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Accounting Policies of TCP Ltd. Company

Mar 31, 2014

1. CORPORATE INFORMATION:

TCP Ltd (the Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on the Madras Stock Exchange, Ahmadabad Stock Exchange and the Delhi Stock Exchange. The Company is engaged in the business of manufacture and sale of Sodium Hydrosulphite, Liquid Sulphur Dioxide and generation and sale of power.

2. BASIS OF PREPARATION:

The financial statements have been prepared in conformity with generally accepted accounting principles to comply in all material respects with the notified Accounting Standards (''AS'') under Companies Accounting Standards Rules, 2006, as amended, the relevant provisions of the Companies Act, 1956 (''the Act''). The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year, except for the change in accounting policy explained below.

Current / Non-current classification of assets / liabilities

The Company has classified all its assets / liabilities into current / non-current portion based on the time frame of 12 months from the date of financial statements. Accordingly, assets / liabilities expected to be realised / settled within 12 months from the date of financial statements are classified as current and other assets / liabilities are classified as non-current.

2.1 SIGNIFICANT ACCOUNTING POLICIES:

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognised prospectively in the current and future years.

Tangible / Intangible Fixed Assets, Depreciation / Amortisation and Impairment

Tangible Fixed Assets

Fixed assets are stated at the cost of acquisition or construction less accumulated depreciation and impairment losses, if any. All costs directly attributable to bring the fixed assets to its working condition for its intended use and borrowing costs on specified borrowings relating to the acquisition of fixed assets up to the date of commercial production are included in the cost of acquisition. CENVAT credit availed, wherever applicable, due to purchase of fixed assets, is deducted from the cost.

Depreciation on Tangible Fixed Assets

a) Depreciation on Tangible Fixed Assets is provided on the Written down Value method (For assets of Biomass Division on the Straight Line method) at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

b) Depreciation on assets acquired / sold during the year is provided on a pro rata basis to the statement of profit and loss - in the case of additions from the date of installation and in the case of sale till the date of sale.

c) Individual fixed assets costing Rs.5,000 or less are fully depreciated in the year of their installation.

Intangible Assets

The Company does not own any Intangible Asset. There are no Intangible assets under development.

Capital Work-in-progress

All expenditure, including advances, paid for acquisition of fixed assets and cost of assets not put to use before the year-end date are accumulated and disclosed under Capital work- in-progress. The value of Capital work-in-progress is reduced for CENVAT credit availed, wherever applicable. Assets under construction are not depreciated.

Impairment of Assets

a) The company determines the Impairment of Assets based on Cash Generating Units. For this purpose, the Cash Generating Units have been taken on segments of operations viz., Chemical, Power, Biomass, Wind Mills and Leased Unit. The carrying amount of the Cash Generating Units is assessed at each Balance Sheet date for any indication of impairment based on internal/external factors.

b) If any indication of impairment exists, then the company estimates the recoverable amount. If such recoverable amount is less than the carrying amount, the carrying amount is reduced to its recoverable amount.

c) The reduction in the carrying amount is treated as an impairment loss and is recognised in the Profit and Loss Account.

d) If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

e) Since, currently there are no indications of impairment of assets, based on the assessment, the recoverable amount of the Cash Generating Units is not determined.

Investments

a) Investments intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

b) The company holds only long-term investments, which are carried at cost. However, provision for diminution in value is made to recognise a decline, other than a temporary decline, in the value of the investments and is determined separately for each individual investment.

c) Current Investments, if held, are carried at the lower of cost or fair market value determined on an individual investment basis.

Valuation of Inventories

Inventories are valued at cost or net realisable value, whichever is lower.

Raw materials :

Raw materials are valued at the purchase cost, viz., the landed cost, including Excise Duty (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or the net realisable value, whichever is lower.

Work-in-process :

Work-in-process is valued at cost, which includes the cost of raw materials and an appropriate share of production overheads on weighted average cost basis up to the stage of completion or the net realisable value, whichever is lower.

Finished Goods :

Finished Goods are valued at the lower of the cost or net realisable value and are inclusive of excise duty. The cost includes landed cost of Raw materials consumed, conversion costs and other costs directly attributable to bring the finished goods to the present location and condition, as reduced by recovery of by-products.

