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Accounting Policies of Triveni Engineering & Industries Ltd. Company

Mar 31, 2015

A) Basis of preparation of Financial statements

The fnancial statements of the Company have been prepared as a going concern on an accrual basis of accounting under the historical cost convention and in accordance with generally accepted accounting principles in India. The financial statements comply in all material respects with the applicable accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) in accordance with section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014.

All assets and liabilities have been classified as current and non-current as per the criteria set out in the Schedule III of the Companies Act 2013. In line with the normal operating cycle of the main products, the Company has considered a period of 12 months for the purpose of determination of classification between current and non-current assets and liabilities.

b) use of estimates

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

c) Fixed Assets

i) Fixed assets are stated at their acquisition cost less accumulated depreciation. Acquisition cost includes taxes, duties (excluding excise duty, service tax and VAT for which CENVAT/VAT credit is available), freight and other incidental expenses relating to acquisition and installation. In case of certain machineries acquired under lease prior to 01.04.2001, the cost of acquisition represents the principal value of the respective lease (including the residual value at expiry of lease). In the acquisition of fixed assets involved in the establishment of a new project/ factory, all direct expenses including borrowing costs are capitalized.

ii) Fixed assets pending disposal are stated at lower of net book value (at the time of discarding of assets) and net realizable value. Wherever, the net book value of the assets cannot be reasonably determined, it is stated at net realizable value.

d) recognition of income / expenditure

Revenue is recognized to the extent that it is probable that the economic benefits will few to the Company and the revenue can be reliably measured. The following specific recognition criteria are applied for revenue recognition:

i) 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. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and therefore these are not economic benefits flowing to the Company and accordingly they are excluded from revenue.

ii) In contracts involving the rendering of services, revenue is recognized as and when the services are rendered. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit fowling to the Company and is accordingly excluded from revenue.

iii) Income from sale of Certified Emission Reductions (CERs) and Renewable Energy Certificates (RECs) is recognized on the delivery of the CERs/RECs to the customers' account as evidenced by the receipt of confirmation of execution of delivery instructions.

iv) Revenue from construction contracts is recognized on the percentage of completion method, measured by the proportion that contract costs incurred for work performed till the reporting date bear to the estimated total contract cost. Contract costs for this purpose include :

a) Costs that relate directly to the specific contract;

b) Costs that are attributable to contract activity in general and can be allocated to the contract; and

c) Such other costs as are specifically chargeable to the customer under the terms of contract.

Foreseeable losses, if any, are provided for immediately.

v) Income / Expenditure relating to prior periods and prepaid expenses which do not exceed Rs. 10,000/- in each case, are treated as Income / Expenditure of current year.

vi) Compensation under Voluntary Retirement Scheme and all other termination benefits, if any, incurred during the year, are recognized as expense in the statement of profit and loss.

e) Foreign Currency Transactions

i) Transactions denominated in foreign currencies are initially recorded at the exchange rate prevailing at the date of transaction.

ii) Foreign currency monetary items (including forward contracts not relating to from commitments or highly probable forecast transactions and not intended for trading or speculative purposes) are translated at year end rates. Exchange differences arising on settlement of transactions and translation of monetary items are recognized as income or expense in the year in which they arise.

iii) The premium or discount on forward exchange

contracts not relating to from commitments or highly probable forecast transactions and not intended for trading or speculative purposes is amortized as expense or income over the life of the contracts.

iv) In respect of derivative contracts relating to form commitments or highly probable forecast transactions, provision is made for mark to market losses, if any, at the balance sheet date. Gains, if any, are not recognized till settlement.

f) inventories

i) Inventories of raw materials, components, stores and spares are valued at lower of cost and net realizable value. By-products used as raw material are valued at transfer cost. Cost for the purpose of valuation of raw materials and components, stores and spares is considered on the following basis :

ii) Finished goods and Work-in-progress are valued at lower of cost and net realizable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Excise duty is included in the value of finished goods.

iii) Unsold certified emission reductions (CERs) and renewable energy certificates (RECs) are recognized as inventory in accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions, issued by the Institute of Chartered Accountants of India. Inventory of CERs and RECs is valued at lower of cost and net realizable value. The cost incurred on verification / certification of CERs/RECs is considered as the cost of inventories of CERs/RECs.

iv) Patterns, Loose tools, Jigs and Fixtures are written of equally over three years.

v) By-products (excluding those used as raw materials) and scrap are valued at estimated net realizable value.

g) depreciation

i) Depreciation on fixed assets is provided on the straight line method in accordance with Schedule II of the Companies Act, 2013. Schedule II provides the useful lives of various categories of fixed assets and allows the Company to use higher / lower useful lives and residual values if such lives and residual values can be technically supported and the justification for any difference is disclosed in the financial statements.

