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Accounting Policies of Tamil Nadu Newsprint And Papers Ltd. Company

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.

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