Consumable Stores :

Consumable Stores are those materials waiting to be consumed in the production process and are valued at the purchase cost viz., the landed cost of the materials including Excise Duty (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or net realisable value, whichever is lower.

Machinery Spares :

Machinery spares, consisting those items that are not specific to a particular item of fixed asset, but can be used generally for various items of fixed assets and are consumed in the ordinary course of operations, are valued at cost or net realisable value, whichever is lower.

Net realisable value is the estimated selling price in the ordinary course of business less estimated expenses for transacting the sale.

Cash Flow Statement

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise Cash-in-Hand, cash in Current Accounts and Other Accounts (including Fixed Deposits) held with Banks, cheques on hand and remittances in transit.

Contingencies and 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

There are no extraordinary items of significant nature and Prior period income and expenditure to be accounted in accordance with Accounting Standard 5.

Revenue Recognition

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

Sale of goods:

a) Revenue in respect of sale of goods is recognised only when the significant risks and rewards of ownership of the goods have passed to the buyer.

b) Sales are accounted net of excise duty, sales tax, sales returns, and Quantity and Trade discounts.

c) Excise Duty deducted from the Gross Turnover is the amount that is included in the Gross Turnover. The difference of Excise Duty in the Opening Stock and Closing Stock of Finished goods is recognised in the Profit and Loss Account.

Interest:

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

Dividend:

Revenue is recognised when the shareholders'' right to receive payment is established by the Balance Sheet date.

Other Income:

Interest accrued on Investments in National Savings Certificates is accounted on receipt basis as the amount is not material. Other items of revenue are recognised in accordance with the Accounting Standard (AS-9).

Research and Development expenditure

Revenue expenditure incurred on Research and Development is charged against profits of the year in which it is incurred. Capital expenditure incurred on Research and Development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the company.

Foreign currency transactions and exchange differences Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency prevailing on the date of the respective transactions.

Recognition on Balance Sheet date:

Monetary items denominated in foreign currencies as at the Balance Sheet date are translated at the closing rate.

Recognition of Exchange Differences:

Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded, either during the year or in the previous years, are recognised as Income or as expense in the year in which they arise. The exchange differences arising out of translation of the monetary items at the closing rate are recognised in the Profit and Loss Account.

Forward Exchange Contracts:

Forward Exchange Contracts are entered into to hedge the foreign currency risk. The premium on all such contracts arising at the inception of the contract is amortised as expense over the tenor of the contract period. Any profit or loss on settlement of transaction arising on cancellation or renewal of Forward Exchange Contracts is recognised as income or expense for the period.

Employee Benefits

Leave Encashment:

Leave encashment and compensated absences are provided for on the basis of an external actuarial valuation done as per the projected unit credit method as at the end of the year.

Provident Fund:

All the employees of the Company are entitled to receive benefits under the Provident Fund, a defined contribution plan, in which both the employee and the Company contribute monthly at a stipulated rate. The Company has no liability for future Provident Fund benefits other than its contribution and recognises such contribution as an expense in the year it is incurred.

Gratuity:

The Company provides for the gratuity, a defined benefit retirement plan covering all employees. The plan provides for lump sum payments to employees as provided in ''The Payment of Gratuity Act, 1972''. The Company accounts for liability of future gratuity benefits based on an external actuarial valuation on projected unit credit method carried out for assessing liability as at the end of year.

Borrowing Costs

Borrowing costs, directly attributable to acquisition of fixed assets, are capitalised as a part of the cost of the fixed asset up to the date the asset is put to use. All other borrowing costs are charged to revenue in the year in which they are incurred.

Segment Reporting

Identification of segments:

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services and different markets. The analysis of geographical segments is based on the areas in which the operating divisions of the company operate.

Accordingly, the company''s products and services are classified under five primary business segments viz., Chemical, Power, Biomass, Windmills and Others (Leased Unit). Revenue, Profit and value of fixed assets are classified under the aforesaid segments.

The company''s revenue and assets are also classified under two secondary business segments viz., Domestic and International, on the basis of its geographical market.

Unallocated items:

Unallocated items include income and expenses which are not allocated to any reportable business segment.

Segment policies:

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

Related Party Disclosures

Information on transactions with related parties has been provided in the format specified by ASI-13. Disclosure is made, party wise, in respect of material related party transactions as specified by ASI-13.

