Mar 31, 2023
Significant accounting policies
a. Foreign currency transactions
Transactions in foreign currencies (other than advance receipt or payment of foreign currency) are
translated into the functional currency of the Company at the exchange rates at the date of the
transaction. The foreign currency transactions received or paid in advance are accounted at the date of
receipt or payment of foreign currency
Monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency at the exchange rate at the reporting date. Exchange differences are recognized in profit or
loss, except exchange differences arising from the translation of the qualifying cash flow hedges to the
extent that the hedges are effective which are recognized in Other Comprehensive Income (OCI).
As per option given under Ind AS 101, a first time adopter can continue its Indian GAAP policy for
accounting for exchange differences arising from translation of long-term foreign currency monetary
items recognized in the Indian GAAP financial statements for the period ending immediately before
the beginning of the first Ind AS financial reporting period. Accordingly, the company has exercised
the option of capitalizing the exchange difference on Long Term Foreign Currency Loans in relation to
depreciable fixed assets / capital work-in-progress.
b. Financial instruments
i. Recognition and initial measurement
All financial assets and financial liabilities are initially recognized when the Company becomes a party to the
contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through
profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. However,
trade receivables that do not contain a significant component are measured at transaction price.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
⢠amortized cost;
⢠Fair Value through Other Comprehensive Income (FVOCI) - equity investment; or
⢠Fair Value Through Profit and Loss (FVTPL).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the
Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated
as at FVTPL:
⢠the asset is held within a business model whose objective is to hold assets to collect contractual cash
flows; and
⢠the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably
elect to present subsequent changes in the investment''s fair value in OCI. (designated as FVOCI - equity
investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured
at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably
designate a financial asset that otherwise meets the requirements to be measured at amortized cost or
at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would
otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value
basis are measured at FVTPL.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified
as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any
interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at
amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses
are recognized in profit or loss. Any gain or loss on de-recognition is also recognized in profit or loss.
iii. De-recognition
Financial assets
The company de-recognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially
all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither
transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the
financial asset.
If the company enters into transactions whereby it transfers assets recognized on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets
are not derecognized.
Financial liabilities
The company de-recognizes a financial liability when its contractual obligations are discharged or cancelled,
or expire.
The company also de-recognizes a financial liability when its terms are modified and the cash flows under the
modified terms are substantially different. In this case, a new financial liability based on the modified terms
is recognized at fair value. The difference between the carrying amount of the financial liability extinguished
and the new financial liability with modified terms is recognized in profit or loss.
iv. Off-setting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when,
and only when, the company currently has a legally enforceable right to set off the amounts and it intends
either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
v. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk
exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at
fair value, and changes therein are generally recognized in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows
associated with highly probable forecast transactions and firm commitments arising from changes in foreign
exchange rates.
At inception of designated hedging relationships, the Company documents the risk management objective
and strategy for undertaking the hedge. The Company also documents the economic relationship between
the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item
and hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the
fair value of the derivative is recognized in OCI and accumulated in the other equity under ''effective portion
of cash flow hedges''. The effective portion of changes in the fair value of the derivative that is recognized in
OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis,
from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized
immediately in profit or loss.
The Company designates only the change in fair value of forward exchange contracts as the hedging
instrument in cash flow hedging relationships.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as
inventory, the amount accumulated in other equity is included directly in the initial cost of the non-financial item
when it is recognized. The replacement or rollover of a hedging instrument into another hedging instrument
is not an expiration or termination. For all other hedged forecast transactions, the amount accumulated in
other equity is reclassified to profit or loss in the same period or periods during which the hedged expected
future cash flows affect profit or loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is
terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for
cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until,
for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial
item''s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same
period or periods as the hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated
in other equity are immediately reclassified to profit or loss.
vi. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known
amounts of cash that are subject to an insignificant risk of change in value and having original maturities of
three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of
balances with banks which are unrestricted for withdrawal and usage.
c. Property, Plant and Equipment
i. Recognition and measurement
The cost of an item of property, plant and equipment shall be recognized as an asset if, only if it is probable
that future economic benefits associated with the item will flow to the entity and the cost of the item can be
measured reliably.
Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less
accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and
non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost
of bringing the item to its working condition for its intended use and estimated costs of dismantling and
removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and
direct labour, any other costs directly attributable to bringing the item to working condition for its intended
use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are
accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
ii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property,
plant and equipment as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as
the deemed cost of such property, plant and equipment.
iii. Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with
the expenditure will flow to the Company.
iv. Capital Work-in-Progress
All project / capital related expenditure viz., civil works, machinery under erection, construction and erection
materials, pre-operating expenditure including interest net of revenue included / attributable to the contracts
of the project / as of incurred upto the date when the asset is ready for its intended use are shown as Capital
work-in-progress.
iv. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual
values over their estimated useful lives using the straight-line method and is generally recognized in the
statement of profit and loss. Freehold land is not depreciated.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate. Based on technical evaluation and consequent advice, the management believes that its
estimates of useful lives as given above best represent the period over which management expects to use
these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which asset
is ready for use (disposed of).
v. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified
as investment property at its carrying amount on the date of reclassification.
d. Other intangible assets
i. Recognition and measurement
Intangible assets are initially measured at cost. These items of other intangible assets are subsequently
measured at cost less accumulated amortization and accumulated impairment losses, if any.
ii. Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
iii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible
assets recognized as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the
deemed cost of such intangible assets.
iv. Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values over
their estimated useful lives using the straight-line method, and is included in depreciation and amortization
in Statement of Profit and Loss.
v. Internally generated: Research and Development
Expenditure other than for acquisition of capital assets on research activities is recognized in profit or loss as
incurred.
Development expenditure is capitalized as part of the cost of the resulting intangible asset only if the
expenditure can be measured reliably, the product or process is technically and commercially feasible, future
economic benefits are probable, and the Company intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent
to initial recognition, the asset is measured at cost less accumulated amortization and any accumulated
impairment losses.
e. Biological assets
Biological assets, i.e. standing crops are measured at fair value less costs to sell, with any change therein
recognized in profit or loss.
f. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but
not for sale in the ordinary course of business or use in the production or supply of goods or services or for
administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to
initial recognition, investment property is measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
On transition to Ind AS, the company has elected to continue with the carrying value of all of its investment
property recognized as at 1 April 2015, measured as per the previous GAAP and use that carrying value as
the deemed cost of such investment property.
g. Inventories
All inventories are initially recorded at cost. Cost represents all cost of purchase, cost of conversion and
other costs incurred in bringing the inventories to their present location and condition. Cost for the purpose
of valuation is determined by using the weighted average cost, net of taxes and duties eligible for credit and
discounts.
Raw materials, stores, consumables and spare parts
Raw materials, stores, consumables and spare parts held for use in the production of finished products are
not written down below cost except in cases where material prices have declined and it is estimated that the
cost of the finished products will exceed their net realizable value.
Cost of wood transferred from biological assets (captive plantation) is valued initially at their fair value less
costs to sell at the point of harvest. Weighted average cost has been followed for subsequent measurement
as stated above.
All spares having useful life less than one year are treated as inventories and measured accordingly.
Work-in-process
All work-in-process are valued at lower of cost which includes cost of inputs, net of taxes and duties eligible
for credit and overheads up to the stage of completion and net realizable value.
Finished goods
Finished goods at factory are measured at lower of cost which includes cost of inputs (net of taxes and duties
eligible for credits) and overheads and net realizable value. Finished goods at branches are valued on the
above basis and also include transportation cost to branches and insurance cost.
Traded Goods
Traded goods are measured at lower of purchase cost net of taxes and duties, if any and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs
of completion and selling expenses.
Non Moving Stores and Spares
Stores and spares not drawn for use for more than four years as at the end of year and assessed as not usable
are charged to revenue and are carried at nil value in the books of account.
h. Impairment
i. Impairment of financial instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized
cost.
At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-
impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
⢠significant financial difficulty of the borrower or issuer;
⢠a breach of contract such as a default or being past due for 365 days or more;
⢠it is probable that the borrower will enter bankruptcy or other financial reorganization.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as
the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in
accordance with the contract and the cash flows that the company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount
of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there
is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor
does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Company''s procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Company''s non-financial assets, other than biological assets, inventories and deferred tax assets are
reviewed at each reporting date to determine whether there is any indication of impairment. If any such
indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash¬
generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that
are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU is determined based on asset''s value in use. Value in use is based on the
estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the CGU (or the asset).
To determine impairment of a corporate asset (e.g., Corporate office building for providing support to various
CGUs), recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognized in the statement of profit and loss.
i. Non-current assets held for sale
Non-current assets comprising assets and liabilities are classified as held for sale if it is highly probable that
they will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell.
Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are
recognized in profit or loss.
Once classified as held-for-sale, intangible assets, property, plant and equipment and investment properties
are no longer amortized or depreciated.
Fair value of assets held for sale as on the Balance sheet date will be retired from Fixed Assets and classified
under Current assets. Depreciation is charged for such asset only upto the retirement Date. The Difference
between fair value and Book value of such asset is charged to statement of profit and loss.
j. Employee benefits
i. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided. A liability is recognized for the amount expected to be paid e.g. under short-term
cash bonus / Ex-gratia, if the Company has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii. Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company
makes specified monthly contributions towards pension and superannuation scheme. Obligations for
contributions to defined contribution plans are recognized as an employee benefit expense in statement of
profit and loss in the periods during which the related services are rendered by employees.
iii. Defined benefit plan
The Company pays fixed contribution to provident fund at pre-determined rates to a separate irrevocable
trust approved by the Commissioner of Income Tax, which invests the fund in permitted securities. The
contribution to the fund for the period is recognized as expenses and is charged to Statement of Profit
and Loss. While the obligation to the Company is limited to such fixed contribution, as per the rules of
Employee''s Provident Fund (EPF) any deficiency in the rate of interest on the contribution based on its return
on investment as compared to the rate declared for Employees Provident Fund by the Government under Para
60 of the Employees Provident Fund Act is to be met by the Company. Also as per the rules, any deficiency
in the fair value of Plan Assets backing the Provident Fund accumulations compared to the amount of such
accumulations is to be met by the company.
Liabilities in respect of defined benefit plan in the form of Gratuity and Long-term compensated absences are
determined based on actuarial valuation made by an independent actuary using projected unit credit method
as at the balance sheet date and are unfunded.
Re-measurements of the net defined benefit liability on account of experience adjustments and changes
in actuarial assumptions in respect of Gratuity, which comprise actuarial gains and losses are recognized in
Other Comprehensive Income (OCI).
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments
are recognized immediately in statement of profit and loss as past service cost.
Mar 31, 2018
NOTES TO THE FINANCIAL STATEMENTS
1. Company Overview
Tamil Nadu Newsprint and Papers Limited (the Company or ''TNPL'') is in the business of manufacture and marketing of Paper, Paper Board, Cement and Generation of Power. The installed capacity of Paper is 400000 tons per annum (TPA), Paper Board is 200000 Tons per annum (TPA), and Cement is 900 tons per day (TPD). Power Generation Capacity is 174.12 MW consists of 138.62 of Turbo Generators (TG''s) and 35.50 MW of Wind Farm. Generation of Power is primarily for self-consumption and surplus is sold.
