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Accounting Policies of SVC Superchem Ltd. Company

Mar 31, 2015

1 CORPORATE INFORMATION

SVC Superchem Ltd 'the Company' was incorporated in India on 29th August'1989 and is implementing PTA project at its plant site at chhata Barsana Road, Chhata, Mathura(UP). Company's plant under construction has been under shut down condition since September, 2000 due to various reasons beyond its control, after successful trial run. Company has its Registered Office at Mumbai.

2.1 Basis of accounting and preparation financial statements:

I) The financial statements have been prepared under the historical cost convention on an accrual basis to comply in alt material aspects with applicable accounting principles in India including accounting standards notified u/s 133 of the Companies Act. 2013 read with Rule7of Companies (Accounts )Rules,2014.

ii) The Company generally follows mercantile system of accounting and unless otherwise stated recognizes significant item of income and expenditure on accrual basis.

2.2 Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

2.3 Fixed Assets(Tangible):

Fixed assets are stated a1 cost net of cenvat All expenditure pertaining to project under construction and other preoperative expenses and losses including trial run expenses and interest cost (net of income accrued) incurred during the construction period, unless otherwise stated, are capitalized till the commencement of commercial prod uction/ till the date assets are put to use.

2.4 Depreciation and Amortizations:

Depreciation on Fixed Assets except Capital work-in-progress has been provided on Straight Line Method by considering revised useful life as specified in part'c' of Schedule II to the Companies Act 2013.

2.5 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value an technical evaluation. Company has not made any evaluation about the recoverable value of its assets, hence the impairment loss, if any, are not identified and will be written off in the accounts in the Year in which such losses are identified as impaired, as specified in Accounting Standard (AS-28) on impairment of assets.

2.6 Income-Tax:

No provision for the deferred tax arising out of time difference has been made, as the company has not prepared any Profit & Loss Account as commercial production has not started till the date of Balance Sheet and no trading or service activities were carried out during financial year ended on that date.

2.7 Foreign Exchange Transaction:

I) Transactions in foreign currencies are recorded at the exchange rates prevailing at the time of the transactions.

ii) Foreign Currency transactions remaining unsettled at the end of the year a re re-stated in rupee value at the year end rates

iii) Changes in liability arising out of such re-statement pertaining to acquisition of fixed assets is treated as an adjustment to the carrying cost of such fixed assets.

2.8 Inventories:

Inventories are valued on first-in-first-out basis, at cost.

2.9 CenvatCredit:

Cenvat Credit is accounted by recording the capital assets/raw material, stores and spares acquired during the year net of Cenvat Credit. Cenvat Credit receivable is shown under Other Non Current Assets.

2.10 Excise duty;

Excise duty is accounted on clearance of goods and provision, as applicable, is made in respect of finished goods lying unsold.

2.11 Sales:

Sales are accounted net of excise duty and discounts.

2.12 Retirement Benefits(Employees):

Provision for Gratuity a nd Leave Encashment payable on retirement to the employees are made on the basis of actual period of their services and at prescribed rates irrespective of their illegibility due to short tenure of their services. Company has not made any provisions or Investment as pe r AS-15 due to closure of plant activity since 2000

2.13 Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are to be capitalized as part of the cost of such assets when accounts are settled with lender and interest liability crystaiised subject to note no,15 hereinafter, in terms of Accounting Standard (AS-16) on "Borrowing Cost" issued by the Institute of Chartered Accountants of India, a qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use.

2.14Related Party Transaction:

Related party transaction as identified by th e management with in the meaning of Accounting Standard (AS-18) regarding "Related Party Disclosure" are provided as per Note No.27.

2.15 Lease Transactions:

The lease rent payable during the project construction period, in terms of the lease agreement entered into by the Company and the "Lessor", is charged to "Capital Work in progress" under the head pre-operative expenses.

2.16 Provisions, Contingent Liabilities & Contingent Assets:

Provisions involving 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 a outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statement.


Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements :

i) The financial statements have been prepared under the historical cost convention on an accrual basis to comply in all material aspects with applicable accounting principles in India including accounting standards notified u/s 211(3C) of the Companies Act, 1956 read with General Circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect Section 133 of the Companies Act, 2013.

ii) The Company generally follows mercantile system of accounting and unless otherwise stated recognizes significant item of income and expenditure on accrual basis.

2.2 Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

2.3 Fixed Assets (Tangible):

Fixed assets are stated at cost net of cenvat. All expenditure pertaining to project under construction and other preoperative expenses and losses including trial run expenses and interest cost (net of income accrued) incurred during the construction period, unless otherwise stated, are capitalized till the commencement of commercial production / till the date assets are put to use.