Remuneration to Key Management Personnel, other than Independent Non-Executive Directors, is disclosed as ''Related Party Transactions'' as per the Accounting Standard and its Interpretation.

Earnings per Share

a) Basic Earnings per share has been computed by dividing the Net Profit for the year attributable to the Equity shareholders by the Weighted Average number of Equity shares outstanding during the year.

b) Diluted Earnings per share has been computed based on the fully paid-up value of the Equity shares issued.

Provision for Current tax and Deferred tax recognition

a) Income tax expense is accounted in accordance with AS-22 "Accounting for Taxes on Income". This comprises Current tax and Deferred tax. Provision for Current tax is made at the amount expected to be paid in accordance with the Income Tax laws.

b) Deferred tax is the result of 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, whenever applicable, is recognised and carried forward only to the extent that there is reasonable certainty, and in case of unabsorbed depreciation and carried forward losses only to the extent that there is virtual certainty, supported by convincing evidence, that sufficient future taxable income will be available against which such deferred tax asset can be realised.

c) In accordance with ASI-3 "Accounting for taxes on Income-Sec 80 IA & 80 IB", the deferred tax in respect of the timing differences which originate during the tax holiday period but reverse after the tax holiday period, shall be recognised in the year in which the timing difference originate, subject to consideration of prudence. Timing differences, which originate first, shall be considered for reversing first.

d) In accordance with ASI-6 "Accounting for taxes on Income -Sec 115 JB under the IT Act", in a year in which the company pays tax under sec 115 JB (MAT), the Deferred Tax Asset/ Deferred Tax Liability in respect of the timing differences arising during the year, tax effect of which is required to be recognised under AS-22, shall be measured using the ''regular tax rates'' and not the tax rate under sec 115 JB.

Provisions and Contingent Liabilities

a) The company creates a provision where there is a present obligation as a result of a past event, which could be reliably estimated, and it is probable that an outflow of resources embodying economic benefits will be required for its settlement.

b) Disclosures for a contingent liability are made when there is a possible obligation or a present obligation that probably will not require an outflow of resources.

Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

(i) There has been no movement in Equity Share Capital during the year:

The company has only one class of Equity Shares having a par value of Rs.10/-. Each Holder is entitled to one vote per equity share.Dividend proposed by the Board of Directors is subject to the approval of the Shareholders at the ANNUAL GENERAL MEETING. The amount of dividend proposed to be distributed to Equity Shareholders is Rs.50.32 Lakhs and the related amount per Equity Share is Rs. 1/-


Mar 31, 2013

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting year end. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Any revisions to the accounting estimates are recognised prospectively in the current and future years.

Tangible / Intangible Fixed Assets, Depreciation / Amortisation and Impairment

Tangible Fixed Assets

Fixed assets are stated at the cost of acquisition or construction less accumulated depreciation and impairment losses, if any. All costs directly attributable to bring the fixed assets to its working condition for its intended use and borrowing costs on specified borrowings relating to the acquisition of fixed assets up to the date of commercial production are included in the cost of acquisition. CENVAT credit availed, wherever applicable, due to purchase of fixed assets, is deducted from the cost.

Depreciation on Tangible Fixed Assets

a) Depreciation on Tangible Fixed Assets is provided on the Written down Value method (For assets of Biomass Division on the Straight Line method) at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

b) Depreciation on assets acquired / sold during the year is provided on a pro rata basis to the statement of profit and loss - in the case of additions from the date of installation and in the case of sale till the date of sale.

c) Individual fixed assets costing Rs.5,000 or less are fully depreciated in the year of their installation.

Intangible Assets

The Company does not own any Intangible Asset. There are no Intangible assets under development.

Capital Work-in-progress

All expenditure, including advances, paid for acquisition of fixed assets and cost of assets not put to use before the year-end date are accumulated and disclosed under Capital work- in-progress. The value of Capital work-in-progress is reduced for CENVAT credit availed, wherever applicable. Assets under construction are not depreciated.

Impairment of Assets

a) The company determines the Impairment of Assets based on Cash Generating Units. For this purpose, the Cash Generating Units have been taken on segments of operations viz., Chemical, Power, Biomass, Wind Mills and Leased Unit. The carrying amount of the Cash Generating Units is assessed at each Balance Sheet date for any indication of impairment based on internal/external factors.

b) If any indication of impairment exists, then the company estimates the recoverable amount. If such recoverable amount is less than the carrying amount, the carrying amount is reduced to its recoverable amount.

c) The reduction in the carrying amount is treated as an impairment loss and is recognised in the Profit and Loss Account.

d) If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost.

e) Since, currently there are no indications of impairment of assets, based on the assessment, the recoverable amount of the Cash Generating Units is not determined.

