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Accounting Policies of Mysore Paper Mills Ltd. Company

Mar 31, 2014

1.01 DISCLOSURE OF ACCOUNTING POLICIES: AS-1

The financial statements are prepared under historical cost convention except for certain Fixed Assets which have been revalued, on accrual basis in accordance with Indian Generally Accepted Accounting Principles ("GAAP"), Accounting standard notified under section 211 3(C) of Companies Act, 1956 and relevant provisions thereof which continue to be applicable in respect of section 133 of Companies Act, 2013 in terms of General Circular 15/2013 dated September13, 2013 issued by Ministry of Corporate Affairs.

Accounting policies have been consistently applied and followed. However where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy hitherto in use or a change in accounting policy is warranted for better presentation of the underlying transaction, the policy is changed accordingly & thereafter followed consistently.

Use of estimates:

The preparation of financial statements requires the management to make estimates and assumptions of some of the reported amounts of assets & liabilities, the amounts of revenue and expenses and disclosure of contingent assets and liabilities as at the balance sheet date. Actual amounts could differ from these estimates.

1.02 VALUATION OF INVENTORIES: AS-2

(i) Stock of Raw Materials, Pulp, Chemicals, Fuel and Packing Materials is valued generally at weighted average cost.

(ii) Finished stock namely paper and sugar is valued at cost or net realizable value whichever is lower. Molasses is valued at net realizable value. Cost in the case of Finished Goods includes depreciation, packing material, Conversion cost and excise duty but excludes interest & financial charges, selling expenses and administrative and other expenses. In the case of stock in process, it is valued at cost which includes depreciation but excludes administrative and other expenses.

(iii) Bagasse for captive consumption is valued at equated cost of raw material (i.e., sugarcane) including taxes (wherever applicable). Bagasse determined as excess is valued at net realizable value.

(iv) Stores and Spares are valued at weighted average cost. In respect of non-moving stores and spares, as determined, 50% of the value thereof is provided in the accounts for any loss that may arise on the items so determined.

(v) Goods in transit are recognised as at the Balance sheet date as per the terms of supplies.

(vi) Scrap is valued at estimated net realizable value.

(vii) Captive Plantations :

a) All expenses incurred for Captive Plantations are shown separately in the Balance Sheet under "Other non current Assets-Captive Forest Plantation"

b) Yield obtained from Captive Plantation is valued at cost based on the total expenditure incurred on/allocated to the year of plantation and the total quantity of yield obtained/ expected from the respective year of plantation. While doing so due allowances have been made for the Lease Rent payable to Govt. of Karnataka. Similar valuation method is followed in the case of standing crops matured but not extracted.

c) The extractions of pulpwood from the captive plantations are done based on the management plan approved by competent authority from time to time.

1.03 CASH FLOW STATEMENTS: AS-3

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise cash in hand, current and other accounts (including fixed deposits) held with banks.

1.04 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE: AS- 4

Assets and Liabilities & Income and Expenditure are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.

1.05 NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES: AS- 5

Significant items of extra-ordinary items, and prior period incomes and expenditures, are accounted in accordance with Accounting Standard - 5

1.06 DEPRECIATION ACCOUNTING: AS - 6

(a) Fixed Assets acquired prior to 01/04/1960 are depreciated under Written Down Value (WDV) Method at the rates specified in the Income Tax Act, 1961.

(b) In respect of Fixed Assets, except Furniture & Fixtures and Office Equipments, acquired on or after 1.4.1960, depreciation is provided as detailed below:

(i) In respect of Assets acquired upto 1.4.1987 as per the rates prescribed in the Income Tax Act, 1961, prevailing at the time of acquisition of the relevant asset.

(ii) In respect of Assets acquired on or after 2.4.1987 at the rates prescribed in Schedule XIV to the Companies Act 1956 on Straight Line Method. Any change in the rates of depreciation in Schedule XIV is given effect in respect of assets acquired on or after that date.

(c) In respect of Furniture & Fixtures and Office Equipments acquired on or after 1.4.1960, the useful life of the assets has been determined as 10 years and depreciation as per Straight Line Method has been provided in the accounts accordingly.

(d) Expenditure on internal partitions/extension of existing building costing individually Rs.20,000 and below is charged to revenue.

(e) Depreciation on assets acquired/sold/discarded during the year is provided from/upto the month the asset is acquired/sold/discarded.

(f) Insurance spares capital in nature is depreciated over a period of time not exceeding the useful life of the concerned principal / main asset.

(g) Minimum depreciation is provided upto 95% of the acquisition cost/revalued amount as per Companies Act and balance 5% of the value is retained in the books.

1.07 REVENUE RECOGNITION: AS- 9

a) Revenue from sale of goods is recognised after the significant risks and rewards of ownership of the goods have been passed on to the buyer.

b) The amount shown against sales in the profit and loss account is as per contracts of sale and represents the value net off trade discount, excise duty, sales tax and sales returns. Sales value also includes incidentals collected from customers.

c) Revenue from scrap is accounted on the event of sale.

1.08 ACCOUNTING FOR FIXED ASSETS: AS-10

Fixed Assets

i) Fixed Assets are stated at cost of construction/acquisition including any revaluation to the said asset less accumulated depreciation. The costs attributable to bring the fixed assets to a working condition are capitalised net off duties and taxes eligible for credit.

ii) Fixed assets includes cost of Lease hold land which is stated based on the letters of allotment / agreement to lease and the same is amortized over lease period.

