Mar 31, 2015
I. BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (AS) Notified under
section 133 of the Companies Act, 2013, read together with paragraph 7
of the Companies (Accounts) Rules, 2014. 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 in paragraph II below.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle, and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current/non-current classification of
assets and liabilities.
II. CHANGE IN ACCOUNTING POLICY
Till the year ended 31 March, 2014, Schedule XIV to the Companies Act,
1956, prescribed requirements concerning depreciation of fixed assets.
From the current year, Schedule XIV has been replaced by Schedule II to
the Companies Act, 2013. Effective from 1st April, 2014, the Company
has provided depreciation on fixed assets based on useful lives as
provided in Schedule II to the Companies Act, 2013 or as re-assessed by
the Company. The management believes that depreciation rates currently
used fairly reflect its estimate of the useful lives and residual
values of fixed assets, though these rates in certain cases are
different from lives prescribed under Schedule II.
Further, on application of Schedule II to the Companies Act, 2013, the
Company has changed the manner of depreciation for its fixed assets.
Now, the Company identifies and determines separate useful life for
each major component of the fixed asset, if they have useful life that
is materially different from that of the remaining asset.
Based on transitional provision given in Schedule II to the Companies
Act, 2013, the carrying value of assets whose useful lives are already
exhausted amounting to Rs. 12.51 Crore (net of deferred tax Rs. 6.44
Crore) has been charged to opening balance of retained earnings. Had
there been no change in useful lives of fixed assets, the charge to the
Statement of Profit and Loss would have been higher by Rs. 19.03 Crore.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities, at the end of the
reporting period. Although, these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
IV. TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible Fixed Assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Each part of an item of property, plant and equipment
with a cost, that is significant in relation to the total cost of the
item, is depreciated separately. This applies mainly to components for
machinery. When significant parts of fixed assets are required to be
replaced at intervals, the Company recognises such parts as individual
assets with specific useful lives and depreciates them accordingly. Any
trade discounts and rebates are deducted in arriving at the purchase
price.
Depreciation on Tangible Fixed Assets is provided on Straight Line
method using the rates arrived at based on the useful lives as
specified in the Schedule II to the Companies Act, 2013 or estimated by
the management. The Company has used the following useful life to
provide depreciation on its fixed assets.
V. INTANGIBLE ASSETS AND AMORTISATION
Intangible Assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
Assets are amortised on a straight-line basis over their estimated
useful lives.
VI. IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognised in the prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or
have decreased.
VII. BORROWING COSTS
Borrowing Costs attributable to acquisition and construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Statement of Profit and Loss
in the period in which they are incurred.
VIII. TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year.
With respect to the exchange difference arising on
translation/settlement of long-term foreign currency items from 1st
April, 2011, the Company has adopted the following policy:
(i) Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
(ii) In other cases, the foreign exchange difference is accumulated in
a Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long-term asset/liability.
Exchange difference on restatement of all other monetary items is
recognised in the Statement of Profit and Loss. Other non- monetary
items like fixed assets, investments in equity shares are carried in
terms of historical cost using the exchange rate at the date of
transaction.
IX. DERIVATIVE INSTRUMENTS
Premium/Discount, in respect of forward foreign exchange contract to
hedge an underlying recorded asset or liability, is recognised over the
life of the contracts. Exchange differences on such contracts, except
the contracts which are long-term foreign currency monetary items, are
recognised in the Statement of Profit and Loss in the year in which the
exchange rate changes. Profit/Loss on cancellation/renewal of forward
exchange contract is recognised as income/expense for the year.
The Company enters into forward contracts to hedge the foreign currency
risk of firm commitments and highly probable forecast transactions and
designates such forward contracts as cash flow hedge by applying the
principles set out in the Accounting Standard-30 - Financial
Instruments: Recognition and Measurement. All such forward contracts
are used as risk management tools and not for speculative purposes.
For the forward contracts designated as cash flow hedges, the effective
portion of the fair value of forward contracts are recognised in
Hedging Reserve (net of taxes) under Reserves and Surplus, and
reclassified into, i.e., recognised in, the Statement of Profit and
Loss in the period or periods during which the underlying hedged item
assumed affects profit or loss. The ineffective portion of the change
in fair value of such instruments is recognised in the Statement of
Profit and Loss in the period in which they arise. If the hedging
relationship ceases to be effective or it becomes probable that the
expected transaction will no longer occur, the hedge accounting is
discontinued and the fair value changes, arising from the forward
contracts are recognised in the Statement of Profit and Loss.
The Company uses derivative financial instruments such as currency
swap, and interest rate swaps to hedge its risks associated with
foreign currency fluctuations and interest rate. As per the Institute
of Chartered Accountants of India (ICAI) announcement regarding
accounting for derivative contracts, other than covered under AS-11 and
foreign exchange contracts to hedge highly probable forecast
transactions and firm commitments described above, these are
mark-to-market on the portfolio basis and net loss after considering
the offsetting effect on the underlying hedged item is charged to the
income statement. Net gains are ignored.
X. 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 long-term investments.
Investments are recorded at cost on the date of purchase, which include
acquisition charges such as brokerage, stamp duty, taxes, etc. Current
Investments are stated at lower of cost and net realisable value.
Long-term investments are stated at cost after deducting provisions
made, if any, for other than temporary diminution in the value.
XI. INVENTORIES
Raw materials, components, stores and spares, and packing materials are
valued at lower of cost and net realisable value.
However, these items are considered to be realisable at cost if the
finished products, in which they will be used, are expected to be sold
at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realisable value. Finished goods and work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Cost of inventories is computed on a weighted-average basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory are
duly provided for.
Certified Emission Reductions (CERs) are valued at lower of cost and
net realisable value. Cost includes consultant''s fee and the cash
payment made under the second levy to the concerned authorities for
obtaining the credit of CERs.
XII. GOVERNMENT GRANTS
Government Grants are recognised when there is a reasonable assurance
that the same will be received and all attaching conditions will be
complied with. Revenue grants are recognised in the Statement of Profit
and Loss. Capital grants relating to specific Tangible/Intangible
Assets are reduced from the gross value of the respective
Tangible/Intangible Assets. Other capital grants in the nature of
promoter''s contribution are credited to capital reserve.
XIII. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Revenue from sale of products is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer. Sale of
goods are recorded net of trade discounts, rebates, Sales Tax, Value
Added Tax and gross of Excise Duty. Revenue from services are
recognised as they are rendered based on agreements/arrangements with
the concerned parties and recognised net of Service Tax.
Fertiliser price support under Group Concession and other Scheme of
Government of India is recognised based on management''s estimate taking
into account known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised on sale
of CERs.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
Dividend income on investments is accounted for when the right to
receive the payment is established.
XIV. RETIREMENT AND OTHER EMPLOYEE BENEFITS
(a) Defined Contribution Plan
The Company makes defined contribution to Government Employee Provident
Fund, Government Employee Pension Fund, Employee Deposit Linked
Insurance, ESI and Superannuation Schemes, which are recognised in the
Statement of Profit and Loss on accrual basis.
(b) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act, long-term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year using the
projected unit credit method except for short-term compensated
absences, which are provided for based on estimates. Actuarial gains
and losses are recognised immediately in the Statement of Profit and
Loss as income or expense. Obligation is measured at the present value
of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on
Government bonds where the terms of the Government bonds are consistent
with the estimated terms of the defined benefit obligation.