Investments

a) Investments intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

b) The company holds only long-term investments, which are carried at cost. However, provision for diminution in value is made to recognise a decline, other than a temporary decline, in the value of the investments and is determined separately for each individual investment.

c) Current Investments, if held, are carried at the lower of cost or fair market value determined on an individual investment basis.

Valuation of Inventories

Inventories are valued at cost or net realisable value, whichever is lower.

Raw materials : Raw materials are valued at the purchase cost, viz., the landed cost, including Excise Duty (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or the net realisable value, whichever is lower.

Work-in-process : Work-in-process is valued at cost, which includes the cost of raw materials and an appropriate share of production overheads on weighted average cost basis up to the stage of completion or the net realisable value, whichever is lower.

Finished Goods : Finished Goods are valued at the lower of the cost or net realisable value and are inclusive of excise duty. The cost includes landed cost of Raw materials consumed, conversion costs and other costs directly attributable to bring the finished goods to the present location and condition, as reduced by recovery of by-products.

Consumable Stores : Consumable Stores are those materials waiting to be consumed in the production process and are valued at the purchase cost viz., the landed cost of the materials including Excise Duty (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or net realisable value, whichever is lower.

Machinery Spares : Machinery spares, consisting those items that are not specific to a particular item of fixed asset, but can be used generally for various items of fixed assets and are consumed in the ordinary course of operations, are valued at cost or net realisable value, whichever is lower.

Net realisable value is the estimated selling price in the ordinary course of business less estimated expenses for transacting the sale.

Cash Flow Statement

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise Cash-in-Hand, cash in Current Accounts and Other Accounts (including Fixed Deposits) held with Banks, cheques on hand and remittances in transit.

Contingencies and 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

There are no extraordinary items of significant nature and Prior period income and expenditure to be accounted in accordance with Accounting Standard 5.

Revenue Recognition

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

Sale of goods:

a) Revenue in respect of sale of goods is recognised only when the significant risks and rewards of ownership of the goods have passed to the buyer.

b) Sales are accounted net of excise duty, sales tax, sales returns, and Quantity and Trade discounts.

c) Excise Duty deducted from the Gross Turnover is the amount that is included in the Gross Turnover. The difference of Excise Duty in the Opening Stock and Closing Stock of Finished goods is recognised in the Profit and Loss Account.

Interest:

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

Dividend:

Revenue is recognised when the shareholders'' right to receive payment is established by the Balance Sheet date.

Other Income:

Interest accrued on Investments in National Savings Certificates is accounted on receipt basis as the amount is not material. Other items of revenue are recognised in accordance with the Accounting Standard (AS-9).

Research and Development expenditure

Revenue expenditure incurred on Research and Development is charged against profits of the year in which it is incurred. Capital expenditure incurred on Research and Development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the company.

Foreign currency transactions and exchange differences Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency prevailing on the date of the respective transactions.

Recognition on Balance Sheet date:

Monetary items denominated in foreign currencies as at the Balance Sheet date are translated at the closing rate.

Recognition of Exchange Differences:

Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded, either during the year or in the previous years, are recognised as Income or as expense in the year in which they arise. The exchange differences arising out of translation of the monetary items at the closing rate are recognised in the Profit and Loss Account.

Forward Exchange Contracts:

Forward Exchange Contracts are entered into to hedge the foreign currency risk. The premium on all such contracts arising at the inception of the contract is amortised as expense over the tenor of the contract period. Any profit or loss on settlement of transaction arising on cancellation or renewal of Forward Exchange Contracts is recognised as income or expense for the period.

Employee Benefits

Leave Encashment:

Leave encashment and compensated absences are provided for on the basis of an external actuarial valuation done as per the projected unit credit method as at the end of the year.

Provident Fund:

All the employees of the Company are entitled to receive benefits under the Provident Fund, a defined contribution plan, in which both the employee and the Company contribute monthly at a stipulated rate. The Company has no liability for future Provident Fund benefits other than its contribution and recognises such contribution as an expense in the year it is incurred.