Accordingly, the management has re-estimated the useful lives and residual values of all its fixed assets and adopted useful lives as stated in Schedule II along with residual values of 5% except for the following:

On the basis of technical assessment involving technology obsolescence and past experience, the useful lives of instrumentation and control devices installed at sugar plants is considered at ten years as against prescribed life of twenty five years in respect of continuous process plant.

Based on the experience and assessment, mobile phones costing Rs. 5,000/- or more are depreciated over 2 years.

Assets costing less than Rs. 5,000/- are fully depreciated in the year of purchase.

ii) Double or triple shift depreciation, wherever applicable, is provided in respect of machines on the basis of actual number of days for which such machines work on double or triple shift.

iii) Intangible assets are recognized as specified in the applicable accounting standard and are amortized as follows:

iv) Cost of leasehold land, other than acquired on perpetual basis, is amortized over the lease period.

v) Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortized over the lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.

h) 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 / long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision is made to recognize a decline, other than temporary, in the value of long-term investments, such reduction being determined and made for each investment individually.

i) employee Benefits

1) Short Term Employee Benefits:

All employee benefits payable wholly within twelve months after the end of the period in which the employees render the related services are classified as short term employee benefits and are recognized as expense in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid (including compensated absences) in exchange for services rendered, as a liability.

2) Long Term Employee Benefits:

i) Defend Contribution Plans

Defend contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company's contribution to defend contribution plans is recognized in the statement of profit and loss in the financial year to which they relate.

The Company operates the following defned contribution plans.

Provident Fund Plan & Employee Pension Scheme:

The Company makes monthly contributions at prescribed rates towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India.

Employee State Insurance

The Company makes prescribed monthly contributions towards Employees State Insurance Scheme.

Superannuation Scheme

The Company contributes towards a fund established to provide superannuation

benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India.

ii) Defend Benefit Plans

Defend benefit plans are plans under which the Company pays certain defend benefits to its employees at the time of their retirement / resignation / death based on rules framed for such schemes. The Company operates following defend benefit plans:

Provident fund (set-up by the Company and administered through trust)

The Company also contributes to certain funds which were set-up by the Company and administered through trust for the benefit of certain employees. The interest rate payable by the trust to the beneficiaries is regulated by statutory authorities. The Company has an obligation to make good the shortfall, if any, between the return on investments of the Trust and the notified interest rate.

Gratuity

The Company provides for gratuity obligations through a defned beneft retirement plan (the 'Gratuity Plan') covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement / termination of employment or death of an employee, based on the respective employees' salary and years of employment with the Company. The Company provides for its liability under the Gratuity Plan based on actuarial valuation.

Earned Leaves / Sick Leaves

The Company provides for the liability at year end on account of un-availed accumulated leaves on the basis of actuarial valuation.

3) Employee Stock Options:

Compensation cost in respect of stock options granted to eligible employees is recognized using the intrinsic value of the stock options and is amortized over the vesting period of such options granted .

j) Borrowing costs

Borrowing costs attributable to the acquisition of qualifying assets are capitalized till the period such assets are ready for their intended use. All other borrowing costs are charged to the statement of profit and loss.

k) operating leases

Lease payments under an operating lease are recognized as an expense in the statement of profit and loss on a straight line basis over the lease term.

l) government grants

Recognition

Government grants are recognized where:

i) There is reasonable assurance of complying with the conditions attached to the grant.

ii) Such grant / benefit has been earned and it is reasonably certain that the ultimate collection will be made.

