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Accounting Policies of Riddhi Siddhi Gluco Biols Ltd. Company

Mar 31, 2014

A) Basis of accounting and preparation of financial statements:

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs)and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared as a going concern under historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is being carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of estimates:

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialise.

c) Revenue recognition:

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Revenue from wind Power generation is recognized on the basis of electrical units generated, net of transmission loss, as applicable, as shown in the power generation reports issued by the concerned authorities.

Interest income is recognized on the time basis determined by the amount outstanding and the rate applicable and where no significant uncertainty as to measurability or collectability exists.

Dividend from investments is recognized when the right to receive the payment is established and when no significant uncertainty as to measurability or collectability exists.

Insurance claims are accounted at the time when such income has been realised by the Company.

d) Inventories:

Inventories are valued at lower of cost and the net realisable value. Cost of Inventories of trading goods is determined on a First In First Out(FIFO)basis.

e) Fixed Assets and Depreciation:

Tangible Fixed Assets:

Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition and construction of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to period till such assets are ready to be put to use.

Depreciation:

Depreciation on fixed assets other than wind farm power generation assets is provided using the Straight Line Method (SLM) at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956. However, in respect of the following asset categories, the depreciation is provided based on the management''s estimate of the useful life:

a) Furniture and Fixtures : 5 Years

b) Office Equipment : 5 Years

c) Plant and Machineries : 20Years

Depreciation on wind farm power generation assets is provided using the Written down Value (WDV) method at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956.

In respect of fixed assets acquired sold or discarded during the year, depreciation is provided on a pro-rata basis from / to the date on which such assets is ready to be put to use sold or discarded.

Intangible Assets and Amortization:

Intangible assets are stated at cost of acquisition less accumulated amortisation and accumulated impairment loss, if any. Intangible asset, Trademark, is amortized based on management''s estimation of its useful economic life i.e. 5 years on straight line basis.

f) Impairment:

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal or external factors. An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is recognized in the Statement of Profit and Loss where the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

g) Operating Lease:

Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

h) Investments:

Investments are classified as current and long-term Investments. Current Investments are carried at the lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. A provision for diminution is made to recognize a decline, other than temporary in the value of the investments.

Investments that are readily realizable and intended to be held for not more than a one year from the date on which such investments are made, classified as current investments. All other investments are classified as long-term investments.

i) Foreign Currency Translations Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

Exchange Differences

Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.

Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

j) Employee benefits:

Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to the Statement of Profit and Loss in the period in which the service is rendered.

Employee Benefits under defined benefit plans and other long-term employee benefits such as gratuity and compensated absences which fall due for payment after completion of employment or after a period of twelve months from rendering service, are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The company''s obligations recognised in the balance sheet represent the present value of obligations as reduced by the fair value of plan assets, where applicable.

Short term compensated absences are provided for based on estimates.

Actuarial gains / losses are immediately taken to Statement of Profit and Loss.

k) Income Taxes:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised 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 realised.

At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognizes unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

l) Segment Reporting Policies:

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

m) Borrowing Costs:

Borrowing costs directly attributable to the acquisition, construction or production of qualifying asset are capitalized as part of the cost of such asset. Other borrowing costs are expensed in the year in which they incurred.

n) Earnings Per Share:

Basic and diluted Earnings per Share (EPS) are reported in accordance with Accounting Standard 20 on Earnings per Share. Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders (after deducting dividend on preference shares and attributable taxes) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends, relative to a fully paid equity share during the reporting year.

Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti- dilutive.

o) Derivative Contracts:

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Translations.

All other derivative contracts are marked to market and losses are recognized in the Statement of Profit and Loss. Gains arising on the same are not recognized, until realized on the grounds of prudence.

p) Provisions and contingencies:

Provisions involv''ng substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. Contingent Liabilities are not recognised but are disclosed in the notes to the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

A) Basis of accounting and preparation of financial statements

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is being carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

c) Inventory

Inventories are valued as follows:

Stock in trade

Lower of cost and net realizable value. Cost is determined on a First In First Out basis.Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

d) Fixed Assets and Depreciation

Fixed Assets

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition and construction of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to period till such assets are ready to be put to use.