Gratuity:

The Company provides for the gratuity, a defined benefit retirement plan covering all employees. The plan provides for lump sum payments to employees as provided in ''The Payment of Gratuity Act, 1972''. The Company accounts for liability of future gratuity benefits based on an external actuarial valuation on projected unit credit method carried out for assessing liability as at the end of year.

Borrowing Costs

Borrowing costs, directly attributable to acquisition of fixed assets, are capitalised as a part of the cost of the fixed asset up to the date the asset is put to use. All other borrowing costs are charged to revenue in the year in which they are incurred.

Segment Reporting

Identification of segments:

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services and different markets. The analysis of geographical segments is based on the areas in which the operating divisions of the company operate.

Accordingly, the company''s products and services are classified under five primary business segments viz., Chemical, Power, Biomass, Windmills and Others (Leased Unit). Revenue, Profit and value of fixed assets are classified under the aforesaid segments.

The company''s revenue and assets are also classified under two secondary business segments viz., Domestic and International, on the basis of its geographical market.

Unallocated items:

Unallocated items include income and expenses which are not allocated to any reportable business segment.

Segment policies:

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

Related Party Disclosures

Information on transactions with related parties has been provided in the format specified by ASI-13. Disclosure is made, party wise, in respect of material related party transactions as specified by ASI-13.

Remuneration to Key Management Personnel, other than Independent Non-Executive Directors, is disclosed as ''Related Party Transactions'' as per the Accounting Standard and its Interpretation.

Earnings per Share

a) Basic Earnings per share has been computed by dividing the Net Profit for the year attributable to the Equity shareholders by the Weighted Average number of Equity shares outstanding during the year.

b) Diluted Earnings per share has been computed based on the fully paid-up value of the Equity shares issued.

Provision for Current tax and Deferred tax recognition

a) Income tax expense is accounted in accordance with AS-22 "Accounting for Taxes on Income". This comprises Current tax and Deferred tax. Provision for Current tax is made at the amount expected to be paid in accordance with the Income Tax laws.

b) Deferred tax is the result of 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, whenever applicable, is recognised and carried forward only to the extent that there is reasonable certainty, and in case of unabsorbed depreciation and carried forward losses only to the extent that there is virtual certainty, supported by convincing evidence, that sufficient future taxable income will be available against which such deferred tax asset can be realised.

c) In accordance with ASI-3 "Accounting for taxes on Income-Sec 80 IA & 80 IB", the deferred tax in respect of the timing differences which originate during the tax holiday period but reverse after the tax holiday period, shall be recognised in the year in which the timing difference originate, subject to consideration of prudence. Timing differences, which originate first, shall be considered for reversing first.

d) In accordance with ASI-6 "Accounting for taxes on Income -Sec 115 JB under the IT Act", in a year in which the company pays tax under sec 115 JB (MAT), the Deferred Tax Asset/ Deferred Tax Liability in respect of the timing differences arising during the year, tax effect of which is required to be recognised under AS-22, shall be measured using the ''regular tax rates'' and not the tax rate under sec 115 JB.

Provisions and Contingent Liabilities

a) The company creates a provision where there is a present obligation as a result of a past event, which could be reliably estimated, and it is probable that an outflow of resources embodying economic benefits will be required for its settlement.

b) Disclosures for a contingent liability are made when there is a possible obligation or a present obligation that probably will not require an outflow of resources.

Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2009

1. Basis of Accounting

The financial statements have been prepared on mercantile basis under the historical cost convention, on the basis of going concern concept, on accrual basis of accounting, unless otherwise stated, and in accordance with the Generally Accepted Accounting Principles in India.

The accounting policies applied by the company is generally consistent with those applied in the previous years except to the extent modified to comply with the requirements of the Accounting Standards notified under section 211(3C) of the Companies Act. 1956 read with the Companies (Accounting Standards) Rules, 2006, the pronouncements made by the Institute of Chartered Accountants of India, the Companies Act, 1956 and the guidelines issued by the Securities and Exchange Board of India,

2. Valuation of Inventories

Inventories are valued at cost or net realisable value, whichever is lower.

Raw materials:

Raw materials are valued at the purchase cost, viz.. the landed cost, including Excise Duty (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or the net realisable value, whichever is lower.