The Company is a public limited company incorporated and domiciled in India and has its registered office situated at No. 67, Mount Road, Guindy, Chennai - 600 032, India. The Company has been incorporated under the provisions of the Companies Act, 1956 and its equity shares are listed on the Bombay Stock Exchange (''BSE'') and National Stock Exchange (NSE) in India.
The financial statements are approved for issue by the Company''s Board of Directors on May 30, 2018.
2. Basis of preparation
a. Statement of compliance
These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act , 2013 (''the Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Effective April 1, 2016, the Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Amounts for the year ended 31st March, 2017 were audited by previous auditors M/s. Raman Associate.
b. Functional and presentation currency
These financial statements are presented in Indian Rupee (''INR''), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest lakh, unless otherwise indicated.
c. Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items:
- Certain financial assets and liabilities (including derivative instruments) - at fair value;
- Biological assets - Fair value less costs to sell; and
- Net defined benefit liability - Present value of defined benefit obligations
d. Use of estimates and judgements
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.
The company periodically reviews estimates. Changes to estimates are recognized in the period when the change is made if the change only affected that period. If the change affects current and future periods, it is recognized in the period when the change is made and in future periods. During the current financial year, the company has reviewed the estimates of certain financial assets and the impact on the revision of estimate will be considered appropriately both in current and future periods.
Judgements
Information about judgements made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the concerned notes.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 March 2018 is included in the concerned notes.
e. Measurement of fair values
A number of the Company''s accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values. The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information is required, the Company assesses the evidence obtained by the third parties to support the conclusions that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
Notes 6 - Investment Property Notes 8 - Biological Assets Notes 41 - Financial Instruments
3. Significant accounting policies
a. Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange rates at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Exchange differences are recognized in profit or loss, except exchange differences arising from the translation of the qualifying cash flow hedges to the extent that the hedges are effective which are recognized in Other Comprehensive Income (OCI).
As per option given under Ind AS 101, a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. Accordingly, the company has exercised the option of capitalizing the exchange difference on Long Term Foreign Currency Loans in relation to depreciable fixed assets / capital work-in-progress.
b. Financial instruments
i. Recognition and initial measurement
All financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement Financial assets
On initial recognition, a financial asset is classified as measured at
- amortized cost;
- Fair Value through Other Comprehensive Income (FVOCI) - equity investment; or
- Fair Value Through Profit and Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI. (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on de-recognition is also recognized in profit or loss.
iii) De-recognition
Financial assets
The company de-recognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognized.
Financial liabilities
The company de-recognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.
The company also de-recognizes a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in profit or loss.
iv) Off-setting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
v) Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions and firm commitments arising from changes in foreign exchange rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the other equity under ''effective portion of cash flow hedges''. The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
The Company designates only the change in fair value of forward exchange contracts as the hedging instrument in cash flow hedging relationships.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in other equity is included directly in the initial cost of the non-financial item when it is recognized. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial item''s cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified to profit or loss.
vi) Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
c. Property, Plant and Equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
ii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment
iii. Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
iv. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the straight-line method and is generally recognized in the statement of profit and loss. Freehold land is not depreciated.
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which asset is ready for use (disposed of).
v. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment property at its carrying amount on the date of reclassification.
d. Other intangible assets
i. Recognition and measurement
Intangible assets are initially measured at cost. These items of other intangible assets are subsequently measured at cost less accumulated amortization and accumulated impairment losses, if any.
ii. Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
iii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.
iv. Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortization in Statement of Profit and Loss.
Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
Internally generated: Research and Development
Expenditure other than for acquisition of capital assets on research activities is recognized in profit or loss as incurred.
Development expenditure is capitalized as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortization and any accumulated impairment losses
e. Biological assets
Biological assets, i.e. standing crops are measured at fair value less costs to sell, with any change therein recognized in profit or loss.
f. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business or use in the production or supply of goods or services or for administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
On transition to Ind AS, the company has elected to continue with the carrying value of all of its investment property recognized as at 1 April 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of such investment property.
Any gain or loss on disposal of an investment property is recognized in profit or loss.
The fair value of investment property is disclosed in the notes. Fair value is determined by an independent valuer who holds a recognized and relevant professional qualification and has recent experience in the location and category of the investment property being valued or by utilizing guideline value.
g. Inventories
All inventories are initially recorded at cost. Cost represents all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost for the purpose of valuation is determined by using the weighted average cost, net of taxes and duties eligible for credit and discounts.
Raw materials, stores, consumables and spare parts
Raw materials, stores, consumables and spare parts held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
Cost of wood transferred from biological assets (captive plantation) is valued initially at their fair value less costs to sell at the point of harvest. Weighted average cost has been followed for subsequent measurement as stated above.
All spares having useful life less than one year are treated as inventories and measured accordingly.
Work-in-process
All work-in-process are valued at lower of cost which includes cost of inputs, net of taxes and duties eligible for credit and overheads up to the stage of completion and net realizable value.
Finished goods
Finished goods at factory are measured at lower of cost which includes cost of inputs (net of taxes and duties eligible for credits) and overheads and net realizable value. Finished goods at branches are valued on the above basis and also include transportation cost to branches and insurance cost.
Traded Goods
Traded goods are measured at lower of purchase cost net of taxes and duties, if any and net realizable value.
Non Moving Stores and Spares
Stores and spares not drawn for use for more than three years as at the end of year are charged to revenue and are carried at nil value in the books of account.
h. Impairment
i) Impairment of financial instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost.
At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ''credit-impaired'' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or being past due for 365 days or more;
- it is probable that the borrower will enter bankruptcy or other financial reorganization; or Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets
or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Company''s non-financial assets, other than biological assets, inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU is determined based on asset''s value in use. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
To determine impairment of a corporate asset (e.g., Corporate office building for providing support to various CGUs), recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in the statement of profit and loss.
i. Non-current assets held for sale
Non-current assets comprising assets and liabilities are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognized in profit or loss.
Once classified as held-for-sale, intangible assets, property, plant and equipment and investment properties are no longer amortized or depreciated.
Fair value of assets held for sale as on the Balance sheet date will be retired from Fixed Assets and classified under Current assets. Depreciation is charged for such asset only upto the retirement Date. The Difference between fair value and Book value of such asset is charged to Profit and Loss Account
j. Employee benefits
i. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid e.g. under short-term cash bonus / Ex-gratia, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii. Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards pension and superannuation scheme. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
iii. Defined benefit plan
The Company pays fixed contribution to provident fund at pre-determined rates to a separate irrevocable trust approved by the Commissioner of Income Tax, which invests the fund in permitted securities. The contribution to the fund for the period is recognized as expenses and is charged to Statement of Profit and Loss. While the obligation to the Company is limited to such fixed contribution, as per the rules of Employee''s Provident Fund (EPF) any deficiency in the rate of interest on the contribution based on its return on investment as compared to the rate declared for Employees Provident Fund by the Government under Para 60 of the Employees Provident Fund Act is to be met by the Company. Also as per the rules, any deficiency in the fair value of Plan Assets backing the Provident Fund accumulations compared to the amount of such accumulations is to be met by the company.
Liabilities in respect of defined benefit plan in the form of Gratuity and Long-term compensated absences are determined based on actuarial valuation made by an independent actuary using projected unit credit method as at the balance sheet date and are unfunded.
Re-measurements of the net defined benefit liability on account of experience adjustments and changes in actuarial assumptions in respect of Gratuity, which comprise actuarial gains and losses are recognized in Other Comprehensive Income (OCI).
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit and loss as past service cost.
k. Provisions (other than for employee benefits) and contingent liabilities
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.
Decommissioning costs
Decommissioning costs are measured as the best estimate of the expenditure to settle the obligation or to transfer the obligation to a third party. Provisions for decommissioning obligations are required to be recognized at the inception of the arrangement. The estimated costs to be incurred at the end of the arrangement are discounted to its present value using the market rate of return.
Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognized nor disclosed in the financial statements. l. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable after netting trade discounts, volume discounts and sales returns. Revenue from sale of goods is recognized when significant risks and rewards have been transferred to buyer.
Rental income from investment property is recognized as part of other income in profit or loss on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
Renewable Energy Certificate (REC) benefits are recognized in the statement of Profit and Loss on sale of REC''s.
Dividend from investments is recognized when the right to receive the payment is established.
Liquidated damages and penalties recovered from suppliers/contractors, in relation to property, plant and equipment are credited to statement of profit and loss unless the delay has resulted in extra cost of assets, in which case the same are adjusted towards the carrying cost of the respective asset.
Barter transactions
The Company has engaged into barter transactions comprising of exchanging steam/fuel for bagasse. This exchange though is of dissimilar goods, would not qualify as sale since it is not a product sold by the Company.
Export Benefits
The benefit accrued under Duty Drawback Scheme as per the Export and Import Policy in respect of exports made is accounted on an accrual basis and is included under the head "revenue from operations" as ''Export Incentives''.
The benefit accrued under the Merchandise Exports from India Scheme (MEIS) in respect of exports on an accrual basis and is included under the head "revenue from operations" as ''Export Incentives''.
Export benefits available under eligible schemes are recognized in the year when the right to receive credit as per the terms of the scheme is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization/ realization of such duty credit.
m. Government grants
Government grants and project incentives are recognized initially as deferred income at fair value when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant and the same is recognized in profit or loss as other income on a systematic basis.
Grants that compensate the Company for expenses incurred are recognized in profit or loss as other income on a systematic basis in the periods in which such expenses are recognized.
n. Leases
i. Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values.
ii. Lease payments
Payments made under operating leases are generally recognized in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
o. Recognition of dividend income, interest income or expense
Dividend income is recognized in profit or loss on the date on which the company''s right to receive payment is established. Interest income or expense is recognized using the effective interest method.
The ''effective interest rate'' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortized cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
p. Income tax
Income tax comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognized in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognizes a deferred tax asset only to the extent
that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets - unrecognized or recognized, are reviewed at each reporting date and are recognized/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realized.
Credit for Minimum Alternative Tax (MAT) if any is recognized as a part of deferred tax assets. Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
q. Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowings. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
r. Cash flow statements
Cash flow statements are prepared under Indirect Method whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents comprise of cash in hand, current and other accounts (including fixed deposits) held with banks.
Amendment to Ind AS 7
Effective from April, 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosure that enable users of financial statement to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.
s. Events occurring after the balance sheet date
Assets and liabilities are adjusted for events occurring after the reporting period that provides additional evidence to assist the estimation of amounts relating to conditions existing at the end of the reporting period.
Dividends declared by the Company after the reporting period are not recognized as liability at the end of the reporting period. Dividends declared after the reporting period but before the issue of financial statements are not recognized as liability since no obligation exists at that time. Such dividends are disclosed in the notes to the financial statements.
t. Operating segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Board of Directors (BoD) to make decisions about resources to be allocated to the segments and assess their performance.
Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole are not allocable to a segment on a reasonable basis have been disclosed as un-allocable assets and liabilities.
Inter segment revenue / expenses are recognized at cost.
Geographical segments considered for reporting are India and Rest of the World.
Information about reportable segments
Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Company''s CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on cost basis.
u. Earnings per share (EPS)
Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. The Company did not have any potentially dilutive securities in any of the years presented.
v. Dividends
Final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
The Company declares and pays dividends in Indian rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution taxes.
