Mar 31, 2015
1. CORPORATE IN FORMATIONS
a. Orissa Sponge Iron & Steel Limited was incorporated in the year
1979. The Company established manufacturing facilities to produce
Sponge Iron, Steel Billets and Power at its works at Palaspanga, Dist
Keonjhar, Odisha. The Company also provides engineering and technical
services.
b- The Company suspended production from June, 2012 due to unviable
cost economics and continuing losses. In the present scenario viability
of the Company is largely dependent on availability of raw material
from captive sources.
c. State Bank of India on behalf of itself, Bank of India and Punjab
National Bank have issued Possession Notice dated 24.04.201 S under
Section 13{4J of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) as per
their demand for recall of loan issued under Section 13(2) of the Act
caller could not be paid by the Company, As It stands, aforesaid banks
have taken possession of the property described in the notice. In
addition, State Bank of India and Edelweiss Asset Reconstruction
Company Limited have also filed application under Section 19(1) of the
Recovery of Debts due to Banks and Financial Institutions Act. 1993
before the Debt Recovery Tribunal (DRT).
d. The Company has mode representation before oil the lenders
explaining the reasons for the current state of affairs and the action
plan far revival of the Company In the near future. The Company is
hopeful of receiving favorable response from the lenders for a
comprehensive debt restructuring and working capital facility in view
of the iron ore mines allotted to the Company which on commencement of
mining operations has the potential to turnaround the Company into a
profitable unit in the near future.
e. The Company was allotted Iron Ore Mines by the Central Government
and the State Government of Odisha. Commencement of mining operations
from the mines requires several approvals, clearances and fulfillment
of conditions as specified in the respective documents. The Company
has received all approvals and clearances Including State 1 Clearance
from the Ministry of Environment and Forest and Compliance Certificate
under the Scheduled Tribes and Other Traditional Dwellers {Recognition
of Forest Rights Act), 2006 and are presently awaiting Stage II
Clearance on receipt of which lease agreements could be executed for
commencement of mining operations Availability of iron ore from captive
mines will permit production ot higher capacity and significant improve
profitability of the Company.
f. Despite stoppage of plant operations since 2012 due to unviable
cast economic business situation, the Project and Engineering Division
continued to operate and generate revenue from sale of technology
during the year.
g. Having regard to the aforesaid developments, the Company has the
potential to turnaround and revive as a profitable unit and accordingly
the financial statements have been prepared on historical cost basis as
a going concern.
I. Basis of preparation of financial statements
The financial statements of the Company have been prepared In
accordance with the Generally Accepted Accounting Principles In India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 1 33 of the Companies Act, 2013 read with the Rule 7 of the
Companies {Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013. The financial statements have been prepared on
accrual basis under the historical cost convention.
II. Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities and commitments on the date of financial
statements and the results of operations during the year. Differences
between actual results and estimates are recognized in the year in
which the results are known or materialized. Actual results could
differ Tram those estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
III. Revenue Recognition
Revenue from sale of products is recognized when the products are
dispatched against orders from customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
Sales are stated Inclusive of excise duty and net of rebates, trade
discounts and sales tax.
Revenue from services are recognized when services have been rendered
in accordance with the contract terms.
Revenue From the sale of power is recognized based on monthly bill
raised as per month-end meter reading.
Dividend income is recognized when the Company's right to receive
dividend is established. Interest income is recognized on accrual basis
on implicit interest rates.
Revenue from Certified Emission Reductions (CER) is recognized In the
financial statements only after certification by accredited agency i.e.
United Nation Framework Convention on Climate Change {UNFCCC).
IV. Tangible Assets
All tangible assets are stated at cost or at revalued amount less
accumulated depreciation. The cost of an asset includes the purchase
cost of materials, Including import duties and non refundable taxes and
any deftly attributable costs of bringing an asset to the location and
condition of its intended use. 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.
V. Intangible Assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any. Intangible assets are amortized over the
useful life of the assets.
VI. Capital Work-In-progress
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest if any.
VII. Depreciation
Depreciation on tangible fixed assets have been provided on the
straight line method, aspect the useful life prescribed in Schedule 1J
to the Companies Act 2013. Additional charge of depreciation on amount
added on revaluation is adjusted against revaluation reserve.
VIII. Investments
Investments held by the Company which are long term in nature are
stated at cost unless there is any permanent diminution in value, where
provision for diminution is made on individual investment basis.
Current investments are carried lower of cost and fair value.
IX. Inventories
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials and other products are determined
on weighted average basis. By-products are valued at net realizable
value.
