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Accounting Policies of Terai Tea Company Ltd. Company

Mar 31, 2015

Note 1: Corporate Information

Terai Tea Co Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on Bombay Stock Exchange. The company is engaged in the Manufacturing and Selling of Tea and Trading in Merchandise.

Note 2: Basis of Preparation

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rule, 2014. The financial statements have been prepared on accrual basis and under the historical cost convention except for Land & Plantations, Building and Plant & Machinery acquired before 1st April, 1994 that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy explained below.

a. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

b. Fixed Assets

Fixed assets, except Land and Plantation, Building and Plant & Machinery acquired before 1st April, 1994 is carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets comprises purchase price, interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Land & Plantation, Building and Plant & Machinery acquired before 1 st April 1994 are stated on revalued figure plus actual cost of acquisition after that date less accumulated depreciation and impairment losses, if any.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

c. Depreciation on Fixed Assets

— Depreciation on fixed assets is provided on written down value method at the rates and in the manner specified in Schedule II to the Companies Act, 2013 and necessary changes in depreciation system has been made as provided in the Act and Schedule.

— Freehold land and plantation is not depreciated.

d. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. All investments are stated at cost.

e. Inventories

— Stock of stores, spare parts and food stuff have been taken on the basis of physical verification conducted by the management at the year end and valued at cost which is arrived at on FIFO method.

— Stock of tea produced is valued on since sold &/or estimated sales realization basis.

f. Revenue Recognition

Revenue is recognized 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

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The company collects value added tax (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.

- Income from Services

Revenue from services is recognized when the service is completed as per terms of agreement.

- Other Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss account. Dividend income is recognized when the company's right to receive dividend is established by the reporting date.

g. Retirement Benefits:

Retirement benefits include provident fund, gratuity and leave encashment benefits. Company's contributions to Provident Fund are charged to Statement of Profit & Loss on accrual basis. In respect of Gratuity, liability has been provided for on the basis of actuarial valuation and in respect of leave encashment benefits, the Company accounts for the same on cash basis and neither the liability is actuarially determined at the end of accounting period nor any provision made for accrued liability.

h. Borrowing Costs:

Borrowing costs are expensed in the accounting period in which it is incurred except where the cost is incurred during the construction of an asset that takes a substantial period to get ready for its intended use in which case it is capitalized. Borrowing cost is net of subsidy on interest received/ receivable as per the Incentive Scheme of the Government, where applicable.

i. Provision For Current & Deferred Tax:

Tax expense comprises of both current tax and deferred tax. Deferred tax reflects the effect of temporary timing differences between the assets and liabilities recognized for financial reporting purposes and the amounts that are recognized for current tax purposes. As a matter of prudence deferred tax assets are recognized and carried forward only to the extent, there is certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

j. Subsidies and Incentives:

Subsidies receivable on account of capital assets or of revenue nature are accounted for on the basis of claims made with the concerned authorities.

k. Gratuity:

Disclosure as per actuarial report of independent actuary:


Mar 31, 2014

A. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialize.

b. Fixed Assets

Fixed assets, except land and plantation, building and plant & machinery acquired before 1st April, 1994, is carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets comprises purchase price, interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Land & plantation, Building and Plant & Machinery acquired before 1st April 1994 are stated on revalued figure plus actual cost of acquisition after that date less accumulated depreciation and impairment losses, if any.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

c. Depreciation on Fixed Assets

- Depreciation on fixed assets is provided on written down value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 19S6.

- Freehold land and plantation is not depreciated.

- Depreciation on the revalued portion is debited to Revaluation Reserve.

d. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. Current investments are stated at the lower of cost and fair value. Long-term investments or non- current investment are valued at their acquisition cost. Any decline in the value of the said investment, other than a temporary decline is recognised and charged to profit and loss account.

e. Inventories

- Stock of stores, spares part and food stuff have been taken on the basis of physical verification conducted

by the management at the year end and valued at cost which is arrived at on FIFO method.

- Stock of tea produced is valued on since sold &/or estimated sales realization basis.

f. Revenue Recognition

Revenue is recognized 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

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The company collects value added tax (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.

- Income from Services

Revenue from services is recognized when the service is completed as per terms of agreement.