Capital Work -in- progress

Advances paid for acquisition of fixed assets and cost of assets (net off duties & taxes eligible for credit) not put to use as at the Balances Sheet date are disclosed under capital work in progress. Assets are capitalized when they are ready for use/put to use.

1.09 FOREIGN CURRENCY TRANSACTIONS: AS-11

Foreign currency transactions are recognised at the exchange rate prevailing on the date of transaction. As at the balance sheet date outstanding foreign currency items are restated at the closing rate prevailing on that date. Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates different from which they were initially recorded during the year or reported in previous financial statements, are recognised as income or expenditure in the year in which they arise.

Contingent liabilities on foreign currency transactions as at the balance sheet date are disclosed at the closing rate.

Forward contracts in foreign currencies.

The Company enters into foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduce the risk or cost to the Company and the Company does not use those for trading or speculation purposes.

a) The Premium or Discount arising at the inception of such a Forward Contract is amortised as expense or income over the life of the contract.

b) Exchange differences arising on reporting the above items at rates different from which they were initially recorded during the period or reported in the previous financial statements are recognized as income/expenditure in the Statement of Profit and Loss.

1.10 ACCOUNTING OF GOVERNMENT GRANTS: AS-12

Government grants are reckoned in the accounts after its sanction by the competent authorities. Grants received against specific asset/s are credited to the respective asset/s. In the case of grant towards a specific project the same is reduced from the project cost. Grants in the form of assets received free of cost are taken into books of accounts at nominal value. Grants relating to revenue are recognized and shown under Rebates & Incentives as other income.

1.11 INVESTMENTS: AS-13

Long-term investments are valued at cost. Provision, if any, is made to recognize a decline other than a temporary decline in the value of long-term investments. Current investments if any, are valued at lower of cost or fair market value.

1.12 EMPLOYEE BENEFITS: AS-15

a) Short term employee benefits are charged at actuals to Profit and Loss account in the year in which the related services are rendered.

b) Provident Fund:

i) It is a Defined Benefit Plan covering permanent employees, TPF/HPF workers and Forest workers wherein the company pays fixed contribution at pre-determined rates to a separate Provident Fund Trust approved by competent authority. The contribution to the fund for the period is charged to Profit and Loss Account. As the company is obliged to pay the amount of interest declared by the government from time to time, any short fall in the interest rate declared by the trust will be made good by the company.

ii) In respect of other contract workers fixed contribution at the pre-determined rates are remitted to state defined contribution plan operated by Regional Provident Fund commissioner and is charged to profit and loss account.

c) Accumulated Compensated Absences Liability towards Leave Encashment and sick leave is provided based on Actuarial Valuation and charged to Profit & Loss Account.

d) Superannuation:

It is a Defined Contribution Plan. Certain employees of the company are participants of superannuation scheme. The company makes/provides pre-determined rate of contribution to the superannuation fund administered by Life Insurance Corporation of India and the same is charged to Profit & Loss Account. The company has no further obligation/s to the scheme beyond its contribution.

e) Gratuity

It is a Defined Benefit Plan. The Company provides for gratuity to eligible employees, contract workers & forest workers in accordance with the payment of Gratuity Act, 1972. Liability with regard to gratuity is determined by actuarial valuation as at the Balance Sheet date. Amount charged to profit & loss account is the difference between actuarial valuation and the corpus (including accrued interest) of the trust.

f) Voluntary Retirement Scheme (VRS)

The expenditure incurred on VRS to employees is charged-off to profit and loss account.

1.13 BORROWING COST: AS-16

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the asset. In respect of funds which are borrowed generally and used for the purpose of obtaining qualifying assets, the borrowing cost is determined by applying weighted average rate of the borrowing cost of the respective year. Other borrowing costs are recognised as expenditure in the year in which they are incurred.

1.14 SEGMENT REPORTING: AS-17

a) The company has identified two business segments viz. Paper and Sugar. Revenue and expenses have been identified to respective segments on the basis of operating activities of the company. Non-allocable revenue and expenses to a segment but relate to the company as a whole has been disclosed as unallocable revenue and expenses on a reasonable basis.

b) Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment have been disclosed as unallocable assets and liabilities on a reasonable basis.

c) Inter segment revenue/expenditure is recognized as per Accounting Policy No. 1.02 (iii).

d) There are no geographical segments to be reported as defined in Accounting standard - 17.

1.15 RELATED PARTY TRANSACTIONS: AS-18

There are no related parties transactions except Remuneration to Key Managerial Personnel, other than independent non-executive directors.

1.16 EARNINGS PER SHARE: AS-20

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of extra-ordinary/exceptional items, if any. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. earning per share is not computed when there are anti dilutive potential equity shares.

1.17 ACCOUNTING FOR TAXES ON INCOME: AS-22

Income tax expense is accounted in accordance with AS 22 which includes current taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient taxable income will be available to realize such assets.

1.18 INTANGIBLE ASSETS: AS-26

Research and Development expenses excluding items of capital in nature and those relating to Captive Forestry are charged to Profit & Loss Account as and when incurred.