Dividends, if any are to be declared at the Annual General Meeting of Shareholders based on the recommendation of the Board of Directors. Generally, the factors that may be considered by the Board of Directors before making any recommendation of dividend include, without limitation, the company''s future expansion plans and capital requirements, profits earned during the fiscal year, cost of raising funds from alternative sources, liquidity position, applicable taxes including tax on dividend as well as exemptions under tax laws available to various categories of investors from time to time and general market conditions.
w. Standard issued but not effective
Ministry of Corporate Affairs ("MCA"), on March 28, 2018, through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the new standard for revenue recognition and amended certain existing Ind ASs which are effective for annual periods beginning on or after April 1, 2018.
Ind AS 115- Revenue from Contract with Customers:
Ind AS 115 will supersede the existing revenue recognition standard ''Ind AS 18 - Revenue''. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach) -The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.
The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The effect on adoption of Ind AS 115 is expected to be insignificant.
Ind AS 21 - The effect of changes in Foreign Exchange rates (Appendix B)
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. The amendment will come into force from April 1, 2018.
The Company does not expect the effect of this on the financial statements to be material based on preliminary evaluation."
Mar 31, 2017
a. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange rates at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Exchange differences are recognized in profit or loss, except exchange differences arising from the translation of the qualifying cash flow hedges to the extent that the hedges are effective which are recognized in Other Comprehensive Income(OCI).
As per option given under Ind AS 101, whereby a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. Accordingly, the company has exercised the option of capitalizing the exchange difference on Long Term Foreign Currency Loans in relation to depreciable fixed assets / capital work-in-progress.
b. Financial instruments
i. Recognition and initial measurement
All financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
ii. Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at
- amortized cost;
- Fair Value through Other Comprehensive Income (FVOCI) - equity investment; or
- Fair Value Through Profit and Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investmentâs fair value in OCI. (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI or at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on de-recognition is also recognized in profit or loss
iii) De-recognition
Financial assets
The company de-recognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the company enters into transactions whereby it transfers assets recognized on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognized.
Financial liabilities
The company de-recognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.
The company also de-recognizes a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in profit or loss.
iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.
v) Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions and firm commitments arising from changes in foreign exchange rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the other equity under âeffective portion of cash flow hedgesâ. The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss.
The Company designates only the change in fair value of forward exchange contracts as the hedging instrument in cash flow hedging relationships.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in other equity is included directly in the initial cost of the non-financial item when it is recognized. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect profit or loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in recognition of a non-financial item, it is included in the non-financial itemâs cost on its initial recognition or, for other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in other equity are immediately reclassified to profit or loss.
c. Property, Plant and Equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labour, any other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
ii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment
iii. Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
iv. Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual values over their estimated useful lives using the straight-line method and is generally recognized in the statement of profit and loss. Freehold land is not depreciated.
The estimated useful lives of items of property, plant and equipment are as follows:
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Based on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (up to) the date on which asset is ready for use (disposed off).
v. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property, the property is reclassified as investment property at its carrying amount on the date of reclassification.
d. Other intangible assets
i. Recognition and measurement
Intangible assets are initially measured at cost. These items of other intangible assets are subsequently measured at cost less accumulated amortization and accumulated impairment losses, if any.
ii. Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.
iii. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1 April 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.
iv. Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values over their estimated useful lives using the straight-line method, and is included in depreciation and amortization in Statement of Profit and Loss.
The estimated useful lives are as follows:
Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
Internally generated: Research and Development
Expenditure on research activities is recognized in profit or loss as incurred.
Development expenditure is capitalized as part of the cost of the resulting intangible asset only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, the asset is measured at cost less accumulated amortization and any accumulated impairment losses
e. Biological assets
Biological assets, i.e. standing crops are measured at fair value less costs to sell, with any change therein recognized in profit or loss.
f. Investment property
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business or use in the production or supply of goods or services or for administrative purposes. Upon initial recognition, an investment property is measured at cost. Subsequent to initial recognition, investment property is measured at cost less accumulated depreciation and accumulated impairment losses, if any.
On transition to Ind AS, the company has elected to continue with the carrying value of all of its investment property recognized as at 1 April 2015, measured as per the previous GAAP and use that carrying value as the deemed cost of such investment property.
The estimated useful lives are as follows:
Any gain or loss on disposal of an investment property is recognized in profit or loss.
The fair value of investment property is disclosed in the notes. Fair value is determined by an independent valuer who holds a recognized and relevant professional qualification and has recent experience in the location and category of the investment property being valued or by utilizing guideline value.
g. Inventories
All inventories are initially recorded at cost. Cost represents all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost for the purpose of valuation is determined by using the weighted average cost, net of taxes and duties eligible for credit and discounts.
Raw materials, stores, consumables and spare parts
Raw materials, stores, consumables and spare parts held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
Cost of wood transferred from biological assets (captive plantation) is valued initially at their fair value less costs to sell at the point of harvest. Weighted average cost has been followed for subsequent measurement as stated above.
All spares having useful life less than one year are treated as inventories and measured accordingly.
Work-in-process
All work-in-process are valued at cost which includes cost of inputs, net of taxes and duties eligible for credit and overheads up to the stage of completion.
Finished goods
Finished goods at factory are measured at lower of cost which includes cost of inputs (net of taxes and duties eligible for credits) and overheads and net realizable value. Finished goods at branches are valued on the above basis and also include transportation cost to branches and insurance cost.
Traded Goods
Traded goods are measured at lower of purchase cost net of taxes and duties, if any and net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
h. Impairment
i. Impairment of financial instruments
The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost.
At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is âcredit-impairedâ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
- significant financial difficulty of the borrower or issuer;
- a breach of contract such as a default or being past due for 365 days or more;
- it is probable that the borrower will enter bankruptcy or other financial reorganization;
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the company expects to receive).
Presentation of allowance for expected credit losses in the balance sheet
Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets.
Write-off
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Companyâs procedures for recovery of amounts due.
ii. Impairment of non-financial assets
The Companyâs non-financial assets, other than biological assets, inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU is determined based on assetâs value in use. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).
To determine impairment of a corporate asset (e.g., Corporate office building for providing support to various CGUs), recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognized in the statement of profit and loss.
i. Non-current assets held for sale
Non-current assets comprising assets and liabilities are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognized in profit or loss.
Once classified as held-for-sale, intangible assets, property, plant and equipment and investment properties are no longer amortized or depreciated.
j. Employee benefits
i. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid e.g. under short-term cash bonus / Ex-gratia, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the amount of obligation can be estimated reliably.
ii. Defined contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. The Company makes specified monthly contributions towards pension and superannuation scheme. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit or loss in the periods during which the related services are rendered by employees.
iii. Defined benefit plan
The Company pays fixed contribution to provident fund at pre-determined rates to a separate irrevocable trust approved by the Commissioner of Income Tax, which invests the fund in permitted securities. The contribution to the fund for the period is recognized as expenses and is charged to Statement of Profit and Loss. While the obligation to the Company is limited to such fixed contribution, as per the rules of Employeeâs Provident Fund (EPF) any deficiency in the rate of interest on the contribution based on its return on investment as compared to the rate declared for Employees Provident Fund by the Government under Para 60 of the Employees Provident Fund Act is to be met by the Company. Also as per the rules, any deficiency in the fair value of Plan Assets backing the Provident Fund accumulations compared to the amount of such accumulations is to be met by the company.
Liabilities in respect of defined benefit plan in the form of Gratuity and Long-term compensated absences are determined based on actuarial valuation made by an independent actuary using projected unit credit method as at the balance sheet date and are unfunded.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses are recognized in OCI.
k. Provisions (other than for employee benefits)
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the present obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. Expected future operating losses are not provided for.
Decommissioning costs
Decommissioning costs are measured as the best estimate of the expenditure to settle the obligation or to transfer the obligation to a third party. Provisions for decommissioning obligations are required to be recognized at the inception of the arrangement. The estimated costs to be incurred at the end of the arrangement are discounted to its present value using the market rate of return.
l. Revenue
Revenue is measured at the fair value of the consideration received or receivable after netting trade discounts, volume discounts and sales returns. Revenue from sale of goods is recognized when significant risks and rewards have been transferred to buyer.
Liquidated damages and penalties recovered from suppliers/contractors, in relation to property, plant and equipment are credited to statement of profit and loss unless the delay has resulted in extra cost of assets, in which case the same are adjusted towards the carrying cost of the respective asset.
Rental income from investment property is recognized as part of other income in profit or loss on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
Renewable Energy Certificate (REC) benefits are recognized in the statement of Profit and Loss on sale of RECâs.
Dividend from investments is recognized when the right to receive the payment is established.
Barter transactions
The Company has engaged into barter transactions comprising of exchanging steam/fuel for bagasse. This exchange though is of dissimilar goods, would not qualify as sale since it is not a product sold by the Company.
m. Government grants
Government grants are recognized initially as deferred income at fair value when there is reasonable assurance that they will be received and the Company will comply with the conditions associated with the grant and the same is recognized in profit or loss as other income on a systematic basis.
Grants that compensate the Company for expenses incurred are recognized in profit or loss as other income on a systematic basis in the periods in which such expenses are recognized.
n. Leases
i. Determining whether an arrangement contains a lease
At inception of an arrangement, it is determined whether the arrangement is or contains a lease.
At inception or on reassessment of the arrangement that contains a lease, the payments and other consideration required by such an arrangement are separated into those for the lease and those for other elements on the basis of their relative fair values.
ii. Lease payments
Payments made under operating leases are generally recognized in profit or loss on a straight-line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
o. Recognition of dividend income, interest income or expense
Dividend income is recognized in profit or loss on the date on which the companyâs right to receive payment is established. Interest income or expense is recognized using the effective interest method.
The âeffective interest rateâ is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:
- the gross carrying amount of the financial asset; or
- the amortized cost of the financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.
p. Income tax
Income tax comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to an item recognized directly in equity or in other comprehensive income.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognized amounts, and it is intended to realize the asset and settle the liability on a net basis or simultaneously.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognized in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognizes a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized. Deferred tax assets - unrecognized or recognized, are reviewed at each reporting date and are recognized/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realized.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
q. Borrowing cost
Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of fund. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.
r. Cash flow statements
Cash flow statements are prepared under Indirect Method whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. Cash and cash equivalents comprise of cash in hand, current and other accounts (including fixed deposits) held with banks.
s. Events occurring after the balance sheet date
Assets and liabilities are adjusted for events occurring after the reporting period that provides additional evidence to assist the estimation of amounts relating to conditions existing at the end of the reporting period.
Dividends declared by the Company after the reporting period are not recognized as liability at the end of the reporting period. Dividends declared after the reporting period but before the issue of financial statements are not recognized as liability since no obligation exists at that time. Such dividends are disclosed in the notes to the financial statements.
t. Operating segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Companyâs other components, and for which discrete financial information is available. All operating segmentsâ operating results are reviewed regularly by the Companyâs Board of Directors (BoD) to make decisions about resources to be allocated to the segments and assess their performance.
The Company has identified following operating segments i.e. Paper& Paper Board, Energy and Cement.
Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole are not allocable to a segment on a reasonable basis have been disclosed as un-allocable assets and liabilities.
Inter segment revenue / expenses are recognized at cost.
Geographical segments considered for reporting are India and Rest of the World.
