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Accounting Policies of Ruchi Soya Industries Ltd. Company

Mar 31, 2015

B.1 Basis of Preparation:

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain tangible assets which are being carried at revalued amounts.

These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under Rule 7 of the Companies (Accounts) Rules, 2014 in respect of section 133 of the Companies Act, 2013 and other recognised accounting practices and policies.

B.2 Tangible and Intangible assets

Tangible and intangible assets (other than those acquired under Hire Purchase Schemes) are stated at cost of acquisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation after reducing Cenvat credit received/ receivable, if any. With effect from 1st April, 2011, gain/loss on account of fluctuation in exchange rates pertaining to long term foreign currency monetary items, to the extent it is related to acquisition of depreciable assets, is adjusted to the cost of the assets.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value . Any expected loss is recognised immediately in the Statement of Profit and Loss. Fixed assets acquired under Hire Purchase Schemes are valued at cash price less depreciation.

In accordance with the requirements of Accounting Standard 16 (AS 16), "Borrowing Costs", borrowing costs attributable to acquisition/construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use or sale) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Pre-operative expenses incurred during construction period are capitalised, where appropriate.

B.3 Depreciation and Amortisation:

Depreciation being the difference between original cost/ revalued amount and estimated residual value is provided over the estimated useful life of the asset. The useful life of assets & the estimated residual value, which are different from those prescribed under Schedule II to the Companies Act, 2013, are based on technical advice.

The useful life and estimated realisable values, adopted are as follows:

Type of Useful Life Residual

Asset Adopted Value Adopted

* Building 3 to 22 Years 5 Percent

* Plant and Equipment 12 to 26 Years 5 to 27 Percent

Depreciation on additions during the year is provided on pro rata basis with reference to month of addition/ installation. Depreciation on assets disposed /discarded is charged upto the month of sale excluding the month in which such asset is sold.

B.4 Impairment of Assets:

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

B.5 Inventories:

Inventories, other than realisable by-products, are valued at lower of cost and net realisable value. The cost of inventories is arrived at on moving average price method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of manufactured products comprises direct costs and production overheads including depreciation. Realisable by products are valued at net realisable value. Cost of trading items includes cost of purchase and other costs of acquisition attributable thereto.

B.6 Retirement Benefits:

(i) Short term employee benefits are recognised as an expense in the Statement of Profit and Loss of the year in which service is rendered.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and Superannuation Fund are charged to the Statement of Profit and Loss .

(iii) The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of Profit and Loss . Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying Project Unit Credit Method. The actuarial gain/ loss arising during the year is recognised in the Statement of Profit and Loss of the year.

B.7 Investments:

Investments that are readily realisable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non- current investments. Current investments are carried at cost or fair value, whichever is lower. Non-current investments are carried at cost. However, provision is made for diminution in the value of these investments, which in the opinion of Board of Directors is other than temporary and the same is made for each investment individually.

Investments include investments in shares of companies registered outside India. Such investments are stated at cost by converting relevant foreign currency at the rate of exchange prevailing on the date of acquisition.

B.8 Premium on Redemption of Debentures:

Premium payable, if any, on redemption of debentures is spread over the life of debentures.

B.9 Foreign Exchange Transactions:

Transactions in foreign currency are accounted at the exchange spot rate prevailing on the date of the transaction. Year end receivables and payables are translated at year end rate of exchange. With effect from 1st April 2011, gain/loss on account of fluctuations in exchange rates pertaining to long term foreign currency borrowings to the extent they are related to acquisition of depreciable fixed assets is adjusted to the cost of asset, and in case of other long term borrowings, the same are amortised over the life of such long term borrowings.

In all other cases , the difference on account of fluctuation in the rate of exchange is recognised in the Statement of Profit and Loss.

B.10 Forward Exchange Contracts:

In case of forward exchange contracts, premium/discount arising at the inception of the contracts is spread over the life of the contracts. Exchange fluctuation on such contracts is recognised in the Statement of Profit & Loss in the year in which there is a change in exchange rates.

B.11 Borrowing Costs:

In accordance with the requirements of Accounting Standard (AS) 16, "Borrowing Costs", borrowing costs directly attributable to acquisition, construction or production of a qualifying asset are added to the cost of those assets , until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are charged to the Statement of Profit and Loss.

B.12 Employee Stock Options:

Stock options granted to employees under the "Ruchi Soya Employee Stock Option Plan 2007"are accounted as per accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the 'Guidance Note on Share Based Payments' issued by the Institute of Chartered Accountant of India (ICAI). Accordingly, the excess of market price of the shares as on the date of grant of options over the exercise price is recognised as deferred employee compensation and is charged to the Statement of Profit and Loss on straight-line basis over the vesting period of the respective option. The number of options expected to vest is based on the best available estimate and is revised, if necessary, where subsequent information indicates that the number of stock options expected to vest differs from the previous estimates.