1.19 IMPAIRMENT OF ASSETS: AS-28

In accordance with the AS-28 at each balance sheet date the company determines whether there is any indication of impairment of the carrying amount of the company''s fixed assets. In case of any indication of impairment i.e., the carrying amount of the fixed assets exceeds its estimated recoverable amount, impairment loss is recognized and charged to Profit & Loss Account.

1.20 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS: AS-29

a) Provision is recognized when

i. The company has a present obligation as a result of past event;

ii. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

iii. A reliable estimate can be made of the amount of the obligation.

b) Contingent liabilities are disclosed by way of Notes to accounts.

c) Contingent assets are neither recognised nor disclosed.


Mar 31, 2013

1.01 DISCLOSURE OF ACCOUNTING POLICIES: AS-1

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under historical cost convention on accrual basis, except for certain Fixed Assets which have been revalued. GAAP comprises mandatory standards as specified in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 1956.

Accounting policies have been consistently applied and followed. However where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy hitherto in use or a change in accounting policy is warranted for better presentation of the underlying transaction, the policy is changed accordingly & thereafter followed consistently.

Use of estimates:

The preparation of financial statements requires the management to make estimates and assumptions of some of the reported amounts of assets & liabilities, the amounts of revenue and expenses and disclosure of contingent assets and liabilities as at the balance sheet date. Actual amounts could differ from these estimates.

1.02 VALUATION OF INVENTORIES: AS-2

(i) Stock of Raw Materials, Pulp, Chemicals, Fuel and Packing Materials is valued generally at weighted average cost.

(ii) Finished stock namely paper and sugar is valued at cost or net realizable value whichever is lower. Molasses is valued at net realizable value. Cost in the case of Finished Goods include depreciation, packing material, Conversion cost and excise duty but excludes interest & financial charges, selling expenses and administrative and other expenses. In the case of stock in process, it is valued at cost which includes depreciation but excludes administrative and other expenses.

(iii) Bagasse for captive consumption is valued at equated cost of raw material (i.e., sugarcane) including taxes (wherever applicable). Bagasse determined as excess is valued at net realizable value.

(iv) Stores and Spares are valued at weighted average cost. In respect of non-moving stores and spares, as determined, 50% of the value thereof is provided in the accounts for any loss that may arise on the items so determined. (v) Goods in transit are recognised as at the Balance sheet date as per the terms of supplies. (vi) Scrap is valued at estimated net realizable value. (vii)Captive Plantations :

a) All expenses incurred for Captive Plantations are shown separately in the Balance Sheet under "Other non current Assets-Captive Forest Plantation"

b) Yield obtained from Captive Plantation is valued at cost based on the total expenditure incurred on/allocated to the year of plantation and the total quantity of yield obtained/ expected from the respective year of plantation. While doing so due allowances have been made for the Lease Rent payable to Govt. of Karnataka. Similar valuation method is followed in the case of standing crops matured but not extracted.

c) The extractions of pulpwood from the captive plantations are done based on the management plan approved by competent authority from time to time.

1.03 CASH FLOW STATEMENTS: AS-3

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise cash in hand, current and other accounts (including fixed deposits) held with banks.

1.04 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE: AS- 4

Assets and Liabilities & Income and Expenditure are adjusted for events occurring after the balance sheet datethat provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.

1.05 NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES: AS- 5

Significant items of extra-ordinary items, and prior period incomes and expenditures, are accounted in accordance with Accounting Standard – 5

1.06 DEPRECIATION ACCOUNTING: AS - 6

(a) Fixed Assets acquired prior to 01/04/1960 are depreciated under Written Down Value (WDV) Method at the rates specified in the Income Tax Act, 1961.

(b) In respect of Fixed Assets, except Furniture & Fixtures and Office Equipments, acquired on or after 1.4.1960, depreciation is provided as detailed below:

(i) In respect of Assets acquired upto 1.4.1987 as per the rates prescribed in the Income Tax Act, 1961, prevailing at the time of acquisition of the relevant asset.

(ii) In respect of Assets acquired on or after 2.4.1987 at the rates prescribed in Schedule XIV to the Companies Act 1956 on Straight Line Method. Any change in the rates of depreciation in Schedule XIV is given effect in the respect of assets acquired on or after that date.

(c ) In respect of Furniture & Fixtures and Office Equipments acquired on or after 1.4.1960,the useful life of the assets has been determined as 10 years and depreciation as per Straight Line Method has been provided in the accounts accordingly.

(d) Expenditure on internal partitions/extension of existing building costing individually Rs.20,000 and below is charged to revenue.

(e) Depreciation on assets acquired/sold/discarded during the year is provided from/upto the month the asset is acquired/sold/discarded.

(f) Insurance spares capital in nature is depreciated over a period of time not exceeding the useful life of the concerned principal / main asset.

(g) Minimum depreciation is provided upto 95% of the acquisition cost/revalued amount as per Companies Act and balance 5% of the value is retained in the books.

1.07 REVENUE RECOGNITION: AS- 9

a) Revenue from sale of goods is recognised after the significant risks and rewards of ownership of the goods have been passed on to the buyer.

b) The amount shown against sales in the profit and loss account is as per contracts of sale and represents the value net off trade discount, excise duty, sales tax and sales returns. Sales value also includes incidentals collected from customers.

c) Revenue from scrap is accounted on the event of sale.