X. Retirement Benefits and Employee Benefits Schemes a) Provident
Fund:
Retirement benefit in the form of Provident Fund is a defined benefit
obligation of the Company and the contributions are charged to the
Statement of Profit & Loss of the year when the contributions to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided by the Company. b) Superannuation Fund:
Superannuation Fund (for certain class of employees) is a defined
contribution scheme. Liability and contribution in respect of
Superannuation Fund of the concerned employees Is accounted for as per
Company's scheme and paid to the Life Insurance Corporation of India
(LICI) every year. The contributions to the fund are charged in the
Statement of Profit fit Loss of the year. The Company does not have
any other obligations to the Fund other than the contribution payable
to LICI.
c) Gratuity Fund:
Gratuity Fund is a defined benefit obligation and is provided on the
basis of actuarial valuation on project unit credit method at the end
of each financial year. The Company has taken a policy with LICI to
cover the gratuity liabilities of the employees and contribution paid
to LICI is charged to the Statement of Profit & Loss. The difference
between the actuarial valuation of gratuity of the employees at the
year end and the balance of fund with LICI is recognized as Liability
in the Books of Accounts.
d) Leave Encashment:
Short term compensated absence are provided on the basis of actuarial
valuation at the year end. The actuarial valuation Is as per project
unit credit method.
Actuarial gains/losses are recognized immediately in the Statement of
Profit & Loss and are not deferred,
XI. Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss. Capital expenditure on tangible assets
for research and development is shown as additions to Fixed Assets.
XII. Foreign Currency Transaction
Transactions in foreign currency are recorded initially at the exchange
rate prevailing on the date of transaction. Monetary assets or
liabilities in currency other than the reporting currency and foreign
exchange transactions remaining unsettled at the Balance Sheet date are
valued at the yearend exchange rate.
Exchange difference arising on the settlement of monetary items and on
the re-settlement of the monetary items are recognized as income or
expense in the Statement of Profit and Loss.
XIII. Relining Expenses
Expenditure on relining of kiln and cooler is charged to the Statement
of Profit and Loss in the year in which it is incurred.
XIV. Taxation
a) Current Taxes:
Provision for current taxes is determined on the basis of taxable
income and tax credits as per provision of the Income Tax Act,1961.
b) Deferred Taxes:
Deferred tax assets are recognized only to the extent that there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that have been
enacted or substantially enacted and the Balance Sheet date.
Deferred tax assets arising from unabsorbed depreciation or carry
forward losses are recognized only If there Is virtual certainty of
realization of such amounts.
XV. Lease
Where the Company is a lessee, financial leases, effectively
transferred to the Company substantially, the risk and benefits
incidental to the ownership of the lease item, are capitalized at the
lower of the fair value and present value of the minimum lease payment
at the inception of the lease starts. Lease payments are apportioned
between the finance charge and deduction of the lease liability based
on the implicit rate of return. Finance charges are expensed.
XVI. Borrowing Cost
Borrowing Costs that are attributable to the acquisitions, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
XVII Provisions and Contingent, Liabilities
A provision is recognized when it is more likely that an obligation
will result in an outflow of resources. Provisions are not discounted
at their present value and are determined based on the management's
estimation of the obligation required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect current management estimates. A disclosure for a
contingent liability is made where it is more likely than a present
obligation or possible obligation would not result in or involve an
outflow of resources.
XVIII. Eaming per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of the equity shares outstanding during the period.
Diluted earnings during the year adjusted for the effects of all
dilutive potential equity shares per share Is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year.
XIX, Impairment
At each Balance Sheet date, the Company reviews the carrying value of
tangible and intangible assets for any possible impairment An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is higher of the
asset's net selling price or estimated future cash flows which are
discounted to their present value based on appropriate discount rates.
For the purpose of assessing impairment, assets are grouped at the
levels for which there are separately identifiable cash flows (cash
generating unit).
Mar 31, 2014
I. Basis of preparation of financial statements
The financial statements are prepared on accrual basis under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAAP). Financial statements comply with
the applicable Accounting Standards (AS) specified in Companies
(Accounting Standard) Rules, 2006 and presentational requirement of the
Companies Act, 1956.
II. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities and
commitments on the date of financial statements and the result of
operations during the year. Differences between actual results and
estimates are recognized in the year in which the results are known or
materialized. Actual results could differ from those estimates. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
III. Revenue Recognition
Revenue from sale of products is recognized when the products are
dispatched against orders from customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
Sales are stated inclusive of excise duty and net of rebates, trade
discounts and sales tax.
Revenue from the sale of power is recognized based on monthly bill
raised as per month-end meter reading.