Presentation in Financial Statements:

i) Government grants relating to specific fixed assets are adjusted with the value of such fixed assets.

ii) Government grants in the nature of promoters' contribution, i.e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to capital reserve.

iii) Government grants related to revenue items are either adjusted with the related expenditure / revenue or shown under "Other Income", in case direct linkage with cost / income is not determinable.

m) Taxes on income

i) Current tax on income is determined on the basis of taxable income computed in accordance with the applicable provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognized for all timing differences between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

iii) Deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized, except in the case of unabsorbed depreciation or carry forward of losses under the Income Tax Act, 1961, where such deferred tax asset

is recognized 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 assets can be realized.

iv) Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will be in a position to avail of such credit under the provisions of the Income Tax Act, 1961.

n) impairment of Asset

Impairment of individual assets / cash generating unit (a group of assets that generates identified independent cash fows) is identified using external and internal sources of information and impairment loss if any, is determined and recognized in accordance with the Accounting Standard (AS) 28 "Impairment of Assets".

o) provisions, Contingent liabilities and Contingent assets

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if:

i) the Company has a present obligation as a result of a past event;

ii) a probable outfox of resources is expected to settle the obligation; and

iii) the amount of the obligation can be reliably estimated.

Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not probable that an outfox of resources will be required to settle the obligation.

ii) a possible obligation, unless the probability of outfox of resources is remote.


Sep 30, 2012

A) Basis of preparation of Financial Statements

These financial statements have been prepared on a going concern basis to comply in all material respects with the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956.

B) Adoption of revised Schedule VI of the Companies Act,1956

For the year ended September 30th, 2012, the revised Schedule VI, notified under the Companies Act 1956 has become applicable to the Company for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement of principles followed for preparation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

All assets and liabilities have been classified as current and non-current as per the criteria set out in the revised Schedule VI. In line with the normal operating cycle of the main products, the Company has considered a period of 12 months for the purpose of determination of classification between current and non-current assets and liabilities.

C) Use of Estimates

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

D) Fixed Assets

i. Fixed assets are stated at their acquisition cost (except in the case of revaluation of certain assets where these are stated at revalued amounts) less accumulated depreciation. Acquisition cost includes taxes, duties (excluding excise duty, service tax and VAT for which CENVAT/VAT credit is available), freight and other incidental expenses relating to acquisition and installation. In case of certain machineries acquired under lease prior to 01.04.2001, the cost of acquisition represents the principal value of the respective lease (including the residual value at expiry of lease). In the acquisition of fixed assets involved in the establishment of a new project/ factory, all direct expenses including borrowing costs are capitalised.

ii. Fixed assets pending disposal are stated at lower of net book value (at the time of discarding of assets) and net realisable value. Wherever, the net book value of the assets can not be reasonably determined, it is stated at net realisable value.

E) Recognition of Income/Expenditure

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. The following specific recognition criteria are applied for revenue recognition:

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

ii. In contracts involving the rendering of services, revenue is recognised as and when the services are rendered. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit flowing to the Company and is accordingly excluded from revenue.

iii. Income from sale of certified emission reductions (CERs/carbon credits) is recognised on the delivery of the carbon credits to the customers'' account as evidenced by the receipt of confirmation of execution of delivery instructions.

iv. Revenue from construction contracts is recognised on the percentage of completion method, measured by the proportion that contract costs incurred for work performed till the reporting date bear to the estimated total contract cost. Contract costs for this purpose include :

a. Costs that relate directly to the specific contract;

b. Costs that are attributable to contract activity in general and can be allocated to the contract; and

c. Such other costs as are specifically chargeable to the customer under the terms of contract.

Foreseeable losses, if any, are provided for immediately.

v. Off-season expenses relating to sugar and bagasse based co-generation units, other than interest, selling and non-operating expenses/income incurred/earned during off-season, are deferred and are absorbed over the duration of the ensuing operating season.

vi. Income/Expenditure relating to prior periods and prepaid expenses which do not exceed Rs. 0.10 lacs in each case, are treated as Income/Expenditure of current year.

vii. Compensation under Voluntary Retirement Scheme and all other termination benefits, if any, incurred during the year, are recognised as expense in the statement of profit and loss.