Information about reportable segments
Performance is measured based on segment profit (before tax), as included in the internal management reports that are reviewed by the Companyâs CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Inter-segment pricing is determined on cost basis.
u. The company commissioned commercial production of its Board Plant (Unit II) on 01.05.2016 at Trichy District. The data given for the year 2016-2017 is inclusive of Unit I & Unit II. The figures of the previous year relate to Unit I only. The company has restated the figures of previous year in compliance with Ind AS and therefore the current year figures are not comparable with the previous year.
Mar 31, 2016
II a) SIGNIFICANT ACCOUNTING POLICIES
Disclosure of Accounting Policies
1) Basis of Preparation of Financial Statements
The financial statements have been prepared using historical cost convention and on the basis of going concern, with revenues recognized, expenses accounted on accrual basis, unless otherwise stated and in accordance with generally accepted accounting principles in India [Indian GAAP] and Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies [Accounts] Rules, 2014.
Use of Estimates:
The preparation of financial statements requires management to make judgments, estimates and assumptions of some of the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements and amounts of revenues and expenses during the period reported. However any revision to accounting estimates or difference between the actual results and estimates are recognized prospectively in the period in which the results are known / materialized
2) Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at cost or net realizable value, whichever is lower. Cost represents all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost for the purpose of valuation is determined by using the weighted average cost, net of taxes and duties eligible for credit, except note books where stocks are valued at lower of cost and net realizable value on FIFO Basis.
b) Wood from captive plantation is valued at cost (incurred till the date of felling) or market price whichever is less. Standing Crops are valued at the total amount of expenditure incurred (including land development expenditure), adjusted for failed plantation costs and incidental revenue realized.
c) Bagasse consumption value and stock is valued at weighted average cost, net of taxes and duties eligible for credit.
d) Work-in-Process
Work in process of paper, Cement and Coated Board are valued at cost which includes cost of inputs, net of taxes and duties eligible for credit and overheads up to the stage of completion.
e) Finished Goods
Finished stock of paper, cement and coated board at factory are valued at cost which includes cost of inputs (net of taxes and duties eligible for credits).
Finished stocks at branches are valued on the above basis and also include transportation cost to branches and insurances cost.
Traded Goods
Traded goods stocks are valued at purchase cost net of taxes and duties if any.
f) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the end of the year are charged to revenue. Such stores and spares are carried at nil value in the books and charged to revenue at nil value in the year of issue.
3) Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise Cash in Hand, Current and Other Accounts (including Fixed Deposits) held with Banks.
4) Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the balance sheet date that provide additional evidence to assist the estimation of amounts relating to conditions existing at the balance sheet date.
b) Dividends, which are proposed / declared by the Company after the Balance Sheet date but before the approval of the Financial Statements, are adjusted.
5) Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
Extra-ordinary Items, Prior Period Incomes and Expenditures and impact of changes in Accounting Policies are accounted
in accordance with Accounting Standard 5.
6) Depreciation Accounting
a) Depreciation on tangible and intangible assets is uniformly charged over the estimated useful life of the assets as assessed by the management.
b) Depreciation on additions / deductions in respect of fixed assets are charged pro-rata from / upto the date in which the asset is put to use / available for disposal
c) Depreciation on addition to assets (which are to supplement the usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been provided prospectively over the residual life of the parent asset from the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery, Depreciation has been provided prospectively over the residual useful life of the parent asset from the beginning of the year in which such addition is made.
iii) In respect of rebuild / upgrade of machinery leading to substantial capacity expansion, depreciation is charged uniformly over the remaining useful life of the parent asset.
d) In respect of modernization programme leading to replacement of existing assets, depreciation is provided over the remaining useful life of the assets getting replaced.
e) Pending renewal of agreements with some of the sugar mills, depreciation on fixed assets at such Offsite is charged uniformly over the useful life of the assets, considering the continued arrangement for procurement of bagasse from sugar mills.
7) Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, where there are uncertainties in the ascertainment / realization of income such as interest from customers (upon factors such as financial condition of the person from whom the same is to be realized) / Liquidated damages recovered from suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from suppliers/contractors, in relation to fixed assets are credited to Statement of profit and loss unless the delay has resulted in extra cost of assets, in which case the same are adjusted towards the carrying cost of the respective asset.
d) Clean Development Mechanism [CDM] benefits are recognized in the Statement of profit and loss upon issue of Certified Emission Reduction [CER] by the Executive Board of CDM and Execution of Emission Reduction Purchase Agreement with the Buyer.
e) Renewable Energy Certificate (REC) benefits are recognized in the statement of Profit and Loss on sale of REC''s.
f) Dividend from investments is recognized when the right to receive the payment is established.
8) Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are capitalized when the relevant assets are ready for intended use i.e. ready for commencement of commercial production. The assets are stated at cost net of accumulated depreciation. The cost comprises of purchase price net of taxes and duties eligible for credit and all other directly attributable cost incurred on bringing the asset to its working condition for its intended use.
b) Additional compensation for lands acquired from farmers under Land Acquisition Act, 1894 is capitalised with the cost ofthe land in the year of payment based on final award of compensation by appropriate authority.
c) Operating software is capitalized with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as addition to fixed asset.
Capital Work-in-Progress
Capital Work-in-Progress comprises of purchase price of capital assets net of taxes and duties eligible for credit and all other directly attributable cost of fixed assets / projects that are not ready for their intended use (not ready for commencement of commercial production), as at the Balance Sheet date. Expenditure incurred during the test run of the project net of income is capitalized.
9) Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as current assets and current liabilities are initially recognized at the exchange rate on the date of the transaction. These items are reported at the closing rate on the balance sheet date.
b) Forward exchange contracts or other financial instruments, that are in substance, a forward exchange contracts entered into for hedging the monetary items are initially recognized at the exchange rate on the date of inception of the Forward Contract. The company does not enter into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward Contract is amortized as expense or income over the life of the contract.
d) Forward contracts are reported at the closing rate on the date of the balance sheet.
e) Exchange differences other than those covered under para(g) arising on reporting the above items at rates different from which they were initially recorded during the period or reported in the previous financial statements are recognized as income / expenditure in the Statement of Profit and Loss.
f) Contingent liabilities denominated in foreign currency at the balance sheet date are disclosed using the closing rate.
g) Pursuant to insertion of paragraph 46A in Accounting Standard - 11 (AS-11) by the Companies (Accounting Standard) (Second Amendment) Rules, 2011 vide Notification GSR 913(E) & Notification No.GSR 914(E) dated 2912-2011, issued by the Ministry of Corporate Affairs, Government of India, the Company has exercised the option of capitalizing the exchange difference on Long Term Foreign Currency Loans in relation to depreciable fixed assets / Capital Work-in-Progress with effect from 01-04-2011.
10) Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets and other Capital Grants are treated as Capital Reserve.
Government grants relating to revenue are recognized on accrual and are shown under other income.
11) Accounting for investments
a) Long-term investments are valued at cost. Provision, if any, is made to recognize a decline other than a temporary, in the value of long-term investments. Decline in the value of long-term investments is determined initially ten years from the date of its purchase and thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market value.
12) Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount to Statement of Profit and Loss in the year in which the related service is rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre-determined rates to a separate irrevocable trust approved by the Commissioner of Income Tax, which invests the fund in permitted securities. The contribution to the fund for the period is recognized as expenses and is charged to Statement of Profit and Loss. While the obligation to the Company is limited to such fixed contribution, as per the rules of Employee''s Provident Fund (EPF) any deficiency in the rate of interest on the contribution based on its return on investment as compared to the rate declared for Employees Provident Fund by the Government under para 60 of the Employees Provident Fund Act is to be met by the Company. Also as per the rules, any deficiency in the fair value of plan assets backing the Provident Fund accumulations compared to the amount of such accumulations is to be met by the company.
ii) Gratuity and long term compensated absence
Liabilities in respect of defined benefit plan in the form of gratuity and Long term compensated absences are determined based on actuarial valuation made by an independent actuary using projected unit credit method as at the balance sheet date and are unfounded.
c) Defined Contribution
Defined contributions towards retirement benefits in the form of Pension and Superannuation Fund for the year are charged to Statement of Profit and Loss.
13) Borrowing costs
Borrowing Costs that are directly attributable to the acquisition, construction or production of fixed asset / project, as the case may be, are capitalized as part of the cost of the respective asset / project, till such time the asset / project is substantially ready for its intended use. All other Borrowing Costs are expensed in the period in which they are incurred.
14) Segment Reporting
a) The company has identified business segments viz. Paper, Energy and Cement. Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallowable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallowable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment Reporting by treating sales in India and foreign currency as reportable geographical segments.
15) Related Party Transactions
Remuneration to Directors, other than Independent Non-executive Directors, is disclosed as ''Related Party Transactions'' in the Notes to Accounts.
16) Leases
Rentals are expensed with reference to lease terms and other considerations.
17) Earnings per Share
a) Basic Earnings per share is computed with reference to the Weighted Average number of Shares, based on monthly rests.
b) Diluted Earnings per share is computed based on fully paid-up value of the Share issued, as if Calls-in-Arrears has been received.
18) Accounting for Taxes on Income
Income-tax expense is accounted in accordance with AS 22 - "Accounting for taxes on Income" which includes current taxes and deferred taxes. Current tax is net of Minimum Alternative Tax [MAT] credit entitlement, which is recognized when there is convincing evidence that the Company will pay normal income tax during the specified period credit set off is allowed under the Income-tax Act.
Deferred taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available.
Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the Balance Sheet date.
19) Intangible Assets
(i) General
a) Intangible assets are stated at cost less accumulated amortization.
b) Computer software being intangible asset is amortized over a period of four years.
c) Expenditure incurred which provides future economic benefits to the enterprise but no intangible asset or other asset is acquired or created, has been expensed as and when it is incurred.
(ii) Research and Development
a) Expenditure relating to capital items are treated as fixed assets and depreciated at applicable rates.
b) Other expenditure on Research is recognized as an expense under respective natural heads, as and when incurred.
20) Impairment of Assets
The Company determines the Impairment of Assets based on Cash Generating Units. For this purpose, the Cash Generating Units have been based on segments of operations, viz., ''Paper & Pulp'' ''Energy'' and Cement. The impairment loss will be provided if the carrying amount exceeds recoverable amount.
21) Provisions, Contingent Liabilities and Contingent Assets
a) A present obligation, which could be reliably estimated, is provided for in the accounts, if it is probable that an outflow of resources embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance Sheet.
c) Contingent Assets are neither recognized nor disclosed.
22) Accounting of Derivative Financial Instruments
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm future commitments and probable forecast transactions. The Company designates these hedging instruments as cash flow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 "Financial Instruments : Recognition and measurement" (AS - 30).
Hedging instruments are initially measured at fair value, and are premeasured at subsequent reporting dates. Changes in the fair value of these derivatives that are designated and effective as hedges of future cash flows are recognized directly in hedge reserve account and the ineffective portion is recognized immediately in Statement of profit and loss.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in Statement of profit and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in hedge reserve account is transferred to Statement of profit and loss.
The gain / loss on the hedging instrument in respect of a probable forecast transaction / firm future commitment in respect of a non financial asset / liability is recognized in the hedge reserve account. Upon the probable forecast transaction / firm future commitment subsequently resulting in the recognition of a non financial asset / liability, the associated gain / loss recognized in the hedge reserve account is transferred to the initial cost / carrying cost of the non financial asset / liability.