In respect of certain employees, Provident Fund contributions are made
to a Trust, administered by the Company. The interest rate payable to
the members of the Trust shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees''
Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall,
if any, shall be made good by the Company. The Company''s liability is
actuarially determined (using the Projected Unit Credit Method) at the
end of the year and any shortfall in the Fund size maintained by the
Trust set up by the Company is additionally provided for. Actuarial
losses/gains are recognised in the Statement of Profit and Loss in the
year in which they arise.
XV. EMPLOYEE STOCK OPTIONS
The stock options and stock appreciation rights (SAR) granted are
accounted for as per the accounting treatment prescribed by Securities
and Exchange Board of India (Share-Based Employee Benefits)
Regulations, 2014, issued by Securities and Exchange Board of India and
the Guidance Note on Accounting for Employee Share-based Payments,
issued by the ICAI, whereby the intrinsic value of the option is
recognised as employee compensation. The employee compensation is
charged to the Statement of Profit and Loss on the straight-line basis
over the vesting period of the option.
In respect of re-pricing of existing stock options, the incremental
intrinsic value of the options is accounted as employee cost over the
remaining vesting period.
In case of forfeiture stock option which is not vested, amortised
portion is reversed by credit to employee compensation expense. In a
situation where the stock option expires unexercised, the related
balance standing to the credit of the employees Stock Options
Outstanding Account are transferred to the General Reserve.
XVI. TAXATION
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the
Income-tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain, that
sufficient future taxable income will be available against which
deferred tax asset can be realised. Any such write-down is reversed to
the extent that it becomes reasonably certain, that sufficient future
taxable income will be available.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profit. At each Balance Sheet date the Company reassesses the
unrecognised deferred tax assets.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal Income Tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shown as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period.
XVII. RESEARCH AND DEVELOPMENT
Revenue expenditure on research is expensed under the respective heads
of the account in the period in which it is incurred. Development
expenditure is capitalised as an asset if the following conditions can
be demonstrated:
a) The technical feasibility of completing the asset so that it can be
made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) The Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has the ability to measure the expenditure attributable
to the asset during its development reliably. Other development costs
which do not meet the above criteria are expensed out during the period
in which they are incurred.
XVIII. FINANCE LEASE
As a Lessee:
Leases, where substantially all the risks and benefits incidental to
ownership of the leased item are transferred to the Lessee, are
classified as finance lease. The Company has capitalised the leased
item at lower of fair value and present value of the minimum lease
payments at the inception of the lease and disclosed as leased assets.
Such assets are amortised over the period of lease or estimated life of
such asset, whichever is less.
Lease payments are apportioned between the finance charges and
reduction of the lease liability based on implicit rate of return.
Lease management fees, lease charges and other initial direct costs are
capitalised.
XIX. OPERATING LEASES
(a) As a Lessee:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of Profit and Loss on a
straight-line basis over the lease term.
(b) As a Lessor:
The Company has leased certain tangible assets, and such leases, where
the Company has substantially retained all the risks and rewards of
ownership, are classified as operating leases. Lease income is
recognised in the Statement of Profit and Loss on a straight-line basis
over lease term. Initial direct costs are recognised in the Statement
of Profit and Loss.
XX. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents for the purpose of Cash Flow Statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of three months or less and short-term highly
liquid investments with an original maturity of three months or less.
XXI. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
XXII. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted-average
number of equity shares outstanding during the period. The
weighted-average number of equity shares outstanding during the period
and for all periods presented is adjusted for events such as bonus
issue; bonus element in a rights issue to the existing shareholders;
share split; and reverse share split (consolidation of shares) that
have changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted-average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
XXIII. CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence. Provisions are
recognised when there is a present obligation as a result of past
events, and it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable
estimate can be made. Provisions are not discounted to its present
value and are determined based on the best estimate required to settle
the obligation at the Balance Sheet date.
Mar 31, 2014
I. BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standards (AS) notified by the
Companies Accounting Standard Rules, 2006 (as amended), and the
relevant provisions of the Companies Act, 1956, read with General
Circular 8/2014 dated April 4, 2014, issued by the Ministry of
Corporate Affairs to the extent applicable. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle, and other
criteria set out in the Revised Schedule VI of the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current/non-current classification of
assets and liabilities.
II. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities, at the end of the
reporting period. Although, these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
III. TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible Fixed Assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Depreciation on Tangible Fixed Assets is provided on Straight Line
Method at the rates and in the manner prescribed under the Schedule XIV
of the Companies Act, 1956, except in the case of followings, where
depreciation is equally charged over the estimated useful lives of the
assets, which is higher than the rates prescribed under the Schedule
XIV of the Companies Act, 1956.
Fixed Assets, individually costing less than Rupees Five Thousand, are
fully depreciated in the year of purchase.
Depreciation on the Fixed Assets added/disposed off/discarded during
the year is provided on pro-rata basis with reference to the month of
addition/disposal/discarding and in the case of capitalisation of
Greenfield/Brownfield project, depreciation is charged from the date
the project is ready to commence commercial production to the Statement
of Profit and Loss.
"Continuous process plants" are classified based on technical
assessment and depreciation is provided accordingly.
IV. INTANGIBLE ASSETS AND AMORTISATION
Intangible Assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their estimated
useful lives.
V. IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
asset exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognised in the prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or
have decreased.
VI. BORROWING COSTS
Borrowing Costs attributable to acquisition and construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Statement of Profit and Loss
in the period in which they are incurred.
VII. TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year.
With respect to exchange difference arising on translation/settlement
of long-term foreign currency items from 1st April, 2011, the Company
has adopted the following policies:
(i) Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
(ii) In other cases, the foreign exchange difference is accumulated in
a Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long-term asset/liability.
Exchange difference on restatement of all other monetary items is
recognised in the Statement of Profit and Loss. Other non- monetary
items like fixed assets, investments in equity shares are carried in
terms of historical cost using the exchange rate at the date of
transaction.
VIII. DERIVATIVE INSTRUMENTS
Premium/Discount, in respect of forward foreign exchange contract to
hedge an underlying recorded asset or liability, is recognised over the
life of the contracts. Exchange differences on such contracts, except
the contracts which are long-term foreign currency monetary items, are
recognised in the Statement of Profit and Loss in the year in which the
exchange rates changes. Profit/Loss on cancellation/renewal of forward
exchange contract is recognised as income/expense for the year.
The Company enters into forward contracts to hedge the foreign currency
risk of firm commitments and highly probable forecast transactions and
designates such forward contracts as cash flow hedge by applying the
principles set out in the Accounting Standard-30 Â Financial
Instruments: Recognition and Measurement. All such forward contracts
are used as risk management tools and not for speculative purposes.
For the forward contracts designated as cash flow hedges, the effective
portion of the fair value of forward contracts are recognised in
Hedging Reserve (net of taxes) under Reserves and Surplus, and
reclassified into, i.e., recognised in the Statement of Profit and Loss
in the period or periods during which the underlying hedged item
assumed affects profit or loss. The ineffective portion of the change
in fair value of such instruments is recognised in the Statement of
Profit and Loss in the period in which they arise. If the hedging
relationship ceases to be effective or it becomes probable that the
expected transaction will no longer occur, the hedge accounting is
discontinued and the fair value changes, arising from the forward
contracts are recognised in the Statement of Profit and Loss.
