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Accounting Policies of REI Agro Ltd. Company

Mar 31, 2012

A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The Financial Statements have been prepared and presented under the historical cost convention using the accrual basis of accounting and comply with all mandatory Accounting Standards {AS} as specified in the Companies (Accounting Standard) Rules 2006 , the relevant provisions of Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting Policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

b) USE OF ESTIMATES:

The preparation of Financial Statements is in conformity with the Generally Accepted Accounting Principles {GAAP} requires management to make estimates and assumptions that affects the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's best knowledge of current events and actions the Company may undertake in future, actual results ultimately may differ from the estimates. Any revision to the accounting estimates is recognized in current and future periods.

c) FIXED ASSETS:

a) Free Hold Land / Lease Hold Land is stated at cost of acquisition inclusive of incidental expenses thereto.

b) Fixed Assets are recorded at cost of acquisition or construction inclusive of inward freight, duties, taxes and other directly attributable incidental expenses relating thereto less accumulated depreciation.

c) Capital Work-in-Progress includes Advances paid to acquire Fixed Assets and the cost of Fixed Assets together with incidental Expenses and attributable interest on borrowed Fund for the purpose of acquiring these assets that were not put to use for their intended use.

d) When assets are sold or discarded, their cost and accumulated depreciation are removed from fixed asset and any gain/loss resulting therefrom is reflected in Profit & Loss account.

d) INTANGIBLE ASSETS

Acquired Intangible Assets represented Software is recorded at its acquisitions price and related expenses thereon is amortised over its estimated useful life on straight-line basis, commencing from the date, the asset is available for its use. The Management has estimated the useful life for such software as 3 {Three} Years. The useful life of the Assets shall be reviewed by the management at each Balance Sheet Date.

e) DEPRECIATION / AMORTISATION

a) Cost of Lease Hold land is amortized over the period of the lease on Straight-Line Method.

b) Depreciation is provided on the Straight Line Method (SLM) as per rates specified in Schedule XIV of the Companies Act, 1956 (as amended).

f) INVESTMENTS:

Investments are either classified as current or long term based on Management's intention at the time of purchase. Current Investments are carried at the lower of cost and fair value of each investment individually. Cost of Overseas investments comprises the Indian Rupees value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

g) INVENTORIES:

Inventories are valued as under:

a) Raw Materials are valued at lower of cost computed on FIFO basis and net realizable value less VAT where applicable.

b) Finished goods are valued at cost (less realizable value of by-products) or net realizable value whichever is lower.

c) Stores & Spares, Packing Material etc, are valued at cost less VAT wherever applicable.

d) By-Products are valued at estimated realizable value.

h) REVENUE RECOGNITION:

a) Domestic sale is recognized on dispatch to customers and are recorded net of trade discounts, rebates, etc. Export sale is recognized on the date, Company ships the goods as evidenced by their bill of lading. Sale of energy is accounted on actual net billing plus claims for short generation wherever applicable and includes income from Lease Rent of WTG.

b) Export incentives are recognized when the right to receive credit as per the terms of incentive is established in respect of Export made and when there is no significant uncertainty regarding the ultimate collection of the relevant Export Proceeds.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customer's account as evidenced by the receipt of confirmation of execution of delivery instructions.

d) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment / realization of income, the same is accounted when it is measured with certainty.

e) Interest income is recognized on time proportion base taking into account the amount outstanding and the rates applicable.

f) Profit / Loss on sale of investments is booked on the basis of contract notes/delivery of shares.

g) Dividend income is recognized when the right to receive Dividend is established.

h) Income from Operating Lease is recognized as rentals, as accrued during the year.

i) GOVERNMENT GRANTS:

a) Government Grants and subsidies from the Government are reconginsed when there is reasonable certainty that the grant/subsidy will be received and all attaching conditions will be complied with.

b) Capital Grant/subsidy against specific fixed assets is set off against the cost of those fixed assets. j) FOREIGN CURRENCY TRANSACTIONS:

a) Foreign currency transactions are recorded by applying the relevant exchange rates. Exchange differences arising on foreign currency transactions settled during the year are recognized in the Profit & Loss account for the year.