1.08 ACCOUNTING FOR FIXED ASSETS: AS-10 Fixed Assets

(i) Fixed Assets are stated at cost of construction/acquisition including any revaluation to the said asset less accumulated depreciation. The costs attributable to bring the fixed assets to a working condition are capitalised net off duties and taxes eligible for credit.

(ii) Fixed assets includes cost of Lease hold land which is stated based on the letters of allotment / agreement to lease and the same is amortized over lease period.

Capital Work -in- progress

Advances paid for acquisition of fixed assets and cost of assets ( net off duties & taxes eligible for credit) not put to use as at the Balance Sheet date are disclosed under capital work in progress. Assets are capitalized when they are ready for use/put to use.

1.09 FOREIGN CURRENCY TRANSACTIONS: AS-11

Foreign currency transactions are recognised at the exchange rate prevailing on the date of transaction. As at the balance sheet date outstanding foreign currency items are restated at the closing rate prevailing on that date. Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates different from which they were initially recorded during the year or reported in previous financial statements, are recognised as income or expenditure in the year in which they arise.

Contingent liabilities on foreign currency transactions as at the balance sheet date are disclosed at the closing rate.

1.10 ACCOUNTING OF GOVERNMENT GRANTS: AS-12

Government grants are reckoned in the accounts after its sanction by the competent authorities. Grants received against specific asset/s are credited to the respective asset/s. In the case of grant towards a specific project the same is reduced from the project cost. Grants in the form of assets received free of cost are taken into books of accounts at nominal value. Grants relating to revenue are recognized and shown under Rebates & Incentives as other income.

1.11 INVESTMENTS: AS-13

Long-term investments are valued at cost. Provision, if any, is made to recognize a decline other than a temporary decline in the value of long-term investments. Current investments if any, are valued at lower of cost or fair market value.

1.12 EMPLOYEE BENEFITS: AS-15

(a) Short term employee benefits are charged at actuals to Profit and Loss account in the year in which the related services are rendered.

(b) Provident Fund:

(i) It is a Defined Benefit Plan covering permanent employees, TPF/HPF workers and Forest workers wherein the company pays fixed contribution at pre-determined rates to a separate Provident Fund Trust approved by competent authority. The contribution to the fund for the period is charged to Profit and Loss Account. As the company is obliged to pay the amount of interest declared by the government from time to time, any short fall in the interest rate declared by the trust will be made good by the company.

(ii) In respect of other contract workers fixed contribution at the pre- determined rates are remitted to state defined contribution plan operated by Regional Provident Funcommissioner and is charged to profit and loss account.

(c) Accumulated Compensated Absences.

Liability towards Leave Encashment and sick leave is provided based on Actuarial Valuation and charged to Profit & Loss Account.

(d) Superannuation:

It is a Defined Contribution Plan. Certain employees of the company are participants of superannuation scheme. The company makes/provides pre-determined rate of contribution to the superannuation fund administered by Life Insurance Corporation of India and the same is charged to Profit & Loss Account. The company has no further obligation/s to the scheme beyond its contribution.

(e) Gratuity

It is a Defined Benefit Plan. The Company provides for gratuity to eligible employees, contract workers & forest workers in accordance with the payment of Gratuity Act, 1972. Liability with regard to gratuity is determined by actuarial valuation as at the Balance Sheet date. Amount charged to profit & loss account is the difference between actuarial valuation and the corpus (including accrued interest) of the trust.

(f) Voluntary Retirement Scheme (VRS)

The expenditure incurred on VRS to employees is charged-off to profit and loss account.

1.13 BORROWING COST: AS-16

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the asset. In respect of funds which are borrowed generally and used for the purpose of obtaining qualifying assets, the borrowing cost is determined by applying weighted average rate of the borrowing cost of the respective year. Other borrowing costs are recognised as expenditure in the year in which they are incurred.

1.14 SEGMENT REPORTING: AS-17

(a) The company has identified two business segments viz. Paper and Sugar. Revenue and expenses have been identified to respective segments on the basis of operating activities of the company. Non-allocable revenue and expenses to a segment but relate to the company as a whole has been disclosed as unallocable revenue and expenses on a reasonable basis.

(b) Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment have been disclosed as unallocable assets and liabilities on a reasonable basis.

(c) Inter segment revenue/expenditure is recognized as per Accounting Policy No. 1.02 (iii).

(d) There are no geographical segments to be reported as defined in Accounting standard – 17.

1.15 RELATED PARTY TRANSACTIONS: AS-18

There are no related parties transactions except Remuneration to Key Managerial Personnel, other than independent non-executive directors.

1.16 EARNINGS PER SHARE: AS-20

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of extra-ordinary/exceptional items, if any. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

1.17 ACCOUNTING FOR TAXES ON INCOME: AS-22

Income tax expense is accounted in accordance with AS 22 which includes current taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient taxable income will be available to realize such assets.

1.18 INTANGIBLE ASSETS: AS-26

Research and Development expenses excluding items of capital in nature and those relating to Captive Forestry are charged to Profit & Loss Account as and when incurred.

