Accounting Policies of Dalmia DSP Ltd. Company

Mar 31, 2015

The Financial Statements of Kalyanpur Cements Ltd. have been prepared on accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. The Management makes reasonable estimates and assumptions which help prepare the accounts giving true and fair view of the financial position of the Company. The significant accounting policies are described as below:

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices has not been given either in the Financial Statements or in the notes thereto. I

2. Depreciation on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with i Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of Fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/external factors, the impairment loss is recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Stock of Raw Materials and Work-in-Progress have been valued at weightage average cost or net realizable value, whichever is lower. Stock of Finished Goods has been valued at the lower of the cost or net realisable market value. Stores & Spares are valued at average cost.

5. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

6. Fixed assets are valued at historical cost less depreciation.

7. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

8. Revenue Recognition

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

Sale of Goods : Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of excise duty, sales returns and sales tax.

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

Dividend : Revenue is recognised when the right to receive is established.

9. Expenses are recognised on accrual basis.

10. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions are finally determined.

11. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review are considered in drawing-up the accounts.

12. Company's accounts are being maintanied on going concern basis.

1.0 Contingent Liabilities:

Claims against the Company not acknowledged as debt:

1.1 In respect of 33KV power connection; Prior to August'93 whereafter the company started drawing power on 132 KV line consequent upon enhancement in contract demand from 10.5 MVA to 15.0 MVA, the company used to draw power on 33 KV line. In respect of the power supplied by BSEB through 33 KV line, there were some disputes between the company and BSEB on account of difference between the enhanced tariff claimed by BSEB and the tariff admitted by the company for the period upto 31.03.1994. The total amount under dispute aggregated to Rs. 336.53 lacs against which the company advanced Rs. 272.85 lacs till 31.12.1982 under the Court Order.

According to an agreement between the company and BSEB dated 30.06.1986, a Retired Judge of Patna High Court was appointed as "Arbitrator Sole" to settle the disputes between BSEB and the company and submit his Award. While the arbitration proceedings were in progress, the "Arbitrator Sole" died and the new Arbitrator was to be appointed. However, even though the arbitration proceedings were in progress and unfortunately the "Arbitrator Sole" died, an Award, allegedly signed by the Arbitrator, was filed by BSEB in the Civil Court, Patna for making the same the Rule of the Court. Under the situation, the company has not accepted the award and has challenged its veracity.

1.2 Other disputes in respect of 33 KV and 132 KV lines : The company had been representing before BSEB for resolving various disputes and after reconciliation of accounts between the company as well as BSEB, the dues payable by the company were determined as Rs. 40.75 crs. as on 31 st March, 2008. The said amount included Rs. 27.10 crs. towards AMG/MMG/DPS. The company was eligible for relief of Rs. 27.10 crs. pursuant to Industrial Incentive Policy, 2006 where under a sick unit was exempted from payment of AMG/MMG/DPS for a period of five years from the date of sickness and therefore the company's actual liability was Rs. 13.65 crs. only.

However, at the time of issuing the revised Energy Bill, BSEB wrongly levied DPS of Rs. 6.27 Crs. on the ground that since the dues were reconciled as on 31st March, 2008, the company was liable to pay the said amount soon after reconciliation and since the same was not paid, the company was liable to pay DPS thereon. Although the Company did not agree with the contention of BSEB, it had, under duress signed an agreement with BSEB for payment of DPS. However, since the company had not agreed to pay the DPS on its own volition, it approached the Hon'ble Patna High Court for direction in the matter in light of the stipulations made by Hon'ble BIFR in the revival scheme sanctioned by it in October, 2011. On the specific issue of applicability of this DPS amount of Rs. 6.27 crs. the Hon'ble Patna High Court constituted a committee to decide the matter in light of the stand taken by the company and BSEB before BIFR.

The Committee appointed by the Hon'ble High Court met and decided that if the company has paid Rs. 13.65 crs. as directed by BIFR, the issue should be considered as resolved. But still the energy bill, pursuant either to the direction of the BIFR or the Hon'ble High Court is yet to be rectified. Not acknowledging the DPS of Rs. 6.27 crs., as its liability, the company has treated the same as contingent liability.