2.4 Depreciation and Amortizations:

Depreciation on fixed assets except Capital work-in progress has been provided on Straight Line method, unless otherwise stated, as per the rates and in the manner prescribed under Schedule XIV to the Companies Act,1956.

2.5 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Company has not made any evaluation about the recoverable value of its assets, hence the impairment loss, if any, will be written off in the accounts in the Year in which an asset is identified as impaired, as specified in Accounting Standard (AS-28) on impairment of assets.

2.6 Income-Tax :

No provision for the deferred tax arising out of time difference has been made, as the company has not prepared any Profit & Loss Account as commercial production has not started till the date of Balance Sheet and no trading or service activities were carried out during financial year ended on that date.

2.7 Foreign Exchange Transaction:

i) Transactions in foreign currencies are recorded at the exchange rates prevailing at the time of the transactions.

ii) Foreign Currency transactions remaining unsettled at the end of the year are re-stated in rupee value at the year end rates.

iii) Changes in liability arising out of such re-statement pertaining to acquisition of fixed assets is treated as an adjustment to the carrying cost of such fixed assets.

2.8 Inventories:

Inventories are valued on first-in-first-out basis, at cost.

2.9 Cenvat Credit:

Cenvat credit is accounted by recording the capital assets/raw material, stores and spares acquired during the year net of Cenvat Credit. Cenvat Credit receivable is shown under Other Non Current Assets.

2.10 Excise duty:

Excise duty is accounted on clearance of goods and provision, as applicable, is made in respect of finished goods lying unsold.

2.11 Sales:

Sales are accounted net of excise duty and discounts.

2.12 Retirement Benefits(Employees):

Provision for Gratuity and Leave Encashment payable on retirement to the employees are made on the basis of actual period of their services and at prescribed rates irrespective of their illegibility due to short tenure of their services. Company has not made any provisions or Investment as per AS-15 due to closure of plant activity since 2000.

2.13 Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets read with note no.15 hereinafter, unless otherwise stated in terms of Accounting Standard (AS-16) on "Borrowing cost" issued by the Institute of Chartered Accountants of India, a qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use.

2.14 Related Party Transaction:

Related party transaction as identified by the management within the meaning of Accounting Standard (AS-18) regarding "Related Party Disclosure" are provided as per Note No.27.

2.15 Lease Transactions :

The lease rent payable during the project construction period, in terms of the lease agreement entered into by the Company and the "Lessor", is charged to "Capital Work in progress" under the head pre-operative expenses.

2.16 Provisions, Contingent liabilities & Contingent Assets :

Provisions involving 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 a outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statement.

(a) Non-Convertible Debentures of Rs.10185.63 lacs which were redeemable at par in one or more installments on various dates with redemptions commencing from February, 1999 being the earliest redemption and October, 2007 being the last redemption date. All the above Non-Convertible Debentures have become overdue.

(b) The Working Capital loan from banks including amount of Letter of Credits devolved (net of margin money provided against such devolved Letter of Credit) amounting to Rs.7,147.63 lacs (Rs.7,157.65 lacs) are secured / to be secured by way of hypothecation of present and future inventories, books debts and other movable assets of the company and second and subsequent charges on the immovable properties of the Company excluding assets specifically charged to others and is further secured by way of personal guarantee of Promoter Director. Demand Loan against Modvat receivables amounting to Rs. 1,935.72 lacs ( Rs.1,935.72 lacs) are secured / to be secured by way of hypothecation of Modvat receivables of the company and second and subsequent charge on the immovable properties of the company excluding assets specifically charged to others and is further secured by personal guarantee of Promoter Director.

(c) Term Loan from Financial Institutions to the extent of Rs. 12,329.65 lacs (Rs.12,329.65 lacs) are secured / to be secured by way of Equitable Mortgage created on immovable properties situated at Chhata, District. Mathura in the State of Uttar Pradesh and are further secured by way of hypothecation of movable properties of the Company both present and future (other than current assets and specific assets charged to others) ranking on a pari-pasu basis which is further secured by personal guarantee of a Promoter Director and (ii) Rs 2,512.92 lacs (Rs.2,512.92 lacs) from a Financial Institution under its Bill Discounting Scheme are secured by exclusive charge by way of hypothecation of specific items of machinery purchased under this scheme and guarantee of two corporate bodies.