- Other Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss account. Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

g. Retirement Benefits:

Retirement benefits include contribution to provident fund, gratuity and leave encashment benefits. Company''s contributions to Provident Fund are charged to Statement of Profit & Loss on accrual basis. In respect of Gratuity, liability has been provided for on the basis of actuarial valuation and in respect of leave encashment benefits, the Company accounts for the same on cash basis and neither the liability is actuarially determined at the end of accounting period nor any provision made for accrued liability.

h. Borrowing Costs:

Borrowing costs are expensed in the accounting period in which it is incurred except where the cost is incurred during the construction of an asset that takes a substantial period to get ready for its intended use in which case it is capitalized. Borrowing cost is net of subsidy on interest received/ receivable as per the Incentive Scheme of the Government.

i. Provision for Current & Deferred Tax:

Tax expense comprises of both current tax and deferred tax. Deferred tax reflects the effect of temporary timing differences between the assets and liabilities recognised for financial reporting purposes and the amounts that are recognised for current tax purposes. As a matter of prudence deferred tax assets are recognised and carried forward only to the extent, there is certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

j. Subsidies and Incentives:

Subsidies receivable on account of capital assets or of revenue nature are accounted for on the basis of claims made with the concerned authorities.

k. Gratuity:

Disclosure as per actuarial report of independent actuary:

Amount of obligation as at the year end is determined as under

b) Terms/ Rights attached to Equity Shares

The company has only one class of equity shares having a par value of - 10 per share. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in indian rupees. The dividend proposed by the Board of Director is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company, the holders of the equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per the records of the Company, Including its Register of Shareholders/Members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

Term Loan referred above includes : (a) Term Loan from Central Bank of India of - 342.67 Lakhs carries interest @ Base Rate plus 1.7S% P.A. The Loan is repayable in 20 equal quarterly installments. The Loan is secured by bank''s charge on replantation on areas having tea bushes of age group S0 years and above in the Company''s Bagdogra Tea estate and also guaranteed by its Directors Sri Ajit Kumar Agarwala and Smt. Shashikala Agarwala. (b) Term Loan from Axis Bank of - 18.87 Lakhs is secured against hypothecation of Car and carries interest @ 10.43% P.A. on a monthly reducing basis and is repayable in 60 equal monthly installments including interest. (c) Term Loan from Corporation Bank of - 133.77 Lakhs carries interest @ Base Rate plus 0.S0% p.a. The Loan is repayable in 18 quarterly installments of - 20 lakhs each and secured against Company''s, Factory and Stock. (d) Unsecured Term Loan of - 1,000 lakhs from UCO Bank carries interest BR Plus 2% and is guarantted by Sri Ajit Kumar Agarwala and Smt. Shashi Kala Agarwala and also secured by Equitable Mortgage of Land of Abhijit Tea Co. Pvt. Ltd. and due for repayment in the year 201S-16.

(a) Working Capital Loans are against bank''s exclusive 1st charge by Hypothecation of Stocks of Finished Goods, Raw Materials and Stores and Book Debts and Equitable Mortage of Land and Building in Tea Garden and Tea Factory and guaranteed by its Directors Sri Ajit Kumar Agarwala and Smt. Shashikala Agarwala. CC limit from Bank of India carries interest @ BR plus 1.7S% and from Central Bank of India carries interest @ BR plus 1.7S%. (b) Short Term Loan from Yes Bank of - 1,100 lakh carries interest @ Yes Bank Base Rate currently Yes Bank Base Rate is 10.S% p.a. and repayable after 9 months from the date of disbursement. The loan is secured by equitable mortage of property situated at Mouza-Dabgram, Bhaktinagar, Dist Jalpaiguri in the name of M/s. Abhijit Tea Company (P) Ltd. Loan is also guaranteed by its Directors Sri Ajit Kumar Agarwala and Smt. Shashikala Agarwala and further corporate guarantee of M/s Abhijit Tea Co (P) Ltd. (c) Unsecured Loan of - 19.66 Lakhs (- 17.98 Lakhs) from related parties and others are due for repayment within one year and carries no interest.


Mar 31, 2013

A. Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialize.

b. Fixed Assets

Fixed assets, except land and plantation, building and plant & machinery acquired before 1st April, 1994 are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets comprises purchase price, interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

c. Depreciation on Fixed Assets

Depreciation on fixed assets is provided on written down value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

Freehold land and plantation is not depreciated.

Depreciation on the revalued portion is debited to Revaluation Reserve.

d. Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current investments. Current investments are stated at the lower of cost and fair value. Long-term investments or non- current investment are valued at their acquisition cost. Any decline in the value of the said investment, other than a temporary decline is recognised and charged to profit and loss account.

e. Inventories

Stock of stores, spares part and food stuff have been taken on the basis of physical verification conducted by the management at the year end and valued at cost which is arrived at on FIFO method.