The Company uses derivative financial instruments such as currency swap
and interest rate swaps to hedge its risks associated with foreign
currency fluctuations and interest rate. As per the Institute of
Chartered Accountants of India (ICAI) announcement regarding accounting
for derivative contracts, other than covered under AS-11 and foreign
exchange contracts to hedge highly probable forecast transactions and
firm commitments described above, these are mark-to-market on the
portfolio basis and net loss after considering the offsetting effect on
the underlying hedged item is charged to the income statement. Net
gains are ignored.
IX. 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 long-term investments.
Investments are recorded at cost on the date of purchase, which
includes acquisition charges such as brokerage, stamp duty, taxes, etc.
Current investments are stated at lower of cost and net realisable
value. Long-term investments are stated at cost after deducting
provisions made, if any, for other than temporary diminution in the
value.
X. INVENTORIES
Raw materials, components, stores and spares, and packing material are
valued at lower of cost and net realisable value. However, these items
are considered to be realisable at cost if the finished products, in
which they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realisable value. Finished goods and work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition.
Cost of inventories is computed on a weighted-average basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory are
duly provided for.
CERs are valued at lower of cost and net realisable value. Cost
includes consultant''s fee and the cash payment made under the second
levy to the concerned authorities for obtaining the credit of CERs.
XI. GOVERNMENT GRANTS
Government Grants are recognised when there is a reasonable assurance
that the same will be received and all attaching conditions will be
complied with. Revenue grants are recognised in the Statement of Profit
and Loss. Capital grants relating to specific Tangible/Intangible
Assets are reduced from the gross value of the respective
Tangible/Intangible Assets. Other capital grants in the nature of
promoter''s contribution are credited to capital reserve.
XII. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Revenue from sale of products is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer. Sale of
goods are recorded net of trade discounts, rebates, Sales Tax, Value
Added Tax and gross of Excise Duty.
Revenue from services are recognised as they are rendered based on
agreements/arrangements with the concerned parties and recognised net
of Service Tax.
Fertiliser price support under Group Concession and other Scheme of
Government of India is recognised based on management''s estimate taking
into account known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised on sale
of CERs.
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
Dividend income on investments is accounted for when the right to
receive the payment is established.
XIII. RETIREMENT AND OTHER EMPLOYEE BENEFITS
(a) Defined Contribution Plan
The Company makes defined contribution to Government Employee Provident
Fund, Government Employee Pension Fund, Employee Deposit Linked
Insurance, ESI and Superannuation Schemes, which are recognised in the
Statement of Profit and Loss on accrual basis.
(b) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act, long-term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year using the
projected unit credit method except for short-term compensated
absences, which are provided for based on estimates. Actuarial gains
and losses are recognised immediately in the Statement of Profit and
Loss as income or expense. Obligation is measured at the present value
of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on
Government bonds where the terms of Government bonds are consistent
with the estimated terms of the defined benefit obligation.
In respect of certain employees, Provident Fund contributions are made
to a Trust, administered by the Company. The interest rate payable to
the members of the Trust shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees''
Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall,
if any, shall be made good by the Company. The Company''s liability is
actuarially determined (using the Projected Unit Credit Method) at the
end of the year and any shortfall in the Fund size maintained by the
Trust set up by the Company is additionally provided for. Actuarial
losses/gains are recognised in the Statement of Profit and Loss in the
year in which they arise.
XIV. EMPLOYEE STOCK OPTIONS
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Options Scheme, Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India and the Guidance Note on Accounting for Employee Share-based
Payments, issued by the ICAI, whereby the intrinsic value of the option
is recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight-line basis over the vesting period of the option.
In respect of re-pricing of existing stock options, the incremental
intrinsic value of the options is accounted as employee cost over the
remaining vesting period.
The deferred employee compensation is charged to the Statement of
Profit and Loss on straight-line basis over the vesting period of the
option. In case of forfeiture stock option, which is not vested,
amortised portion is reversed by credit to employee compensation
expense. In a situation where the stock option expires unexercised, the
related balance standing to the credit of the employee''s Stock Options
Outstanding Account are transferred to the General Reserve.
Stock Appreciation Rights (SARs) granted to employees under the
Cash-settled Employee Share-based Payment Plan is recognised based on
intrinsic value method. Intrinsic value of the SARs is determined as
excess of closing market price on the reporting date over the market
price as on the date of grant of the unit and is charged as employee
benefit over the vesting period in accordance with "Guidance Note on
Accounting for Employee Share-based Payments" issued by the Institute
of Chartered Accountants of India.
XV. TAXATION
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the
Income-tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain, that
sufficient future taxable income will be available against which
deferred tax asset can be realised. Any such write-down is reversed to
the extent that it becomes reasonably certain, that sufficient future
taxable income will be available.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profit. At each Balance Sheet date the Company reassesses the
unrecognised deferred tax assets.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal Income-tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in Guidance Note issued
by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shown as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income-tax during the specified period.
XVI. RESEARCH AND DEVELOPMENT
Revenue expenditure on research is expensed under the respective heads
of the account in the period in which it is incurred. Development
expenditure is capitalised as an asset if the following conditions can
be demonstrated:
(a) The technical feasibility of completing the asset so that it can be
made available for use or sell.
(b) The Company has intention to complete the asset and use or sell it.
(c) The Company has the ability to sell the asset.
(d) The future economic benefits are probable.
(e) The Company has ability to measure the expenditure attributable to
the asset during its development reliably.
Other development costs, which do not meet the above criteria, are
expensed out during the period in which they are incurred.
XVII. OPERATING LEASES
(a) As a Lessee:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of Profit and Loss on a
straight-line basis over the lease term.
(b) As a Lessor:
The Company has leased certain tangible assets, and such leases, where
the Company has substantially retained all the risks and rewards of
ownership, are classified as operating leases. Lease income is
recognised in the Statement of Profit and Loss on a straight-line basis
over lease term. Initial direct costs are recognised in the Statement
of Profit and Loss.
XVIII. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of three months or less and short-term highly
liquid investments with an original maturity of three months or less.
XIX. MEASUREMENT OF PROFIT BEFORE DEPRECIATION/ AMORTISATION, INTEREST
AND TAX (PBDIT)
As permitted by the Guidance Note on the Revised Schedule VI of the
Companies Act, 1956, the Company has elected to present PBDIT as a
separate line item on the face of the Statement of Profit and Loss. The
Company measures PBDIT on the basis of profit/loss from operations. In
its measurement, the Company does not include depreciation and
amortisation expenses, finance costs and tax expenses.
XX. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
XXI. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted-average
number of equity shares outstanding during the period. The
weighted-average number of equity shares outstanding during the period
and for all periods presented is adjusted for events such as bonus
issue; bonus element in a rights issue to existing shareholders; share
split; and reverse share split (consolidation of shares) that have
changed the number of equity shares outstanding, without a
corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted-average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
XXII. CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
2) Term/Right Attached to Equity Shares
The Company has only one class of equity shares having a par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the Annual General Meeting.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution to all preferential holders. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
The Board of Directors has recommended Equity Dividend of Rs. 7.00 per
share for the year ended 31st March, 2014 (Previous Year: Rs. 6.50 per
share). The total cash outflows on account of the Equity Dividend would
be Rs. 91.06 Crore (Previous Year: Rs. 78.14 Crore) and Dividend
Distribution Tax thereon (Net of Tax Credit on dividend from subsidiary
companies) would be Rs. 6.67 Crore (Previous Year: Rs. Nil).