B.13 Revenue Recognition :

Sale of goods:

Domestic sales are recognised at the point of dispatch of goods when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are net of returns. Sales are stated net of trade discounts and taxes on sale.

Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to the buyer as per the terms of the contract.

Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation.

Carbon Credits are recognised on credit of Carbon Emission Reduction (CER units) by the approving authority in a manner it is unconditionally available to the generating entity.

Sale of Services:

Revenue from services is recognised on rendering of the services.

Notes to Financial Statement for the year ended March 31, 2015

Other Income:

(i) Dividend income on investment is recognised when the right to receive dividend is established.

(ii) Interest and other Income are recognised on accrual basis on time proportion basis.

B.14 LEASE ACCOUNTING:

As a Lessee

Operating lease payments are recognised as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

B.15 Accounting of Taxes on Income:

Tax expense comprises of current tax and deferred tax . Current tax is measured at amount expected to be paid to tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing difference between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates.

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. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

B.16 Provisions and Contingent Liabilities:

Provisions: Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.

Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value.

Contingent Liabilities : Contingent liabilities are disclosed in respect of possible obligations that may arise from past events but their existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The amount of liability is based on a reliable estimate when it is probable that an outflow of resources will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision for contingent liablity is not discounted and is determined based on best estimate required to settle the obligation at the year end date. Contingent assets are not recognized in the financial statements.

b) Rights, Preferences and Restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Lock in Restrictions

None of the shares are subject to lock in restrictions. Preference Shares: 6% Non-Convertible Redeemable Cumulative Preference Shares of Rs. 100/- each were issued pursuant to the Scheme of Amalgamation and Arrangement between Sunshine Oleochem Limited, Ruchi Soya Industries Limited and their respective shareholders sanctioned by the Hon'ble High Court of judicature of Mumbai in an earlier year on the same terms and conditions as originally issued by Sunshine Oleochem Limited.

These preference shares are redeemable as follows:

a) First installment of Rs. 33/- per preference share on completion of 144 months from March 31, 2009.

b) Second installment of Rs. 33/- per preference share on completion of 156 months from March 31, 2009.

c) Third installment of Rs. 34/- per preference share on completion of 168 months from March 31, 2009.

(c) Shares alloted under Employee Stock Option Plan Scheme, 2007 as modified from time to time. Refer Note 2 (L).

L EMPLOYEES STOCK OPTIONS

(a) The Company vide resolution passed at their Extra Ordinary General Meeting held on November 28, 2007 as modified by resolution passed at the Extra Ordinary Meeting held on June 16, 2009 approved grant of up to 54,71,000 options to eligible directors and employees of the Company and its subsidiary Ruchi Worldwide Limited.

(b) In terms of the said approval, the eligible employees/ directors are entitled against each option to subscribe for one equity share of face value of Rs. 2/- each at a premium of Rs. 33/- per share.

(c) The holders of the Employee Stock Options are entitled to exercise the option within a period of three years from the date of first vesting, failing which they stand cancelled. In the case of termination of employment by the Company, all options, vested or not, stand cancelled immediately. In case of voluntary resignation, all un-vested options stand cancelled. The resigning employees may exercise the vested options concurrently with the resignation, beyond which such options stand cancelled. In the event of death of an employee, retirement or the employee becoming totally and permanently disabled, all unvested options vest immediately and can be exercised during the original term of the option.

M (a) In an earlier year, the Hon'ble High Court of judicature of Mumbai, had approved u/s. 391-394 the Scheme of Amalgamation and Arrangement of 'Mac Oil Palm Limited' with Ruchi Soya Industries Limited and its shareholders, which was effective from April 1, 2009.

(b) Pursuant to the Scheme referred to in (a) above, the Company had, in an earlier year, created Business Development Reserve from the balance standing to the credit of General Reserve & Securities Premium Account.

In terms of the Scheme, as and when deemed fit by the Board, the said Business Development Reserve is available for adjusting various expenses, including advertisement, sales promotion, development of brands, research and development activities, provision / write off of doubtful debtors/current assets/loans and advances, additional depreciation necessitated by revaluation of fixed assets and expenses of amalgamation including expenses of the Transferor Company i.e. Mac Oil Palm Limited, incurred on or after 1st April 2009, after adjusting for any tax effects, both current and deferred tax thereon.

d) Had the Scheme, approved by the Hon'ble High Court, not prescribed the accounting treatment as described in (b) above,

i) the Company would have been required to:

Credit an amount of Rs. 36,157.70 lac to Revaluation Reserve instead of the Business Development Reserve.

Debit the additional depreciation ( Including Rs. 7,068.87 lac on account of Depreciation on account of transition provisions of Schedule II of Companies Act 2013 ) arising from the revaluation of fixed assets of Rs. 10,259.83 lac (previous year Rs. 1,946.45 lac), Reversal of revaluation on sale of assets amounting to Rs. 17.74 lac (Previous year Rs. 566.93 lac) and additional Impairment on revalued assets amounting to Rs. Nil/- (Previous year Rs. 42.43 lac) to Revaluation Reserve instead of Business Development Reserve and credit an equivalent amount to the Statement of Profit and Loss. Accordingly, there is no impact on the Statement of Profit and Loss .