Mar 31, 2015
Disclosure of Accounting Policies
Basis of Preparation of Financial Statements
The financial statements have been prepared using historical cost
convention and on the basis of going concern, with revenues recognised,
expenses accounted on accrual basis, unless otherwise stated and in
accordance with generally accepted accounting principles in India
[Indian GAAP] and Accounting Standards notified under Section 133 of
the Companies Act, 2013 read with Rule 7 of the Companies [Accounts]
Rules, 2014.
Use of Estimates:
The preparation of financial statements requires management to make
judgments, estimates and assumptions of some of the reported amounts of
assets and liabilities, the disclosure of contingent assets and
liabilities on the date of the financial statements and amounts of
revenues and expenses during the period reported. However any revision
to accounting estimates or difference between the actual results and
estimates are recognized prospectively in the period in which the
results are known / materialised
Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at
cost or net realisable value, whichever is lower. Cost represents all
cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. Cost
for the purpose of valuation is determined by using the weighted
average cost, net of taxes and duties eligible for credit, except note
books where stocks are valued at lower of cost and net realisable value
on FIFO Basis.
b) Wood from captive plantation is valued at cost (incurred till date
of felling) or market price whichever is less. Standing Crops are
valued at the total amount of expenditure incurred (including land
development expenditure), adjusted for failed plantation costs and
incidental revenue realized.
c) Bagasse consumption value and stock is valued at weighted average
cost, net of taxes and duties eligible for credit.
d) Work-in-Process
Paper in process is valued at cost which includes cost of inputs, net
of taxes and duties eligible for credit and overheads upto the stage of
completion.
e) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
Net Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies
Extra-ordinary Items, and Prior Period Incomes and Expenditures, are
accounted in accordance with Accounting Standard 5.
Depreciation Accounting
a) Depreciation on tangible and intangible assets is charged over the
useful life of the assets in straight line method in accordance with
Schedule II to the Companies Act, 2013.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / upto the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual life of the parent asset from
the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery,
Depreciation has been provided prospectively over the residual useful
life of the parent asset from the beginning of the year in which such
addition is made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is charged over the useful
life of the assets in straight line method in accordance with Schedule
II to the Companies Act, 2013.
d) In respect of modernisation programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is charged over the useful
life of the assets in straight line method in accordance with Schedule
II to the Companies Act, 2013, considering the continued arrangement
for procurement of bagasse from sugar mills.
Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment / realisation of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realised) / Liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
Statement of profit and loss unless the delay has resulted in extra
cost of assets, in which case the same are adjusted towards the
carrying cost of the respective asset.
d) Clean Development Mechanism [CDM] benefits are recognized in the
Statement of profit and loss upon issue of Certified Emission Reduction
[CER] by the Executive Board of CDM and Execution of Emission Reduction
Purchase Agreement with the Buyer.
e) Renewable Energy Certificate (REC) benefits are recognized in the
statement of Profit and Loss on sale of REC's.
f) Dividend from investments is recognized when the right to receive
the payment is established.
Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalised net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalised with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalised with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset.
Capital Work-in-Progress
Cost of assets (net of taxes and duties eligible for credit) not put to
use before the year-end are disclosed under Capital Work-in-Progress.
In respect of identified projects, expenditure incurred during
construction period net of related income is included under capital
work in progress and the same is allocated to the respective fixed
assets that are capitalised.
Assets are capitalised when they are ready for use / put to use.
Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as current assets and current
liabilities are initially recognized at the exchange rate on the date
of the transaction. These items are reported at the closing rate on the
balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, a forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortised as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences other than those covered under para(g) arising
on reporting the above items at rates different from which they were
initially recorded during the period or reported in the previous
financial statements are recognized as income / expenditure in the
Statement of Profit and Loss.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
g) Pursuant to insertion of paragraph 46A in Accounting Standard - 11
(AS-11) by the Companies (Accounting Standard) (Second Amendment)
Rules, 2011 vide Notification GSR 913(E) & Notification No.GSR 914(E)
dated 29-12-2011, issued by the Ministry of Corporate Affairs,
Government of India, the Company has exercised the option of
capitalizing the exchange difference on Long Term Foreign Currency
Loans in relation to depreciable fixed assets / Capital
Work-in-Progress with effect from 01-04-2011.
Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and other Capital Grants are
treated as Capital Reserve.
Government grants relating to revenue are recognised on accrual and are
shown under other income. Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognise a decline other than a temporary, in the value of
long-term investments. Decline in the value of long-term investments is
determined initially ten years from the date of its purchase and
thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value.
Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Statement of Profit and Loss in the year in which the related
service is rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre-determined
rates to a separate irrevocable trust approved by the Commissioner of
Income Tax, which invests the fund in permitted securities. The
contribution to the fund for the period is recognised as expenses and
is charged to Statement of Profit and Loss. While the obligation to the
Company is limited to such fixed contribution, as per the rules of
Employee's Provident Fund (EPF) any deficiency in the rate of interest
on the contribution based on its return on investment as compared to
the rate declared for Employees Provident Fund by the Government under
para 60 of the Employees Provident Fund Act is to be met by the
Company. Also as per the rules, any deficiency in the fair value of
plan assets backing the Provident Fund accumulations compared to the
amount of such accumulations is to be met by the company.
ii) Gratuity and long term compensated absence:
Liabilities in respect of defined benefit plan in the form of gratuity
and Long term compensated absences are determined based on actuarial
valuation made by an independent actuary using projected unit credit
method as at the balance sheet date and are unfunded.
c) Defined Contribution
Defined contributions towards retirement benefits in the form of
Pension and Superannuation Fund for the year are charged to Statement
of Profit and Loss.
Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up
to the date the asset is ready for use / put to use. All other
borrowing costs are charged to revenue.
Segment Reporting
a) The company has identified business segments viz. Paper, Energy and
Cement. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment
Reporting by treating sales in India and foreign currency as reportable
geographical segments.
Related Party Transactions
Remuneration to Key Managerial Personnel, other than Independent
Non-executive Directors, is disclosed as 'Related Party Transactions'
in the Notes to Accounts.
Leases
Rentals are expensed with reference to lease terms and other
considerations.
Earnings per Share
a) Basic Earnings per share is computed with reference to the Weighted
Average number of Shares, based on monthly rests.
b) Diluted Earnings per share is computed based on fully paid-up value
of the Shares issued, as if Calls-in-Arrears has been received.
Accounting for Taxes on Income
Income-tax expense is accounted in accordance with AS 22 - "Accounting
for taxes on Income" which includes current taxes and deferred taxes.
Current tax is net of Minimum Alternative Tax [MAT] credit entitlement,
which is recognised when there is convincing evidence that the Company
will pay normal income tax during the specified period credit set off
is allowed under the Income-tax Act.
Deferred taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available.
Deferred tax assets and liabilities are measured using the tax rates
and tax law that have been enacted or substantively enacted by the
Balance Sheet date.
Intangible Assets General:
a) Intangible assets are stated at cost less accumulated amortisation.
b) Computer software being intangible asset is amortised over a period
of four years.
Research and Development:
a) Expenditure relating to capital items are treated as fixed assets
and depreciated at applicable rates.
b) Other expenditure on Research is recognised as an expense under
respective natural heads, as and when incurred.
Impairment of Assets
The Company determines the Impairment of Assets based on Cash
Generating Units. For this purpose, the Cash Generating Units have been
based on segments of operations, viz., 'Paper & Pulp', 'Energy' and
'Cement'. The impairment loss will be provided if the carrying amount
exceeds recoverable amount.
Provisions, Contingent Liabilities and Contingent Assets
a) A present obligation, which could be reliably estimated, is provided
for in the accounts, if it is probable that an outflow of resources
embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance
Sheet.
c) Contingent Assets are neither recognised nor disclosed.
Accounting of Derivative Financial Instruments
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to certain firm
future commitments and probable forecast transactions. The Company
designates these hedging instruments as cash flow hedges applying the
recognition and measurement principles set out in the Accounting
Standard 30 "Financial Instruments : Recognition and measurement" (AS -
30).
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognized directly in hedge reserve account and the
ineffective portion is recognized immediately in Statement of profit
and loss.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognized in Statement of profit
and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognized in hedge reserve account is
transferred to Statement of profit and loss.
The gain / loss on the hedging instrument in respect of a probable
forecast transaction / firm future commitment in respect of a non
financial asset / liability is recognized in the hedge reserve account.
Upon the probable forecast transaction / firm future commitment
subsequently resulting in the recognition of a non financial asset /
liability, the associated gain / loss recognized in the hedge reserve
account is transferred to the initial cost / carrying cost of the non
financial asset / liability.
Mar 31, 2014
AS - 1 Disclosure of Accounting Policies
The accounts have been prepared using historical cost convention and on
the basis of going concern, with revenues recognised, expenses
accounted on accrual basis, unless otherwise stated and in accordance
with applicable accounting standards.
Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions of some of the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities on the
date of the financial statements and amounts of revenues and expenses
during the period reported.
AS - 2 Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at
cost or net realisable value, whichever is lower. Cost represents all
cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. Cost
for the purpose of valuation is determined by using the weighted
average cost, net of taxes and duties eligible for credit, except note
books where stocks are valued at lower of cost and net realisable value
on FIFO Basis.
b) Wood from captive plantation is valued at cost (incurred till date
of felling) or market price whichever is less. Standing C rops are
valued at the total amount of expenditure incurred (including land
development expenditure), adjusted for failed plantation costs and
incidental revenue realized.
c) Bagasse consumption value and stock is valued at weighted average
cost, net of taxes and duties eligible for credit.
d) Work-in-Process
Paper in process is valued at cost which includes cost of inputs, net
of taxes and duties eligible for credit and overheads upto the stage of
completion.
e) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
AS - 3 Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
AS - 4 Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
AS - 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies
Extra-ordinary Items, and Prior Period Incomes and Expenditures, are
accounted in accordance with Accounting Standard 5.
AS - 6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / upto the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual life of the parent asset from
the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery,
Depreciation has been provided prospectively over the residual useful
life of the parent asset from the beginning of the year in which such
addition is made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is provided on straight
line basis at the rates and in the manner provided in Schedule XIV to
the Companies Act, 1956.
d) In respect of modernisation programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is provided on
straight-line basis at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 considering the continued
arrangement for procurement of bagasse from sugar mills.
AS - 9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment /realisation of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realised) / Liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
Statement of profit and loss unless the delay has resulted in extra
cost of assets, in which case the same are adjusted towards the
carrying cost of the respective asset.
d) CDM benefits are recognized in the Statement of profit and loss upon
issue of CER by the Executive Board of CDM and Execution of Emission
Reduction Purchase Agreement with the Buyer.
e) Renewable Energy Certificate (REC) benefits are recognized in the
statement of Profit and Loss on sale of REC''s.
AS - 10 Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalised net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalised with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalised with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset.
Capital Work-in-Progress
Cost of assets (net of taxes and duties eligible for credit) not put to
use before the year-end are disclosed under Capital Work-in-Progress.
In respect of identified projects, expenditure during construction
period net of related income is included under capital work in progress
and the same is allocated to the respective fixed assets that are
capitalised.
Assets are capitalised when they are ready for use / put to use.