3) Term of Conversion/Redemption of Preference Shares
In accordance with the Composite Scheme of Arrangement, 10,000
(Previous Year: 10,000) 6% Redeemable Cumulative Preference Shares of Rs.
100/- each, fully paid-up, were issued to preference shareholders
(other than the Company) of Pantaloons Fashion & Retail Limited.
Preference shares carry cumulative dividend @6% p.a. The Company
declares and pays dividend in Indian rupees. The dividend proposed by
the Board of Directors is subject to the approval of the shareholders
in the Annual General Meeting.
These preference shares are redeemable by the Company at any time after
completion of one year and on or before completion of five years from
the 1st January, 2010, at the face value. In the event of liquidation
of the Company before conversion/redemption of preference shares, the
holders of Preference Shares will have priority over Equity Shares in
the payment of dividend and repayment of capital.
The Board of Directors has recommended Preference Dividend of Rs. 6.00
per share for the year ended 31st March, 2014 (Previous Year: Rs. 6.00
per share). The total cash outflows on account of the Preference
Dividend would be Rs. 0.01 Crore (Previous Year: Rs. 0.01 Crore) and
Dividend Distribution Tax thereon (Net of Tax Credit on dividend from
subsidiary companies) would be Rs. Nil (Previous Year: Rs. Nil). There are
no arrears of Dividend relating to Preference Shares.
4) The Company does not have any Holding Company.
6) Share reserved for issue under options and contracts, including the
terms and amounts: For details of Shares reserved for issue under the
Employee Stock Options Plan (ESOP) of the Company refer Note: 41.
7) There are no Equity and Preference Shares issued as fully paid-up
pursuant to any contract in consideration of other than cash or bought
back during the preceding last five years except issue of 10,000 6%
Redeemable Cumulative Preference Shares of Rs. 100 each pursuant to a
Scheme of Composite Arrangement to shareholders of Pantaloons Fashion &
Retail Limited.
9) In the year 1997, the Company had forfeited 4,487 shares held by 299
holders on account of non-payment of call money with interest on shares
issued against each detachable warrant.
10) 3,182,052 Equity Shares (Previous Year: 3,182,052) are represented
by Global Depository Receipts.
11) During the last five years, preceding 31st March, 2014, there were
80 Bonus Shares (Previous Year: 420 Bonus Shares) issued out of shares
kept in abeyance.
12) Figures in brackets represent the corresponding number of shares
for Previous Year.
Mar 31, 2013
I. BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (AS) Notified by the
Companies Accounting Standard Rules, 2006 (as amended), and the
relevant provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year except for those disclosed in Paragraph
II given below.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle, and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current/non-current classification of
assets and liabilities.
II. CHANGE IN ACCOUNTING POLICY
(a) Effective from 1st April, 2012, the Company has applied hedge
accounting principles in respect of forward exchange contracts taken to
hedge the foreign currency risk of firm commitments and highly probable
forecast transactions as set out in the Accounting Standard (AS) 30 -
Financial Instruments: Recognition and Measurement. Accordingly, all
such contracts that are designated as hedging instruments to hedge the
foreign currency risk of firm commitments and highly probable forecast
transactions, are marked to market, and loss (net) aggregating to Rs.
2.43 Crore has been recognised in the Hedging Reserve Account. Had the
Company continued to follow the earlier accounting policy, this loss
(net) would have been recognised in the Statement of Profit and Loss.
(b) Effective from 1st April, 2012, the Company has accounted for
Certified Emission Reductions (CERs) accounting based on the Guidance
Note on Accounting for self-generated Certified Emission Reductions,
issued by The Institute of Chartered Accountants of India. Accordingly,
income from CERs is recognised on sale of CERs, and CERs are shown as
inventory at lower of cost or net realisable value. Further, CER as on
1 st April, 2012, has been recognised at lower of cost or Net
realisable value based on Transitional provision of the Guidance Note
and differential amount of Rs. 0.74 Crore (net of taxes) has been
adjusted against General Reserves as per the Guidance Note.
III. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities, at the end of the
reporting period. Although, these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
IV. TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible Fixed Assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Depreciation on Tangible Fixed Assets is provided on Straight Line
Method at the rates and in the manner prescribed under the Schedule XIV
of the Companies Act, 1956, except in the case of followings, where
depreciation is equally charged over the estimated useful lives of the
assets, which is higher than the rates prescribed under the Schedule
XIV of the Companies Act, 1956.
Depreciation on the Fixed Assets added/disposed off/discarded during
the year is provided on pro-rata basis with reference to the month of
addition/disposal/discarding and in the case of capitalisation of
Greenfield/ Brownfield project, depreciation is charged from the date
the project is ready to commence commercial production to the Statement
of Profit and Loss.
"Continuous process plants" are classified based on technical
assessment and depreciation is provided accordingly.
V. INTANGIBLE ASSETS AND AMORTISATION
Intangible Assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives.
VI. IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognised in the prior years is recorded when there is an indication
that the impairment losses recognised for the assets no longer exist or
have decreased.
VII. BORROWING COSTS
Borrowing Costs attributable to acquisition and construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Statement of Profit and Loss
in the period in which they are incurred.
VIII. TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year.
With respect to exchange difference arising on translation/settlement
of long-term foreign currency items from 1 st April, 2011, the Company
has adopted the following policy:
(i) Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
(ii) In other cases, the foreign exchange difference is accumulated in
a Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long-term asset/liability.
Exchange difference on restatement of all other monetary items is
recognised in the Statement of Profit and Loss. Other non-monetary
items like fixed assets, investments in equity shares are carried in
terms of historical cost using the exchange rate at the date of
transaction.
IX. DERIVATIVE INSTRUMENTS
Premium/Discount, in respect of forward foreign exchange contract to
hedge an underlying recorded asset or liability, is recognised over the
life of the contracts. Exchange differences on such contracts are
recognised in the Statement of Profit and Loss in the year in which the
exchange rates changes. Profit / Loss on cancellation/renewal of
forward exchange contract is recognised as income/expense for the year.
The Company enters into forward contracts to hedge the foreign currency
risk of firm commitments and highly probable forecast transactions and
designates such forward contracts as cash flow hedge by applying the
principles set out in the Accounting Standard 30 - Financial
Instruments: Recognition and Measurement. All such forward contracts
are used as risk management tools and not for speculative purposes.
For the forward contracts designated as cash flow hedges, the effective
portion of the fair value of forward contracts are recognised in
Hedging Reserve (net of taxes) under Reserves and Surplus, and
reclassified into, i.e., recognised in, the Statement of Profit and
Loss in the period or periods during which the underlying hedged item
assumed affects profit or loss. The ineffective portion of the change
in fair value of such instruments is recognised in the Statement of
Profit and Loss in the period in which they arise. If the hedging
relationship ceases to be effective or it becomes probable that the
expected transaction will no longer occur, the hedge accounting is
discontinued and the fair value changes, arising from the forward
contracts are recognised in the Statement of Profit and Loss.