(d) Non-Convertible Debentures amounting to Rs. 10,185.63 lacs (Rs.10,185.63 lacs) are secured / to be secured by way of first charge (i) by Legal Mortgage on immovable property situated at Palas, District Roha, in the state of Maharashtra (ii) extension of first charge by equitable mortgage ranking pari-pasu on immovable properties situated at Chhata, District. Mathura in the state of Uttar Pradesh. They are further secured on all the movable asssets of the Company both present and future (excluding current assets and specific assets charged to others) ranking on a pari-pasu first charge basis with others and are also further secured by personal guarantee of a Promoter Director.


(f) Advance given by a Financial Institutions of Rs. 407.90 lacs (Rs. 407.90 lacs) to Equipment Vendor for the supply of specific Plants at Company''s site and to be leased on commissioning along with arrear of lease rental up to March 2001 provided by Company amounting to Rs.122.69 lacs (Rs. 122.69 lacs) are included in the capital work in progress. The above outstanding is included in the Term Loan in view of earlier CDR proposal and based on inprinciple confirmation from the said Financial Institution received earlier for converting the above lease finance into term loan as per the then restructuring scheme.

(g) In view of disputes with Bankers and Lenders and also due to non-commencement of commercial Production, Company has defaulted on all the above mentioned borrowings which were recalled and become subject matter of recovery at various Debt Recovery Tribunals and no payment has been made against the above over dues. Interest accrued and due company amounting to Rs. 5,971.53 lacs (Rs.5,971.53 lacs) on the above mentioned borrowings provided in the Books of accounts by the Company upto September,1999 together with further interest thereon and not provided by the Company since then where company has defaulted and which remain unpaid is treated as Long Term liabilities pending final settlement with lenders including certain assets reconstruction company and strategic investors who have acquired the part of the debt covered under the above NCD & Term Loans, read with Note No. 15 is secured ranking on a pari-pasu basis with respective Secured loans.

(h) The Promoter Director of the Company, his family members and investment companies, have also pledged Rs. 228.32 lac (228.32 lacs) shares owned by them to Banks and Financial Institutions as collateral security.

14 Most of lenders have approached DRT for recovery. However, certain bankers and Financial Institutions have assigned their claims to certain Asset reconstruction Company, Foreign bank and other Investment Companies including certain strategic investor. Company has not replaced those lenders in its books of accounts due to ongoing disputes. PICUP being one of the Secured Creditors has issued notice for taking possession of assets of company, however company has already got stay order from honourable Allahabad High court against the PICUP notice of possession, till further order.


Mar 31, 2013

1.1 Basis of accounting and preparation of financial statements :

i) The financial statements, unless otherwise stated, have been prepared under the historical cost convention and are in accordance with the generally accepted accounting principles (GAAP) and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

ii) The financial statement for the year ended 31st March, 2013 has been drawn and presented as per the revised requirement of modified schedule VI of the Companies Act 1956 along with previous year figures.

iii) The Company generally follows mercantile system of accounting and unless otherwise stated recognizes significant item of receipt and expenditure on accrual basis.

1.2 Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of incomes and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

1.3 Fixed Assets(Tangible):

Fixed assets are stated at cost net of cenvat. All expenditure pertaining to project under construction and other preoperative expenses and losses including trial run expenses and interest cost (net of income accrued) incurred during the construction period, unless otherwise stated, are capitalized till the commencement of commercial production / till the date assets are put to use.

1.4 Depreciation and Amortizations:

Depreciation on fixed assets except Capital work-in- progress has been provided on Straight Line method, unless otherwise stated, as per the rates and in the manner prescribed under Schedule XIV to the Companies Act,1956.

1.5 Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Company has not made any evaluation about the recoverable value of its assets, hence the impairment loss, if any, will be written off in the accounts in the Year in which an asset is identified as impaired, as specified in Accounting Standard (AS-28) on impairment of assets.

1.6 Income-Tax :

No provision for the deferred tax arising out of time difference has been made, as the company has not prepared any Profit & Loss Account as commercial production has not started till the date of Balance Sheet and no trading or service activities were carried out during financial year ended on that date.

1.7 Foreign Exchange Transaction:

i) Transactions in foreign currencies are recorded at the exchange rates prevailing at the time of the transactions.

ii) Foreign Currency transactions remaining unsettled at the end of the year are re-stated in rupee value at the year end rates. iii) Changes in liability arising out of such re-statement pertaining to acquisition of fixed assets is treated as an adjustment to the carrying cost of such fixed assets.

1.8 Inventories:

Inventories are valued on first-in-first-out basis, at cost.