Debit the Advertisement and Sales Promotion expenses of Rs. 3,981.27 lac (net of current tax thereon) (previous year Rs. 2,015.81 lac) to the Statement of Profit and Loss .

Credit the amount of Rs. 162.26 lac (previous year credit Rs. 7.45 lac ) being the reversal of provision for doubtful debts / advances [ net of deferred tax thereon] and Debit the amount of Rs. 18.85 lac (previous year Rs. Nil ) being the Bad Debts and advances written off [ net of current tax thereon] to the Statement of Profit & Loss.

ii) As a cumulative impact of the treatment described in para (i) above, the accumulated balance in the General Reserve and Securities Premium account as at March 31, 2015 would have been higher by Rs. 5,193.54 lac and Rs. 23,842.30 lac respectively, profit for the year would have been lower by Rs. 3,837.86 lac, the accumulated balance in the Statement of Profit and Loss as at March 31, 2015 would have been lower by Rs. 19,696.38 lac, the balance in Revaluation Reserve would have been higher by Rs. 14,711.59 lac and the balance in Business Development Reserve would have been Rs. Nil.

However, the aggregate balance in Reserves and Surplus as at March 31, 2015 would have remained the same .

N The Company has adopted the principles of derivatives and hedge accounting prescribed in Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement", to account for interest rate swaps. Accordingly, mark to market losses of Rs. 544.57 lac (net of taxes) upto the year ended March 31, 2015 [Previous year Rs. 561.15 lac (net of taxes)] on account of interest rate swaps designated as effective hedge has been recognised in the balance sheet under the head "Hedging Reserve". The corresponding derivative liability has been disclosed under Other Long Term Liabilities in Note 5 and Other current Liabilities in Note 9.

Other disclosures

Gratuity is payable to all employees at the rate of 15 days salary for each completed year of service. In respect of employees covered by the Payment of Gratuity Act, 1965. The same is subject to a maximum limit of Rs. 10.00 lac.

Salary escalation is considered in line with the industry practice considering promotion and demand and supply of the employees. ii) Defined contribution plan

The Company has recognised Rs. 891.15 lac (Previous year Rs. 777.16 lac) towards contribution to Provident and pension Fund and contributed Rs. 79.11 lac (Previous year Rs. 76.85 lac) towards Employee State Insurance in the Statement Profit and Loss.

E i) In the opinion of the directors the diminution in the value of shares is temporary in nature and accordingly , no provision for diminution is considered necessary.

ii) During the year, the Company has divested its entire holding of 37,50,001 shares in Gemini Edibles and Fats India Private Limited for a consideration of Rs. 10,992.43 lac. The surplus of Rs. 6,492.43 lac on divestment has been shown in the Statement of Profit & Loss as an Exceptional item.

iii) Pursuant to Schemes u/s. 391-394 of then applicable The Companies Act 1956, approved by the Hon'ble High Court of judicature at Mumbai and Delhi in an earlier year, 76,30,115 Equity shares of the Company are held by a Trust for the benefit of the Company and its successors. The right, title and interest in the Trust has been shown under the head 'Non- current Investments' at cost in accordance with the accounting policy of the Company. The dividend received by the Trust in respect of these shares is included under the head 'Dividend' under 'Other Income' in Note 22.

D. [Excludes Rs. 18.85 lac (Previous year Rs. Nil/-)pertaining to Bad debts and advances written off debited to Business Development Reserve] and Excludes Rs. (162.26) lac [ Previous year ( 7.45) lac ] Gain on Reversal of Provision for doubtful debts and doubtful advances (net of deferred tax) Refer Note 2 (M).

E. [Excludes Rs. 17.74 lac (Previous year Rs. 566.93 lac) Additional charge on sale of revalued assets debited to Business Development Reserve] Refer Note 2 (M).

F. [Excludes Rs. 3,981.27 lac (Previous year Rs. 2,015.81 lac) pertaining to Advertisement & sales promotion expenses [both years net of current tax thereon] debited to Business Development Reserve] Refer Note 2(M).




Mar 31, 2014

1 Basis of Preparation:

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain tangible assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

2 Tangible And Intangible Assets:

Tangible and intangible assets (other than those acquired under Hire Purchase Schemes) are stated at cost of acquisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation after reducing Cenvat credit received/ receivable, if any. With effect from 1st April, 2011, gain/loss on account of fluctuation in exchange rates pertaining to long term foreign currency monetary items, to the extent it is related to acquisition of depreciable assets, is adjusted to the cost of the assets.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value . Any expected loss is recognised immediately in the Statement of Profit and Loss. Fixed assets acquired under Hire Purchase Schemes are valued at cash price less depreciation.