b) All foreign currency denominated monetary Assets & Liabilities are translated at the Exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognized in the Profit & Loss Account for the year.

c) The Company uses Derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currencies fluctuations. Profit / loss on derivatives and financial instruments such as forward exchange contracts and interest rate swap to hedge risks associated with foreign currency fluctuations and interest rates are considered as revenue items on maturity of the contracts.

d) Gain or Loss on restatement of forward exchange contracts for hedging underlying outstanding if any, at the Balance Sheet date are recognized for the year in which it occurs. The Premium or Discounts on such contracts is recognized in the Profit

& Loss account over the period of the contract.

k) ACCOUNTING OF CLAIMS:

a) Insurance claims receivable are accounted at the time when certainty of receivable is established.

b) Claims raised by the Government Authorities regarding taxes & duties which are disputed by the company are accounted based on the merits of each claim.

l) BORROWING COST:

Borrowing costs are recognized as an expense in the year in which they are incurred, except cost that are directly attributable to the acquisition, construction or installation of qualifying assets which are either kept in Capital work in progress or being capitalized as part of the cost of the asset.

m) SECURITIES ISSUE EXPENSE:

Right Issue, & Debenture issue expenses incurred are adjusted against the Securities Premium Account in the year in which they are incurred in terms of Section 78 (2) of the Companies Act, 1956. n) IMPAIRMENT OF ASSETS:

The company tests on annual basis the carrying amount of the asset for impairment so as to determine -

a) The provision for impairment loss, if any, or

b) The reversal, if any, required on account of impairment loss recognized in previous periods. o) EMPLOYEE BENEFITS:

a) Short Term Employee Benefits:

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the year when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

b) Long Term Employee Benefits:

i) Defined Contribution Scheme- This benefit includes contribution to Employee's State Insurance Corporation {ESI} and Provident Fund Contribution {PF} to the Regional Provident Fund Commissioner. These contributions are defined as an expense in the Profit & Loss account as and when such contributions are due.

ii) Defined Benefit Scheme- For Gratuity and compensated leave- The Company records its liability for Gratuity and compensated leave to its employees based on actuarial valuation as at the balance Sheet date, using the projected unit credit method. Effects of changes in actuarial valuations are immediately recognized in the Profit & Loss account. The retirement benefit obligation recognized in the balance sheet represents value of defined benefit obligation as reduced by the fair value of planned assets. Actuarial gains/losses are recognized in full during the year in which they occur.

p) PROPOSED DIVIDEND:

Dividend proposed by the Board of Directors is adjusted in Statement of Profit & loss under the head Reserve & Surplus, pending approval at the Annual General Meeting.

q) CASH FLOW STATEMENT:

Cash flows are reported using the indirect method, whereby Profit Before Tax (PBT) is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities of the company is segregated.

r) TAXATION:

Current Tax is determined on the profit of the year in accordance with the provisions of Income Tax Act, 1961. Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted by the Balance sheet date and is recognised on timing differences that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that they can be realized. s) PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:

a) Provision is created when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation.

b) Contingent Liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

c) Contingent Assets are neither recognized nor disclosed in Financial Statements.

t) EARNING PER SHARE:

Basic Earning Per Share (EPS) is computed by dividing, the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted Earnings Per Share are computed after adjusting the effects of all dilutive potential equity shares, if any.


Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared and presented under the historical cost convention using the accrual basis of accounting and comply with all mandatory Accounting Standards [AS] as specified in the Companies (Accounting Standard) Rules 2006 and the relevant provisions of Companies Act, 1956.

2. USE OF ESTIMATES:

The preparation of financial statements is in conformity with the Generally Accepted Accounting Principles {GAAP} requires management to make estimates and assumptions that affects the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's best knowledge of current events and actions the Company may undertake in future, actual results ultimately may differ from the estimates. Any revision to the accounting estimates is recognized in current and future periods.