F) Foreign Currency Transactions

i. Transactions denominated in foreign currencies are initially recorded at the exchange rate prevailing at the date of transaction.

ii. Foreign currency monetary items (including forward contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes) are translated at year end rates. Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

iii. The premium or discount on forward exchange contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes is amortised as expense or income over the life of the contracts.

iv. In respect of derivative contracts relating to firm commitments or highly probable forecast transactions, provision is made for mark to market losses, if any, at the balance sheet date. Gains, if any, are not recognised till settlement.

G) Inventories

i. Inventories of raw materials, components, stores and spares are valued at lower of cost and net realisable value. By-products used as raw material are valued at transfer cost. Cost for the purpose of valuation of raw materials and components, stores and spares is considered on the following basis :

ii. Finished goods and Work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. Excise duty is included in the value of finished goods.

iii. Unsold certified emission reductions are recognised as inventory in accordance with the Guidance Note on Accounting for Self-generated Certified Emission Reductions (CERs), issued by the Institute of Chartered Accountants of India. Inventory of CERs is valued at lower of cost and net realisable value. The cost incurred on verification/certification of CERs is considered as the cost of inventories of CERs.

iv. Patterns, Loose tools, Jigs and Fixtures are written off equally over three years.

v. By-products (excluding those used as raw materials) and scrap are valued at estimated net realisable value.

H) Depreciation

i) Depreciation on fixed assets is provided on the straight line method at the rates specified in Schedule XIV of the Companies Act, 1956 other than the following assets which are depreciated at higher rates on the straight line basis over their estimated useful economic life as follows :

ii) Cost of leasehold land is amortised over the lease period.

iii) Fixture and fittings and improvements to leasehold buildings not owned by the Company are amortised over the lease period or estimated useful life of such fixture, fittings and improvements, whichever is lower.

iv) The additional depreciation on increase in cost on account of revaluation of certain assets, is adjusted against the Revaluation Reserve and is thus not charged to the statement of profit and loss.

I) Research & Development

Revenue expenditure on research & development is charged under respective heads of account. Capital expenditure on research and development is included as part of cost of fixed assets and depreciated on the same basis as other fixed assets.

J) Investments

Investments, which are readily realisable 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 / long-term investments. Current investments are carried at the lower of cost and fair value. Long-term investments are carried at cost. However, provision is made to recognize a decline, other than temporary, in the value of long-term investments, such reduction being determined and made for each investment individually.

K) Employee Benefits

1) Short Term Employee Benefits:

All employee benefits payable wholly within 12 months after the end of the period in which the employees render the related services are classified as short term employee benefits and are recognised as expense in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid (including compensated absences) in exchange for services rendered, as a liability.

2) Long Term Employee Benefits:

i) Defined Contribution Plans

Defined contribution plans are retirement benefit plans under which the Company pays fixed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Company''s contribution to defined contribution plans is recognised in the statement of profit and loss in the financial year to which they relate.

The Company operates the following defined contribution plans.

- Provident Fund Plan & Employee Pension Scheme:

The Company makes monthly contributions on prescribed basis towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India / funds (set up by the Company and administered through Trusts). The Company has an obligation to make good the shortfall, if any, between the return on investments of the Trusts and notified interest rate.

- Employee State Insurance

The Company makes specified monthly contributions towards Employees State Insurance Scheme.

- Superannuation Scheme

The Company contributes towards a fund established to provide superannuation benefit to certain employees in terms of Group Superannuation Policies entered into by such fund with the Life Insurance Corporation of India. Contribution towards aforesaid fund is charged to the statement of profit and loss in the financial year to which it relates.

ii) Defined Benefit Plans

Defined benefit plans are retirement benefit plans under which the Company pays certain defined benefits to the employees at the time of their retirement/resignation/death based on rules framed for such schemes. The Company operates following defined benefit plans:

- Gratuity

The Company provides for gratuity obligations through a defined benefit retirement plan (the ''Gratuity Plan1) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement/termination of employment or death of an employee during service, based on the respective employees'' salary and years of employment with the Company. The Company provides for its liability under the Gratuity Plan based on actuarial valuation.

- Earned Leaves / Sick Leaves

The Company provides for the liability at year end on account of unavailed accumulated leaves on the basis of actuarial valuation.

3) Employee Stock Options:

Compensation cost in respect of stock options granted to eligible employees is recognised using the intrinsic value of the stock options and is amortised over the vesting period of such options granted.