Dividend income is recognized when the Company''s right to receive
dividend is established. Interest income is recognized on accrual
basis on implicit interest rates.
Revenue from Certified Emission Reductions (CER) is recognized in the
financial statements only after certification by accredited agency
i.e. United Nation Framework Convention on Climate Change (UNFCCC).
IV. Tangible Assets
All tangible assets are stated at cost or at revalued amount less
accumulated depreciation. The cost of an asset includes the purchase
cost of materials, including import duties and non refundable taxes and
any directly attributable costs of bringing an asset to the location
and condition of its intended use. 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.
V. Intangible Assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any. Intangible assets are amortized over the
useful life of the assets.
VI. Capital Work-in-progress
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest, if any.
VII. Depreciation
Depreciation is computed on the straight line method, as per the rates
prescribed in Schedule XIV to the Companies Act, 1956 on the assets
which are in use. Additional charge of depreciation on amount added on
revaluation is adjusted against revaluation reserve.
VIII. Investments
Investments held by the Company which are long term in nature are
stated at cost unless there is any permanent diminution in value, where
provision for diminution is made on individual investment basis.
Current investments are carried lower of cost and fair value.
IX. Inventories
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials and other products are determined
on weighted average basis. By-products are valued at net realizable
value.
X. Retirement Benefits and Employee Benefits Schemes a) Provident
Fund:
Retirement benefit in the form of Provident Fund is a defined benefit
obligation of the Company and the contributions are charged to the
Statement of Profit & Loss of the year when the contributions to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided by the Company.
b) Superannuation Fund:
Superannuation Fund (for certain class of employees) is a defined
contribution scheme. Liability and contribution in respect of
Superannuation Fund of the concerned employees is accounted for as per
Company''s scheme and paid to the Life Insurance Corporation of India
(LICI) every year. The contributions to the fund are charged in the
Statement of Profit & Loss of the year. The Company does not have any
other obligations to the Fund other than the contribution payable to
LICI.
c) Gratuity Fund:
Gratuity Fund is a defined benefit obligation and is provided on the
basis of actuarial valuation on project unit credit method at the end
of each financial year. The Company has taken a policy with LICI to
cover the gratuity liabilities of the employees and contribution paid
to LICI is charged to the Statement of Profit & Loss. The difference
between the actuarial valuation of gratuity of the employees at the
year end and the balance of fund with LICI is recognized as Liability
in the Books of Accounts.
d) Leave Encashment:
Short term compensated absence are provided on the basis of actuarial
valuation at the year end. The actuarial valuation is as
per project unit credit method.
Actuarial gains/losses are recognized immediately in the Statement of
Profit & Loss and are not deferred.
XI. Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss. Capital expenditure on tangible assets
for research and development is shown as additions to Fixed Assets.
XII. Foreign Currency Transaction
Transactions in foreign currency are recorded initially at the exchange
rate prevailing on the date of transaction. Monetary assets or
liabilities in currency other than the reporting currency and foreign
exchange transactions remaining unsettled at the Balance Sheet date are
valued at the year end exchange rate.
Exchange difference arising on the settlement of monetary items and on
the re-settlement of the monetary items are recognized as income or
expense in the Statement of Profit and Loss.
XIII. Relining Expenses
Expenditure on relining of kiln and cooler is charged to the Statement
of Profit and Loss in the year in which it is incurred.
XIV. Taxation
a) Current Taxes:
Provision for current taxes is determined on the basis of taxable
income and tax credits as per provision of the Income Tax Act, 1961.
b) Deferred Taxes:
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realized.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that
have been enacted or substantially enacted on the Balance Sheet date.
Deferred tax assets arising from unabsorbed depreciation or carry
forward losses are recognized only if there is virtual certainty
of realization of such amounts.
XV. Lease
Where the Company is a lessee, financial leases, effectively
transferred to the Company substantially, the risk and benefits
incidental to the ownership of the lease item, are capitalized at the
lower of the fair value and present value of the minimum lease payment
at the inception of the lease starts. Lease payments are apportioned
between the finance charge and deduction of the lease liability based
on the implicit rate of return. Finance charges are expensed.
XVI. Borrowing Cost
Borrowing Costs that are attributable to the acquisitions, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
XVII. Provisions and Contingent Liabilities
A provision is recognized when it is more likely that an obligation
will result in an outflow of resources. Provisions are not discounted
at their present value and are determined based on the management''s
estimation of the obligation required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect current management estimates. A disclosure for a
contingent liability is made where it is more likely than a present
obligation or possible obligation would not result in or involve an
outflow of resources.
XVIII. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of the equity shares outstanding during the period.