1.19 IMPAIRMENT OF ASSETS: AS-28

In accordance with the AS-28 at each balance sheet date the company determines whether there is any indication of impairment of the carrying amount of the company''s fixed assets. In case of any indication of impairment i.e., the carrying amount of the fixed assets exceeds its estimated recoverable amount, impairment loss is recognized and charged to Profit & Loss Account.


Mar 31, 2011

1.01 DISCLOSURE OF ACCOUNTING POLICIES: AS-1

The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles ("GAAP") under historical cost convention on accrual basis, except for certain Fixed Assets which have been revalued. GAAP comprises mandatory standards as specified in the Companies (Accounting Standards) Rules 2006 and the provisions of the Companies Act, 1956.

Accounting policies have been consistently applied and followed. However where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy hitherto in use or a change in accounting policy is warranted for better presentation of the underlying transaction, the policy is changed accordingly & thereafter followed consistently.

USE OF ESTIMATES:

The preparation of financial statements requires the management to make estimates and assumptions of some of the reported amounts of assets & liabilities, the amounts of revenue and expenses and disclosure of contingent assets and liabilities as at the balance sheet date. Actual amounts could differ from these estimates.

1.02 VALUATION OF INVENTORIES: AS-2

(i) Stock of Raw Materials, Pulp, Chemicals, Fuel and Packing Materials is valued generally at weighted average cost.

(ii) Finished stock namely paper and sugar is valued at cost or net realizable value whichever is lower. Molasses is valued at net realizable value. Cost in the case of Finished Goods include depreciation, packing material and excise duty but excludes interest & financial charges, selling expenses and administrative and other expenses, in the case of stock in process, it is valued at cost which includes depreciation but excludes administrative and other expenses.

(iii) Bagasse for captive consumption is valued at equated cost of raw material (i.e., sugarcane) including taxes (wherever applicable). Bagasse determined as excess is valued at net realizable value.

(iv) Stores and Spares are valued at weighted average cost. In respect of non-moving stores and spares, as determined, 50% of the value thereof is provided in the accounts for any loss that may arise on the items so determined.

(v) Goods in transit are recognised as at the Balance sheet date as per the terms of supplies.

(vi) Scrap is valued at estimated net realizable value.

(vii) Captive Plantations:

a) All expenses incurred for Captive Plantations are shown separately in the Balance Sheet under "Captive Forest Plantations".

b) Yield obtained from Captive Plantation is valued at cost based on the total expenditure incurred on/ allocated to the year of plantation and the total quantity of yield obtained/expected from the respective year of plantation. While doing so due allowances have been made for the Lease Rent payable to Govt. of Karnataka. Similar valuation method is followed in the case of standing crops matured but not extracted.

c) The extractions of pulpwood from the captive plantations are done based on the management plan approved by competent authority from time to time.

1.03 CASH FLOW STATEMENTS: AS-3

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise cash in hand, current and other accounts (including fixed deposits) held with banks.

1.04 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE: AS- 4

Assets and Liabilities & Income and Expenditure are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.

1.05 NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES: AS-5

Significant items of extra-ordinary items, and prior period incomes and expenditures, are accounted in accordance with Accounting Standard - 5

1.06 DEPRECIATION ACCOUNTING: AS-6

(a) Fixed Assets acquired prior to 01/04/1960 are depreciated under Written Down Value (WDV) Method at the rates specified in the Income Tax Act, 1961.

(b) In respect of Fixed Assets, except Furniture & Fixtures and Office Equipments, acquired on or after 1.4.1960, depreciation is provided as detailed below:

(i) In respect of Assets acquired upto 1.4.1987 as per the rates prescribed in the Income Tax Act, 1961, prevailing at the time of acquisition of the relevant asset.

(ii) In respect of Assets acquired on or after 2.4.1987 at the rates prescribed in Schedule XIV to the Companies Act ,1956 on Straight Line Method. Any change in the rates of depreciation in Schedule XIV is given effect in the respect of assets acquired on or after that date.

(c) In respect of Furniture & Fixtures and Office Equipments acquired on or after 1.4.1960, the useful life of the assets has been determined as 10 years and depreciation as per Straight Line Method has been provided in the accounts accordingly.

(d) Expenditure on internal partitions/extension of existing building costing individually Rs.20,000 and below is charged to revenue.

(e) Depreciation on assets acquired/sold/discarded during the year is provided from/upto the month the asset is acquired/sold/discarded,

(f) Insurance spares capital in nature is depreciated over a period of time not exceeding the useful life of the concerned principal / main asset.

(g) Minimum depreciation is provided upto 95% of the acquisition cost/revalued amount as per Companies Act and balance 5% of the value is retained in the books.

1.07 REVENUE RECOGNITION: AS-9

a) Revenue from sale of goods is recognised after the significant risks and rewards of ownership of the goods have been passed on to the buyer.

b) The amount shown against sales in the profit and loss account is as per contracts of sale and represents the value net off trade discount, excise duty, sales tax and sales returns. Sales value also includes incidentals collected from customers.

c) Sale of scrap is accounted on realisation.

1.08 ACCOUNTING FOR FIXED ASSETS: AS-10

Fixed Assets

Fixed Assets are stated at cost of construction/acquisition including any revaluation to the said asset less accumulated depreciation. The costs attributable to bring the fixed assets to a working condition are capitalised net off duties and taxes eligible for credit.