AS - 11 Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as current assets and current
liabilities are initially recognized at the exchange rate on the date
of the transaction. These items are reported at the closing rate on the
balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortised as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences other than those covered under para(g) arising
on reporting the above items at rates different from which they were
initially recorded during the period or reported in the previous
financial statements are recognized as income / expenditure in the
Statement of Profit and Loss.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
g) Pursuant to insertion of paragraph 46A in Accounting Standard - 11
(AS-11) by the Companies (Accounting Standard) (Second Amendment)
Rules, 2011 vide Notification GSR 913(E) & Notification No.GSR 914(E)
dated 29-12-2011, issued by the Ministry of Corporate Affairs,
Government of India, the Company has exercised the option of
capitalizing the exchange difference on Long Term Foreign Currency
Loans in relation to depreciable fixed assets / Capital
Work-in-Progress with effect from 01-04-2011.
AS - 12 Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and other Capital Grants are
treated as Capital Reserve.
Government grants relating to revenue are recognised on accrual and are
shown under other income.
AS - 13 Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognise a decline other than a temporary, in the value of
long-term investments. Decline in the value of long-term investments is
determined initially ten years from the date of its purchase and
thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value.
AS - 15 Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Statement of Profit and Loss in the year in which the related
service is rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre -
determined rates to a separate irrevocable trust approved by the
Commissioner of Income Tax, which invests the fund in permitted
securities. The contribution to the fund for the period is recognised
as expenses and is charged to Statement of Profit and Loss. While the
obligation to the Company is limited to such fixed contribution, as per
the rules of Employee''s Provident Fund (EPF) any deficiency in the rate
of interest on the contribution based on its return on investment as
compared to the rate declared for Employees Provident Fund by the
Government under para 60 of the Employees Provident Fund Act is to be
met by the Company. Also as per the rules, any deficiency in the fair
value of plan assets backing the Provident Fund accumulations compared
to the amount of such accumulations is to be met by the company.
ii) Gratuity and long term compensated absence:
Liabilities in respect of defined benefit plan in the form of gratuity
and Long term compensated absences are determined based on actuarial
valuation made by an independent actuary using projected unit credit
method as at the balance sheet date and are unfunded.
c) Defined Contribution
Defined contributions towards retirement benefits in the form of
Pension and Superannuation Fund for the year are charged to Statement
of Profit and Loss.
AS - 16 Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up
to the date the asset is ready for use / put to use. All other
borrowing costs are charged to revenue.
AS - 17 Segment Reporting
a) The company has identified business segments viz. Paper, Energy and
Cement. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment
Reporting by treating sales in India and foreign currency as reportable
geographical segments.
AS - 18 Related Party Transactions
Remuneration to Key Managerial Personnel, other than Independent
Non-executive Directors, is disclosed as ''Related Party Transactions''
in the Notes to Accounts.
AS - 19 Leases
Rentals are expensed with reference to lease terms and other
considerations.
AS - 20 Earnings per Share
a) Basic Earnings per share is computed with reference to the Weighted
Average number of Shares, based on monthly rests.
b) Diluted Earnings per share is computed based on fully paid-up value
of the Shares issued, as if Calls-in-Arrears has been received.
AS - 22 Accounting for Taxes on Income
Income-tax expense is accounted in accordance with AS 22 - "Accounting
for taxes on Income" which includes current taxes and deferred taxes.
Deferred taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available.
AS - 26 Intangible Assets
General:
a) Intangible assets are stated at cost less accumulated amortisation.
b) Computer software being intangible asset is amortised over a period
of four years.
Research and Development:
a) Expenditure relating to capital items are treated as fixed assets
and depreciated at applicable rates.
b) Other expenditure on Research is recognised as an expense under
respective natural heads, as and when incurred.
AS - 28 Impairment of Assets
The Company determines the Impairment of Assets based on Cash
Generating Units. For this purpose, the Cash Generating Units have been
based on segments of operations, viz., ''Paper & Pulp'', ''Energy'' and
''Cement''. The impairment loss will be provided if the carrying amount
exceeds recoverable amount.
AS - 29 Provisions, Contingent Liabilities and Contingent Assets
a) A present obligation, which could be reliably estimated, is provided
for in the accounts, if it is probable that an outflow of resources
embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance
Sheet.
c) Contingent Assets are neither recognised nor disclosed.
AS - 30 Accounting of Derivative Financial Instruments
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to certain firm
commitments and forecast transactions. The Company designates these
hedging instruments as cash flow hedges applying the recognition and
measurement principles set out in the Accounting Standard 30 "Financial
Instruments : Recognition and measurement" (AS - 30).
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognized directly in hedge reserve account and the
ineffective portion is recognized immediately in Statement of profit
and loss.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognized in Statement of profit
and loss as they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognized in hedge reserve account is
transferred to Statement of profit and loss.
The gain / loss on the hedging instrument in respect of a forecasted
transaction / firm commitment in respect of a non financial asset /
liability is recognized in the hedge reserve account. Upon the forecast
transaction / firm commitment subsequently resulting in the recognition
of a non financial asset / liability, the associated gain / loss
recognized in the hedge reserve account is transferred to the initial
cost / carrying cost of the non financial asset / liability.
b) Accounting Standard Disclosures:
i) AS - 15 - Employee Benefit
a) The fair value of the assets of the provident fund trust including
the return on the assets thereof, as on the balance sheet date is
greater than the obligations under the defined contribution plan, as
determined by the actuary and requires no further charge to Statement
of profit and loss.
b) Other Defined Benefits
iv) IMPAIRMENT OF ASSETS (AS 28):
The "recoverable amount" is higher than the "carrying amount" of the
cash generating units and hence there is no impairment of losses under
AS - 28
III) GENERAL
a) Figures for the previous year have been regrouped/restated/
reclassified wherever necessary to conform to current year''s
classification.
b) Amounts have been rounded off to the nearest two decimal points of
lakh of rupees.
Mar 31, 2013
AS -1 Disclosure of Accounting Policies
The accounts have been prepared using historical cost convention and on
the basis of going concern, with revenues recognised, expenses
accounted on accrual basis, unless otherwise stated and in accordance
with applicable accounting standards.
Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions of some of the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities on the
date of the financial statements and amounts of revenues and expenses
during the period reported.
AS - 2 Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at
cost or net realisable value, whichever is lower. Cost represents all
cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. Cost
for the purpose of valuation is determined by using the weighted
average cost, net of taxes and duties eligible for credit, except note
books where stocks are valued at lower of cost and net realisable value
on FIFO Basis:
b) Wood from captive plantation is valued at cost (incurred till date
of felling) or market price whichever is less. Standing Crops are
valued at the total amount of expenditure incurred (including land
development expenditure), adjusted for failed plantation costs and
incidental revenue realized.
c) Bagasse consumption value and stock is valued at weighted average
cost, net of taxes and duties eligible for credit.
d) Work-in-Process
Paper in process is valued at cost which includes cost of inputs, net
of taxes and duties eligible for credit and overheads upto the stage of
completion.
e) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
AS - 3 Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
AS - 4 Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
AS - 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies
Significant items of Extra-ordinary Items, and Prior Period Incomes and
Expenditures, are accounted in accordance with Accounting Standard 5.
AS - 6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / upto the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual life of the parent asset from
the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery,
Depreciation has been provided prospectively over the residual useful
life of the parent asset from the beginning of the year in which such
addition is made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is provided on straight
line basis at the rates and in the manner provided in Schedule XIV to
the Companies Act, 1956.
d) In respect of modernisation programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is provided on
straight-line basis at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 considering the continued
arrangement for procurement of bagasse from sugar mills.
AS - 9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment /realisation of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realised) / Liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
Statement of profit and loss unless the delay has resulted in extra
cost of assets, in which case the same are adjusted towards the
carrying cost of the respective asset.
d) CDM benefits are recognized in the Statement of profit and loss upon
issue of CER by the Executive Board of CDM and Execution of Emission
Reduction Purchase Agreement with the Buyer.
e) Renewable Energy Certificate (REC) benefits are recognized in the
statement of Profit and Loss on sale of REC''s.
AS-10 Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalised net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalised with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalised with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset.
Capital Work-in-Progress
Cost of assets (net of taxes and duties eligible for credit) not put to
use before the year-end are disclosed under Capital Work-in-Progress.
In respect of identified projects, expenditure during construction
period net of related income is included under capital work in progress
and the same is allocated to the respective fixed assets that are
capitalised.
Assets are capitalised when they are ready for use / put to use.
AS -11 Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as current assets and current
liabilities are initially recognized at the exchange rate on the date
of the transaction. These items are reported at the closing rate on the
balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, a forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortised as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences arising on reporting the above items at rates
different from which they were initially recorded during the period or
reported in the previous financial statements are recognized as income
/ expenditure in the Statement of Profit and Loss.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
g) Pursuant to insertion of paragraph 46A in Accounting Standard - 11
(AS-11) by the Companies (Accounting Standard) (Second Amendment)
Rules, 2011 vide Notification GSR 913(E) & Notification No.GSR 914(E)
dated 29-12-2011, issued by the Ministry of Corporate Affairs,
Government of India, the Company has exercised the option of
capitalizing the exchange difference on Long Term Foreign Currency
Loans in relation to depreciable fixed assets with effect from
01-04-2011.
AS -12 Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and other Capital Grants are
treated as Capital Reserve.
Government grants relating to revenue are recognised on accrual and are
shown under other income.
AS-13 Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognise a decline other than a temporary, in the value of
long-term investments. Decline in the value of long-term investments is
determined initially ten years from the date of its purchase and
thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value. AS -15 Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Statement of Profit and Loss in the year in which the related
service is rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre -
determined rates to a separate irrevocable trust approved by the
Commissioner of Income Tax, which invests the fund in permitted
securities. The contribution to the fund for the period is recognised
as expenses and is charged to Statement of Profit and Loss. While the
obligation to the Company is limited to such fixed contribution, as per
the rules of Employee''s Provident Fund (EPF) any deficiency in the rate
of interest on the contribution based on its return on investment as
compared to the rate declared for Employees Provident Fund by the
Government under para 60 of the Employees Provident Fund Act is to be
met by the Company. Also as per the rules, any deficiency in the fair
value of plan assets backing the Provident Fund accumulations compared
to the amount of such accumulations is to be met by the company.
ii) Gratuity and long term compensated absence:
Liabilities in respect of defined benefit plan in the form of gratuity
and Long term compensated absences are determined based on actuarial
valuation made by an independent actuary using projected unit credit
method as at the balance sheet date and are unfunded.
C) Defined Contribution
Defined contributions towards retirement benefits in the form of
Pension and Superannuation Fund for the year are charged to Statement
of Profit and Loss.
AS -16 Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up
to the date the asset is ready for use / put to use. All other
borrowing costs are charged to revenue.
AS - 17 Segment Reporting
a) The company has identified two business segments viz. Paper and
Energy. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment
Reporting by treating sales in India and foreign currency as reportable
geographical segments.
Mar 31, 2012
AS - 1 Disclosure of Accounting Policies
The accounts have been prepared using historical cost convention and on
the basis of going concern, with revenues recognized, expenses
accounted on accrual basis, unless otherwise stated and in accordance
with applicable accounting standards.
Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions of some of the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities on the
date of the financial statements and amounts of revenues and expenses
during the period reported.