Diluted earnings during the year adjusted for the effects of all
dilutive potential equity shares per share is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year.
XIX. Impairment
At each Balance Sheet date, the Company reviews the carrying value of
tangible and intangible assets for any possible impairment. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is higher of the
asset''s net selling price or estimated future cash flows which are
discounted to their present value based on appropriate discount rates.
For the purpose of assessing impairment, assets are grouped at the
levels for which there are separately identifiable cash flows (cash
generating unit).
3.3 Rights, Preferences and Restrictions attached to Shares:
a) Equity shares
The Company has issued Equity Shares having a par value of ? 10. Each
holder of equity shares is entitled to one vote per share. The
dividend proposed by the Board of Directors, if any, is subject to the
approval of shareholders in Annual General Meeting. In the event of
liquidation of the Company the holder of the equity shares will be
entitled to receive remaining assets of the Company after settlement of
all preferential amounts. The distribution will be in proportion to the
number of equity shares held by the equity shareholders.
b) Preference Shares
Company''s Article of Association provdes for issuance of Redeemable
Preference Shares. Redeemale Preference Shares can be redeemed only out
of profits in accordance with the Article of Association of the Company
and the Companies Act.
3.4 Rights attached to 30 lacs equity shares out of warrant conversion
cannot be exercised as the matter is sub-judice.
3.5 The details of Shareholders holding more than 5 % shares
* Note : During the year Lease Hold and Free Hold Land of the Company
at Palaspanga has been revalued by an accredited valuer.
The difference between the cost of Acquisition and Revaluation of
?11,711.80 lacs has been created by Revaluation Reserve.
5. a) Money received against Share Warrants
Equity share warrants amounting to ? 601.50 lacs represent 10 %
consideration received from a party against share warrants issued on
preferential basis during the year 2007-08. The conversion of share
warrants to equity is sub-judice. b) Advance received for issue of
Preference Share
The money received from strategic partner of the company i.e. Monnet
Ispat & Energy Limited and an Associated Company of the Promoter i.e.
Torsteel Services Pvt. Ltd. amounting to ? 2,000 lacs will be adjusted
by issuing Redeemable Preference Share as per the terms and conditions
agreed between the two parties and in accordance to the Company''s
Article of Association/Companies Act.
6.1 Term loans from banks and other parties are secured / to be secured
by joint equitable mortgage by deposit of title deed of immovable
properties and hypothecation of all moveable assets of the Company both
present and future (save and except book debts) ranking pari-passu
subject to prior charge created in favour of the Company''s bankers for
securing working capital finance on stock of raw material, finished
goods etc. and also by second charge on current assets. Further, the
above term loans have been guaranteed by the personal guarantee of the
Vice Chairman & Managing Director of the Company.
6.2 Interest and maturity profile on Term Loans are set out below :
Interest on term loan from banks and other parties carry interest @
15.75 % to 16.75 % and 10% to 12.89 % respectively.
7.1 Disclosure as required under AS 29
Provision for Entry Tax, Sales Tax and Interest on Bank Borrowings have
been recognized in the financial statements considering the following:
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.
8.1 Cash Credit from banks are sanctioned on a consortium basis by
hypothecation of raw materials, finished goods, stores and spares, book
debts etc. pari-passu secured charge on immovable properties and other
fixed assets and also guaranteed by personal guarantee of vice-
chairman of the Company (Dr. P. K. Mohanty). The above cash credit is
repayable on demand and carries interest @15.75 % to 17.15 %.
* Based on and to the extent of information obtained from suppliers
regarding their status as Micro, Small or Medium enterprises under the
Micro, Small and Medium Enterprises Development Act, 2006, there are no
amounts due to them as at the end of the year.
13.1 Loans and advances to related parties includes:
Advances to Bilati (Orissa) Ltd (BOL) - doubtful ? 1,927.51 lacs (?
1,901 A3 lacs)
Advance to Bamra Iron & Steel Company (India) Ltd. (Bamra) - ? 84.70
lacs (? 84.10 lacs)
As the prospect of reviving of Bilati (Orissa) Ltd. (which is under
BIFR). appears to be uncertain, provision has been made for
advanced due from Bilati (Orissa) Ltd.