Depreciation

Depreciation on fixed assets other than wind farm power generation assets is provided using the Straight Line Method (SLM) at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956. However, in respect of the following asset categories, the depreciation is provided based on the management''s estimate of the useful life:

a) Furniture & Fixtures : 5 Years

b) Office Equipments : 5 Years

c) Plant & Machinery : 20Years

Depreciation on wind farm power generation assets is provided using the Written Down Value (WDV) method at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956.

Depreciation on revalued assets is provided on expected useful life of the assets and the incremental depreciation on account of revaluation is recouped from Revaluation Reserve.

In respect of fixed assets acquired sold or discarded during the year, depreciation is provided on a pro-rata basis from / to the date on which such assets is ready to be put to use sold or discarded.

Intangible Assets and Amortization

Intangible asset, Trademark, is amortized based on management''s estimation of its useful economic life i.e. 5 years on straight line basis.

e) Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

f) Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight- line basis over the lease term.

g) Government Grants and Subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance tiiat the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy received is revenue in nature, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate or adjusted against the specific expense.

Where the grant or subsidy relates towards specific fixed asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset

Government grants of the nature of promoters'' contribution are credited to capital reserve and treated as a part of shareholders'' funds.

h) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

i) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of Goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

Revenue from sale of electricity

Power generation income is recognized on the basis of electrical units generated, net of transmission loss, as applicable, as shown in the power generation reports issued by the concerned authorities.

Insurance Claims

Insurance claims are accounted at the time when such income has been realised by the Company.

Interest

Interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividends

Dividend income is recognised when the right to receive the payment is established by the balance sheet date. j) Foreign Currency Translations

a. Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b. Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c. Exchange Differences

Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.

d. Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

k) Retirement and other employee benefits

a. Retirement benefits in the form of Provident Fund, Superannuation Fund Scheme and Employee State Insurance (ESI), are defined contribution scheme and the contributions are charged to the Statement of Profit and Loss for the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

b. Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

c. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the year end. The actuarial valuation is done as per projected unit credit method.

d. Actuarial gains / losses are immediately taken to Statement of Profit and Loss and are not deferred.

I) Income Taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised 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 realised.

At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognizes unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

m) Segment Reporting Policies

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

n) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

o) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends, relative to a fully paid equity share during the reporting year.

For the purpose of calculating diluted earnings per share, the 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 effects of all dilutive potential equity shares.

p) Derivative Contracts

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Translations.

All other derivative contracts are marked to market and losses are recognized in the Statement of Profit and Loss. Gains arising on the same are not recognized, until realized on the grounds of prudence.

q) Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.


Mar 31, 2012

A) Basis of accounting and preparation of financial statements

The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is being carried out. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) and the results of operations during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates.

c) Fixed Assets and Depreciation Fixed Assets

Fixed assets are stated at cost (or revalued amounts, as the case may be), less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition and construction of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to period till such assets are ready to be put to use.

Depreciation

Depreciation on fixed assets other than wind farm power generation assets is provided using the Straight Line Method (SLM) at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956. However, in respect of the following asset categories, the depreciation is provided based on the management's estimate of the useful life:

a) Leasehold Assets : Over the Period of lease

b) Road / Drainage : 10 Years

c) Bio - Gas Plant : 5 Years

d) Instrumentation : 10 Years

e) Lab Equipments : 4 Years

f) Furniture & Fixtures : 5 Years

Depreciation on wind farm power generation assets is provided using the Written Down Value (WDV) method at the rates and in the manner prescribed under Schedule XIV of Companies Act, 1956.

Depreciation on revalued assets is provided on expected useful life of the assets and the incremental depreciation on account of revaluation is recouped from Revaluation Reserve.