In accordance with the requirements of Accounting Standard 16 (AS 16), "Borrowing Costs", borrowing costs attributable to acquisition/construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use or sale) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Pre-operative expenses incurred during construction period are capitalised, where appropriate.

3 Depreciation And Amortisation:

Depreciation on other than intangible assets, is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956 . Depreciation is provided on pro-rata basis with reference to the month of addition/ installation, except low value items costing Rs. 5,000/- or less which are written off fully in the year of purchase. Depreciation on assets disposed /discarded is charged excluding the month in which such assets is sold. In respect of intangible assets (other than expenditure on software) the cost is amortised over the period for which the asset''s economic benefits are expected to accrue. Expenditure incurred on software acquired is amortised over a maximum period of five years from the date the expenditure is incurred or its useful life, whichever is shorter.

4 Impairment of Assets:

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

5 Inventories:

Inventories, other than realisable by-products, are valued at lower of cost and net realisable value. The cost of inventories is arrived at on moving average price method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of manufactured products comprises direct costs and production overheads including depreciation. Realisable by products are valued at net realisable value. Cost of trading items includes cost of purchase and other costs of acquisition attributable thereto.

6 Retirement Benefits:

(i) Short term employee benefits are recognised as an expense in the Statement of Profit and Loss of the year in which service is rendered.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and Superannuation Fund are charged to the Statement of Profit and Loss .

(iii) The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of Profit and Loss . Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying Project Unit Credit Method. The actuarial gain/loss arising during the year is recognised in the Statement of Profit and Loss of the year.

7 Investments:

Investments that are readily realisable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non-current investments. Current investments are carried at cost or fair value, whichever is lower. Non-current investments are carried at cost. However, provision is made for diminution in the value of these investments, which in the opinion of Board of Directors is other than temporary and the same is made for each investment individually.

Investments include investments in shares of companies registered outside India. Such investments are stated at cost by converting relevant foreign currency at the rate of exchange prevailing on the date of acquisition.

8 Expenses Incurred For Issue of Shares, Debentures and Other Miscellaneous Expenses:

Share issue expenses incurred after April 1, 2003 are either charged to the Statement of Profit and Loss or securities premium account. Expenses pertaining to issue of debentures are charged to the Statement of Profit and Loss in the year in which they are incurred.

9 Premium on Redemption of Debentures:

Premium payable, if any, on redemption of debentures is spread over the life of debentures.

10 Foreign Exchange Transactions:

Transactions in foreign currency are accounted at the exchange spot rate prevailing on the date of the transaction. Year end receivables and payables are translated at year end rate of exchange. With effect from 1st April 2011, gain/loss on account of fluctuations in exchange rates pertaining to long term foreign currency borrowings to the extent they are related to acquisition of depreciable fixed assets is adjusted to the cost of asset, and in case of other long term borrowings, the same are amortised over the life of such long term borrowings.

In all other cases, the difference on account of fluctuation in the rate of exchange is recognised in the Statement of Profit and Loss.

11 Forward Exchange Contracts:

In case of forward exchange contracts, premium/discount arising at the inception of the contracts is spread over the life of the contracts. Exchange fluctuation on such contracts is recognised in the Statement of Profit & Loss in the year in which there is a change in exchange rates.

12 Borrowing Costs:

In accordance with the requirements of Accounting Standard (AS) 16, "Borrowing Costs", borrowing costs directly attributable to acquisition, construction or production of a qualifying asset are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Other borrowing costs are charged to The Statement of Profit and Loss.

13 Employee Stock Options:

Stock options granted to employees under the "Ruchi Soya Employee Stock Option Plan 2007"are accounted as per accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the ''Guidance Note on Share Based Payments'' issued by the Institute of Chartered Accountant of India (ICAI). Accordingly, the excess of market price of the shares as on the date of grant of options over the exercise price is recognised as deferred employee compensation and is charged to the Statement of Profit and Loss on straight-line basis over the vesting period of the respective option. The number of options expected to vest is based on the best available estimate and is revised, if necessary, where subsequent information indicates that the number of stock options expected to vest differs from the previous estimates.

14 Revenue Recognition :

Sale of goods:

Domestic sales are recognised at the point of dispatch of goods when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are net of returns. Sales are stated net of trade discounts and taxes on sale.

Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to the buyer as per the terms of the contract.

Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation.

Carbon Credits are recognised on credit of Carbon Emission Reduction (CER) by the approving authority in a manner it is unconditionally available to the generating entity.

Sale of Services:

Revenue from services is recognised on rendering of the services.

Other Income:

(i) Dividend income on investment is recognised when the right to receive dividend is established.

(ii) Interest and other income are recognised on accrual basis on time proportion basis.

15 Lease Accounting:

As a Lessee

Operating lease payments are recognised as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

16 Accounting of Taxes on Income:

Tax expense comprises of current tax and deferred tax . Current tax is measured at amount expected to be paid to tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing difference between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates.