13.2 Long Term Advances under doubtful includes claim receivable
amounting to ? 119.00 lacs from Mahanadi Coalfield Ltd. Mahanadi
Coalfield Ltd. enchashed the bank guarantee given to them for
purchasing of coal under the fuel supply agreement. The company has
contested such encashment of bank guarantee and the matter is
subjudice.
b) Defined Benefit Plans :
i) Compensated Absences: Liability for Compensated Absences is provided
on the basis of valuation, as at the Balance Sheet date, carried out by
an independent actuary. The actuarial valuation method used for
measuring the liability is the Projected Unit Credit method. Under
this method, the Defined Benefit Obligation is calculated taking into
account pattern of availment of leave while in service and qualifying
salary on the date of availment of leave. In respect of encashment of
leave, the Defined Benefit obligation is calculated taking into account
in qualifying salary projected up to the assumed date of encashment.
Mar 31, 2013
I. Basis of preparation of financial statements
The financial statements are prepared on accrual basis under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAPP). Financial statements comply with
the applicable Accounting Standards (AS) specified in Companies
(Accounting Standard) Rules, 2006 and presentational requirement of the
Companies Act, 1956.
II. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities and
commitments on the date of financial statements and the result of
operations during the year. Differences between actual results and
estimates are recognized in the year in which the results are known or
materialized. Actual results could differ from those estimates. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
III. Revenue Recognition
Revenue from sale of products is recognized when the products are
despatched against orders from customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
Sales are stated inclusive of excise duty and net of rebates, trade
discounts and sales tax.
Revenue from services are recognized when services have been rendered
in accordance with the contract terms.
Revenue from the sale of power is recognized based on monthly bill
raised as per month-end meter reading.
Dividend income is recognized when the Company''s right to receive
dividend is established. Interest income is recognized on accrual basis
on implicit interest rates.
Revenue from Certified Emission Reductions (CER) is recognized in the
financial statements only after certification by accredited agency
i.e. United National Framework Convention on Climate Change (UNFCCC).
IV. Tangible Assets
All tangible assets are valued at cost less depreciation. The cost of
an asset includes the purchase cost of materials, including import
duties and non refundable taxes and any directly attributable costs of
bringing an asset to the location and condition of its intended use.
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.
V. Intangible Assets
Intangible assets are carried at cost less accumulated amortizatin and
impairment losses, if any. Intangible assets are amortized over the
useful life of the assets.
VI. Capital Work-in-progress
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest, if any.
VII. Depreciation
Depreciation for the year is computed on the straight line method, as
per the rates prescribed in Schedule XIV to the Companies Act, 1956.
Additional charge of depreciation on amount added on revaluation is
adjusted against revaluation reserve.
VIII. Investments
Investments held by the Company which are long term in nature are
stated at cost unless there is any permanent diminution in value, where
provision for diminution is made on individual investment basis.
Current investments are carried lower of cost and fair value.
IX. Inventories
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials and other products are determined
on weighted average basis. By-products are valued at net realizable
value.
X. Retirement Benefits and Employee Benefits Schemes a) Provident
Fund:
Retirement benefit in the form of Provident Fund is a defined benefit
obligation of the Company and the contributions are charged to the
Statement of Profit & Loss of the year when the contributions to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided by the Company.
b) Superannuation Fund:
Superannuation Fund (for certain class of employees) is a defined
contribution scheme. Liability and contribution in respect of
Superannuation Fund of the concerned employees is accounted for as per
Company''s scheme and paid to the Life Insurance Corporation of India
(LICI) every year. The contributions to the fund are charged in the
Statement of Profit & Loss of the year. The Company does not have any
other obligations to the Fund other than the contribution payable to
LICI.
c) Gratuity Fund:
Gratuity Fund is a defined benefit obligation and is provided on the
basis of actuarial valuation on project unit credit method at the end
of each financial year. The Company has taken a policy with LICI to
cover the gratuity liabilities of the employees and contribution paid
to LICI is charged to the Statement of Profit & Loss. The difference
between the actuarial valuation of gratuity of the employees at the
year end and the balance of fund with LICI is recognized as Liability
in the Books of Accounts.
d) Leave Encashment:
Short term compensated absence are provided on the basis of actuarial
valuation at the year end. The actuarial valuation is as per project
unit credit method.
Actuarial gains/losses are recognized immediately in the Statement of
Profit & Loss and are not deferred.
XI. Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss. Capital expenditure on tangible assets
for research and development is shown as additions to Fixed Assets.
XII. Foreign Currency Transaction
Transactions in foreign currency are recorded initially at the exchange
rate prevailing at the date of transaction. Monetary assets or
liability in currencies other than the reporting currency and foreign
exchange transactions remaining unsettled at the Balance Sheet date are
valued at the year end exchange rate.
Exchange difference arising on the settlement of monetary items and on
the re-settlement of the monetary items are recognized as income or
expense in the Statement of Profit and Loss.
XIII. Relining Expenses
Expenditure on relining of kiln and cooler is charged to the Statement
of Profit and Loss in the year in which it is incurred.