In respect of fixed assets acquired sold or discarded during the year, depreciation is provided on a pro-rata basis from / to the date on which such assets is ready to be put to use sold or discarded.

Intangible Assets and Amortization

Intangible assets are amortized, based on management's estimation of its useful economic life on straight - line basis as under:

a) Trademark : 5 Years

b) Software : 3 Years

d) Impairment

i) The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset's net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

ii) After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

e) Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss account on a straight-line basis over the lease term.

f) Government Grants and Subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.

When the grant or subsidy received is revenue in nature, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate or adjusted against the specific expense.

Where the grant or subsidy relates towards specific fixed asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of shareholders' funds.

g) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

Current Investments are carried at lower of cost and fair value determined on an individual investment basis.

h) Inventories

Inventories are valued as follows:

Raw Materials, Packing Materials, Consumable Stores and Spares

Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on a First In First Out basis.

Work-in-progress and finished goods

Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on Weighted Average Basis. By-products are valued at Net Realisable Value (NRV)

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

i) Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

Sale of Goods / By-products

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability arised during the year. Sales include the amount of export incentive earned in accordance with various incentive schemes. Excise duties in respect of finished goods are shown separately as an item of Decrease / Increase in inventories and included in valuation of finished goods.

Revenue from sale of electricity

Power generation income is recognized on the basis of electrical units generated, net of transmission loss, as applicable, as shown in the power generation reports issued by the concerned authorities.

Insurance Claims

Insurance claims are accounted at the time when such income has been realised by the Company.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividends

Revenue is recognised when the shareholders' right to receive payment is established by the balance sheet date.

j) Foreign Currency Translations

a. Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b. Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

c. Exchange Differences

Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.

d. Forward Exchange Contracts not intended for trading or speculation purposes

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

k) Retirement and other employee benefits

i) Retirement benefits in the form of Provident Fund, Superannuation Fund Scheme and Employee State Insurance (ESI), are defined contribution scheme and the contributions are charged to the Statement of Profit and Loss for the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

ii) Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

iii) Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation at the year end. The actuarial valuation is done as per projected unit credit method.

iv) Actuarial gains / losses are immediately taken to Statement of Profit and Loss and are not deferred.

l) Income Taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised 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 realised.

At each balance sheet date, the Company re-assesses unrecognised deferred tax assets. It recognizes unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Minimum Alternative Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

m) Segment Reporting Policies

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

n) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

o) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends, relative to a fully paid equity share during the reporting year.

For the purpose of calculating diluted earnings per share, the 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 effects of all dilutive potential equity shares.

p) Derivative Contracts

The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Translations. All other derivative contracts are marked to market and losses are recognized in the Statement of Profit and Loss. Gains arising on the same are not recognized, until realized on the grounds of prudence.

q) Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

r) Measurement of EBITDA

As permitted by the Guidance note on Revised Schedule VI of the Companies Act, 1956, the Company has selected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the Statement of Profit and Loss. The Company measures EBIDTA on the basis of profit / loss from operations. In its measurement, the Company does not include depreciation and amortization expenses, finance costs and tax expenses.


Mar 31, 2009

1. Accounting Convention

Financial statements are prepared under the historical cost convention in accordance with generally accepted accounting principles in India and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

2. Fixed Assets

The Gross Block of fixed assets are shown at cost (net of availed CENVAT) and those which were revalued are stated at revalued amounts. The cost includes taxes & duties, interest and financial costs, preoperative expenses up to the date of put to use and exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset.

Capital work in progress is shown at cost. It includes the amount of capital work in progress, advances for capital goods, debit recoverable amount of non recurring transaction or an exceptional nature, less liability for capital goods and expenses.

3. Depreciation

The Depreciation has been provided as per Schedule XIV of the Companies Act, 1956 on the Straight Line Method (SLM) on the assets of the Company. Depreciation on revalued amount is provided on SLM and adjusted from revaluation reserves. The rate of depreciation for plant and machinery is provided on continuous process plant basis or at higher rate of depreciation, as may be decided by the management. In respect of fixed assets acquired during the year, the depreciation is provided on pro- rata basis.