The Company uses derivative financial instruments such as currency swap
and interest rate swaps to hedge its risks associated with foreign
currency fluctuations and interest rate. As per The Institute of
Chartered Accountants of India (ICAI) announcement regarding accounting
for derivative contracts, other than covered under AS - 11 and foreign
exchange contracts to hedge highly probable forecast transactions and
firm commitments described above, these are mark to market on the
portfolio basis and net loss after considering the offsetting effect on
the underlying hedged item is charged to the income statement. Net
gains are ignored.
X. 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 long-term investments.
Investments are recorded at cost on the date of purchase, which
includes acquisition charges such as brokerage, stamp duty, taxes, etc.
Current Investments are stated at lower of cost and net realisable
value. Long-term investments are stated at cost after deducting
provisions made, if any, for other than temporary diminution in the
value.
XI. INVENTORIES
Raw materials, components, stores and spares, and packing material are
valued at lower of cost and net realisable value. However, these items
are considered to be realisable at cost if the finished products, in
which they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realisable value. Finished goods and work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost of
inventories is computed on a weighted-average basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory are
duly provided for.
CERs are valued at lower of cost and net realisable value. Cost
includes consultant''s fee and the cash payment made under the second
levy to the concerned authorities for obtaining the credit of CERs.
XII. GOVERNMENT GRANTS
Government Grants are recognised when there is a reasonable assurance
that the same will be received and all attaching conditions will be
complied with. Revenue grants are recognised in the Statement of Profit
and Loss. Capital grants relating to specific Tangible/Intangible
Assets are reduced from the gross value of the respective Tangible/
Intangible Assets. Other capital grants in the nature of promoter''s
contribution are credited to capital reserve.
XIII. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Revenue from sale of products is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer. Sale of
goods are recorded net of trade discounts, rebates, Sales Tax, Value
Added Tax and gross of Excise Duty.
Sale of power is recognised based on power off-take by the customer.
Revenue from services are recognised as they are rendered based on
agreements/arrangements with the concerned parties and recognised net
of Service Tax.
Fertiliser price support under Group Concession and other Scheme of
Government of India is recognised based on management''s estimate taking
into account known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised on sale
of CERs.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
Dividend income on investments is accounted for when the right to
receive the payment is established.
XIV. RETIREMENT AND OTHER EMPLOYEE BENEFITS
(a) Defined Contribution Plan
The Company makes defined contribution to Government Employee Provident
Fund, Government Employee Pension Fund, Employee Deposit Linked
Insurance, ESI and Superannuation Schemes, which are recognised in the
Statement of Profit and Loss on accrual basis.
(b) Defined Benefit Plan
The Company''s liabilities under Payment of Gratuity Act, long-term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year using the
projected unit credit method except for short-term compensated
absences, which are provided for based on estimates. Actuarial gains
and losses are recognised immediately in the Statement of Profit and
Loss as income or expense. Obligation is measured at the present value
of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the Balance Sheet date on
Government bonds where the terms of the Government bonds are consistent
with the estimated terms of the defined benefit obligation.
In respect of certain employees, Provident Fund contributions are made
to a Trust, administered by the Company. The interest rate payable to
the members of the Trust shall not be lower than the statutory rate of
interest declared by the Central Government under the Employees''
Provident Funds and Miscellaneous Provisions Act, 1952, and shortfall,
if any, shall be made good by the Company. The Company''s liability is
actuarially determined (using the Projected Unit Credit Method) at the
end of the year and any shortfall in the Fund size maintained by the
Trust set up by the Company is additionally provided for. Actuarial
losses/gains are recognised in the Statement of Profit and Loss in the
year in which they arise.
XV. EMPLOYEE STOCK OPTIONS
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Options Scheme, Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India and the Guidance Note on Accounting for Employee Share-based
Payments, issued by the ICAI, whereby the intrinsic value of the option
is recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight-line basis over the vesting period of the option.
In respect of re-pricing of existing stock options, the incremental
intrinsic value of the options is accounted as employee cost over the
remaining vesting period.
The options that lapse are reversed by a credit to employee
compensation expense, equal to the amortised portion of the value of
lapsed portion and credit to deferred employee compensation expense
equal to the unamortised portion.
XVI. TAXATION
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the
Income-tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts, and
there is an intention to settle the asset and the liability on a net
basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which
deferred tax asset can be realised. Any such write-down is reversed to
the extent that it becomes reasonably certain that sufficient future
taxable income will be available.
In case of unabsorbed losses and unabsorbed depreciation, deferred tax
assets thereon are recognised only if there is virtual certainty
supported by convincing evidence that they can be realised against
future taxable profit. At each Balance Sheet date, the Company
reassesses the unrecognised deferred tax assets.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal Income Tax during the specified period. In the year, in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shown as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period.
XVII. RESEARCH AND DEVELOPMENT
Revenue expenditure on research is expensed under the respective heads
of the account in the period in which it is incurred.
Development expenditure is capitalised as an asset if the following
conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be
made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) The Company has the ability to sell the asset.
d) The Future economic benefits are probable.
e) The Company has the ability to measure the expenditure attributable
to the asset during its development reliably.
Other development costs, which do not meet the above criteria, are
expensed out during the period in which they are incurred.
XVIII. OPERATING LEASES
(a) As a Lessee:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of Profit and Loss on a
straight-line basis over the lease term.
(b) As a Lessor:
The Company has leased certain tangible assets, and such leases, where
the Company has substantially retained all the risks and rewards of
ownership, are classified as operating leases. Lease income is
recognised in the Statement of Profit and Loss on a straight-line basis
over lease term. Initial direct costs are recognised in the Statement
of Profit and Loss.
XIX. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of three months or less and short-term highly
liquid investments with an original maturity of three months or less.
XX. MEASUREMENT OF PROFIT BEFORE DEPRECIATION/AMORTISATION, INTEREST
AND TAX (PBDIT)
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present PBDIT as a
separate line item on the face of the Statement of Profit and Loss. The
Company measures PBDIT on the basis of profit/loss from continuing
operations. In its measurement, the Company does not include
depreciation and amortisation expenses, finance costs and tax expenses.
XXI. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby the profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
XXII. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted-average
number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company''s earnings per share is the net
profit for the period after deducting preference dividends and any
attributable tax thereto for the period. The weighted-average number of
equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted-average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
XXIII. CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Mar 31, 2012
I. BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on an accrual basis in compliance with
all material aspect of the Accounting Standard (AS) Notified by the
Companies Accounting Standard Rules, 2006 (as amended), and the
relevant provisions of the Companies Act, 1956. 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 the accounting
policy as specified below.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as up to
twelve months for the purpose of current and non-current classification
of assets and liabilities.
II. CHANGE IN ACCOUNTING POLICY
(a) Presentation and Disclosure of the Financial Statements
The financial statements for the year ended March 31, 2011, had been
prepared as per the then applicable, pre-revised Schedule VI to the
Companies Act, 1956. Consequent to the notification of Revised Schedule
VI under the Companies Act, 1956, the financial statements for the year
ended March 31, 2012, are prepared as per the Revised Schedule VI.
Accordingly, the previous year figures have also been reclassified to
conform to this year's classification. The adoption of Revised Schedule
VI for previous year figures does not impact any recognition and
measurement principles followed for the preparation of financial
statements.