Fixed assets includes cost of Leased hold land which is stated based on the letters of allotment / agreement to lease and the same is amortized over lease period.

Capital Work -in- progress

Advances paid for acquisition of fixed assets and cost of assets (net off duties & taxes eligible for credit) not put to use as at the Balance Sheet date are disclosed under capital work in progress. Assets are capitalized when they are ready for use/put to use.

1.09 FOREIGN CURRENCY TRANSACTIONS: AS-11

Foreign currency transactions are recognised at the exchange rate prevailing on the date of transaction. As at the balance sheet date outstanding foreign currency items are restated at the closing rate prevailing on that date. Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates different from which they were initially recorded during the year or reported in previous financial statements, are recognised as income or expenditure in the year in which they arise.

Contingent liabilities on foreign currency transactions as at the balance sheet date are disclosed at the closing rate.

1.10 ACCOUNTING OF GOVERNMENT GRANTS: AS-12

Government grants are reckoned in the accounts after its sanction by the competent authorities. Grants received against specific asset/s are credited to the respective asset/s. In the case of grant towards a specific project the same is reduced from the project cost. Grants in the form of assets received free of cost are taken into books of accounts at nominal value. Grants relating to revenue are recognized and shown under Rebates & Incentives as other income.

1.11 INVESTMENTS: AS-13

Long-term investments are valued at cost. Provision, if any, is made to recognize a decline other than a temporary decline in the value of long-term investments. Current investments if any, are valued at lower of cost and fair market value,

1.12 EMPLOYEE BENEFITS: AS-15

a) Short term employee benefits are charged at actuals to Profit and Loss account in the year in which the related services are rendered.

B) PROVIDENT FUND:

i) It is a Defined Benefit Plan covering permanent employees, TPF workers and Forest watchers wherein the company pays fixed contribution at pre-determined rates to a separate Provident Fund Trust approved by competent authority. The contribution to the fund for the period is charged to Profit and Loss Account. As the company is obliged to pay the amount of interest declared by the government from time to time, any short fall in the interest rate declared by the trust will be made good by the company.

ii) in respect of other contract workers fixed contribution at the pre- determined rates are remitted to state defined contribution plan operated by Regional Provident Fund commissioner and is charged to profit and loss account.

C) ACCUMULATED COMPENSATED ABSENCES

Liability towards Leave Encashment and Sick leave is provided based on Actuarial Valuation and charged to Profit & Loss Account.

D) SUPERANNUATION:

It is a Defined Contribution Plan. Certain employees of the company are participants of superannuation scheme. The company makes/provides pre-determined rate of contribution to the superannuation fund administered by Life Insurance Corporation of India and the same is charged to Profit & Loss Account. The company has no further obligation/s to the scheme beyond its contribution.

E) GRATUITY

It is a Defined Benefit Plan. The Company provides for gratuity to eligible employees, contract workers & forest watchers in accordance with the payment of Gratuity Act, 1972. Liability with cegard to gratuity is determined by actuarial valuation as at the Balance Sheet date. Amount charged to profit & loss account is the difference between actuarial valuation and the corpus (including accrued interest) of the trust.

F) VOLUNTARY RETIREMENT SCHEME (VRS)

The expenditure incurred on VRS to employees is charged-off to profit and loss account.

1.13 BORROWING COST: AS-16

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the asset. In respect of funds which are borrowed generally and used for the purpose of obtaining qualifying assets, the borrowing cost is determined by applying weighted average rate of the borrowing cost of the respective year. Other borrowing costs are recognised as expenditure in the year in which they are incurred.

1.14 SEGMENT REPORTING: AS-17

a) The company has identified two business segments, viz., Paper and Sugar. Revenue and expenses have been identified to respective segments on the basis of operating activities of the company. Non- allocable revenue and expenses to a segment but relate to the company as a whole has been disclosed as unallocable revenue and expenses on a reasonable basis.

b) Segment assets-and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated toa segment have been disclosed as unallocable assets and liabilities on a reasonable basis.

c) Inter segment revenue/expenditure is recognized as per Accounting Policy No. 1.02 (iii).

d) There are no geographical segments to be reported as defined in Accounting standard -17.

1.15 RELATED PARTY TRANSACTIONS: AS-18

Remuneration to Key Managerial Personnel, other than independent non-executive directors, is disclosed as ''Related Party Transactions'' in Notes to Accounts.

1.16 EARNINGS PER SHARE: AS-20

In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of extra-ordinary/exceptional items, if any. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares.

1.17 ACCOUNTING FOR TAXES ON INCOME: AS-22

Income tax expense is accounted in accordance with AS 22 which includes current taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient taxable income will be available to realize such assets.

1.18 INTANGIBLE ASSETS: AS-26

Research and Development expenses excluding items of capital in nature and those relating to Captive Forestry are charged to Profit & Loss Account as and when incurred.

1.19 IMPAIRMENT OF ASSETS: AS-28

In accordance with the AS-28 at each balance sheet date the company determines whether there is any indication of impairment of the carrying amount of the company''s fixed assets. In case of any indication of impairment i.e., the carrying amount of the fixed assets exceeds its estimated recoverable amount, impairment loss is recognized and charged to Profit & Loss Account.