Stock of tea produced is valued on since sold &/or estimated sales realization basis.

f. Revenue Recognition

Revenue is recognized 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

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The company collects value added tax (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.

Income from Services

Revenue from services is recognized when the service is completed as per terms of agreement.

Other Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss account. Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

g. Retirement Benefits:

Retirement benefits includes provident fund, gratuity fund and leave encashment benefits. Company''s contributions to Provident Fund are charged to Statement of Profit & Loss on accrual basis. In respect of Gratuity, liability has been provided for on the basis of actuarial valuation and in respect of leave encashment benefits, the Company accounts for the same on cash basis and neither the liability is actuarially determined at the end of accounting period nor any provision made for accrued liability.

h. Borrowing costs:

Borrowing costs are expensed in the accounting period in which it is incurred except where the cost is incurred during the construction of an asset that takes a substantial period to get ready for its intended use in which case it is capitalized. Borrowing cost is net of subsidy on interest received/ receivable as per the Incentive Scheme of the Government.

i. Provision for current & deferred tax:

Tax expense comprises of both current tax and deferred tax. Deferred tax reflects the effect of temporary timing differences between the assets and liabilities recognised for financial reporting purposes and the amounts that are recognised for current tax purposes. As a matter of prudence deferred tax assets are recognised and carried forward only to the extent, there is certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

j. Subsidies and incentives:

Subsidies receivable on account of capital assets or of revenue nature are accounted for on the basis of claims made with the concerned authorities.

k. Gratuity:

Disclosure as per actuarial report of independent actuary: Amount of obligation as at the year end is determined as under


Mar 31, 2010

(A) GENERAL

The financial statements are prepared on accrual basis and under the historical cost convention and in accordance with the generally accepted accounting principles in India and the provisions of Companies Act, 1956.

(B) USE OF ESTIMATES

The preparation of financial statements require estimates and assumptions to be made that affect the reported amount of assets & liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and the estimates are recognized in the period in which results are known/ materialized.

(C) FIXED ASSETS

Fixed assets are stated at cost net of modvat/ cenvat/ value added tax and include amounts added on revaluation, less accumulated depreciation. In the case of acquisition of Dharnipur Tea Estate and Land at Bangalore, all expenses incurred on litigations are capitalized.

(D) DEPRECIATION

a. Depreciation on fixed assets is provided on written down value method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

b. Freehold land and plantation is not depreciated.

c. Depreciation on the revalued portion is debited to Revaluation Reserve.

(E) INVESTMENTS

Investments are classified into current and long-term investments. Current investments are stated at the lower of cost and fair value. Long-term investments are valued at their acquisition cost. Any decline in the value of the said investment, other than a temporary decline is recognised and charged to profit and loss account.

(F) INVENTORY

a. Stock of stores, spare parts and food stuff have been taken on the basis of physical verifica- tion conducted by the management at the year end and valued at cost which is arrived at on FIFO method.

b. Stock of tea produced is valued on since sold &/or estimated sales realization basis.

(G) TURNOVER

Turnover includes sale of goods, services, service tax, and excise duty, adjusted for discounts (net).

(H) RETIREMENT BENEFITS

Companys contributions to Provident Fund are charged to Profit & Loss Account on accrual basis. In respect of Gratuity, liability has been provided for on the basis of actuarial valuation and in respect of leave encashment benefits, the Company accounts for the same on cash basis and neither the liability is actuarially determined at the end of accounting period nor any provision made for accrued liability.

(I) BORROWING COSTS

Borrowing costs are expensed in the accounting period in which it is incurred except where the cost is incurred during the construction of an asset that takes a substantial period to get ready for its intended use in which case it is capitalised. Borrowing cost is net of subsidy on interest received/ receivable as per the Incentive Scheme of the Government.

(J) PROVISION FOR CURRENT & DEFERRED TAX

Tax expense comprises of both current tax and deferred tax. Deferred tax reflects the effect of temporary timing differences between the assets and liabilities recognised for financial reporting purposes and the amounts that are recognised for current tax purposes. As a matter of prudence deferred tax assets are recognised and carried forward only to the extent, there is certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(K) SUBSIDIES AND INCENTIVES

Subsidies receivable on account of capital assets or of revenue nature are accounted for on the basis of claims made with the concerned authorities.

 
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