1.9 Cenvat Credit:

Cenvat credit is accounted by recording the capital assets/raw material, stores and spares acquired during the year net of Cenvat Credit. Cenvat Credit receivable is shown under ''Other Non Current Assets''.

1.10 Excise duty:

Excise duty is accounted on clearance of goods and provision, as applicable, is made in respect of finished goods lying unsold.

1.11 Sales:

Sales are accounted net of excise duty and discounts.

1.12 Retirement Benefits(Employees):

Provision for Gratuity and Leave Encashment payable on retirement to the employees are made on the basis of actual period of their services and at prescribed rates irrespective of their eligibility due to short tenure of their services. Company has not made any provisions or Investment as per AS-15 due to closure of plant activity since 2000.

1.13 Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets read with note no.15 hereinafter , unless otherwise stated in terms of Accounting Standard (AS-16) on "Borrowing cost" issued by the Institute of Chartered Accountants of India a qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use.

1.14 Related Party Transaction:

Related party transaction as identified by the management within the meaning of Accounting Standard (AS-18) regarding "Related Party Disclosure" are provided as per Note No.27.

1.15 Lease Transactions :

The lease rent payable during the project construction period, in terms of the lease agreement entered into by the Company and the "Lessor", is charged to "Capital Work in progress" under the head pre-operative expenses.

1.16 Provisions, Contingent liabilities & Contingent Assets :

Provisions involving 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 a outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes, Contingent Assets are neither recognised nor disclosed in the financial statement.


Mar 31, 2010

1. Basis of preparation of financial statements:

a) The financial statements, unless otherwise stated, have been prepared under the historical cost convention and are in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 as adopted consistently by the Company.

b) The Company generally follows mercantile system of accounting and unless otherwise stated recognizes significant item of income and expenditure on accrual basis.

2. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

3. Fixed Assets:

Fixed assets are stated at cost net of cenvat. All expenditure pertaining to project under construction and other preoperative expenses and losses including trial run expenses and interest cost (net of income accrued) incurred during the construction period, unless otherwise stated, are capitalized till the commencement of commercial production / till the date assets are put to use.

4. Depreciation:

Depreciation on fixed assets except Capital work-in- progress has been provided on Straight Line method, unless otherwise stated, as per the rates and in the manner prescribed under Schedule XIV to the Companies Act,1956.

5. Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. Company has not made any evaluation about the recoverable value of its assets, hence the impairment loss, if any, will be written off in the accounts in the Year in which an asset is identified as impaired, as specified in Accounting Standard (AS-28) on impairment of assets.

6. Income-Tax :

No provision for the deferred tax arising out of time difference has »been made, as the company has not prepared any Profit & Loss Account as commercial production has not started till the date of Balance Sheet and no trading or service activities were carried out during financial period ended on that date.

7. Foreign Exchange Transaction:

a) Transactions in foreign currencies are recorded at the exchange rates prevailing at the time of the transactions.

b) Foreign Currency transactions remaining unsettled at the end of the year are re-stated in rupee value at the year end rates.

c) Changes in liability arising out of such re-statement pertaining to acquisition of fixed assets is treated as an adjustment to the carrying cost of such fixed assets.

8. Inventories :

Inventories are valued on first-in-first-out basis, at cost.

9. Cenvat Credit:

Cenvat credit is accounted by recording the capital assets/raw material, stores and spares acquired during the year net of Cenvat Credit. Cenvat Credit receivable is shown under "Loans & Advances".

10. Excise duty:

Excise duty is accounted on clearance of goods and provision, as applicable, is made in respect of finished goods lying unsold.

11. Sales:

Sales are accounted net of excise duty and discounts.

12. Retirement Benefits:

Provision for Gratuity and Leave Encashment payable on retirement to the employees are made on the basis of actual period of their services and at prescribed rates irrespective of their eligibility due to short tenure of their services. Company has not made any provisions or Investment as per AS-15

13. Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets, unless otherwise stated in terms of Accounting Standard (AS-16) on "Borrowing cost" issued by the Institute of Chartered Accountants of India. A qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use.

14. Related Party Transaction:

Related party transaction as identified by the management within the meaning of Accounting Standard (AS-18) regarding "Related Party Disclosure" are provided as per NoteNo.B-17.

15. Lease Transactions :

The lease rent payable during the project construction period, in terms of the lease agreement entered into by the Company and the "Lessor", is charged to "Capital Work in progress" under the head.preoperative expenses.

16. Contingent liabilities (AS-29)

Contingent liabilities are disclosed in the accounts by way of notes.

 
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