(b) Exchange Difference
The Company has opted to avail the choice provided under paragraph 46A
of AS-11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification dated December 29, 2011. Consequently, the following
exchange differences on long-term foreign currency monetary items,
which were until now being recognised in the Statement of Profit and
Loss, are now being dealt with in the following manner:
(i) Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
(ii) In other cases, the foreign exchange difference is accumulated in
a Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long-term asset/liability.
The above change in accounting policy does not have any impact on the
current financial year,
III. USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainly
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
IV. TANGIBLE FIXED ASSETS AND DEPRECIATION
Tangible Fixed Assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Depreciation on Tangible Fixed Assets is provided on Straight-Line
Method at the rates and in the manner prescribed under the Schedule XIV
of the Companies Act, 1956, except in case of following, where
depreciation is equally charged over the estimated useful lives of the
assets, which is higher than rates prescribed under the Schedule XIV of
the Companies Act, 1956.
V. INTANGIBLE ASSETS AND AMORTISATION
Intangible Assets are stated at acquisition cost, net of accumulated
amortisation and accumulated impairment losses, if any. Intangible
assets are amortised on a straight-line basis over their estimated
useful lives.
VI. IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognised in prior years is recorded when there is an indication that
the impairment losses recognised for the assets no longer exist or have
decreased.
VII. BORROWING COST
Borrowing Costs attributable to acquisition and construction of
qualifying assets are capitalised as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
Other borrowing costs are charged to the Statement of Profit and Loss
in the period in which they are incurred.
VIII. TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year.
With respect to long- term foreign currency items from 1st April, 2011,
onwards, the Company has adopted following policy:
(i) Foreign exchange difference on account of a depreciable asset is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
(ii) In other cases, the foreign exchange difference is accumulated in
a Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long term asset/liability.
Exchange difference on restatement of all other monetary items is
recognised in the Statement of Profit and Loss. Other non-monetary
items like fixed assets, investments in equity shares are carried in
terms of historical cost using the exchange rate at the date of
transaction.
IX. DERIVATIVE INSTRUMENTS
Premium/Discount, in respect of forward foreign exchange contract, is
recognised over the life of the contracts. Exchange differences on
such contracts are recognised in the Statement of Profit and Loss in
the year which the exchange rates changes. Profit/Loss on
cancellation/renewal of forward exchange contract is recognised as
income/ expense for the year.
The Company uses derivative financial instruments such as forward
contracts, currency swap and interest rate swaps to hedge its risks
associated with foreign currency fluctuations and interest rate. As per
The Institute of Chartered Accountants of India (ICAI) announcement
regarding accounting for derivative contracts, other than covered under
AS-11, these are mark to market on the portfolio basis and net loss
after considering the offsetting effect on the underlying hedged item
is charged to the income statement. Net gains are ignored.
X. 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 long-term investments.
Investments are recorded at cost on the date of purchase, which
includes acquisition charges such as brokerage, stamp duty, taxes, etc.
Current Investments are stated at lower of cost and net realisable
value. Long-term investments are stated at cost after deducting
provisions made, if any, for other than temporary diminution in the
value.
XI. INVENTORIES
Raw materials, components, stores and spares, and packing material are
valued at lower of cost and net realisable value. However, these items
are considered to be realisable at cost if the finished products, in
which they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realisable value. Finished goods and work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost of
inventories is computed on a weighted average basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory is
duly provided for,
XII. GOVERNMENT GRANTS
Government Grants are recognised when there is reasonable assurance
that the same will be received and all attaching conditions will be
complied with. Revenue grants are recognised in the Statement of Profit
and Loss. Capital grants relating to specific Tangible/Intangible
Assets are reduced from the gross value of the respective
Tangible/Intangible Assets. Other capital grants in the nature of
promoter's contribution are credited to capital reserve.
XIII. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Revenue from sale of products is recognised when the significant risks
and rewards of ownership of the goods have passed to the buyer. Sale of
goods are recorded net of trade discounts, rebates, sales tax and
excise duty. Sale of power is recognised based on power off-take by
the customer.
Income from services are recognised as they are rendered based on
agreements/arrangements with the concerned parties and recognised net
of service tax.
Fertiliser price support under Group Concession and other Scheme of
Government of India is recognised based on management's estimate taking
into account known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised at
estimated realisable value on confirmation of CERs by the concerned
authorities.
Interest Income is recognised on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
Dividend income on investments is accounted for when the right to
receive the payment is established.
XIV. RETIREMENT AND OTHER EMPLOYEE BENEFITS
(a) Defined Contribution Plan
The Company makes defined contribution to Government Employee Provident
Fund, Government Employee Pension Fund, Employee Deposit Linked
Insurance, ESI and Superannuation Schemes, which are recognised in the
Statement of Profit and Loss on accrual basis.
(b) Defined Benefit Plan
The Company's liabilities under Payment of Gratuity Act, long-term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year using the
projected unit credit method except for short-term compensated
absences, which are provided for based on estimates.
Actuarial gain and losses are recognised immediately in the Statement
of Profit and Loss as income or expense. Obligation is measured at the
present value of estimated future cash flows using a discounted rate
that is determined by reference to market yields at the Balance Sheet
date on Government bonds where the terms of the Government bonds are
consistent with the estimated terms of the defined benefit obligation.
In respect of certain employees, Provident Fund contributions are made
to a Trust administered by the Company. The interest rate payable to
the members of the Trust shall not be lower than the statutory rate of
interest declared by the Central Government under the Employee
Provident Fund and Miscellaneous Provisions Act, 1952, and shortfall,
if any, shall be made good by the Company. The Company's liability is
actuarially determined (using the Projected Unit Credit Method) at the
end of the year and any shortfall in the Fund size maintained by the
Trust set up by the Company is additionally provided for. Actuarial
losses/gains are recognised in the Statement of Profit and Loss in the
year in which they arise.
XV. EMPLOYEE STOCK OPTIONS
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Option Scheme, Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India and the Guidance Note on Accounting for Employee Share-based
Payments, issued by the ICAI, whereby the intrinsic value of the option
is recognised as deferred employee compensation. The deferred employee
compensation is charged to the Statement of Profit and Loss on the
straight-line basis over the vesting period of the option.
In respect of re-pricing of existing stock option, the incremental
intrinsic value of the option is accounted as employee cost over the
remaining vesting period.
The options that lapse are reversed by a credit to employee
compensation expense, equal to the amortised portion of value of lapsed
portion and credit to deferred employee compensation expense equal to
the unamortised portion.
XVI. TAXATION
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profit. At each Balance Sheet date the Company reassesses the
unrecognised deferred tax assets.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in Guidance Note issued
by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shown as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period.
XVII. RESEARCH AND DEVELOPMENT
Revenue expenditure on research is expensed under the respective heads
of the account in the period in which it is incurred.
Development expenditure is capitalised as an asset if the following
conditions can be demonstrated:
a) The technical feasibility of completing the asset so that it can be
made available for use or sell.
b) The Company has intention to complete the asset and use or sell it.
c) The Company has the ability to sell the asset.
d) The future economic benefits are probable.
e) The Company has ability to measure the expenditure attributable to
the asset during its development reliably.
Other development costs which do not meet the above criteria are
expensed out during the period in which they are incurred.