3. FIXED ASSETS:

a) Free Hold Land / Lease Hold Land is stated at cost of acquisition inclusive of incidental expenses thereto.

b) Fixed Assets are recorded at cost of acquisition or construction inclusive of inward freight, duties, taxes and other directly attributable incidental expenses relating thereto less accumulated depreciation.

c) Capital Work-in-Progress includes Advances paid to acquire Fixed Assets and the cost of Fixed Assets together with incidental Expenses and attributable interest on borrowed Fund for the purpose of acquiring these assets that were not put to use for their intended use.

d) When assets are sold or discarded, their cost and accumulated depreciation are removed from fixed asset and any gain/loss resulting therefrom is reflected in Profit 8c Loss account.

4. INTANGIBLEASSETS

Acquired Intangible Assets represented Software is recorded at its acquisitions price and related expenses thereon is amortised over its estimated useful life on straight-line basis, commencing from the date, the asset is available for its use. The Management has estimated the useful life for such software as 3 (Three) Years.The useful life of the Assets shall be reviewed by the management at each Balance Sheet Date.

5. DEPRECIATION /AMORTISATION

a) Cost of Lease Hold land is amortized over the period of the lease on straight-line Method.

b) Depreciation is provided on the Straight Line Method (SLM) as per rates specified in Schedule XIV of the Companies Act, 1956 (as amended).

6. INVESTMENTS:

Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

7. INVENTORIES:

Inventories are valued as under:

a) Raw Materials are valued at lower of cost computed on FIFO basis and net realizable value less VAT where applicable.

b) Finished goods are valued at cost (less realizable value of by-products) or net realizable value whichever is lower.

c) Stores & Spares, Packing Material etc, are valued at cost less VAT wherever applicable.

d) By-Products are valued at estimated realizable value.

8. REVENUE RECOGNITION:

a) Domestic sale is recognized on dispatch to customers and are recorded net of trade discounts, rebates, etc. Export sale is recognized on the date, Company ships the goods as evidenced by their bill of lading. Sale of energy is accounted on actual net billing plus claims for short generation wherever applicable and includes income from Lease Rent of WTG.

b) Export incentives are recognized when the right to receive credit as per the terms of incentive is established in respect of Export made and when there is no significant uncertainty regarding the ultimate collection of the relevant Export Proceeds.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customer's account as evidenced by the receipt of confirmation of execution of delivery instructions.

d) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment / realization of income, the same is accounted when it is measured with certainty.

e) Interest income is recognized on time proportion base taking into account the amount outstanding and the rates applicable.

f) Profit / Loss on sale of investments is booked on the basis of contract notes/delivery of shares.

g) Dividend income is recognized when the right to receive Dividend is established.

h) Income from Operating Lease is recognized as rentals, as accrued during the year.

9. FOREIGN CURRENCY TRANSACTIONS:

a) Foreign currency transactions are recorded by applying the relevant exchange rates. Exchange differences arising on foreign currency transactions settled during the year are recognized in the Profit & Loss account for the year.

b) All foreign currency denominated monetary Assets 8c Liabilities are translated at the Exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognized in the Profit & Loss Account for the year.

c) The Company uses Derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currencies fluctuations. Profit / loss on derivatives and financial instruments such as forward exchange contracts and interest rate swap to hedge risks associated with foreign currency fluctuations and interest rates are considered as revenue items on maturity of the contracts.

d) Gain or Loss on restatement of forward exchange contracts for hedging underlying outstanding if anyat the Balance Sheet date are recognized for the year in which it occurs. The Premium or Discounts on such contracts is recognized in the Profit & Loss account over the period of the contract.

10. ACCOUNTING OF CLAIMS:

a) Insurance claims receivable are accounted at the time when certainty of receivable is established.

b) Claims raised by the Government Authorities ' regarding taxes & duties which are disputed by the company are accounted based on the merits of each claim.

11. BORROWING COST:

Borrowing costs are recognized as an expense in the year in which they are incurred, except cost that are directly attributable to the acquisition, construction or installation of qualifying assets which are either kept in Capital work in progress or being capitalized as part of the cost of the asset.

12. SECURITIES ISSUE EXPENSE:

Foreign Currency Convertible Bonds (FCCBs), Qualified Institutional Placement (QIP's) , Right Issue, &, Debenture issue expenses incurred are adjusted against the Securities Premium Account in the year in which they are incurred in terms of Section 78 (2) of the Companies Act, 1956.