XIV. Taxation
a) Current Taxes:
Provision for current taxes is determined on the basis of taxable
income and tax credits as per provision of the Income Tax Act, 1961.
b) Deferred Taxes:
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realized.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that have been
enacted or substantially enacted on the Balance Sheet date. Deferred
tax assets arising from unabsorbed depreciation or carry forward losses
are recognized only if there is virtual certainty of realization of
such amounts.
XV. Lease
Where the Company is a lessee, financial leases, effectively
transferred to the Company substantially, the risk and benefits
incidental to the ownership of the lease item, are capitalized at the
lower of the fair value and present value of the minimum lease payment
at the inception of the lease starts. Lease payments are apportioned
between the finance charge and deduction of the lease liability based
on the implicit rate of return. Finance charges are expensed.
XVI. Borrowing Cost
Borrowing Costs that are attributable to the acquisitions, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
XVII. Provisions and Contingent Liabilities
A provision is recognized when it is more likely that an obligation
will result in an outflow of resources. Provisions are not discounted
at their present value and are determined based on the management''s
estimation of the obligation required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect current management estimates. A disclosure for a
contingent liability is made where it is more likely than a present
obligation or possible obligation would not result in or involve an
outflow of resources.
XVIII. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of the equity shares outstanding during the period.
Diluted earnings during the year adjusted for the effects of all
dilutive potential equity shares per share is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year.
XIX. Impairment
At each Balance Sheet date, the Company reviews the carrying value of
tangible and intangible assets for any possible impairment. An
impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is higher of the
asset''s net selling price or estimated future cash flows which are
discounted to their present value based on appropriate discount rates.
For the purpose of assessing impairment, assets are grouped at the
levels for which there are separately identifiable cash flows (cash
generation unit).
Mar 31, 2012
I. Basis of preparation of financial statements
The financial statements are prepared on accrual basis under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAPP). Financial statements comply with
the applicable Accounting Standards (AS) specified in Companies
(Accounting Standard) Rules, 2006 and presentational requirement of the
Companies Act, 1956.
II. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities and
commitments on the date of financial statements and the result of
operations during the year. Differences between actual results and
estimates are recognized in the year in which the results are known or
materialized. Actual results could differ from those estimates. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
III. Fixed Assets / Depreciation
Fixed assets are stated at cost or at revalued amounts less accumulated
depreciation. Cost of fixed assets includes all incidental expenses and
interest costs on borrowings, attributable to the acquisition of the
assets, upto the date of commissioning of the assets. Depreciation for
the year is computed on the straight line method, as per the rates
prescribed in Schedule XIV to the Companies Act,1956. Additional charge
of depreciation on amount added on revaluation is adjusted against
revaluation reserve.
Fixed assets are reviewed for impairment on each Balance Sheet date, in
accordance with AS 28 "Impairment of Assets".
IV. Revenue Recognition
Revenue from sale of products is recognized when the products are
dispatched against orders from customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
Revenue from services are recognized when services have been rendered
in accordance with the contract terms.
Revenue from the sale of power is recognized based on monthly bill
raised as per month-end meter reading.
Sales are stated inclusive of excise duty and net of rebates, trade
discounts and sales tax.
Dividend income is recognized when the Company's right to receive
dividend is established. Interest income is recognized on accrual basis
on implicit interest rates.
V. Carbon Credit
Till 31st March 2011, Certified Emission Reductions (CER) was accounted
for on estimated accrued CER valued at net realizable value. From 2011
-12, following the Guidance Notes on Accounting for self-generated CER
issued by Accounting Standards Board of the Institute of Chartered
Accountants of India (ICAI), CER is recognized in the financial
statements only after certification by accredited agency i.e. United
Nation Framework Convention on Climate Change (UNFCCC).
VI. Investments
Investments held by the Company which are long term in nature are
stated at cost unless there is any permanent diminution in value, where
provision for diminution is made on individual investment basis.
Current investments are carried lower of cost and fair value.
VII. Inventories
Items of inventories are measured at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories
comprises of cost of purchase, cost of conversion and other costs
including manufacturing overheads incurred in bringing them to their
respective present location and condition. Cost of raw materials,
stores and spares, packing materials and other products are determined
on weighted average basis. By-products are valued at net realizable
value.