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. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

17 Provisions and Contingent Liabilities:

Provisions: Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.

Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value.

Contingent Liabilities: Contingent liabilities are disclosed in respect of possible obligations that may arise from past events but their existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The amount of liablity is based on a reliable estimate when it is probable that an outflow of resources will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision for contingent liablity is not discounted and is determined based on best estimate required to settle the obligation at the year end date. Contingent assets are not recognized in the financial statements.


Mar 31, 2013

A.1 Basis of Preparation:

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain tangible assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the Accounting Standards notified under Section 211(3C) of the Companies (Accounting Standards) Rules, 2006, as amended and the other relevant provisions of The Companies Act, 1956.

A.2 Tangible And Intangible Assets:

Tangible and intangible assets (other than those acquired under Hire Purchase Schemes) are stated at cost of acquisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation after reducing Cenvat credit received/ receivable, if any. With effect from April 1, 2011, gain/loss on account of fluctuation in exchange rates pertaining to long term foreign currency monetary items, to the extent it is related to acquisition of depreciable assets, is adjusted to the cost of the assets.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value . Any expected loss is recognised immediately in the Statement of Profit and Loss. Fixed assets acquired under Hire Purchase Schemes are valued at cash price less depreciation.

In accordance with the requirements of Accounting Standard 16 (AS 16), "Borrowing Costs", borrowing costs attributable to acquisition/construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use or sale) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Pre-operative expenses incurred during construction period are capitalised, where appropriate.

A.3 Depreciation And Amortisation:

Depreciation on other than intangible assets, is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956 . Depreciation is provided on pro-rata basis with reference to the month of addition/ installation/ disposal of assets, except low value items costing Rs. 5,000/- or less which are written off fully in the year of purchase. In respect of intangible assets (other than expenditure on software) the cost is amortised over the period for which the asset''s economic benefits are expected to accrue. Expenditure incurred on software acquired is amortised over a maximum period of five years from the date the expenditure is incurred or its useful life, whichever is shorter.

A.4 Impairment Of Assets:

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

A.5 Inventories:

Inventories, other than realisable by-products, are valued at lower of cost and net realisable value. The cost of inventories is arrived at on Moving Average price method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. The cost of manufactured products comprises direct costs and production overheads including depreciation. Realisable by products are valued at net realisable value. Cost of trading items includes cost of purchase and other costs of acquisition attributable thereto.

A.6 Retirement benefits:

(i) Short term employee benefits are recognised as an expense in the Statement of Profit and Loss of the year in which service is rendered.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and Superannuation Fund are charged to the Statement of Profit and Loss .

(iii) The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of Profit and Loss . Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying Project Unit Credit Method. The actuarial gain/loss arising during the year is recognised in the Statement of Profit and Loss of the year.

A.7 Investments:

Investments that are readily realisable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non- current investments. Current investments are carried at cost or fair value, whichever is lower. Non-current investments are carried at cost. However, provision is made for diminution in the value of these investments, which in the opinion of Board of Directors is other than temporary and the same is made for each investment individually.

Investments include investments in shares of companies registered outside India. Such investments are stated at cost by converting relevant foreign currency at the rate of exchange prevailing on the date of acquisition.

A.8 Expenses Incurred For Issue of Shares, Debentures and Other Miscellaneous Expenses:

Share issue expenses incurred after April 1, 2003 are either charged to the Statement of Profit and Loss or securities premium account. Expenses pertaining to issue of debentures are charged to the Statement of Profit and Loss in the year in which they are incurred.

A.9 Premium On Redemption Of Debentures:

Premium payable, if any, on redemption of debentures is spread over the life of debentures.

A.10 Foreign Exchange Transactions:

Transactions in foreign currency are accounted at the exchange spot rate prevailing on the date of the transaction. Year end receivables and payables are translated at year end rate of exchange. With effect from April 1, 2011, gain/loss on account of fluctuations in exchange rates pertaining to long term foreign currency borrowings to the extent they are related to acquisition of depreciable fixed assets is adjusted to the cost of asset, and in case of other long term borrowings, the same are amortised over the life of such long term borrowings.

In all other cases , the difference on account of fluctuation in the rate of exchange is recognised in the Statement of Profit and Loss.

A.11 Forward Exchange Contracts:

In case of forward exchange contracts, premium/discount arising at the inception of the contracts is spread over the life of the contracts. Exchange fluctuation on such contracts is recognised in the Statement of Profit & Loss in the year in which there is a change in exchange rates.

A.12 Borrowing Costs:

In accordance with the requirements of Accounting Standard (AS)16, "Borrowing Costs", borrowing costs directly attributable to acquisition, construction or production of a qualifying asset are added to the cost of those assets , until such time as the assets are substantially ready for their intended use or sale. Other borrowings costs are charged to The Statement of Profit and Loss.