L) Borrowing costs

Borrowing costs attributable to the acquisition of qualifying assets are capitalised till the period such assets are ready for their intended use. All other borrowing costs are charged to the statement of profit and loss.

M) Operating leases

Lease payments under an operating lease are recognised as an expense in the statement of profit and loss on a straight line basis over the lease term.

N) Government Grants

Recognition

Government grants are recognised where:

i) There is reasonable assurance of complying with the conditions attached to the grant.

ii) Such grant/benefit has been earned and it is reasonably certain that the ultimate collection will be made.

Presentation in Financial Statements:

i) Government grants relating to specific fixed assets are adjusted with the value of such fixed assets.

ii) Government grants in the nature of promoters'' contribution, i.e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to capital reserve.

iii) Government grants related to revenue items are either adjusted with the related expenditure/revenue or shown under "Other Income", in case direct linkage with cost/income is not determinable.

O) Taxes on Income

i) Current tax on income is determined on the basis of taxable income computed in accordance with the applicable provisions of the Income Tax Act, 1961.

ii) Deferred tax is recognised for all timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

iii) Deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised, except in the case of unabsorbed depreciation or carry forward of losses under the Income Tax Act, 1961, where such deferred tax asset is recognised 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 assets can be realised.

iv) Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will be in a position to avail of such credit under the provisions of the Income Tax Act, 1961.

P) Intangible Assets

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 "Intangible Assets" and are amortised on straight line basis as follows:

Q) Impairment of Asset

Impairment of individual assets/cash generating unit (a group of assets that generates identified independent cash flows) is identified using external and internal sources of information and impairment loss if any, is determined and recognised in accordance with the Accounting Standard (AS) 28 " Impairment of Assets"

R) Provisions, Contingent liabilities and Contingent assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if:

i) the Company has a present obligation as a result of a past event;

ii) a probable outflow of resources is expected to settle the obligation; and

iii) the amount of the obligation can be reliably estimated.

Reimbursement expected in respect of expenditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settle the obligation.

ii) a possible obligation, unless the probability of outflow of resources is remote.

Contingent assets are not recognised.


Sep 30, 2010

A) Basis of preparation of Financial Statements

These financial statements have been prepared on a going concern basis to comply in all material respects with the applicable accounting standards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

b) Fixed Assets

i. Fixed assets are stated at cost of acquisition (eRs.cept in case of revaluation of certain assets where these are stated at revalued amounts) less accumulated depreciation. Cost includes taRs.es, duties (eRs.cluding eRs.cise duty, service taRs. and VAT for which CenvatTVAT credit is available), freight and other incidental eRs.penses relating to acquisition and installation. In respect of new projects, all direct eRs.penses including borrowing costs incurred upto the date of commencement of commercial production or when related asset is put to use are capitalized.

ii. Discarded fiRs.ed assets are stated at lower of net book value (at the time of discarding of assets) and net realisable value. Wherever, the net book value of the assets can not be reasonably determined, it is stated at net realisable value.

c) Recognition of Income/ERs.penditure

i. Income from sale of products and services is recognised on despatch of goods or when the services are rendered. Gross sales are stated at contractual realisable values inclusive of eRs.cise duty and eRs.port incentive and net of sales taRs. and trade discounts.

ii. Income from carbon credits is recognized on the delivery of the carbon credits to the customers account as evidenced by the receipt of confirmation of eRs.ecution of delivery instructions.

iii. Revenue from fiRs.ed price construction contracts is recognized on the percentage of completion method, measured by the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract cost. Contract costs for this purpose include:

a. Costs that relate directly to the specific contract;

b. Costs that are attributable to contract activity in general and can be allocated to the contract; and

c. Such other costs as are specifically chargeable to the customer under the terms of contract.