AS - 2 Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at
cost or net realizable value, whichever is lower. Cost represents all
cost of purchase, cost of conversion and other costs incurred in
bringing the inventories to their present location and condition. Cost
for the purpose of valuation is determined by using the weighted
average cost, net of taxes and duties eligible for credit, except note
books where stocks are valued at lower of cost and net realizable value
on FIFO Basis.
b) Wood from captive plantation is valued at cost (incurred till date
of felling) or market price whichever is less. Standing Crops are
valued at the total amount of expenditure incurred (including land
development expenditure), adjusted for failed plantation costs and
incidental revenue realized.
c) Bagasse consumption value and stock is valued at weighted average
cost, net of taxes and duties eligible for credit.
d) Work-in-Process
Paper in process is valued at cost which includes cost of inputs, net
of taxes and duties eligible for credit and overheads upto the stage of
completion.
e) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
AS - 3 Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
AS - 4 Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
AS - 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies
Significant items of Extra-ordinary Items, and Prior Period Incomes and
Expenditures, are accounted in accordance with Accounting Standard 5.
AS - 6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / up to the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual life of the parent asset from
the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery,
Depreciation has been provided prospectively over the residual useful
life of the parent asset from the beginning of the year in which such
addition is made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is provided on straight
line basis at the rates and in the manner provided in Schedule XIV to
the Companies Act, 1956.
d) In respect of modernization programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is provided on
straight-line basis at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 considering the continued
arrangement for procurement of bagasse from sugar mills.
AS - 9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognized in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment /realization of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realized) / Liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
Statement of profit and loss unless the delay has resulted in extra
cost of assets, in which case the same are adjusted towards the
carrying cost of the respective asset.
d) CDM benefits are recognized in the Statement of profit and loss upon
issue of CER by the Executive Board of CDM and Execution of Emission
Reduction Purchase Agreement with the Buyer.
e) Renewable Energy Certificate (REC) benefits are recognized in the
statement of Profit and Loss on sale of REC's. Renewable Energy
Purchase Obligation (RPO) provision is recognized as per Tamil Nadu
Electricity Regulatory Commission (RPO) (Amendment) Regulations, 2011
at Floor Price in the respective financial year on accrual basis.
AS -10 Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalized net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalized with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalized with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset.
Capital Work-in-Progress
Cost of assets (net of taxes and duties eligible for credit) not put to
use before the year-end are disclosed
under Capital Work-in-Progress.
In respect of identified projects, expenditure during construction
period net of related income is included under
capital work in progress and the same is allocated to the respective
fixed assets that are capitalized.
Assets are capitalized when they are ready for use / put to use.
AS -11 Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as current assets and current
liabilities are initially recognized at the exchange rate on the date
of the transaction. These items are reported at the closing rate on the
balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortized as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences arising on reporting the above items at rates
different from which they were initially recorded during the period or
reported in the previous financial statements are recognized as income
/ expenditure in the Statement of Profit and Loss.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
g) Pursuant to insertion of paragraph 46A in Accounting Standard - 11
(AS-11) by the Companies (Accounting Standard) (Second Amendment)
Rules, 2011 vide Notification GSR 913(E) & Notification No.GSR 914(E)
dated 29-12-2011, issued by the Ministry of Corporate Affairs,
Government of India, the Company has exercised the option of
capitalizing the exchange difference on Long Term Foreign Currency
Loans in relation to depreciable fixed assets with effect from
01-04-2011.
AS -12 Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and other Capital Grants are
treated as Capital Reserve.
Government grants relating to revenue are recognized on accrual and are
shown under other income.
AS -13 Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognize a decline other than a temporary, in the value of
long-term investments. Decline in the value of long-term investments is
determined initially ten years from the date of its purchase and
thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value.
AS-15 Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Statement of Profit and Loss in the year in which the related
service is rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre -
determined rates to a separate irrevocable trust approved by the
Commissioner of Income Tax, which invests the fund in permitted
securities. The contribution to the fund for the period is recognized
as expenses and is charged to Statement of Profit and Loss. While the
obligation to the Company is limited to such fixed contribution, as per
the rules of Employee's Provident Fund (EPF) any deficiency in the rate
b) Accounting Standard Disclosures:
i) AS 15 - Employee Benefit
a) The fair value of the asset of the provident fund trust including
the return on the assets thereof, as on the balance sheet date is
greater than the obligations under the defined contribution plan, as
determined by the actuary and requires no further charge to Statement
of profit and loss.
b) Other Defined Benefits
iii) Impairment Of Assets (AS 28):
The "recoverable amount" is higher than the "carrying amount" of the
cash generating units and hence there is no impairment of losses under
AS - 28.
III GENERAL
a) Figures for the previous year have been
regrouped/restated/reclassified wherever necessary to conform to
current year's classification.
b) Amounts have been rounded off to the nearest two decimal points of
lakh of rupees.
Mar 31, 2011
AS-1 Disclosure of Accounting Policies
The accounts have been prepared using historical cost convention and on
the basis of going concern, with revenues recognised, expenses
accounted on accrual basis, unless otherwise stated and in accordance
with applicable accounting standards.
Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions of some of the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities on the
date of the financial statements and amounts of revenues and expenses
during the period reported.
Captive Plantations
Standing Crops are valued at the total amount of expenditure incurred
(including land development expenditure), adjusted for failed
plantation costs and incidental revenue realised.
AS-2 Valuation of Inventories
a) Inventories excluding wood from captive plantation are valued at
cost or net realisable value, whichever is lower. Cost for the purpose
of valuation is determined by using the weighted average cost, net of
taxes and duties eligible for credit, except note books where stocks
are valued at lower of cost and net realisable value on FIFO Basis.
b) Wood from captive plantation is valued at cost (incurred till date
of felling) or market price whichever is less.
c) Non Moving Stores & Spares.
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
AS-3 Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
AS-4 Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
AS-5 Net Profit or Loss for the Period, Prior Period Items and Changes
in Accounting Policies
Significant items of Extra-ordinary Items, and Prior Period Incomes and
Expenditures, are accounted in accordance with Accounting Standard 5.
AS-6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / upto the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below: -
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual life of the parent asset from
the beginning of the year in which such additions are made.
ii) In respect of additions to existing Plant and Machinery,
Depreciation has been provided prospectively over the residual useful
life of the parent asset from the beginning of the year in which such
addition is made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is provided on straight
line basis at the rates and in the manner provided in Schedule XIV to
the Companies Act, 1956.
d) In respect of modernisation programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is provided on
straight-line basis at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 considering the continued
arrangement for procurement of bagasse from sugar mills.
AS-9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment /realisation of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realised) / Liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
profit and loss account unless the delay has resulted in extra cost of
assets, in which case the same are adjusted towards the carrying cost
of the respective asset.
d) CDM benefits are recognized in the profit and loss account upon
issue of CER by the Executive Board of CDM and Execution of Emission
Reduction Purchase Agreement with the Buyer.
AS-10 Accounting for Fixed Assets
Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalised net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalised with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalised with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset.
Capital Work-in-Progress
Advances paid for acquisition of fixed assets and cost of assets (net
of taxes and duties eligible for credit) not put to use before the
year-end are disclosed under Capital Work-in-Progress.
In respect of identified projects, expenditure during construction
period net of related income is included under capital work in progress
and the same is allocated to the respective fixed assets that are
capitalised.
Assets are capitalised when they are ready for use / put to use.
AS-11 Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as loans, current assets and
current liabilities are initially recognized at the exchange rate on
the date of the transaction. These items are reported at the closing
rate on the balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, a forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortised as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences arising on reporting the above items at rates
different from which they were initially recorded during the period or
reported in the previous financial statements are recognized as income
/ expenditure in the Profit & Loss Account.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
AS-12 Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and other Capital Grants are
treated as Capital Reserve.
Government grants relating to revenue are recognised on accrual and are
shown under other income.
AS-13 Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognise a decline other than a temporary, in the value of
long-term investments. Decline in the value of long-term investments is
determined initially ten years from the date of its purchase and
thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value. AS-15 Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Profit and Loss Account in the year in which the related service is
rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre -
determined rates to a separate irrevocable trust approved by the
Commissioner of Income Tax, which invests the fund in permitted
securities. The contribution to the fund for the period is recognised
as expenses and is charged to Profit and Loss Account. While the
obligation to the Company is limited to such fixed contribution, as per
the rules of Employees' Provident Fund (EPF) any deficiency in the rate
of interest on the contribution based on its return on investment as
compared to the rate declared for Employees' Provident Fund by the
Government under para 60 of the Employees' Provident Fund Act is to be
met by the Company. Also as per the rules, any deficiency in the fair
value of plan assets backing the Provident Fund accumulations compared
to the amount of such accumulations is to be met by the company.
ii) Gratuity, Employee benefit Scheme and long term compensated
absence:
Liabilities in respect of defined benefit plan in the form of gratuity,
Long term compensated balances and employee benefit scheme are
determined based on actuarial valuation made by an independent actuary
using projected unit credit method as at the balance sheet date and are
unfunded.
c) Defined Contribution
Defined contributions towards retirement benefits in the form of
Pension and Superannuation Fund for the year are charged to Profit and
Loss Account.
AS-16 Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up
to the date the asset is ready for use / put to use. All other
borrowing costs are charged to revenue.
AS-17 Segment Reporting
a) The company has identified two business segments viz. Paper and
Energy. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment
Reporting by treating sales in India and foreign currency as reportable
geographical segments.
AS-18 Related Party Transactions
Remuneration to Key Managerial Personnel, other than Independent
Non-executive Directors, is disclosed as 'Related Party Transactions'
in the Notes to Accounts.
AS-19 Leases
Rentals are expensed with reference to lease terms and other
considerations. AS-20 Earnings per Share
a) Basic Earnings per share is computed with reference to the Weighted
Average number of Shares, based on monthly rests.
b) Diluted Earnings per share is computed based on fully paid-up value
of the Shares issued, as if Calls-in- Arrears has been received.
AS-22 Accounting for Taxes on Income
Income-tax expense is accounted in accordance with AS 22 - "Accounting
for taxes on Income" which includes current taxes and deferred taxes.
Deferred taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available.
AS-26 Intangible Assets
General:
a) Intangible assets are stated at cost less accumulated amortisation.
b) Computer software being intangible asset is amortised over a period
of four years. Research and Development:
a) Expenditure relating to capital items are treated as fixed assets
and depreciated at applicable rates.
b) Expenditure on Research is recognised as an expense under respective
natural heads, as and when incurred.
AS-28 Impairment of Assets
The Company determines the Impairment of Assets based on Cash
Generating Units. For this purpose, the Cash Generating Units have been
based on segments of operations, viz., 'Paper & Pulp' and 'Energy'. The
impairment loss will be provided if the carrying amount exceeds
recoverable amount.
AS-29 Provisions, Contingent Liabilities and Contingent Assets
a) A present obligation, which could be reliably estimated, is provided
for in the accounts, if it is probable that an outflow of resources
embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance
Sheet.
c) Contingent Assets are neither recognised nor disclosed.
AS-30 Accounting of Derivative Financial Instruments
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to certain firm
commitments and forecast transactions. The Company designates these
hedging instruments as cash flow hedges applying the recognition and
measurement principles set out in the Accounting Standard 30 "Financial
Instruments : Recognition and measurement" (AS - 30).
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognized directly in hedge reserve account and the
ineffective portion is recognized immediately in profit and loss
account.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognized in profit and loss
account as they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognized in hedge reserve account is
transferred to profit and loss account for the period.
The gain / loss on the hedging instrument in respect of a forecasted
transaction / firm commitment in respect of a non financial asset /
liability is recognized in the hedge reserve account. Upon the forecast
transaction / firm commitment subsequently resulting in the recognition
of a non financial asset / liability, the associated gain / loss
recognized in the hedge reserve account is transferred to the initial
cost / carrying cost of the non financial asset / liability.
