.
b) Revenue Recognition and Expenses
Revenue from the sale of products is recognized when the property in
goods is transferred to the buyer for a consideration. Revenue from
service transaction is recognized as the service is performed.
Insurance claims have been accounted for on cash basis as per past
practice.
All the expenses are accounted for on accrual basis.
c) Inventories are valued as under:
a. Raw Materials and Finished Goods (except molasses) are carried at
lower of cost or net realisable value.
b. Stock of Molasses are carried at net realizable value.
c. Stores & Spares are carried at cost.
d. Goods in Process / WIP is carried at lower of cost or net
realizable Value.
e. Banked power with UPPCL is carried at lower of cost or net
realizable value.
Cost for the purpose of valuations of raw material and components,
stores & spares are considered on following basis
Raw Materials, stores & spares and other components Manufacturing Units
Basis
Sugar
- Raw Material First in First Out
- Stores & Spares and Weighted monthly average other components
- Trading Goods First in First Out
Distillery
- RawMaterial First in First Out
- Stores & Spares Weighted monthly average Other components
- Co-generation First in First Out Raw Material
d) Investments
Long term Investments are carried at cost. However, provision for
diminution is made to recognize decline, other than temporary, in the
value of investment, if any. Current Investment is carried at cost or
market value, whichever is lower.
e) Employees Benefits
Long term employee benefits in respect of Gratuity and Leave Encashment
benefits payable to the employees is recognized on the basis of
actuarial valuation done by the competent authority as at 30Th
September of every accounting year as an expense in the Statement of
Profit & Loss for the year in which the employees have rendered the
services.
Shortterm employee benefits are recognized as an expense at the
undiscounted amount in the Statement of Profit & Loss for the year in
which the related service is rendered.
f) Borrowing Costs
Borrowing costs attributable to the qualifying assets are capitalized
up to the period such assets are ready for the intended use and
commenced commercial production. All other borrowing cost is charged to
the Statement of Profit & Loss.
g) Government Grants
Government Grants in the nature of Government promoters'' contribution,
i e which have reference to the total investment in an undertaking or
by way of contribution towards total capital outlay, are credited to
capital reserve.
h) Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for
on the date of their settlement and realized gain/loss in respect of
settled contracts are recognized in the profit & loss account, along
with the underlying transactions.
i) Foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the difference between the year end and the rate on
the date of contract is recognised as exchange difference and the
premium on such forward contracts is recognised over the life of the
forward contract. The exchange differences arising on
settlement/translation are recognized in the Statement of Profit and
Loss.
j) Taxes on Income
a. Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the Income
Tax Act, 1961.
b. Deferred Tax is recognized on timing differences between accounting
income and taxable income for the period, and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date.
c. Deferred Tax Assets are recognized only to the extent there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred Tax Assets in respect to brought forward losses / unabsorbed
depreciation is recognized only to the extent that there is a virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
k) Impairment of Assets
Impairment of individual assets/cash generating unit ( a group of
assets that generates identified independent cash flows) are identified
using external and internal sources of information and impairment loss
if any, is determined and recognized in accordance with the Accounting
Standard 28 issued in this regard by the Institute of Chartered
Accountants of India.
I) Public Issue Expenditure
The company amortizes miscellaneous expenditure representing public
issue expenses over a period of 5 years.
m) Leases
Assets acquired as leases where a significant portion of the risks and
rewards of the ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Statement of Profit
& Loss on accrual basis.
n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company
A contingent asset is neither recognized nor disclosed in the financial
statements.
o) Segment Reporting
Primary Segment
Based on the guiding principles given in the Accounting Standard-17
"Segment Reporting" issued by ICAI, the Company''s segments are
Sugar, Power Generation and Distillery.
Revenue and expenses have been accounted for on the basis of their
relationship to the operating activities of the respective segment.
Segment Identification
Business segments have been identified on the basis of the nature of
products/ services, the risk return profile of individual business, the
organizational structure and the internal reporting system of the
company.
p) Excise duty in respect of finished goods held in stock has been
accounted for at the end of the year and is included in the value of
closing stock.