The amount of Long Term lease hold land is amortised by equal installments during the last fifteen years of the residual lease period.

4. Expenditure During Construction Period

In case of new project and substantial expansion of existing factories, direct expenditure incurred, including trial production expenses and other cost prior to commencement of commercial production are capitalised.

5. Inventories

Finished goods and raw material are valued at cost or Market value whichever is lower. Goods in transit, Work-in-progress, consumable stores, fuel and chemicals are stated at cost. The cost is determined on FIFO / specific identification basis, as applicable.

6. Sales and Other Operational Income

It includes sales value of goods, export incentives and excise duty.

7. Retirement Benefits

i) Provision for Leave encashment is made on accrual basis at the end of each year.

ii) The Company has opted for the scheme managed by Life Insurance Corporation of India for Gratuity of the employees of Company. Gratuity liability under the payment of Gratuity Act is provided and funded on the basis of an actuarial valuation made at the end of each financial year.

8. Deferred Revenue Expenses & Share Issue Expenses

Preliminary and shares issue expenses have been amortised over a period of 5 years from the end of year in which they were incurred.

9. Investments

Long term investments are stated at cost. Diminution in value, if any, which is of a permanent nature, is provided.

10. Taxation

Income Tax expenses comprises current tax and deferred tax charged or credit, is recognised using current tax rates. Tax on income for the current period is determined on the basis of taxable income and provision of Minimum Alternate Tax and tax credits computed in accordance with the provisions of the Income Tax Act, 1961 and based on expected outcome of assessments/ appeals. Where there is an unabsorbed depreciation or carry forward loss, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Other deferred tax assets are recognised only to the extent there is reasonable certainty of realisation in future. Deferred tax assets/liabilities are reviewed as at each Balance Sheet date based on developments during the year and available case laws, to reassess realisation /liabilities.

11. Borrowing Cost

Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost after the date of put to use of the assets is charged to revenue.

12. Foreign Exchange Transaction

a) The transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. Monetary foreign currency assets and liabilities (Monetary items) are reported at the exchange rate prevailing on the balance sheet date.

b) Pursuant to the notifications of the Companies (Accounting Standards) Amendment Rules 2009, dated 31/03/09 which amended accounting standard 11 of the effects of changes in foreign exchange rate, exchange differences relating to monetary items are dealt with in the following manner:

1) Exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of a depreciable capital asset are added to/deducted from the cost of the asset and depreciated over the balance life of the asset.

2) In cases of periodical renewable foreign currency working capital loan not repayable with in 12 months in normal circumstances such differences are accumulated in a "Foreign Currency Monetary Item Translation Difference Account" and amortised to the Profit and Loss account over the balance life of the long term monetary item, however that the period of amortization does not extend beyond 31/03/11.

Exchange differences relating to long term monetary items that have been recognised in the profit and loss account in the previous year have been reversed from the general reserve and accounted for in accordance with (1) & (2) above.

All other exchange differences are dealt with in the profit and loss account.

13. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the profit and loss account. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is, reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

14. Provisions and Contingent Liabilities

a) Provisions are recognised when the present obligation of a past event gives rise to a probable outflow, embodying economic benefits on settlement, and the amount of obligation can be reliably estimated.

b) Contingent Liabilities are disclosed in notes to account, after a careful evaluation of facts and legal aspects of the matter involved.

c) Provisions and Contingent Liabilities are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

15. Insurance Claims

Insurance and other claims to the extent considered recoverable are accounted for in the year of claim based on the amount assessed by the surveyor.

However, claims and refunds whose recovery cannot be ascertained with reasonable certainty are accounted for on acceptance / actual receipt basis.

16. Accounting policies not specifically referred to are consistent with generally accepted accounting practices.

 
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