13. IMPAIRMENT OF ASSETS:

The company tests on annual basis the carrying amount of the asset for impairment so as to determine -

a) The provision for impairment loss, if any, or

b) The reversal, if any, required on account of impairment loss recognized in previous periods.

14. EMPLOYEE BENEFITS:

a) Short Term Employee Benefits:

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the year when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

b) Long Term Employee Benefits:

i) Defined Contribution Scheme- This benefit includes contribution to Employee's State Insurance Corporation {ESI} and Provident Fund Contribution {PF} to the Regional Provident Fund Commissioner. These contributions are defined as an expense in the Profit & Loss account as and when such contributions are due.

ii) Defined Benefit Scheme- For Gratuity and compensated leave-

The Company records its liability for Gratuity and compensated leave to its employees based on actuarial valuation as at the balance Sheet date, using the projected unit credit method. Effects of changes in actuarial valuations are immediately recognized in the Profit & Loss account. The retirement benefit obligation recognized in the balance sheet represents. value of defined benefit obligation as reduced by the fair value of planned assets. Actuarial gains/losses are recognized in full during the year in which they occur.

15. PROPOSED DIVIDEND:

Dividend proposed by the Board of Directors is provided for in the books of accounts pending approval at the Annual General Meeting.

16. TAXATION:

Current Tax is determined on the profit of the year in accordance with the provisions of Income Tax Act, 1961. Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted by the Balance sheet date and is recognised on timing differences that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence, are recognized and carried forward only to the extent that they can be realized.

17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:

a) Provision is created when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation.

b) Contingent Liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

c) Contingent Assets are neither recognized nor disclosed in Financial Statements.

18. EARNING PER SHARE:

Basic Earning Per Share (EPS) is computed by dividing, the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted Earning per Share are computed after adjusting the effects of all dilutive potential equity shares, if any.


Mar 31, 2010

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared and presented under the historica) cost convention using the accrual basis of accounting and comply with all mandatory accounting standards as specified in the Companies (Accounting Standard) Rules 2006 and the relevant provisions of Companies Act, 1956.

2. USE OF ESTIMATES:

The preparation of financial statements is in conformity with the generally accepted accounting principles which requires management to make estimates and assumptions that affects the amounts reported in the financial statements and accompanying notes. Although these estimates are based on managements best knowledge of current events and actions the Company may undertake in future, actual results ultimately may differ from the estimates.

3. FIXED ASSETS:

a) Free Hold Land/ Lease Hold Land is stated at cost of acquisition inclusive of incidental expenses thereto.

b) Fixed Assets are recorded at cost of acquisition or construction inclusive of freight, duty, taxes and incidental expenses relating thereto less accumulated depreciation.

c) Project under commissioning and Capital Work-in-Progress are carried at cost comprising Direct Cost, Advance to Supplier and related incidental Expenses and attributable Interest on Borrowed Fund for project, if any.

d) When assets are sold or discarded, their cost and accumulated depreciation are removed from fixed asset and any gam/loss resulting there from is reflected in Profit & Loss account.

4. DEPRECIATION:

a) Cost of Lease Hold land is amortized over the year of the lease on straight-line basis.

b) Depreciation on Fixed Assets has been charged in accordance with Straight Line Method (SLM) as per rates specified in Schedule XIV of the Companies Act, 1956 (as amended) on a pro-rata basis.

5. INVESTMENTS:

Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.

6. INVENTORIES: Inventories are valued as under:

a) Raw Materials are valued at lower of cost computed on FIFO basis and net realizable value less VAT where applicable.

b) Finished goods are valued at cost (less realizable value of by-products) or net realizable value whichever is lower.

c) Stores & Spares, Packing Material etc. are valued at cost less VAT wherever applicable.

d) By-Products are valued at estimated realizable value.