1.3 The company had entered into a Fuel Supply Agreement (FSA) with Central Coalfields Ltd. (CCL), a subsidiary of Coal India Ltd. (CIL) for supply of coal to meet its requirement under a Long Term Coal Linkage issued by the Govt, of India, Ministry of Energy, Deptt. of Coal. The first FSA was executed on 30.1.2004 which was valid for three years. The second FSA was executed on 25.4.2008 and the same was valid for five years which was to expire on 30.4.2013. Pursuant to the provisions of FSA, the company had furnished to CCL, a Security Deposit of Rs. 123.94 lacs by way of Bank Guarantee. The FSA provided for lifting of an Annual Contractual Quantity (ACQ) with a provision for review thereof on expiry of 3 years from the date of FSA. After substantial increase in pit head price of Coal effective from February, 2011 and in view of technical aspects of the Plant's operation, the company on expiry of three years from the date of FSA requested CCL for review of ACQ which request was followed up subsequently by the Company at the highest level.

The ACQ however, was not reviewed despite explicit provision to that effect in the FSA and CCL unilaterally terminated the same on 30.4.2013 on the ground of lifting of coal quantity which was lower than the ACQ. CCL also levied damage of Rs. 4.96 crores for not lifting the coal as per ACQ even though such damage was not leviable as the ACQ was liable to be reviewed and CCL did not review the same. They subsequently forfeited the security deposit by invoking the Bank Guarantee of Rs. 123.94 Lacs

The Company has filed a writ petition in the Hon'ble Jharkhand High Court against the unilateral and arbitrary action of CCL and considering its strong position, the company is hopeful of refund of the security amount by CCL and accordingly, the amount forfeited by them has not been considered as expenditure. The Company is confident of waiver of the damages also and this is why the same has not been acknowledged as liability.

1.4 Unexecuted Capital Commitments Estimated amount of Contracts remaining to be executed on Capital Account and not provided for amount to Rs. 28.18 Lacs (Previous Year Rs. 26.70 Lacs ).

1.5 Cummulative Dividend on Preference Shares : On approval of the scheme of compromise by the Hon'ble Calcutta High Court, the Preference share capital was reduced by 85%. The Preference shares, after reduction of the share capital have face value of Rs. 15/- each. The said Preference shares carry a coupon rate of 0.1%. The cumulative dividend on such shares with effect from the date of approval of the scheme of compromise i.e. 21st November,2006 till 31st March'15 amounted to Rs. 5.53 lacs.

Guarantees

1.6 Counter-guarantees given by the Company : Counter Guarantees to Banks in respect of Guarantees given by them amount to Rs.13.10 Lacs (Previous Year Rs.11.60 Lacs).

2.0 As per the Rehabilitation Scheme sanctioned by BIFR, the deferred sales tax dues amounting to Rs. 700.16 lacs have been rescheduled to be paid during 2014-15. Considering the present financial position, the company could not pay the deferred sales tax dues during 2014-15 and has sought reschedulement thereof through the proposed Modified Draft Rehabilitation Scheme submitted to BIFR.

3.0 The declaration filed under Urban Land (Ceiling and Regulation) Act, 1976 in respect of the Company's holding in excess of the Ceiling prescribed under the Act and the application to retain these lands were made for consideration of the concerned authority. The company at present is contesting a case filed by the Appropriate authority.

4.0 Documents and papers relating to all the immovable properties including land at Banjari are deposited with IFCI Ltd. which assigned its loan earlier granted to the Company to Arcil - Kalyanpur Cements Ltd. Trust.

5.0 In view of erosion of its Net Worth , the company was registered with Board for Industrial & Financial Reconstruction (BIFR) as Sick Company under the provisions of Sick Industrial Companies (Special Provisions) Act,1985. BIFR sanctioned a Revival Scheme in the hearing held on 24,10.2011 and issued the same vide letter dt. 3.2.2012. The Scheme is under implementation. However, considering the deviations from the parameters laid down in the sanctioned scheme due to various economic reasons, the company has approached the Hon'ble BIFR for Modification of the Sanctioned Scheme including VAT Reimbursement for additional period of 2 Vz years provided in the Sanctioned Scheme.