WorK-in-process:

Work-in-process is valued at cost, which includes the cost of raw materials and an appropriate share of production overheads on weighted average cost basis up to the stage of completion or the net realisable value, whichever is lower.

Finished Goods.

Finished Goods are valued at the lower of the cost or net realisable value and are inclusive of excise duty. The cost includes landed cost of Raw material consumed, conversion costs and other costs directly attributable to bring the finished goods to the present location and condition,as reduced by recovery of by-products-

Consumable Stores:

Consumable Stores are those materials waiting to be consumed in the production process and are valued at the purchase cost viz.. the landed cost of the materials including Excise Duly (Net of CENVAT credit, wherever applicable) by using the weighted average cost formula or net realisable value, whichever is lower.

Machinery Spares:

Machinery Spares, consisting those items, that are not specific to a particular item of fixed asset, but can be used generally for various items of fixed assets and are consumed in the ordinary course of operations, are valued at cost or net realisable value, whichever is lower.

Net realisable value is the estimated selling price in the ordinary course of business less estimated expenses for transacting the sale.

3. Cash Flow Statement

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise Cash-in-Hand end Current Accounts and Other Accounts (including Fixed Deposits) held with Banks.

4 Contingencies and 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

There are no extraordinary items of significant nature and Prior period income and expenditure to be accounted in accordance with Accounting Standard 5.

6. Depreciation Accounting

a) Depreciation on Fixed Assets is provided on the Written Down Value method (For assets of Biomass Division on the Straight Line method) at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

b) Depreciation on additions to the fixed assets and sale of fixed assets is provided on a pro rata basis.

c) Individual assets costing Rs.5,0O0 or less are depreciated at 95% of its cost in the year of its acquisition

7. Revenue Recognition

Sale of goods:

a) Revenue in respect of sale of goods is recognised only when the significant risks and rewards of ownership of the goods have passed to the buyer,

b) Sales are accounted" net of excise duty, sales tax, sates returns, and Quantity and Trade discounts.

c) Excise Duty deducted from the Gross Turnover is the amount that is included in the Gross Turnover The difference of Excise Duty in the Opening Stock and Closing Stock of Finished goods is recognised in the Profit and Loss Account.

Interest:

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

Dividend:

Revenue is recognised when the shareholders right to receive payment is established by the Balance Sheet date.

Other Income,

Interest accrued on Investments in National Savings Certificates is accounted on receipt basis as the amount is not material.

Other items of revenue are recognised in accordance with the Accounting Standard (AS-9).

8. Accounting for Fixed Assets

Fixed Assets:

Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation. .All costs directly attributable to bring the fixed assets to its working condition, including borrowing costs on specified borrowings up to the date of commercial production, are capitalised. CENVAT credit availed, wherever applicable, due to purchase of fixed assets, is deducted from the cost.

Capital Work-in-progress:

All expenditure, including advances paid for acquisition of fixed assets and cost of assets not put to use before the year-end date are accumulated and disclosed under Capital work-in-progress. The value of Capital work-in-progress is reduced tor CENVAT credit availed, wherever applicable. Assets under construction are not depreciated.

9. Research and Development expenditure

Revenue expenditure incurred on Research and Development is charged against profits of the year in which it is incurred. Capital expenditure incurred on Research and Development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the company.

10. Foreign currency transactions and exchange differences

Initial recognition:

Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency prevailing on the date of the respective transactions.

Recognition on Balance Sheet date:

Monetary items denominated in foreign currencies as at the Balance Sheet date are translated at the closing rate.

Recognition of Exchange Differences:

Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded, either during the year or in the previous years, are recognised as Income or as expense in the year in-which they arise The exchange differences arising out of translation of the monetary items at the closing rate are recognised in the Profit and Loss Account.

Forward Exchange Contracts:

Forward Exchange Contracts are entered into to hedge the foreign currency risk. The premium on all such contracts arising at the inception of the contract is amortised as expense over the tenor of the contract period Any profit or loss on setllement of transaction arising on cancellation or renewal of

Forward Exchange Contracts is recognised as income or expense for the period.

11. Accounting for Investments

a) The company holds only Long-term Investment, which are carried at cost less any other-than- temporary decline in value determined separately for each individual investment.

b) Current investments, if held, are carried at the lower of cost or fair market value.

12 Employee Benefits

The value of Employee Benefits to be recognised in the financial statements is determined in accordance with Accounting Standard 15 Employee Benefits.