VIII. Retirement Benefits and Employee Benefits Schemes
a) Provident Fund:
Retirement benefit in the form of Provident Fund is a defined benefit
obligation of the Company and the contributions are charged to the
Profit & Loss Account of the year when the contributions to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided by the Company.
b) Superannuation Fund:
Superannuation Fund (for certain class of employees) is a defined
contribution scheme liability and contribution in respect of
Superannuation Fund of the concerned employees is accounted for as per
Company's scheme and paid to the Life Insurance Corporation of India
(LICI) every year. The contributions to the fund are charged in the
Profit & Loss Account of the year. The Company does not have any other
obligations to the Fund other than the contribution payable to LICI.
c) Gratuity Fund:
Gratuity Fund is a defined benefit obligation and is provided on the
basis of actuarial valuation on project unit credit method at the end
of each financial year. The Company has taken a policy with LICI to
cover the gratuity liabilities of the employees and contribution paid
to LICI is charged to Profit & Loss Account. The difference between the
actuarial valuation of gratuity of the employees at the year end and
the balance of fund with LICI is recognized as Liability in the Books
of Accounts.
d) Leave Encashment:
Short term compensated absence are provided on the basis of actuarial
valuation at the year end. The actuarial valuation is as per project
unit credit method.
Actuarial gains/losses are recognized immediately in the Profit & Loss
Account and are not deferred.
IX. Research and Development
Revenue expenditure on research and development is charged to Profit
and Loss Account. Capital expenditure on tangible assets for research
and development is shown as additions to Fixed Assets.
X. Foreign Currency Transaction
Transactions in foreign currency are recorded initially at the exchange
rate prevailing at the date of transaction. Monetary assets or
liability in currencies other than the reporting currency and foreign
exchange transactions remaining unsettled at the balance sheet date are
valued at the yearend exchange rate.
Exchange difference arising on the settlement of monetary items and on
the re-settlement of the monetary items are recognized as income or
expense in the Profit and Loss Account.
XI. Relining Expenses
Expenditure on relining of kiln and cooler is charged to Profit and
Loss Account in the year in which it is incurred.
XII. Taxation
a) Current Taxes:
Provision for current taxes is determined on the basis of taxable
income and tax credits as per provision of the Income Tax Act 1961.
b) Deferred Taxes:
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that have been
enacted or substantially enacted on the Balance Sheet date.
Deferred tax assets arising from unabsorbed depreciation or carry
forward losses are recognized only if there is virtual certainty of
realization of such amounts.
XIII. Lease
Where the Company is a lessee, financial leases, effectively
transferred to the Company substantially, the risk and benefits
incidental to the ownership of the lease item, are capitalized at the
lower of the fair value and present value of the minimum lease payment
at the inception of the lease starts. Lease payments are apportioned
between the finance charge and deduction of the lease liability based
on the implicit rate of return. Finance charges are expensed.
XIV. Borrowing Cost
Borrowing Costs that are attributable to the acquisitions, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
XV. Provisions and Contingent Liabilities
A provision is recognized when it is more likely that an obligation
will result in an outflow of resources. Provisions are not discounted
at their present value and are determined based on the management's
estimation of the obligation required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect current management estimates.
A disclosure for a contingent liability is made where it is more likely
than a present obligation or possible obligation would not result in or
involve an outflow of resources.
XVI. Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of the equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, net profit
or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
Mar 31, 2010
I. Basis of preparation of financial statements
The financial statements are prepared on accrual basis under the
historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (GAPP). Financial statements comply with
the applicable Accounting Standards (AS) specified in Companies
(Accounting Standard) Rules, 2006 and presentational requirement of the
Companies Act, 1956.
II. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (GAAP) requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of financial statements and the result of operations during
the year. Differences between actual results and estimates are
recognized in the year in which the results are known or materialized.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
III. Fixed Assets / Depreciation
Fixed assets are stated at cost or at revalued amounts less accumulated
depreciation. Cost of fixed assets includes all incidental expenses and
interest costs on borrowings, attributable to the acquisition of the
assets, upto the date of commissioning of the assets. Depreciation for
the year is computed on the straight line method, as per the rates
prescribed in Schedule XIV to the Companies Act,1956. Additional charge
of depreciation on amount added on revaluation is adjusted against
revaluation reserve.
Fixed assets are reviewed for impairment on each Balance Sheet date, in
accordance with AS 28 "Impairment of Assets".
IV. Revenue Recognition
Revenue from sale of products is recognized when the products are
despatched against orders from customers in accordance with the
contract terms, which coincides with the transfer of risks and rewards.
Revenue from services are recognized when services have been rendered
in accordance with the contract terms.
Revenue from the sale of power is recognized based on monthly bill
raised as per month-end meter reading.
Sales are stated inclusive of excise duty and net of rebates, trade
discounts and sales tax.