6.0 Related Party disclosures

The disclosure of related party relationship and transactions with the related parties are given as under:

A. Related Party relationships:

Description of Party Relationship

Mr. Satyadeva Prakash Sinha Executive Chairman - Key Management Personnel (Unfortunate demise on 11.04.2014)**

Mr. Shailendra Prakash Sinha Managing Director - Key Management Personnel

Mr. Anant Prakash Sinha Joint Managing Director - Key Management Personnel

Mr. Siddharth Prakash Sinha Executive Director -Key Management Personnel

Mrs. Renuka Sinha Relative of Key Management Personnel

Mrs. Mukta Sinha Relative of Key Management Personnel

Mr. Aditya Prakash Sinha Relative of Key Management Personnel

Mr.Mayank Prakash Sinha Relative of Key Management Personnel

Mr.Tanuj Prakash Sinha Relative of Key Management Personnel

Ms. Ratika Sinha Relative of Key Management Personnel

Mrs. Nishka Sinha Relative of Key Management Personnel

Maurya Management Pvt.Ltd. Enterprise under common control

Elate Investments & Holdings Significant Interest in the Company Pvt.Ltd. (Holding 25.51% in the Company's Share Capital)

Vivid Colors Pvt. Ltd. Earlier treated as Strategic Investor under the Scheme of Compromise approved by the Hon'ble Calcutta High Court, havinG * significant voting power (48%) of the Company. Now pursuant to the direction of SEBI vide their letter dated 30.10.2013, M/s Vivid Colors Pvt. Ltd. have been treated as Promoter.

7.0 In view of carry forward losses, in drawing up the Accounts, the Company has not considered the impact of deferred tax liability arising out of timing difference. For the same reason Deferred Tax Assets have been ignored.

8.0 The Company has claimed from BSEB Rs.2574.25 Lacs (Previous year Rs.2574.25 Lacs) on account of reduction in maximum demand charges, damages to machinery, etc. and loss of profit due to restricted and erratic power supply for the past periods.

12.0 Figures of the Previous Year have been recast and/or regrouped wherever necessary to bring them in line with the figures of the current year.

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Mar 31, 2014

The Financial Statements of Kalyanpur Cements Ltd. have been prepared on accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. The Management makes reasonable estimates and assumptions which help prepare the accounts giving true and fair view of the financial position of the Company. The significant accounting policies are described as below :

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices has not been given either in the Financial Statements or in the notes thereto.

2. Depreciation on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of Fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/extemal factors, the impairment loss is recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Stock of Raw Materials and Work-in-Progress have been valued at weightage average cost or net realizable value, whichever is lower. Stock of Finished Goods has been valued at the lower of the cost or net realisable market value. Stores & Spares are valued at average cost.

5. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

6. Fixed assets are valued at historical cost less depreciation.

7. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

8. Revenue Recognition

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

Sale of Goods: Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of excise duty,sales returns and sales tax. Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate of interest. Dividend: Revenue is recognised when the right to receive is established.

9. Expenses are recognised on accrual basis.

10. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on

the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions

are finally determined.

11. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review are considered in drawing-up the accounts.

12. Company''s accounts are being maintanied on going concern basis.

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Mar 31, 2013

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices has not been given either in the Financial Statements or in the notes thereto.

2. Depreciation on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of Fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/external factors, the impairment loss is recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Stock of Raw Materials and Work-in-Progress have been valued at weightage average cost or net realizable value, whichever is lower. Stock of Finished Goods has been valued at the lower of the cost or net realisable market value. Stores & Spares are valued at average cost.

5. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

6. Fixed assets are valued at historical cost less depreciation.

7. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

8. Revenue Recognition

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

Sale of Goods : Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of excise duty, sales returns and sales tax.

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

Dividend : Revenue is recognised when the right to receive is established.

9. Expenses are recognised on accrual basis.

10. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions are finally determined.

11. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review have been considered in drawing-up the accounts.

12. Company''s accounts are being maintanied on going concern basis.

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Mar 31, 2012

The Financial Statements of Kalyanpur Cements Ltd. have been prepared on accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. The Management makes reasonable estimates and assumptions which help prepare the accounts giving true and fair view of the financial position of the Company. The significant accounting policies are described as below :

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices has not been given either in the Financial Statements or in the notes thereto.

2. Depreciation on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of Fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/external factors, the impairment loss is recognized wherever the carrying amount of an assets exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Stock of Raw Materials and Work-in-Progress have been valued at weightage average cost or net realizable value, whichever is lower. Stock of Finished Goods has been valued at the lower of the cost or net realizable market value. Stores & Spares are valued at average cost.

5. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

6. Fixed assets are valued at historical cost less depreciation.

7. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

8. Revenue Recognition

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

Sale of Goods : Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of excise duty, sales returns and sales tax. Interest: Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.

Dividend: Revenue is recognised when the right to receive is established.

9. Expenses are recognised on accrual basis.

10. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions are finally determined.

11. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review have been considered in drawing-up the accounts.

12. Company s accounts are being maintained on going concern basis.

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Mar 31, 2011

The Financial Statements of Kalyanpur Cements Ltd. have been prepared on accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. The Management makes reasonable estimates and assumptions which help prepare the accounts giving true and fair view of the financial position of the Company. The significant accounting policies are described as below :

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices have not been given either in the accounts or in the notes thereto.

2. Depreciation, on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/external factors, the impairment loss is recognized wherever the carrying amount of an assets exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Current liabilities not discharged in past twelve months and not likely to be met in next twelve months are classified as Unsecured Loan as given in "glossary of terms" issued by The Institute of Chartered Accountants of India.

5. Stock of Raw Materials, Work-in-Progress and Stores and Spares have been valued at cost or net realizable value, whichever is lower. Stock of Naked Cement and Packed Cement have been valued at the lower of cost or net realisable value.

6. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

7. Fixed assets are valued at historical cost less depreciation.

8. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

9. Revenue Recognition

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

Sales of Goods: Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of trade discounts, excise duty, sales returns and sales tax.

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

Dividend : Revenue is recognised when the right to receive is established.

10. Expenses are recognised on accrual basis.

11. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions are finally determined.

12. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review have been considered in drawing-up the accounts.

13. Company''s accounts are being maintained on going concern basis.

14. The expenditure on Voluntary Retirement Scheme (VRS), the benefit of which is expected to accrue in future years also is treated as Deferred Revenue Expenditure and is written off, over the period of five years.

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Mar 31, 2010

The Financial Statements of Kalyanpur Cements Ltd. have been prepared on accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. The Management makes reasonable estimates and assumptions which help prepare the accounts giving true and fair view of the financial position of the Company. The significant accounting policies are described as below :

1. The accounts have been drawn-up on the basis of historical cost. Impact of changing prices have not been given either in the accounts or in the notes thereto.

2. Depreciation on historical cost is calculated on straight line method in terms of Section 205 (2)(b) read with Section 350 and Schedule XIV of the Companies Act, 1956. In respect of sale/disposal of fixed assets during the year, no depreciation is provided.

3. The carrying amounts of Fixed assets are reviewed at each Balance Sheet date and if there is any indication of impairment based on internal/external factors, the impairment loss is recognized wherever the carrying amount of an assets exceeds its estimated recoverable amount. Previously recognized impairment loss is further provided or reversed depending on change in circumstances.

4. Current liabilities not discharged in past twelve months and not likely to be met in next twelve months are classified as Unsecured Loan as given in "glossary of terms" issued by The Institute of Chartered Accountants of India.

5. Stock of Raw Materials, Work-in-Progress and Stores and Spares have been valued at cost or net realizable value, whichever is lower. Stock of Naked Cement and Packed Cement have been valued at the lower of cost or net realisable value.

6. Retirement benefits in the form of Gratuity and Leave are determined on actuarial basis at the end of the year.

7. Fixed assets are valued at historical cost less depreciation.

8. Contingent Liabilities as disclosed, have not been provided for. Other liabilities are accounted for in the year in which the same are determined.

9. Revenue Recognition

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

Sales of Goods : Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer and is stated net of excise duty,sales returns and sales tax.

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

Dividend : Revenue is recognised when the right to receive is established.

10. Expenses are recognised on accrual basis.

11. Transactions involving foreign exchange are translated into Rupee on the basis of prevailing exchange rates on the date of transaction. Impact of difference in exchange rate is accounted for in the year in which the transactions are finally determined.

12. Occurrences of events after the Balance Sheet date and having material effect on the revenue statements of the year under review have been considered in drawing-up the accounts.

13. Companys accounts are being maintanied on going concern basis.

14. The expenditure on Voluntary Retirement Scheme (VRS), the benefit of which is expected to accrue in future years also is treated as Deferred Revenue Expenditure and is written off, over the period of five years.