Sep 30, 2010
A) Basis of Preparation of Financial Statements
These financial statements have been prepared on the accrual basis of
accounting, under the historical cost convention except for revaluation
of certain Fixed Assets, in accordance with the Companies Act, 1956 and
the applicable Accounting Standards issued by the Institute of
Chartered Accountants of India. There is no change in the system of
accounting as being consistently followed from earlier years unless
otherwise stated.
b) Fixed Assets
i) Fixed Assets are stated at cost net of cenvat credit and/or at
revalued price less accumulated depreciation. All costs including
financing costs relating to borrowing till commencement of commercial
production attributable to the fixed assets are capitalized.
ii) Depreciation on fixed assets is provided on written down value
method at the rates and the manner prescribed in Schedule XIV of the
Companies Act, 1956. The additional depreciation, on increase in cost
on account of revaluation, is transferred to the Profit & Loss account
from Revaluation Reserve and is thus not charged to Profit & Loss
account of the year.
iii) Fixed Assets costing upto Rs.5,000/- are being depreciated fully
in the year of their put to use.
iv) Intangible Assets: - Computer software is amortized over a period
of four years.
c) Revenue Recognition
Revenue from the sale of products is recognized when the property in
goods is transferred to the buyer for a consideration. Revenue from
service transaction is recognized as the service is performed.
d) Inventories are valued as under:
- Raw Materials and Finished Goods (except molasses) are carried at
lower of cost or net realisable value.
- Stock of Molasses are carried at net realizable value.
- Stocks Spares are carried at cost.
- Goods in Process / WIP is carried at lower of cost or net
realizable value.
- Banked power with UPPCL is carried at lower of cost or net realizable
value.
Cost for the purpose of valuations of raw material and components,
stores & spares are considered on following basis:-
Raw Materials, stores & spares and other components
Manufacturing Units Basis
Sugar - Raw Material First in First Out
- Stores & Spares and Weighted monthly
other components average
Distillery Raw Material First in First Out
-Stores & Spares Other Weighted monthly
components average
Co-generation- Raw Material First in First Out
e) Investments
Long term Investments are carried at cost. However, provision for
diminution is made to recognize decline, other than temporary, in the
value of investment, if any. Current Investment is carried at cost or
market value, whichever is lower.
f) Employees Benefits
Provision is made in the accounts towards Companys liability in
respect of Gratuity and Leave Encashment benefits payable to the
employees on the basis of actuarial valuation done by the competent
authority as required by the Accounting Standard-15 on Employees
Benefits issued by the Institute of Chartered Accountants of India.
g) Borrowing Costs
Borrowing costs attributable to the qualifying assets are capitalized
up to the period such assets are ready for the intended use and
commenced commercial production. All other borrowing cost is charged to
the Profit & Loss account.
h) Government Grants
Government Grants in the nature of Government
promoters contribution, i e. which have reference to .the total
investment in an undertaking or by way of contribution towards total
capital outlay, are credited to capital reserve.
i) Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for
on the date of their settlement and realized gain/loss in respect of
settled contracts are recognized in the profit & loss account, along
with the underlying transactions.
j) Taxes on Income
- Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the Income
Tax Act, 1961.
- Deferred Tax is recognized on timing differences between accounting
income and taxable income for the period, and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date.
- Deferred Tax Assets are recognized only to the extent there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred Tax Assets in respect to brought forward losses/unabsorbed
depreciation is recognized only to the extent that there is a virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
k) Impairment of Assets
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) are identified using
external and internal sources of information and impairment loss if
any, is determined and recognized in accordance with the Accounting
Standard 28 issued in this regard by the Institute of Chartered
Accountants of India.
I) Public Issue Expenditure
The company amortizes miscellaneous expenditure representing public
issue expenses over a period of 5 years.
m) Leases
Assets acquired as leases where a significant portion of the
risks and rewards of the ownership are retained by the lessor are
classified as operating leases. Lease rentals are charged to the Profit
& Loss Account on accrual basis.
n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably estimated.
Contingent Liabilities are disclosed in respect of possible obligations
that arise from past events but their existence is confirmed by the
occurrence or non occurrence of one or more uncertain future events not
wholly within the control of the Company.
A contingent asset is neither recognized nor disclosed in the financial
statements.
o) Segment Reporting
Primary Segment
Based on the guiding principles given in the Accounting Standard-17
"Segment Reporting" issued by ICAI, the Companys segments are Sugar,
Power Generation and Distillery.
Revenue and expenses have been accounted for on the basis of their
relationship to the operating activities of the respective segment.
Segment Identification
Business segments have been identified on the basis of the nature of
products/ services, the risk return profile of individual business, the
organizational structure and the internal reporting system of the
company.
p) Excise duty in respect of finished goods held in stock has been
accounted for at the end of the year and is included in the value of
closing stock.
q) Insurance claims have been accounted for on cash basis as per past
practice.