1.20 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS: AS-29

a) Provision is recognized when

i. The company has a present obligation as a result of past event.

ii. It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and

iii. A reliable estimate can be made of the amount of the obligation.

b) Contingent liabilities are disclosed by way of Notes on accounts.

c) Contingent assets are neither recognised nor disclosed.














Mar 31, 2010

DISCLOSURE OF ACCOUNTING POLICIES : AS - 1

The financial statements are prepeared in accordance with Indian Generally Accepted Accounting Principles(GAPP") under historical cost convention on accrual basis, except for certain Fixed Assets which have been revalued. GAPP comprises mandatory standards as specified in the Companies(Accounting Standards) Rules, 2006 and the provisions of the Companies Act, 1956.

Accounting policies have been consistently applied and followed. However, where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in accounting policy hitherto in use or a change in accounting policy is warranted for better presentation of the underlying transaction, the policy is changed accordingly and thereafter followed consistenly.

Use of estimtes

The preparation of financial statements requires the management to make estimates and assumptions of some of the reported amounts of assets and liabilities, the amounts of revenue and expenses and disclosure of contingent assets and liabilities as at the balance sheet date Actual amounts could differ from these estimates.

1.A2 VALUATION OF INVENTORIES : AS - 2

Stock oif Raw Materials, Pulp, Chemicals, Fuel, Packing Materials and Process Stock is valued generally at weighted average cost.

Finished and unfinished stock is valued at cost or net realisable value whichever is lower.ln respect of free sale sugar, realisable value is the amount as per latest market rates. Molasses is valued at net realisable value. Cost in the case of Finished Goods include depreciation,packing material and exciseduty but excludes interest and financial charges, selling expenses an adminis trative and other expenses. In the case of un- finished stock, cost includes depreciation but excludes administrative and other expenses.

Bagasse for captive consumption is valued at equated cost of raw material (i.e., sugarcane) including taxed (wherever applicable). Bagassee determined as excess is valued at net realisable value.

Stores and Spares are valued at weighted average cost. In respect of non-moving stores and spares, as determined, 50% of the value thereof is provided in the accounts for any loss that may arise on the items so determined.

Goods in transit are recognised as at the Balance Sheet date as per the terms of supplies.

(vi) Scrap is valued at estimated net realisable value

(vii) Captive Plantations:

All expenses incurred for Captive Plantations are shown separately in the Balance Sheet under "Captive Forest Plantations".

Yield obtained from Captive Plantation is valued at cost based on the total expenditure incurred on / allocated to the year of plantation and the total quantity of yield obtained / expected from the respective year of plantation, While doing so due allowances have been made for the Lease Rent payable to Govt, of Karnataka. Similar valuation method is followed in the case of standing crips matured but not extracted.

The extractions of pulpwood from the captive plantations are done based on the management plan approved by competent authority from time to time.

1.03 CASH FLOW STATEMENTS -AS - 3

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise cash in hand, current and other accounts(including fixed deposits) held with banks.

1.04 EVENTS OCCURRING AFTER THE BALANCE SHEET DATE: AS - 4

Assets and Liabilities and Income and Expenditure are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.

1.05 NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES :AS-5

Significant items of extraordinary items, and prior period incomes and expenditure are accounted in accordance with Accounting Standard - 5.

1.06 DEPRECIATION ACCOUNTING : AS - 6

(a) Fixed Assets acquired prior to 01-04-1960 are depreciated under Written Down Value (WDV) Method at the rates specified in the Income Tax Act, 1961.

(b) In respect of Fixed Assets, except Furniture and Fixtures, Office Equipments and Leased Assets, acquired on or after 1-4-1960, depreciation is provided on Straight Line Method as detailed below

(i) In respect of Assets acquired upto 1-4-1987 as per the rates rescribed in the Income Tax Act,1961, prevailing at the time of acquisition of the relevant asset.

(H> In respect of Assets acquired on or after 2-4-1987 at the rates prescribed in Schedule XIV to the Companies Act, 1956. Any change in the rates of depreciation in Schedule XJV is given effect in respect of assets acquired on or after that date.

(c) In respect of Furniture and Fixtures and Office Equipments acquired on or after 1-4 1960, the useful life of the assets has been determined as 10 years and depreciation as per Straight Line Method has been provided in the accounts accordingly.

(d) Expenditure on internal partitions / extension of existing building costing individually Rs.20,000/- and below is charged to revenue.

(e) Depreciation on assets acquired / sold / discarded during the year is provided from / upto the month the asset is acquired / sold / discarded.

(f) Insurance spares capitals in nature are depreciated over a period of time not exceeding the useful life of the concerned principal / main asset.

(9) Minimum depreciation is provided upto 95% of the acquisition cost / revalued amount as per Companies Act and balance 5% of the value is retained in the books.

1.07 REVENUE RECOGNITION : AS - 9

(a) Revenue from sale of goods is recognised after the significant risks and rewards of ownership of the goods have been passed on to the buyer.

The amount shown against sales in the profit and loss account is as per contracts of sale and represents the value net off trade discount, exciseduty, sales tax and sales returns. Sales value also includes incidentals collected from customers.

(c)1.0 Accounting for fixed assets : as

Fixed Assets

Fixed Assets are stated at cost of construction/ acquisition including any revaluation to the said asset less accumulated depreciation. The costs attributable to bring the fixed assets to a working condition are capitalised net off dues and taxes eligible for credit.