A.13 Employee Stock Options:

Stock options granted to employees under the "Ruchi Soya Employee Stock Option Plan 2007"are accounted as per accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the ''Guidance Note on Share Based Payments'' issued by the Institute of Chartered Accountant of India (ICAI). Accordingly, the excess of market price of the shares as on the date of grant of options over the exercise price is recognised as deferred employee compensation and is charged to the Statement of Profit and Loss on straight-line basis over the vesting period of the respective option. The number of options expected to vest is based on the best available estimate and is revised, if necessary, where subsequent information indicates that the number of stock options expected to vest differs from the previous estimates.

A.14 Revenue Recognition :

Sale of goods:

Domestic sales are recognised at the point of dispatch of goods when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are net of returns. Sales are stated net of trade discounts and taxes on sale.

Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to the buyer as per the terms of the contract.

Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation.

Carbon Credits are recognised on credit of Carbon Emission Reduction (CER) by the approving authority in a manner it is unconditionally available to the generating entity.

Sale of Services:

Revenue from services is recognised on rendering of the services.

Other Income:

(i) Dividend income on investment is recognised when the right to receive dividend is established.

(ii) Interest and other income are recognised on accrual basis on time proportion basis.

A.15 Lease Accounting: As a Lessee

Operating lease payments are recognised as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

A.16 Accounting of Taxes on Income:

Tax expense comprises of current tax and deferred tax . Current tax is measured at amount expected to be paid to tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing difference between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates.

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. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

A.17 Provisions and Contingent Liabilities:

Provisions: Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation.

Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value.

Contingent Liabilities: Contingent liabilities are disclosed in respect of possible obligations that may arise from past events but whose existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. The amount of liability is based on a reliable estimate when it is probable that an outflow of resources will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision for contingent liability is not discounted and is determined based on best estimate required to settle the obligation at the year end date. Contingent assets are not recognised in the financial statements.


Mar 31, 2012

A.I Basis of Preparation:

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, except for certain tangible assets which are being carried at revalued amounts. These financia statements have been prepared to comply in all materia aspects with the Accounting Standards notified under Section 211 (3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions ofThe Companies Act, 1956.

B.2 Tangible and Intangible Assets:

Tangible and intangible assets (other than those acguired under Hire Purchase Schemes) are stated at cost of acguisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of fixed assets includes taxes, duties, freight and other incidental expenses related to acguisition and installation after reducing Cenvat credit received/ receivable, if any. With effect from April 1, 2011,gain/loss on account of fluctuation in exchange rates pertaining to long term foreign currency monetary items, to the extent it is related to acguisition of depreciable assets, is adjusted to the cost of the assets.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realisable value. Any expected loss is recognised immediately in the Statement of Profit and Loss.

Fixed assets acguired under Hire Purchase Schemes are valued at cash price less depreciation.

Borrowing costs attributable to acguisition/construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use or sale) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale in accordance with the requirements of Accounting Standard 16 ("AS 16"),"Borrowing Costs"

Pre-operative expenses incurred during construction period are capitalised, where appropriate.

B.3 Depreciation and Amortisation:

Depreciation is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956 . Depreciation is provided on pro-rata basis with reference to the month of addition/ installation/ disposal of assets, except low value items costing Rs 5,000/- or less which are written off fully in the year of purchase. In respect of intangible assets, the cost is amortised over the period for which the asset's economic benefits are expected to accrue. Expenditure incurred on software acquired is amortised over a maximum period of five years from the date the expenditure is incurred or its useful life, whichever is shorter.

B.4 Impairment of Assets:

The Company reviews the carrying value of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

B.5 Inventories:

Inventories, other than realisable by-products, are valued at lower of cost and net realisable value. The cost of inventories is arrived at on moving average method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of manufactured products comprises direct costs and production overheads including depreciation. Realisable by products are valued at net realisable value. Cost of trading items includes cost of purchase & other costs of acguisition attributable thereto.

B.6 Retirement Benefits:

(i) Short term employee benefits are recognised as an expense in the Statement of profit and loss of the year in which service is rendered.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and Superannuation Fund are charged to the Statement of profit and loss.

(iii) The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the Statement of profit and loss . Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying Project Unit Credit Method. The actuarial gain/loss arising during the year is recognised in the Statement of profit and loss of the year.

B.7 Investments:

Investments that are readily realisable and are intended to be held for not more than one year, are classified as current investments. All other investments are classified as non- current investments. Current investments are carried at cost or fair value, whichever is lower. Non-current investments are carried at cost. However, provision for diminution in the value of these investments is made, where in the opinion of Board of Directors the diminution is other than temporary. The same is made for each investment individually.

Investments include investment in shares of companies registered outside India. Such investments are stated at cost by converting relevant foreign currency at the rate of exchange prevailing on the date of acquisition.

B.8 Expenses Incurred For Issue of Shares, Debentures And Other Miscellaneous Expenses:

Share issue expenses incurred after April 1, 2003 are either charged to Statement of Profits Loss or securities premium account. Expenses pertaining to issue of debentures are charged to the Statement of Profit & Loss in the year in which they are incurred.