Premium on forward exchange contracts designated as hedging instruments
is amortized as expense/income or adjustment to initial carrying cost
of the hedged item over the life of the contract.
Mar 31, 2010
AS - 1 Disclosure of Accounting Policies
The accounts have been prepared using historical cost convention and on
the basis of going concern, with revenues recognised, expenses
accounted on accrual basis, unless otherwise stated and in accordance
with applicable accounting standards.
Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions of some of the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities on the
date of the financial statements and amounts of revenues and expenses
during the period reported. Actual amounts could differ from these
estimates.
Captive Plantations
Standing Crops are valued at the total amount of expenditure incurred
(including land development expenditure), adjusted for failed
plantation costs and incidental revenue realised.
AS - 2 Valuation of Inventories
a) Inventories are valued at cost or net realisable value, whichever is
lower. Cost for the purpose of valuation is determined by using the
weighted average cost, net of taxes and duties eligible for credit,
except note books where stocks are valued at lower of cost and net
realisable value on FIFO Basis:
b) Non Moving Stores & Spares
Stores and spares not drawn for use for more than three years as at the
end of the year are charged to revenue. Such stores and spares are
carried at nil value in the books and in the year of issue, charged to
revenue at nil value.
AS - 3 Cash Flow Statements
Cash Flow Statement has been prepared under Indirect Method. Cash and
Cash Equivalents comprise Cash in Hand, Current and Other Accounts
(including Fixed Deposits) held with Banks.
AS - 4 Events occurring after the Balance Sheet Date
a) Assets and Liabilities are adjusted for events occurring after the
balance sheet date that provide additional evidence to assist the
estimation of amounts relating to conditions existing at the balance
sheet date.
b) Dividends, which are proposed / declared by the Company after the
Balance Sheet date but before the approval of the Financial Statements,
are adjusted.
AS - 5 Net Profit or Loss for the Period, Prior Period Items and
Changes in Accounting Policies
Significant items of Extra-ordinary Items, and Prior Period Income and
Expenditure, are accounted in accordance with Accounting Standard 5.
AS - 6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at
the rates and in the manner prescribed in Schedule XIV to the Companies
Act, 1956.
b) Depreciation on additions / deductions in respect of fixed assets
are charged pro-rata from / upto the date in which the asset is
available for use / disposal
c) Depreciation on addition to assets (which are to supplement the
usage of the parent asset) is provided as detailed below:-
i) In respect of additions to existing Buildings, Depreciation has been
provided prospectively over the residual
life of the parent asset from the beginning of the year in which sueh
additions are made.
ii)In respect of additions to existing Plant and
Machinery, Depreciation has been provided prospectively
over the residual useful life of the parent asset from the beginning
of the year in which such addition is
made.
iii) In respect of rebuild / upgrade of machinery leading to
substantial capacity expansion, depreciation is
provided on straight line basis at the rates and in the manner
provided in Schedule XIV to the Companies
Act, 1956.
d) In respect of modernisation programme leading to replacement of
existing assets, depreciation is provided over the remaining useful
life of the assets getting replaced.
e) In respect of Individual Assets costing less than Rs.5000/-, full
depreciation has been provided in the year of addition.
f) In respect of specific spares
Machinery spares specific to an item of fixed asset costing Rs.3 lakh
and above per individual unit are treated as addition to fixed asset
and depreciation provided over the remaining useful life of the parent
asset. In the year of issue, written down value of such spares are
charged as depreciation. Spares acquired during the year and issued for
use during the year is treated as addition to fixed asset and 100%
depreciation is provided.
g) Pending renewal of agreements with some of the sugar mills,
depreciation on fixed assets at such Offsite is provided on
straight-line basis at the rates and in the manner prescribed in
Schedule XIV to the Companies Act, 1956 considering the continued
arrangement for procurement of bagasse from sugar mills.
AS - 9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, where there are uncertainties
in the ascertainment / realisation of income such as interest from
customers (upon factors such as financial condition of the person from
whom the same is to be realised) / liquidated damages recovered from
suppliers / contractors, the same is not accounted for.
c) Liquidated damages and penalties recovered from
suppliers/contractors, in relation to fixed assets are credited to
profit and loss account unless the delay has resulted in extra cost of
assets, in which case the same are adjusted towards the carrying cost
of the respective asset.
d) CDM benefits are recognized in the profit and loss account upon
issue of CER by the Executive Board of CDM and Execution of Emission
Reduction Purchase Agreement with the Buyer.
AS -10 Accounting for Fixed Assets Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less
accumulated depreciation. Costs attributable to bring the fixed assets
to a working condition are capitalised net of taxes and duties eligible
for credit.
b) Additional compensation for lands acquired from farmers under Land
Acquisition Act, 1894 is capitalised with the cost of the land in the
year of payment based on final award of compensation by appropriate
authority.
c) Operating software is capitalised with the related fixed assets.
d) Machinery spares specific to an item of fixed asset are treated as
addition to fixed asset. Capital Work-in-Progress
Advances paid for acquisition of fixed assets and cost of assets (net
of taxes and duties eligible for credit) not put to use before the
year-end are disclosed under Capital Work-in-Progress.
In respect of identified projects, expenditure during construction
period net of related income is included under capital work in progress
and the same is allocated to the respective fixed assets that are
capitalised.
Assets are capitalised when they are ready for use / put to use.
AS - 11 Accounting for Effects in Foreign Exchange Rates
a) Foreign currency monetary items such as loans, current assets and
current liabilities are initially recognized at the exchange rate on
the date of the transaction. These items are reported at the closing
rate on the balance sheet date.
b) Forward exchange contracts or other financial instruments, that are
in substance, a forward exchange contracts entered into for hedging the
monetary items are initially recognized at the exchange rate on the
date of inception of the Forward Contract. The company does not enter
into any forward contracts for trading or speculative purposes.
c) The Premium or Discount arising at the inception of such a Forward
Contract is amortised as expense or income over the life of the
contract.
d) Forward contracts are reported at the closing rate on the date of
the balance sheet.
e) Exchange differences arising on reporting the above items at rates
different from which they were initially recorded during the period or
reported in the previous financial statements are recognized as income
/ expenditure in the Profit & Loss Account.
f) Contingent liabilities denominated in foreign currency at the
balance sheet date are disclosed using the closing rate.
AS -12 Accounting for Government Grants
Capital Grants relating to specific fixed assets are reduced from the
gross value of the respective fixed assets and
other Capital Grants are treated as Capital Reserve.
Government grants relating to revenue are recognised on accrual and are
shown under other income.
AS -13 Accounting for Investments
a) Long-term investments are valued at cost. Provision, if any, is made
to recognise a decline other than a temporary, in the value of
long-term investments. Permanent decline in the value of long-term
investments is determined initially ten years from the date of its
purchase and thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market
value.
AS - 15 Employee Benefits
a) Short term employee benefits are charged at the undiscounted amount
to Profit and Loss Account in the year in which the related service is
rendered.
b) Defined benefit plan / long term compensated absence
i) Provident Fund
The Company pays fixed contribution to provident fund at pre-determined
rates to a separate irrevocable trust approved by the Commissioner of
Income Tax, which invests the fund in permitted securities. The
contribution to the fund for the period is recognised as expenses and
is charged to Profit and Loss Account. While the obligation to the
Company is limited to such fixed contribution, as per the rules of
Employees Provident Fund (EPF) any deficiency in the rate of interest
on the contribution based on its return on investment as compared to
the rate declared for Employees Provident Fund by the Government under
para 60 of the Employees Provident Fund Act is to be met by the
Company. Also as per the rules, any deficiency in the fair value of
plan assets backing the Provident Fund accumulations compared to the
amount of such accumulations is to be met by the company.
ii) Gratuity, Employee benefit Scheme and long term compensated
absence:
Liabilities in respect of defined benefit plan in the form of gratuity,
Long term compensated balances and employee benefit scheme are
determined based on actuarial valuation made by an independent actuary
using projected credit method as at the balance sheet date and are
unfunded.
c) Defined Contribution
Defined contributions towards retirement benefits in the form of
Pension and Superannuation Fund for the year are charged to Profit and
Loss Account.
AS - 16 Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up
to the date the asset is ready for use / put to use. All other
borrowing costs are charged to revenue.
AS - 17 Segment Reporting
a) The company has identified two business segments viz. Paper and
Energy. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
b) Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
c) Inter segment revenue / expenditure is recognized at cost.
d) Geographical segments have been considered for Secondary Segment
Reporting by treating sales in India and foreign currency as reportable
geographical segments.
AS -18 Related Party Transactions
Remuneration to Key Managerial Personnel, other than Independent
Non-executive Directors, is disclosed as Related Party Transactions
in the Notes to Accounts.
AS -19 Leases
Rentals are expensed with reference to lease terms and other
considerations.
AS - 20 Earnings per Share
a) Basic Earnings per share is computed with reference to the Weighted
Average number of Shares, based on monthly rests.
b) Diluted Earnings per share is computed based on fully paid-up value
of the Shares issued, as if Calls-in-Arrears has been received.
AS - 22 Accounting for Taxes on Income
Income-tax expense is accounted in accordance with AS 22 - "Accounting
for taxes on Income" which includes current taxes and deferred taxes.
Deferred taxes reflect the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available.
AS - 26 Intangible Assets General:
a) Intangible assets are stated at cost less accumulated amortisation.
b) Computer software being intangible asset is amortised over a period
of four years.
Research and Development:
a) Expenditure relating to capital items are treated as fixed assets
and depreciated at applicable rates.
b) Expenditure on Research is recognised as an expense under respective
natural heads, as and when incurred.
- AS - 28 Impairment of Assets
The Company determines the Impairment of Assets based on Cash
Generating Units. For this purpose, the Cash Generating Units have been
based on segments of operations, viz., Paper & Pulp and Energy.
AS - 29 Provisions, Contingent Liabilities and Contingent Assets
a) A present obligation, which could be reliably estimated, is provided
for in the accounts, if it is probable that an outflow of resources
embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance
Sheet.
c) Contingent Assets are neither recognised nor disclosed.
AS - 30 Accounting of Derivative Financial Instruments
The Company uses foreign currency forward contracts to hedge its risks
associated with foreign currency fluctuations relating to certain firm
commitments and forecast transactions. The Company designates these
hedging instruments as cash flow hedges applying the recognition and
measurement principles set out in the Accounting Standard 30 "Financial
Instruments : Recognition and measurement" (AS - 30).
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognized directly in hedge reserve account and the
ineffective portion is recognized immediately in profit and loss
account.
Changes in the fair value of derivative financial instruments that do
not qualify for hedge accounting are recognized in profit and loss
account as they arise.
Hedge accounting is discontinued when the hedging instrument expires or
is sold, terminated, or exercised, or no longer qualifies for hedge
accounting. If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognized in hedge reserve account is
transferred to profit and loss account for the period.
The gain / loss on the hedging instrument in respect of a forecasted
transaction / firm commitment in respect of a non financial asset /
liability is recognized in the hedge reserve account. Upon the forecast
transaction / firm commitment subsequently resulting in the recognition
of a non financial asset / liability, the associated gain / loss
recognized in the hedge reserve account is transferred to the initial
cost / carrying cost of the non financial asset / liability.
Premium on forward exchange contracts designated as hedging instruments
is amortized as expense/income or adjustment to initial carrying cost
of the hedged item over the life of the contract.