XVIII. OPERATING LEASES
(a) As a Lessee:
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Statement of Profit and Loss on a
straight-line basis over the lease term.
(b) As a Lessor:
The Company has leased certain tangible assets, and such leases, where
the Company has substantially retained all the risks and rewards of
ownership, are classified as operating leases.
Lease income is recognised in the Statement of Profit and Loss on a
straight-line basis over lease term.
XIX. CASH AND CASH EQUIVALENT
Cash and Cash Equivalents for the purpose of cash flow statement
comprise cash on hand and cash at bank including fixed deposit with
original maturity period of less than three months and short term
highly liquid investments with an original maturity of three months or
less.
XX. MEASURAMENT OF PROFIT BEFORE DEPRECIATION/AMORTISATION, INTEREST
AND TAX (PBDIT)
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present PBDIT as a
separate line item on the face of the Statement of Profit and Loss. The
Company measures PBDIT on the basis of profit/loss from continuing
operations. In its measurement, the Company does not include
depreciation and amortisation expenses, finance costs and tax expenses.
XXI. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
XXII. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. Earnings
considered in ascertaining the Company's earnings per share is the net
profit for the period after deducting preference dividends and any
attributable tax thereto for the period. The weighted average number of
equity shares outstanding during the period and for all periods
presented is adjusted for events, such as bonus shares, other than the
conversion of potential equity shares that have changed the number of
equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period is
adjusted for the effects of all dilutive potential equity shares.
XXIII. CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past events, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Mar 31, 2011
(I) BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention on an accrual basis in compliance with all material aspect
of the Accounting Standard Notified by Companies Accounting Standard
Rules, 2006 (as amended), and the relevant provisions of the Companies
Act, 1956. The accounting policies have been consistently applied by
the Company and are consistent with those used in the previous year.
(II) FIXED ASSETS
Fixed assets are stated at cost, less accumulated depreciation and
impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
(III) DEPRECIATION/AMORTISATION
a) Depreciation on Fixed Assets is provided on Straight Line Method at
the rates and in the manner specified in the Schedule XIV of the
Companies Act, 1956, except in the case of the following, where
depreciation is equally charged over the estimated useful lives.
c) Depreciation on the Fixed Assets added/disposed off/discarded during
the year is provided on pro-rata basis with reference to the month of
addition/disposal/discarding.
"Continuous Process Plants" are classified based on technical
assessment, and depreciation is provided accordingly.
(IV) IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Profit and Loss Account in the year in which an asset is
identified as impaired. Reversal of impairment losses recognised in
prior years is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
(V) BORROWING COST
Borrowing Costs attributable to acquisition and construction of
qualifying assets are capitalised as a part of the cost of such asset
up to the date when such assets are ready for its intended use. Other
borrowing costs are charged to the Profit and Loss Account.
(VI) TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Profit and Loss
Account. Other non- monetary items, like fixed assets, and investments
in equity shares are carried in terms of historical cost using the
exchange rate at the date of transaction. Premium/Discount, in respect
of forward foreign exchange contract, is recognised over the life of
the contracts. Exchange differences on such contracts are recognised in
the statement of Profit and Loss in the year in which the exchange
rates change Profit/Loss on cancellation/renewal of forward exchange
contract is recognised as income/ expense for the year.
(VII) DERIVATIVE INSTRUMENTS
The Company uses derivative financial instruments such as currency swap
and interest rate swaps to hedge its risks associated with foreign
currency fluctuations and interest rate. As per ICAI announcement
regarding accounting for derivative contracts, other than covered under
AS 11, these are mark to market on the portfolio basis and net loss
after considering the offsetting effect on the underlying hedged item
is charged to the income statement. Net gains are ignored.
(VIII) INVESTMENTS
Investments are recorded at cost on the date of purchase, which
includes acquisition charges such as brokerage, stamp duty, taxes, etc.
Current Investments are stated at lower of cost and net realisable
value. Long term investments are stated at cost after deducting
provisions made, if any, for other than temporary diminution in the
value.
(IX) INVENTORIES
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value. However, these items are considered to
be realisable at cost if the finished products, in which they will be
used, are expected to be sold at or above cost.
Work-in-progress and finished goods are valued at lower of cost and net
realisable value. Finished goods and work-in-progress include costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
Cost of inventories is computed on a weighted-average/FIFO basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory is
duly provided for.
(X) GOVERNMENT GRANTS
Government Grants are recognised when there is reasonable assurance
that the same will be received and all attaching conditions will be
complied with. Revenue grants are recognised in the Profit and Loss
Account. Capital grants relating to specific fixed assets are reduced
from the gross value of the respective fixed assets. Other capital
grants are credited to capital reserve.
(XI) REVENUE RECOGNITION
Sales are recorded net of trade discounts, rebates and include excise
duty. Revenue from sale of products is recognised when the significant
risks and rewards of ownership of the goods have passed to the buyer.
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and can be reliably
measured.
Income from services are recognised as they are rendered based on
agreements/arrangements with the concerned parties.
Fertiliser price support under Group Concession and other Scheme of
Government of India is recognised based on management's estimate taking
into account known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised at
estimated realisable value on confirmation of CERs by the concerned
authorities.
Dividend income on investments is accounted for when the right to
receive the payment is established.
(XII) RETIREMENT AND OTHER EMPLOYEE BENEFITS
(i) Defined Contribution Plan
The Company makes defined contribution to Provident Fund, ESI and
Superannuation Schemes, which are recognised in the Profit and Loss
Account on accrual basis. Provident Fund contributions are made to a
Trust administered by the Company and government administered Provident
Fund. The interest rate payable to the members of the Trust shall not
be lower than the statutory rate of interest declared by the Central
Government under the Employees' Provident Funds and Miscellaneous
Provisions Act, 1952, and shortfall, if any, shall be made good by the
Company. The remaining contributions are made to a government
administered Provident Fund towards which the Company has no further
obligations beyond its monthly contributions.
(ii) Defined Benefit Plan
The Company's liabilities under Payment of Gratuity Act, long term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year using the
projected unit credit method except for short term compensated absences
which are provided for based on estimates. Actuarial gains and losses
are recognised immediately in the statement of Profit and Loss Account
as income or expense. Obligation is measured at the present value of
estimated future cash flows using a discounted rate that is determined
by reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
(XIII) EMPLOYEE STOCK OPTIONS
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India and the Guidance Note on Accounting for Employee Share- based
Payments, issued by the Institute of Chartered Accountants of India,
whereby the intrinsic value of the option is recognised as deferred
employee compensation. The deferred employee compensation is charged to
the Profit and Loss Account on straight-line basis over the vesting
period of the option.
(XIV) TAXATION
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets, are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profit. At each balance sheet date the Company reassesses unrecognised
deferred tax assets.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent there is convincing evidence that the Company
will pay normal income tax during the specified period. In the year in
which the MAT credit becomes eligible to be recognised as an asset in
accordance with the recommendations contained in Guidance Note issued
by the ICAI, the said asset is created by way of a credit to the Profit
and Loss Account and shown as MAT Credit Entitlement. The Company
reviews the same at each balance sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal income tax during the specified period.
(XV) OPERATING LEASES
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Profit and Loss Account on a
straight-line basis over lease term.
Lease income is recognised in the Profit and Loss Account on a
straight-line basis over lease term.