Short-term Employee Benefits:

The total amount of Short-term Employee Benefits, accruing for the year, is recognised as expense on the basis of actuarial valuation. Short term compensated absences comprise of Earned Leave and Casual Leave

For Earned Leave, an additional cost is recognised as expense for the year, due to the carry forward of the accumulated leave that is unavailed by the employee.

For casual leave the cost is recognised as an expense as and whan the employee avails paid leave. The unavailed portion of the leave that is accumulated cannot be carried forward and hence there is no additional cost.

The expense on Short-term Employee Benefits, recognised on accrual basis of accounting, Is charged to the Revenue unless it is required or permitted by another Accounting Standard to be included as cost of an asset.

Post Employment benefits:

Defined contribution plan;

The amount of companys contribution to the Employees Provident Fund & Family Pension Fund scheme, administered and managed by the Government of India, Employees State Insurance scheme, recognised and administered by the Government of India and other schemes are determined under the relevant schemes and I or statute and the expense is charged to the Profit and Loss account, on accrual basis of accounting, unless it is required or permitted by another Accounting Standard to be included as cost of an asset.

The employees of the company covered by the schemes are entitled to receive benefits under the schemes. The company has no further obligation under these schemes beyond the monthly contribution.

Defined Benefit Plan:

The company provides for gratuity obligations through a Defined Benefits Retirement Plan covering all employees. The plan is administered by the LIC. The company makes annual contribution to the LIC tor the gratuity plan in respect of all the employees.

The gross amount of liability towards gratuity is actuarially determined on each Balance Sheet date by applying the Present Value concept using the Projected Unit Credit Method. Actuarial gains or losses on obligations are recognised in revenue.

The fair value of plan assets (viz., assets held by the Fund and the qualifying insurance policies) is determined on each Balance Sheet dale. Actuarial gains or losses on the fair value of assets are recognised in revenue.

The gross liability is adjusted with the fair value of plan assets and only the net amount is shown in the Balance Sheet as unfunded liability.

All the costs attributable to the Plan viz., current service cost, interest cost, actuarial gain or loss. expected return on plan assets, are recognised as expense in Present Value terms and charged to revenue.

13. Borrowing Costs

Borrowing costs, directly attributable to acquisition of fixed assets, are capitalised as a part of the Cost of the fixed asset up to the date the asset is put to use. All other borrowing costs are charged to revenue in the year in which they are incurred.

14. Segment Reporting

The companys products are classified under four primary business segments viz., Chemical. Power, Biomass and Leased Unit. Revenue. Profit and value of fixed assets are classified under the aforesaid segments.

The companys revenue and assets are also classified under two secondary business segments viz,, Domestic and International, on the basis of its geographical market.

15. Related Party Disclosures

Information .on transactions with related parties has been provided in the format specified by ASI-13. Disclosure is made, party wise in respect of material related party transactions as specified by ASI- 13. Remuneration to Key Management Personnel, other than Independent Non-Executive Directors, is disclosed as Related Party Transactions as per the Accounting Standard and its Interpretation.

16. Earnings Per Share

a) Basic Earnings per share has been computed by dividing the Net Profit for the year attributable to the Equity shareholders by the Weighted Average number of Equity shares outstanding during the year.

b) Diluted Earnings per share has been computed based on the fully paid-up value or the Equity shares issued

17. Accounting (or Taxes on Income

a) Income lax expense is accounted in accordance with AS-22 "Accounting for Taxes on income". This comprises Current tax, Deferred tax and Fringe Benefit tax. Current tax and Fringe Benefit tax is accounted at the amount expected to be paid in accordance with the Income Tax laws.

b) Deferred tax is the result of the impact of current year timing differences between taxable income and accounting income for the year end reversal of timing differences of earlier years. Deferred Tax Assets, whenever applicable, is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

c) In accordance with ASI-3 "Accounting for taxes on Income-Sec 801A & 80 IB", the deferred tax in respect of the timing differences which originate during the tax holiday period but reverse after the tax holiday period, shall be recognised in the year in which the timing difference originate, subject to consideration of prudence. Timing differences, which originate first shall be considered for reversing first.

d) in accordance with ASI-6 "Accounting for taxes on Income-Sec 115 JB under the IT Act", in a year in which the company pays tax under sec 115 J6 (MAT), the Deferred Tax Asset/Deferred Tax Liability in respect of the timing differences arising during the year, tax effect of which is required to be recognised under AS-22, shall be measured using the regular lax rates" and not the tax rate under sec 115 JB.