Sep 30, 2009
A) Basis of Preparation of Financial Statements
These financial statements have been prepared on the accrual basis of
accounting, under the historical cost convention except for revaluation
of certain Fixed Assets, in accordance with the Companies Act, 1956 and
the applicable Accounting Standards issued by the Institute of
Chartered Accountants of India. There is no change in the system of
accounting as being consistently followed from earlier years unless
otherwise stated.
b) Fixed Assets
i) Fixed Assets are stated at cost net of cenvat credit and/or at
revalued price less accumulated depreciation. All costs including
financing costs relating to borrowing till commencement of commercial
production attributable to the fixed assets are capitalized.
ii) Depreciation on fixed assets is provided on written down value
method at the rates and the manner prescribed in Schedule XIV of the
Companies Act, 1956, The additional depreciation, on increase in cost
on account of revaluation, is transferred to the Profit & Loss account
from Revaluation Reserve and is thus not charged to Profit & Loss
account of the year.
iii) Fixed Assets costing upto Rs.5,000/- are being depreciated fully
in the year of their put to use.
iv) Intangible Assets: Computer software is amortized over a period of
four years.
e) Revenue Recognition
Revenue from the sale of products is recognized when the property in
goods is transferred to the buyer for a consideration. Revenue from
service transaction is recognized as the service is performed.
d) Inventories are valued as under:
à Raw Materials and Finished Goods (except molasses) are carried at
lower of cost or net realisable value.
à Stock of Molasses are carried at net realizable value, Stock & Spares
are carried at cost. Goods in Process / WIP is carried at lower of
cost or net realizable value.
Banked power with UPPCL is carried at lower of cost or net realizable
value.
Cost for the purpose of valuations of raw material and components,
stores & spares are considered on following basis:-
Raw Material, stores & spares and other components
Manufacturing Units Basis
Sugar - Raw Material First in First Out
- Stores & Spares and Weighted monthly
Distillery -Raw Material First in First Out
- Stores & Spares and Weighted monthly
Co-generation- Raw Material First in First Out
e) Investments
Long term Investments are carried at cost. However, provision for
diminution is made to recognize decline, other than temporary, in the
value of investment, if any. Current Investment is carried at cost or
market value, whichever is lower,
f) Employees Benefits
Provision is made in the accounts towards Companys liability in
respect of Gratuity and Leave Encashment benefits payable to the
employees on the basis of actuarial valuation done by the competent
authority as required by the Accounting Standard -15 on Employees
Benefits issued by the Institute of Chartered Accountants of India.
g) Borrowing Costs
Borrowing costs attributable to the qualifying assets are capitalized
up to the period such assets are ready for the intended use and
commenced commercial production. All other borrowing cost is charged to
the Profit & Loss account.
h) Government Grants
Government Grants in the nature of Government promoters contribution,
i e, which have reference to the total investment in an undertaking or
by way of contribution towards total capital outlay, are credited to
capital reserve.
i) Financial Derivatives and Commodity Hedging Transactions
Financial Derivatives and commodity hedging contracts are accounted for
on the date of their settlement and realized gain/loss in respect of
settled contracts are recognized in the profit & loss account, along
with the underlying transactions,
j) Taxes on Income
Tax on income for the current period is determined on the basis of
taxable income computed in accordance with the provisions of the Income
Tax Act, 1961.
Deferred Tax is recognized on timing differences between accounting
income and taxable income for the period, and quantified using the tax
rates and laws enacted or substantively enacted as on the Balance Sheet
date.
Deferred Tax Assets are recognized only to the extent there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred Tax Assets in respect to brought forward losses/unabsorbed
depreciation is recognized only to the extent that there is a virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
k) Impairment of Assets
Impairment of individual assets/cash generating unit (a group of assets
that generates identified independent cash flows) are identified using
external and internal sources of information and impairment loss if
any, is determined and recognized in accordance with the Accounting
Standard 28 issued in this regard by the Institute of Chartered
Accountants of India.
l) Public Issue Expenditure
The company amortizes miscellaneous expenditure representing public
issue expenses over a period of 5 years.
m) Leases
Assets acquired as leases where a significant portion of the risks and
rewards of the ownership are retained by the lessor are classified as
operating leases. Lease rentals are charged to the Profits Loss Account
on accrual basis.
n) Provisions and Contingent Liabilities
Contingent Liabilities are not recognized in the accounts but are
disclosed after a critical. evaluation of the facts and legal issues
involved in that regard.
o) Excise duty in respect of finished goods held in stock has been
accounted for at the end of the year and is included in the value of
closing stock.
p) The interests on fixed deposit with bank and insurance claims have
been accounted for on cash basis as per past practice.