7. FOREIGN CURRENCY TRANSACTIONS:

a) Foreign currency transactions are accounted at the exchange rates prevailing on the date of the relevant transactions. Gain/ Losses arising out of fluctuation in the exchange rate are recognized in Profit & Loss account in the year in which they arise

b) Monetary items (i.e. receivables, payable, loans etc.) denominated in foreign currencies are reported using the closing exchange rate on Balance Sheet date.

c) In case of items covered by the foreign exchange rates, the difference between the year end rates and the rate on the date of the contract is recognized as exchange difference and the premium paid on forward contract is recognized over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense of the year.

d) Profit/ loss on derivatives and financial instruments such as forward exchange contracts and interest rate swap to hedge risks associated with foreign currency fluctuations and interest rates are considered as revenue items on maturity of the contracts.

8. REVENUE RECOGNITION:

a) Domestic sales are accounted when goods are dispatched to customers and are recorded net of trade discounts, rebates, etc. Export sales are recognized on the date, Company ships the goods as evidenced by their bill of lading. Sale of energy is accounted on actual net billing plus claims for short generation wherever applicable and includes income from Lease Rent of WTG.

b) Export entitlements in respect of Export made under Duty Entitlement Pass Book (DEPB) Scheme are recognized in the Profit & Loss account when the right to receive credit as per the terms of the scheme is established.

c) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customers account as evidenced by the receipt of confirmation of execution of delivery instructions.

d) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment/ realization of income, the same is accounted when it is measured with certainty.

e) Inrerest on Fixed Deposits is booked on rime proportion basis taking into account the amount invested and the rate of interest.

f) Profit/Loss on sale of investments is booked on the basis of contract notes for sale of shares.

g) Dividend income on Investments is accounted for when the right to receive the payment is established.

9. ACCOUNTING OF CLAIMS:

a) Insurance claims receivable are accounted at the time when certainty of receivable is established.

b) Claims raised bv the Government Authorities regarding taxes & duties which are disputed bv the company are accounted based on the merits of each claim.

10. BORROWING COST:

Borrowing costs are recognized as an expense in the year in which they are incurred, except cost that are directly attributable to the acquisition, construction or installation of qualifying assets which are capitalized as part of the cost of the asset.

11. SECURITIES ISSUE EXPENSE:

Foreign Currency Convertible Bonds (FCCBs), Qualified Institutional Placement (QIPs) & Debenture issue expenses incurred arc adjusted against the Securities Premium Account in the year in which thev are incurred in terms of Section 78 (2) of the Companies Act, 1956.

12. IMPAIRMENT OF ASSETS:

The company tests on annual basis the carrying amount of the asset for impairment so as to determine -

a) The provision for impairment loss, if any, or

b) The reversal, if any, required on account of impairment loss recognized in previous years.

13. EMPLOYEE BENEFITS:

a) Short Term Employee Benefits:

The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the year when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.

b) Long Term Employee Benefits:

i) Defined Contribution Scheme- This benefit includes contribution to Employees State Insurance Corporation and provident fund scheme. The contribution is recognized during the year in which the employee rendered service.

ii) Defined Benefit Scheme- For defined benefit scheme the cost of providing benefit is determined using the projected unit credit method with actuarial valuation being carried out at each balance sheet date. The retirement benefit obligation recognized in the balance sheet represents value of defined benefit obligation as reduced bv the fair value of planned assets. Actuarial gains and losses are recognized in full during the year in which they occur.

14. PROPOSED DIVIDEND:

Dividend proposed bv the Board of Directors is provided for in the books of accounts pending approval at the Annual General Meeting.

15. TAXES ON INCOME:

Income Tax expense comprises current tax as per Income Tax Act, 1961, and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year) and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent, there is reasonable certainty that the assets can be realized in future; however where there is unabsorbed depreciation or carried forward losses under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each Balance Sheet date and written down to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.

16. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:

a) Provision is created when there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation.

b) Contingent Liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.

c) Contingent Assets are neither recognized nor disclosed in Financial Statements.

17. EARNING PER SHARE:

Basic Earning Per Share (EPS) is computed by dividing, the net profit for the year attributable to equity shareholders bv the weighted average number of equity shares outstanding during the year. Diluted Earning per Share are computed after adjusting the effects of all dilutive potential equity shares, if any.

18. INCOME FROM OPERATING LEASE:

It is recognized as rentals, as accrued over the year of lease.

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