Capital Work-in-progress

Advances paid for acquisition of fixed assets and cost of assets(net off duties and taxes eligible for credit) not put to use as at the Balance Sheet date are disclosed under capital work in progress. Assets are capitalised when they are ready for use / put to use.

FOREIGN CURRENCY TRANSACTIONS : AS -11

Foreign currency transactions are recognised at the exchange rate prevailing on the date of transactions. As at the balance sheet date outstanding foreign currency items are restated at the closing rate prevailing on that date. Exchange differences arising on the settlement of monetary items or on restatement of monetary items at rates different from which they were initially recorded during the year or reported in previous financial statements, are recognised as income or expenditure in the year in which they arise.

Contingent Liabilities on Foreign Currency transactions as at the Balance Sheet date are disclosed at the closing rate.

1.10 ACCOUNTING OF GOVERNMENT GRANTS: AS-12

Government Grants are reckoned in the accounts after its sanction by the competent authorities. Grants received against specific asset / s are credited to the respective asset / s. In the case of grant towards a specific project, the same is reduced from the project cost. Grants in the form of assets received free of cost are taken into books of accounts at nominal value. Grants relating to revenue are recognised and shown under Rebates and Incentives as other income.

1.11 INVESTMENTS: AS-13

Long term investments are valued at cost. Provision, if any, is made to recognise a decline other than a temporary decline in the value of long term investments. Current investments if any are valued at lower of cost and fair market value.

1.12 EMPLOYEE BENEFITS : AS - 15

(a)Short term employee benefits are charged at actuals to Profit and Loss account in the year in which the related services are rendered.

(b) Provident Fund

(h) It is a Defined Benefit Plan covering permanent employees. TPF workers and Forest watchers wherein the company pays fixed contribution at pre- determined rates to a separate Provident Fund Trust approved by competent authority. The contribution to the fund for the period is charged to Profit and Loss Account. As the company is obliged to pay the amount of interest declared by the government from time to time, any short fall in the interest rate declared by the trust will be made good by the Company.

(ii) In respect of other contract workers, fixed contribution at the pre-determined rates are remitted to state defined contribution plan operated by Regional Provident Fund Commissioner and is charged to profit and loss account.

c) Accumulated Compensated Absences Liability towards Leave Encashment and Sick Leave is provided based on Actuarial Valuation and charged to Profit and Loss Account.

D)Superannuation :

It is a Defined Contribution Plan. Certain employees of the Company are participants of superannuation scheme. The Company makes / provides pre-determined rate of contribution to the superannuation fund administered by Life Insurance Corporation of India and the same is charged to Profit & Loss Account. The Company has no further obligation / s to the scheme beyond its contribution.

E) Gratuity

It is a Defind Benefit Plan, The Company provides for gratuity to eligible employees, contract workers and forest watchers in accordance with the payment of Gratuity Act, 1972. Liability with regard to gratuity is determined by actuarial valuation as at the Balance Sheet date. Amount charged to profit and loss account is the difference between actuarial valuation and the corpus (including accrued interest) of the trust.

F) VOLUNTARY RETIREMENT SCHEME

The expenditure incurred on VRS to employees is charged off to profit and loss account.

1.13 BORROWING COST : AS - 16

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of the asset. In respect of fund which are borrowed generally and used for the purpose of obtaining qualifying assets, the borrowing cost is determined by applying weighted average rate of the borrowing cost of the respective year. Other borrowing costs are recognised as expenditure in the year in which they are incurred.

1.14 SEGMENT REPORTING : AS - 17

(a) The Company has identified two business segments viz., Paper and Sugar. Revenue and expenses have been identified to respective segments on the basis of operating activities of the company. Non-allocable revenue and expenses to a segment but relate to the Company as a whole has been disclosed as unallocable revenue and expenses on a reasonable basis.

(b) Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment have been disclosed as unallocable assets and liabilities on a reasonable basis.

(c) Intersegment revenue/expenditure is recognised as per Accounting Policy No.1.02 (iii).(d) There are no geographical segments to be reported as defined in Accounting Standard -17.

1.15 RELATED PARTY TRANSACTIONS : AS - 18

Remuneration to Key Managerial Personnel, other than independent non-executive Directors is disclosed as "Related Party Transactions" in Notes to Accounts.

1.16 EARNINGS PER SHARE : AS - 20

In determining earnings per share, the Company considers the net profit after tax and includes the post tax effect of extraordinary / exceptional items, if any. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earning per share comprises the weighted average shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity

1.17 ACCOUNTING FOR TAXES ON INCOME : AS - 22

Income Tax expenses is accounted in accordance with AS - 22 which includes current taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between tasable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient taxable income will be available to realize such assets.

1.18 INTANGIBLE ASSETS : AS - 26

Research and Development expenses excluding items of capital in nature and those relating to Captive Forestry are charged to Profit and Loss Account as and when incurred.

1.19 IMPAIRMENT OF ASSETS : AS - 28

In accordance with the AS - 28 at each balance sheet date, the Company determines whether there is any indication of impairment of the carrying amount of the Companys Fixed Assets. In case of any indication of impairment i.e., the carrying amount of the fixed assets exceeds its estimated recoverable amount, impairment loss is recognised and charged to Profit and Loss Account.

 
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