18. Intangible Assets and amortisation

Intangible assets are recorded at the consideration paid for acquisition Intangible assets are amortised over their estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use.

19. Impair merit of Assets

a) The company determines the Impairment of Assets based on Cash Generating Units. For this purpose, the Cash Generating Units have been taken on segment!, of operations viz., Chemical, Power, Biomass and Leased Unit. The carrying amount of the Cash Generating Units is assessed at each Balance Sheet date for any indication of impairment based on internal/external factors.

b) If any indication of impairment exists, then the company estimates the recoverable amount. If such recoverable amount is less than the carrying amount, the carrying amount is reduced to its recoverable amount.

c) The reduction in the carrying amount is "treatedas an impairment loss and is recognised in the Profit and Loss Account.

d) if at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount Subject to a maximum of depreciated historical cost.

a) Since, currently there are no indications of impairment of assets, based on the assessment, the recoverable amount of the Cash Generating Units is not determined.

20. Provisions and Contingent Liabilities

a) The company creates a provision where there is a present obligation as a result of a past event, which could be reliably estimated, and it is probable that an outflow of resources embodying economic benefits will be required for its settlement.

b) Disclosures for a contingent liability is made when there is a possible obligation or a present obligation that probably will not require an outflow of resources.

Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.


Mar 31, 2003

1. FIXED ASSETS:

(a) Fixed assets are stated at cost and cost included appropriate direct and allocated expenses including interest on specified borrowings upto the date of commercial production.

(b) DEPRECIATION :

(i) During the year the Company has changed the method of providing Depreciation, for Plant and Machinery, Buildings, Water Supply works and Computers, from Straight Line Method (SLM) to Written down value (WDV) method to make the method of charging depreciation uniform for all the assets.

In compliance with Accounting Standard -6 on "Depreciation Accounting" issued by the Institute of Chartered Accountants of India, Depreciation has been re-computed from the date of Capitalisation of these assets at WDV rates (amended) as prescribed under Schedule XIV of the Companies Act, 1956. Consequent to this, there is an additional charges of depreciation in the Profit & Loss Account during the year of Rs 34,50,96,298/-(out of which Rs.29,04,70,070 /- relating to Earlier years) with the corresponding impact on Net Block of Fixed Assets and Reserves and Surplus.

(ii) In respect of all other assets, depreciation is provided on written down value method wherein for assets acquired prior to 16-12-1993, it is provided at the rates prevailing on the date of purchase and for assets acquired on or after that date, amended rates as prescribed under Schedule XIV of the Companies Act, 1956 is followed.

2. INVESTMENTS

Long Term investments are stated at cost. Adequate provision has been made for permanent Diminution in the value of investments.

3. THE VALUATION OF INVENTORIES ARE:

Machinery Spares - at cost

Consumable Stores - at cost

Raw Materials - at cost

Work-in-process - at cost

Finished Goods & Stock-in-trade at lower of cost or net realisable value.

4. REVENUE RECOGNITION:

Sales and other income are accounted on accrual basis. Sales are inclusive of excise duty.

Interest accrued on investments in National Savings Certificates is accounted on cash basis as the amount is not material.

5. The Companys liability towards gratuity to employees is covered by Group Gratuity Scheme with Life Insurance Corporation of India. The liability arising out of leave encashment is accounted on accrual basis.

6. RESEARCH AND DEVELOPMENT:

Research and Development expenditure is charged to Revenue.

7. FOREIGN CURRENCY TRANSACTIONS:

Current Assets / Current Liabilities relating to foreign currency transactions are recorded at the exchange rates prevailing on the date of settlement of the transaction or at the year end rates whichever is applicable.

Gains / Losses arising out of fluctuations in the foreign exchange rates are accounted for in the Profit and Loss Account at the time of realisation / payment or at the year end rates as the case may be.

8. INTEREST ON UNCLAIMED DEPOSITS:

In respect of Unclaimed deposits, no provision towards interest is made for the period beyond the maturity date. However, if they are renewed belatedly interest upto the period of renewal is charged as an expenditure of the year of renewal.

 
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