B.9 Premium On Redemption Of Debentures:

Premium payable, if any, on redemption of debentures is spread over the life of debentures.

B.10 Foreign Exchange Transactions:

Transactions in foreign currency are accounted at the exchange spot rate prevailing on thedate of the transaction. Year end receivables and payables are translated at year end rate of exchange. With effect from April 1, 2011, gain/ loss on account of fluctuation in exchange rates pertaining to long term foreign currency borrowings to the extent they are related to acquisition of depreciable fixed assets is adjusted to the cost of asset, and in case of other long term borrowings, the same is amortised over the life of such long term borrowings.

In all other cases, the difference on account of fluctuation in the rate of exchange is recognised in the statement of profit and loss.

B.11 Forward Exchange Contracts:

In case of forward exchange contracts, premium/discount arising at the inception of the contracts is spread over the life of the contracts. Exchange fluctuation on such contracts is recognised in the Statement of profit & loss in the year in which there is a change in exchange rates.

B.I 2 Borrowing Costs:

Borrowing costs directly attributable to acquisition, construction or production of a qualifying asset are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale, in accordance with the requirements of Accounting Standard (AS) 16,"Borrowing Costs" mandated by Rule 3 of the Companies (Accounting Standards) Rules 2006. Other borrowings costs are charged to the statement of profit and loss.

B.I 3 Employee Stock Options:

Stock options granted to employees under the "Ruchi Soya Employee Stock Option Plan 2007" are accounted as per accounting treatment prescribed by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the'Guidance Note on Share Based Payments' issued by the Institute of Chartered Accountant of India (ICAI). Accordingly, the excess of market price of the shares as on the date of grant of options over the exercise price is recognised as deferred employee compensation and is charged to Statement of Profit and Loss on straight- line basis over the vesting period of the respective option. The number of options expected to vest is based on the best available estimate and is revised, if necessary, where subseguent information indicates that the number of stock options expected to vest differs from the previous estimates.

B.14 Revenue Recognition:

Sale of goods:

Domestic sales are recognised at the point of dispatch of goods when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract and are net of returns. Sales are stated net of trade discounts and sales taxes.

Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to the buyer as per the terms of the contract.

Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation.

Sale of Services:

Revenue from services is recognised on rendering of the services.

Other Income:

(i) Dividend income on investment is recognised when the right to receive dividend is established.

(ii) Interest and other income are recognised on accrua basis on time proportion basis.

B.I 5 Lease Accounting:

As a Lessee

Operating lease payments are recognised as expenditure in the Statement of Profit and Loss as per the terms of the respective lease agreements.

As a Lessor

The Company has given assets on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

B.16 Accounting of Taxes on Income:

Tax expense comprises of current tax and deferred tax . Current tax is measured at amount expected to be paid to tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax conseguences attributable to timing difference between taxable income and accounting income that are capable of reversal in one or more subseguent years and are measured using relevant enacted tax rates.

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. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

B.I 7 Provisions And Contingent Liabilities:

Provisions:

Provisions are recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be reguired to settle the obligation and there is a reliable estimate of the amount of the obligation.

Provisions are measured at the best estimate of the expenditure reguired to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent Liabilities:

Contingent liabilities are disclosed in respect of possible obligations that may arise from past events but their existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. A provision is made based on a reliable estimate when it is probable that an outflow of resources will be reguired to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate reguired to settle the obligation at the year end date.

Contingent assets are not recognised in the financia statements.


Mar 31, 2011

A) FIXED ASSETS

Fixed assets and intangible assets (other than those acquired under Hire Purchase Schemes) are stated at cost of acquisition / revalued amount, less accumulated depreciation and impairments, if any. Revalued assets are stated at their fair value as at the date of revaluation based on report of approved valuer less accumulated depreciation. Cost of fixed assets includes taxes, duties, freight and other incidental expenses related to acquisition and installation after reducing Cenvat credit received/ receivable, if any. Borrowing costs attributable to acquisition, construction of a qualifying asset (i.e. an asset requiring substantial period of time to get ready for intended use) are capitalised in accordance with the requirements of Accounting Standard 16 (AS 16), "Borrowing Costs". Other pre-operative expenses during construction period are capitalised, where appropriate. Fixed assets acquired under Hire Purchase Schemes are valued at cash price less depreciation.

b) DEPRECIATION AND AMORTISATION

Depreciation is provided on straight line basis at the rates prescribed in Schedule XIV to the Companies Act, 1956. Depreciation is provided on pro-rata basis with reference to the month of addition/ installation/ disposal of assets, except low value items costing Rs. 5,000/- or less which are written off fully in the year of purchase. In respect of intangible assets the cost is amortised over the period for which the assets economic benefits are expected to accrue. Expenditure incurred on software acquired is amortised over a maximum period of five years from the date the expenditure is incurred or useful life whichever is shorter.