Foreseeable losses, if any, are provided for immediately.

iv. Off-season eRs.penses relating to sugar and bagasse based co-generation units, other than interest, selling and non- operating eRs.penses/income incurred/earned during off- season, are deferred and are absorbed over the duration of the ensuing operating season.

v. Income/ERs.penditure relating to prior periods and prepaid eRs.penses which do not eRs.ceed Rs.10,000/- in each case, are treated as Income/ERs.penditure of current year.

vi. Compensation under Voluntary Retirement Scheme (VRS) incurred till September 30, 2009, is amortised over 36 months or over the duration till 30th September 2010 from the date of its incurrence, whichever period is shorter. VRS compensation and all other termination benefits, if any. incurred during the year, are recognized as eRs.penses.

d) Foreign Currency Transactions

i. Transactions denominated in foreign currencies are recorded at the eRs.change rate prevailing at the date of transaction.

ii. Foreign currency monetary items (including forward contracts) are translated at year end rates. ERs.change differences arising on settlement of transactions and translation of monetary items (including forward contracts) are recognised as income or eRs.pense in the year in which they arise.

iii. The premium or discount on forward eRs.change contracts not relating to firm commitments or highly probable forecast transactions and not intended for trading or speculative purposes is amortised as eRs.pense or income over the life of the contracts.

iv. In respect of derivative contracts relating to firm commitments or highly probable forecast transactions, provision is made for mark to market losses, if any, at the balance sheet date. Gains, if any, on such transactions are not recognized till settlement.

e) Inventories

i. Inventories of raw materials, components, stores and spares are valued at lower of cost and net realisable value. By- products used as raw material are valued at transfer cost. Cost for the purpose of valuation of raw materials and components, stores and spares is considered on the following basis:

Raw Materials & Components Manufacturing Units Basis SugarFirst in first out Turbine, Gears, Co-generation & Distillery_Weighted Average Water Business GroupSpecific Cost Stores and Spares Manufacturing Units Basis Water Business GroupSpecific Cost

Other UnitsWeighted Average

ii. Finished goods and Work-in-progress are valued at lower of cost and net realisable value. The cost of finished goods and work-in-progress includes raw material costs, direct cost of conversion and proportionate allocation of indirect costs incurred in bringing the inventories to their present location and condition. ERs.cise duty is included in the value of finished goods.

iii. Patterns, Loose tools, Jigs and FiRs.tures are written off equally overthreeyears.

iv. By-products (eRs.cluding those used as raw materials) and scrap are valued at estimated net realisable value.

f) Depreciation

ii) Cost of Leasehold Land is amortised overthe lease period.

iii) FiRs.ture and Fittings and improvements to leasehold buildings not owned by the Company are amortised over the lease period or estimated life, whichever is lower.

iv) The additional depreciation, on increase in cost on account of revaluation is adjusted against the Revaluation Reserve and is thus not charged to Profit & Loss Account for the year.

g) Research & Development

Revenue eRs.penditure on research & development is charged under respective heads of account. Capital eRs.penditure on research and development is included as part of cost of fiRs.ed assets and depreciated on the same basis as other fiRs.ed assets.

h) Investments

Investments are valued at cost inclusive of eRs.penses incidental to their acquisition. Long term investments are carried at cost. Provision is made for diminution in value, if suchdimunition is, in the opinion of the management, other than temporary in nature. Current investments are valued at lower of cost and fair value.

i) Employee Benefits

1) Short Term Employee Benefits:

All employee benefits payable wholly within 12 months after the end of the period in which the employees render the related services are classified as short term employee benefits and are recognized as eRs.pense in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits eRs.pected to be paid (including compensated absences) in eRs.change for services rendered as a liability.

2) Long Term Employee Benefits:

a). Defined Contribution Plans

Defined contribution plans are retirement benefit plans under which the Company pays fiRs.ed contributions to separate entities (funds) or financial institutions or state managed benefit schemes. The Companys contribution to defined contribution plans is recognized in the Profit & Loss account in the financial year to which they relate.

The Company operates the following defined contribution plans.

I) Provident Fund Plan & Employee Pension Scheme:

The Company makes specified monthly contributions towards Employee Provident Fund/ Employee Pension Scheme to fund administered and managed by the Government of India / funds (set up by the Company and administered through Trusts). The Company has an obligation to make good the shortfall, if any, between the return on investments of the Trusts and notified interest rate.

ii). Employee State Insurance:

The Company makes specified monthly contributions towards Employees State Insurance Scheme.

iii). Superannuation Scheme:

The Company has taken Group Superannuation Policies with Life Insurance Corporation of India for superannuation payable to specific employees. Contribution towards aforesaid fund is charged to the Profit & Loss account in the financial year to which it relates.

b). Defined Benefit Plans

Defined benefit plans are retirement benefit plans under which the Company pays certain defined benefits to the employees at the time of their retirement/resignation/death based on rules framed for such schemes.