(XVI) CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are not discounted to its present value and are determined
based on best estimate required to settle the obligation at the Balance
Sheet date.
Mar 31, 2010
(I) BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention on an accrual basis in compliance with all material aspect
of the Accounting Standard Notified by the Companies Accounting
Standard Rules, 2006 (as amended), and the relevant provisions of the
Companies Act, 1956. The accounting policies have been consistently
applied by the Company, and are consistent with those used in the
previous year.
(II) FIXED ASSETS
Fixed assets are stated at cost, less accumulated depreciation and
impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
(III) DEPRECIATION/AMORTISATION
a) Depreciation on Fixed Assets is provided on Straight Line Method at
the rates and in the manner specified in the Schedule XIV of the
Companies Act, 1956, except in the case of the following, where
depreciation is equally charged over the estimated useful lives.
Estimated useful life Capital Expenditure on Assets not owned - 5 years
Office Computers - 4 years
Vehicles -5 years
Assets at Showrooms - 5 years
Furniture, Fixtures and Equipment - 7 years
Office Electronic Equipment - 4 years
Leasehold Land/Improvements - Over the primary period of the lease
Catalyst - On the estimated life as technically assessed (ranging from
1.5 to 3 years)
b) Intangible Assets are Amortised Equally over: Trademarks/Brands - 10
years Technical Know-how - 7 years Specialised Software - 3 years
Goodwill - Not being amortised
(Tested for Impairment)
c) Depreciation on the Fixed Assets, added/disposed off/discarded
during the year, is provided on pro- rata basis with reference to the
month of addition/disposal/discarding.
ÃContinuous process plantsà are classified based on technical
assessment, and depreciation is provided accordingly.
(IV) IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment, based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Profit and Loss Account in the year in which an asset is
identified as impaired. Reversal of impairment losses recognised in
prior years is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
(V) BORROWING COSTS
Borrowing costs attributable to acquisition and construction of
qualifying assets, are capitalised as a part of the cost of such asset
upto the date when such assets are ready for its intended use. Other
borrowing costs are charged to the Profit and Loss Account.
(VI) TRANSLATION OF FOREIGN CURRENCY ITEMS
Transactions in foreign currency are recorded at the rate of exchange
prevailing on the date of transaction. Foreign currency monetary items
are reported using closing rate of exchange at the end of the year. The
resulting exchange gain/loss is reflected in the Profit and Loss
Account. Other non-monetary items, like fixed assets, investments in
equity shares, are carried in terms of historical cost using the
exchange rate at the date of transaction. Premium/Discount, in respect
of forward foreign exchange contract, is recognised over the life of
the contracts. Profit/Loss on cancellation/renewal of forward exchange
contract is recognised as income/expense for the year.
(VII) DERIVATIVE INSTRUMENTS
The Company uses derivative financial instruments such as forward
exchange contracts, currency swaps and interest rate swaps to hedge its
risks associated with foreign currency fluctuations and interest rate.
Currency and interest rate swaps are accounted in accordance with their
contract.
(VIII) INVESTMENTS
Investments are recorded at cost on the date of purchase, which
includes acquisition charges such as brokerage, stamp duty, taxes, etc.
Current Investments are stated at lower of cost and fair value. Long
term investments are stated at cost after deducting provisions made, if
any, for other than temporary diminution in the value.
(IX) INVENTORIES
Raw materials, components, stores and spares are valued at lower of
cost and net realisable value.
However, these items are considered to be realisable at cost if the
finished products in which they will be used are expected to be sold at
or above cost.
Work-in-progress and finished goods are valued at lower of cost and net
realisable value. Finished goods and work-in-progress include costs of
conversion and other costs incurred in bringing the inventories to
their present location and condition.
Cost of inventories is computed on a weighted average/FIFO basis.
Proceeds in respect of sale of raw materials/stores are credited to the
respective heads. Obsolete, defective and unserviceable inventory is
duly provided for.
(X) GOVERNMENT GRANTS
Government Grants are recognised when there is reasonable assurance
that the same will be received. Revenue grants are recognised in the
Profit and Loss Account. Capital grants relating to specific fixed
assets are reduced from the gross value of the respective fixed assets.
Other capital grants are credited to capital reserve.
(XI) REVENUE RECOGNITION
Sales are recorded net of trade discounts, rebates and include excise
duty. Revenue from sale of products is recognised when the significant
risks and rewards of ownership of the goods have passed to the buyer.
Income from services are recognised as they are rendered based on
agreements/arrangements with the concerned parties.
Fertiliser" price support under Group Concession and other Scheme of
Government of India is recognised based on managements estimate taking
into account the known policy parameters and input price
escalation/de-escalation.
Income from Certified Emission Reductions (CERs) is recognised at
estimated realisable value on confirmation of CERs by the concerned
authorities.
Dividend income on investments is accounted for when the right to
receive the payment is established.
(XII) RETIREMENT AND OTHER EMPLOYEE BENEFITS (i) Defined Contribution
Plan
The Company makes defined contribution to Provident Fund, ESI and
Superannuation Schemes which are recognised in the Profit and Loss
Account on accrual basis.
(ii) Defined Benefit Plan
The Companys liabilities under Payment of Gratuity Act, long term
compensated absences and pension are determined on the basis of
actuarial valuation made at the end of each financial year, using the
projected unit credit method except for short term compensated absences
which are provided for based on estimates. Actuarial gain and losses
are recognised immediately in the statement of Profit and Loss Account
as income or expense. Obligation is measured at the present value of
estimated future cash flows, using a discounted rate that is determined
by reference to market yields at the Balance Sheet date on Government
bonds where the currency and terms of the Government bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
(XIII) EMPLOYEE STOCK OPTIONS
The stock options granted are accounted for as per the accounting
treatment prescribed by Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999, issued by Securities and Exchange Board of
India, whereby the intrinsic value of the option is recognised as
deferred employee compensation. The deferred employee compensation is
charged to Profit & Loss Account on straight-line basis over the
vesting period of the option. The employee stock option outstanding
account is shown net of any unamortised deferred employee compensation.
(XIV) TAXATION
Tax expense comprises of current, deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
In case of unabsorbed losses and unabsorbed depreciation, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profit. At each Balance Sheet date, the Company reassesses the
unrecognised deferred tax assets. Minimum Alternative Tax (MAT) credit
is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during
the specified period. In the year, in which the MAT credit becomes
eligible to be recognised as an asset in accordance with the
recommendations contained in the Guidance Note issued by the ICAI, the
said asset is created by way of a credit to the Profit and Loss Account
and shown as MAT Credit Entitlement. The Company reviews the same at
each Balance Sheet date, and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that the Company will pay normal Income Tax during the
specified period.
(XV) OPERATING LEASES
Leases, where significant portion of risk and reward of ownership are
retained by the Lessor, are classified as Operating Leases and lease
rentals thereon are charged to the Profit and Loss Account on a
straight- line basis over lease term. Lease income is recognised in
the Profit and Loss Account on a straight-line basis over lease term.
(XVI) CONTINGENT LIABILITIES AND PROVISIONS
Contingent Liabilities are possible but not probable obligations as on
Balance Sheet date, based on the available evidence.
Provisions are recognised when there is a present obligation as a
result of past event, and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made.
Provisions are determined based on the best estimate required to settle
the obligation at the Balance Sheet date.
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