c) IMPAIRMENT OF ASSETS

The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each Balance Sheet date. An impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of net selling price and value in use. In assessing the recoverable amount, the estimated future cash flows are discounted to their present value at appropriate discount rates. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and asset is reflected at the recoverable amount.

d) INVENTORIES

Inventories, other than realisable by-products, are valued at lower of cost and net realisable value. The cost of inventories is arrived at on moving average basis. The cost of manufactured products comprises direct costs and production overheads including depreciation. Realisable by products are valued at net realisable value. Cost of trading items includes cost of purchase & other costs of acquisition attributable thereto.

e) RETIREMENT BENEFITS

(i) Short term employee benefits are recognised as an expense in the profit and loss account of the year in which service is rendered.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and Superannuation Fund are charged to the profit and loss account.

(iii) The Company makes annual contribution to Employees Group Gratuity cum Life Assurance Scheme in respect of qualifying employees and the same is recognised as an expense in the profit & loss account. Additional liability, if any, in respect of gratuity and liability in respect of leave encashment is recognised on the basis of valuation done by an independent actuary applying Project Unit Credit Method. The actuarial gain/loss arising during the year is recognised in the profit and loss account of the year.

f) INVESTMENTS

Long term investments are valued at cost. Provision is made for diminution in the value of investments where in the opinion of the Board of Directors such diminution is other than temporary. Current investments are valued at lower of cost and fair value.

Investments include investments in shares of companies registered outside India. Such investments are stated at cost by converting relevant foreign currency at the rate of exchange prevailing on the date of acquisition.

g) EXPENSES INCURRED FOR ISSUE OF SHARES, DEBENTURES AND OTHER MISCELLANEOUS EXPENSES

Preliminary expenses, pre-operative expenses, share issue expenses incurred prior to April 1, 2003 are written off over a period of 10 years. Share issue expenses incurred after April 1, 2003 are either charged to profit & loss account or securities premium account. Expenses pertaining to issue of debentures are charged to profit & loss account in the year in which they are incurred.

h) PREMIUM ON REDEMPTION OF DEBENTURES

Premium payable, if any, on redemption of debentures is spread over the life of debentures.

i) FOREIGN EXCHANGE TRANSACTIONS

(i) Transactions in foreign currency are accounted at the exchange spot rate prevailing on the date of the transaction. Year end receivables and payables are translated at year end rate of exchange. The difference on account of fluctuation in the rate of exchange is recognised in the profit and loss account. In case of sales and purchases the same is included under the respective heads.

(ii) In case of forward exchange contracts, premium/discount arising at the inception of the contracts is spread over the life of the contracts. Exchange fluctuation on such contracts is recognised in the profit & loss account in the year in which there is a change in exchange rates.

j) BORROWING COSTS

Borrowing costs attributable to acquisition, construction of a qualifying asset are capitalised in accordance with the requirements of Accounting Standard (AS)16, "Borrowing Costs" mandated by Rule 3 of the Companies (Accounting Standards) Rules 2006.

k) EMPLOYEE STOCK OPTIONS

Stock options granted to employees under the Employees' Stock Option Scheme are accounted as per the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the 'Guidance Note on Share Based Payments' issued by the Institute of Chartered Accountants of India (ICAI). Accordingly, the excess of market price of the shares as on the date of grant of options over the exercise price is recognised as deferred employee compensation and is charged to profit and loss account on straight- line basis over the vesting period. The number of options expected to vest is based on the best available estimate and is revised, if necessary, where subsequent information indicates that the number of stock options expected to vest differs from the previous estimates.

I) REVENUE RECOGNITION

(i) Domestic sales are recognised at the point of dispatch of goods to the customers and are net of returns. Sales are stated net of trade discount and sales tax.

(ii) Export sales are recognised when significant risks and rewards in respect of ownership of goods are transferred to customers.

(iii) Export entitlements are recognised as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realisation.

(iv) Revenue from services is recognised on rendering of the services.

(v) Dividend income on investment is recognised when the right to receive dividend is established.

(vi) Interest and other income are recognised on accrual basis.

m) LEASE ACCOUNTING

Assets taken on lease

Operating lease payments are recognised as expenditure in the Profit and Loss account as per the terms of the respective lease agreements.

Asset given on lease

The Company has given Plant and Machinery on an operating lease basis. Lease rentals are accounted on accrual basis in accordance with the respective lease agreements.

n) ACCOUNTING OF TAXES ON INCOME

Tax expense comprises of current tax and deferred tax. Current tax is measured at amount expected to be paid to tax authorities using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing difference between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates.

o) CONTINGENT LIABILITIES

Contingent liabilities are disclosed in respect of possible obligations that may arise from past events but their existence will be confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. A provision is made based on a reliable estimate when it is probable that an outflow of resources will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate required to settle the obligation at the year end date. Contingent assets are not recognised in the financial statements.

 
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