Dividend income is recognized when the Companys right to receive
dividend is established. Interest income is recognized on accrual basis
on implicit interest rates.
V. Carbon Credit
Waste Heat Power Project commissioned in 2001 is a registered CDM
(Clean Development Mechanism) project and eligible for allotment of
Certified Emission Reduction (CER) credits for a period of ten years
upto 30th June, 2011. CER credits are accounted for on an accrual basis
as estimated / certified by the Accredited Agencies. Year end unsold
CER CREDITS is valued at net realizable value.
VI. Investments
Long term investments are stated at cost less provision for permanent
diminution, if any, in the value of such investments. Current
investments are carried lower of cost and fair value.
VII. Inventories
Finished goods and saleable products are valued at lower of costs,
computed on weighted average basis, and net realizable value. Cost
includes on appropriate portion of manufacturing and other overheads.
Excise duty on finished goods is included in the value of finished
goods.
Raw materials are carried at cost computed on a weighted average basis,
after providing for obsolescence. In case there is a decline in
replacement cost of such material and the net realizable value of
finished product in which they will be used is expected to be below
cost, the value is appropriately written down.
Stores and Spare parts are valued at cost and are computed on a
weighted average basis.
VIII. Retirement Benefits and Employee Benefits Schemes
a) Provident Fund:
Retirement benefit in the form of Provident Fund is a defined benefit
obligation of the Company and the contributions are charged to the
Profit & Loss Account of the year when the contributions to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided by the Company.
b) Superannuation Fund:
Superannuation Fund (for certain class of employees) is a defined
contribution scheme liability and contribution in respect of
Superannuation Fund of the concerned employees is accounted for as per
Companys scheme and paid to the Life Insurance Corporation of India
(LICI) every year. The contributions to the fund are charged in the
Profit & Loss Account of the year. The Company does not have any other
obligations to the Fund other than the contribution payable to LICI.
c) Gratuity Fund:
Gratuity Fund is a defined benefit obligation and is provided on the
basis of actuarial valuation on project unit credit method at the end
of each financial year. The Company has taken a policy with LICI to
cover the gratuity liabilities of the employees and contribution paid
to LICI is charged to Profit & Loss Account. The difference between the
actuarial valuation of gratuity of the employees at the year end and
the balance of fund with LICI is recognized as Liability in the Books
of Accounts.
d) Leave Encashment:
Short term compensated absence are provided on the basis of actuarial
valuation at the year end. The actuarial valuation is as per project
unit credit method.
Actuarial gains/losses are recognized immediately in the Profit & Loss
Account and are not deferred.
IX. Research and Development
Revenue expenditure on research and development is charged to Profit
and Loss Account. Capital expenditure on tangible assets for research
and development is shown as additions to Fixed Assets.
X. Foreign Currency Transaction
Transactions in foreign currency are recorded initially at the exchange
rate prevailing at the date of transaction. Monetary assets or
liability in currencies other than the reporting currency and foreign
exchange transactions remaining unsettled at the balance sheet date are
valued at the year end exchange rate.
Exchange difference arising on the settlement of monetary items and on
the re-settlement of the monetary items are recognized as income or
expense in the Profit and Loss Account.
XI. Relining Expenses
Expenditure on relining of kiln and cooler is charged to Profit and
Loss Account in the year in which it is incurred.
XII. Taxation
a) Current Taxes:
Provision for current taxes is determined on the basis of taxable
income and tax credits as per provision of the Income Tax Act 1961.
b) Deferred Taxes:
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The deferred tax charge or credit and the corresponding deferred tax
liability and assets are recognized using the tax rates that have been
enacted or substantially enacted on the Balance Sheet date.
Deferred tax assets arising from unabsorbed depreciation or carry
forward losses are recognized only if there is virtual certainty of
realization of such amounts.
XIII. Lease
Where the Company is a lessee, financial leases, effectively
transferred to the Company substantially, of the risk and benefits
incidental to the ownership of the lease item, are capitalized at the
lower of the fair value and present value of the minimum lease payment
at the inception of the lease starts. Lease payments are apportioned
between the finance charge and deduction of the lease liability based
on the implicit rate of return. Finance charges are expensed.
XIV. Borrowing Cost
Borrowing Costs that are attributable to the acquisitions, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
XV. Provisions and Contingent Liabilities
A provision is recognized when it is more likely that an obligation
will result in an outflow of resources. Provisions are not discounted
at their present value and are determined based on the managements
estimation of the obligation required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect current management estimates.
A disclosure for a contingent liability is made where it is more likely
than a present obligation or possible obligation would not result in or
involve an outflow of resources.
XVI. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of the equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, net profit
or loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
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