I). Gratuity:

The Company provides for gratuity obligations through a defined benefit retirement plan (the Gratuity Plan) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment based on the respective employee salary and years of employment with the Company. The Company provides for its liability under the Gratuity Plan based on actuarial valuation.

ii). Earned Leaves/Sick Leaves:

The Company provides for the liability at year end on account of unavailed accumulated leaves on the basis of actuarial valuation.

3) Employee Stock Options:

Compensation cost in respect of stock options granted to eligible employees is recognised using the intrinsic value ot the stock options and is amortised over the vesting period ot such options granted.

j) Borrowing costs

Borrowing costs attributable to the acquisition of qualifying assets are capitalised upto the period such assets are ready for its intended use. All other borrowing costs are charged to Profits Loss Account.

k) Government Grants

Recognition

Government grants are recognised where:

i) There is reasonable assurance of complying with the conditions attached to the grant.

ii) Such grant/benefit has been earned and it is reasonably certain that the ultimate collection will be made.

Presentation in Financial Statements:

i) Government grants relating to specific fiRs.ed assets are adjusted with the value of the fiRs.ed assets.

ii) Government grants in the nature of promoters contribution, i.e. which have reference to the total investment in an undertaking or by way of contribution towards total capital outlay, are credited to capital reserve.

iii) Government grants related to revenue items are either adjusted with the related eRs.penditure/revenue or shown under "Other Income", in case direct linkage with cost/income is not determinable.

l) Accounting for assets acquired under lease

In respect of plant & machinery acquired on lease before 1 st April 2001, the principal value of the lease (including sale value on the eRs.piry of lease), representing fair value of the assets, is amortised over technically estimated lives of such assets and unamortised value of such lease rentals are stated separately under "FiRs.ed Assets". Lease rentals of other assets, acquired before 1st April 2001 are charged off in the period in which these accrue.

m) TaRs.es on Income

i) Current taRs. on income is determined on the basis of taRs.able income computed in accordance with the applicable provisions of thelncome TaRs. Act, 1961.

ii) Deferred taRs. is recognised for all timing differences between the accounting income and the taRs.able income for the year, and quantified using the taRs. rates and laws enacted or substantively enacted as on the Balance Sheet date.

iii) Deferred taRs. asset is recognised and carried forward only to the eRs.tent that there is a reasonable certainty that sufficient future taRs.able income will be available against which such deferred taRs. assets can be realized, eRs.cept in the case of unabsorbed depreciation or carry forward of losses under the Income TaRs. Act, 1961, deferred taRs. asset is recognised only to the eRs.tent that there is virtual certainty supported by convincing evidence that sufficient future taRs.able income will be available against which such deferred taRs. assets can be realized.

iv) Minimum Alternate TaRs. (MAT) credit is recognized as an asset only when and to the eRs.tent there is convincing evidence that the Company will be in a position to avail of such credit under the provisions of the Income TaRs. Act,1961.

n) Intangible Assets

Intangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 "Intangible Assets" and are amortised on straight line basis as follows:

Period of amortisation

Computer Software 36 months

Designs Drawings 72 months

Technical Know-how fees 72 months

o) Impairment of Asset

Impairment of individual assets/cash generating unit (a group of assets that generates identified independent cash flows) is identified using eRs.ternal and internal sources of information and impairment loss if any, is determined and recognised in accordance with the Accounting Standard (AS) - 28 - Impairment of Assets.

p) Provisions, Contingent liabilities and Contingent assets

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if

i) the Company has a present obligation as a result of a past event.

ii) a probable outflow of resources is eRs.pected to settle the obligation and

iii) the amount of the obligation can be reliably estimated.

Reimbursement eRs.pected in respect of eRs.penditure required to settle a provision is recognised only when it is virtually certain that the reimbursement will be received.

Contingent Liability is disclosed in the case of

i) a present obligation arising from a past event, when it is not probable that an outflow of resources will be required to settlethe obligation.

ii) a possible obligation, unless the probability of outflow of resources is remote.

Contingent Assets are neither recognised nor disclosed.

 
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