Accounting Policies of Kilburn Chemicals Ltd. Company
Mar 31, 2018
Note 1 Significant Accounting Policies
B. Standard issued but not yet effective
MCA has notified Ind AS 115 (Revenue from Contracts with Customers) on 28thMarch 2018 as part of the Companies (Indian Accounting Standards) Amendment Rules, 2018. Ind-AS 115 supersedes Ind-AS 11 Construction Contracts and Ind-AS 18 Revenue. According to the new standard, revenue is recognized to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Ind-AS 115 establishes a five steps model that will apply to revenue earned from a contract with a customer.
The standard allows for two methods of adoption: 1) retrospectively to each prior period presented with or without practical expedients, or 2) retrospectively with cumulative effect of adoption as an adjustment to opening retained earnings in the period of adoption. The standard is effective for periods beginning on or after April 1, 2018. Early adoption is not permitted. The Company has started commercial production only from 22nd March, 2018 and it does not have any contract at present which will be effected by the above amendment hence, no significant impact is expected at present during 2018-19.
1. BASISOFPREPARATION
1.1. The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 with Companies (Indian Accounting Standards)(Amendment) Rules, 2016 & Companies (Indian Accounting Standards) (Amendment) Rules, 2017 and comply in all material aspects with the relevant provisions of the Companies Act, 2013 and Companies (Amendment) Act, 2017.
For all the periods upto 31st March, 2017, the financial statements were prepared under historical cost convention in accordance with the accounting standards specified under Section 133 of the Companies Act, 2013. These financial statements for the year ended 31st March 2018 are the first that the Company has prepared in accordance with Ind AS. Refer to Note- 47 for information on how the Company adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value:
- Certain financial assets and liabilities measured at fair value (refer Significant Accounting Policy No. 13 regarding financial instruments).
The financial statements have been presented in INR, which is also the Companyâs functional currency and all values are rounded to the nearest Lakhs.
1.2. Statement of Compliance with Ind AS
These financial statements comply in all material aspects with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 with Companies (Indian Accounting Standards)(Amendment) Rules, 2016 & Companies (Indian Accounting Standards) (Amendment) Rules, 2017.
2. Property, Plant and Equipment, Intangible Assets, Capital Work-in-progress and Depreciation
2.1. Property, Plant and Equipment (PPE)
2.1.1.The cost of an item of PPE is recognized as an asset if, and only if:
(a) It is probable that future economic benefits associated with the item will flow to the entity; and
(b) The cost of the item can be measured reliably.
2.1.2. PPE are stated at acquisition or construction cost or historical cost less accumulated depreciation / amortization and cumulative impairment.
2.1.3. Technical know-how / license fee relating to plants/facilities and specific software that are integral part of the related hardware are capitalised as part of cost of the underlying asset.
2.1.4. Spare Parts are capitalized when they meet the definition of PPE, i.e., when the Company intends to use these during more than a period of12 months.
2.1.5. On transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognised as at 1st April, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the PPE.
2.2. Intangible asset
2.2.1. Costs incurred on computer software/licenses purchased resulting in future economic benefits, other than specific software that are integral part of the related hardware, are capitalised as Intangible Asset and amortised over a period of three years beginning from the quarter in which such software is capitalised.
2.2.2. Intangible assets acquired separately are measured on initial recognition at cost. The following initial recognition of intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the Statement of Profit and Loss in the period in which the expenditure is incurred.
2.2.3. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life on straight line basis and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Statement of Profit and Loss.
2.2.4. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognized.
2.2.5. On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1stApril, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the Intangible Assets.
2.3. Capital Work in Progress
2.3.1. Expenses exclusively attributable to projects incurred during construction period are capitalised.
2.3.2. Finance costs incurred during construction period on loans specifically borrowed and utilized for projects are capitalized up to the date of capitalization.
2.3.3. Finance costs, if any, incurred on General Borrowings used for projects is capitalized at the weighted average cost.
2.3.4. Capital stores are valued at cost. Specific provision is made for likely diminution in value, wherever required.
2.3.5. Advances paid towards the acquisition of PPE and intangible assets outstanding at each Balance Sheet date is classified as capital advances and the cost of assets not put to use before such date are disclosed under capital work in progress.
2.4. Depreciation/Amortization
2.4.1. Cost of Tangible Fixed Asset (net of residual value) is depreciated on straight-line method as per useful life prescribed in Schedule II to the Companies Act, 2013.
2.4.2. Depreciation/amortization is charged on pro-rata basis with reference to month of capitalization or disposal. Residual value is generally considered at 5% of cost of assets.
2.4.3. The Company depreciates components of the main asset that are significant in value and have different useful lives as compared to the main asset separately. The Company depreciates capitalized spares over the life of the spare from the date it is available for use.
2.4.4. Item of PPE and Intangible assets, costing upto Rs.5,000/- per item are depreciated fully in the year of capitalization.
2.4.5. The residual value, useful lives and methods of depreciation of PPE are reviewed at each financial yearend and adjusted prospectively, if appropriate.
3. LEASES
3.1. A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
3.2. Finance leases as lessee:
(i) Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
(ii) A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
3.3. The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1st April 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
4. IMPAIRMENT OF NON-FINANCIAL ASSETS
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account.
5. BORROWING COSTS
Borrowing costs that are attributable to the acquisition and construction of the qualifying asset are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue.
6. FOREIGNCURRENCY TRANSACTIONS
6.1. The Companyâs financial statements are presented in Indian Rupee, which is also its functional currency.
6.2. Transactions in foreign currency are initially recorded at exchange rates prevailing on the date of transactions.
6.3. Monetary items denominated in foreign currencies (such as cash, receivables, payables etc) outstanding at the end of reporting period, are translated at exchange rates prevailing as at the end of reporting period.
Any gains or losses arising due to differences in exchange rates at the time of translation or settlement are accounted for in the Statement of Profit and Loss either under the head foreign exchange fluctuation.
6.4. Non-monetary items denominated in foreign currency (such as investments, PPE and intangible assets etc.) are valued at the exchange rate prevailing on the date of the transaction other than those measured at fair value.
6.5. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in Other Comprehensive income (OCI) or profit or loss are also recognised in OCI or profit or loss, respectively).
7. INVENTORIES
7.1. Raw Materials & Stock-in-Process
7.1.1.Raw materials are valued at cost determined on weighted average basis or net realizable value, whichever is lower.
7.1.2.Stock in Process is valued at raw material cost plus conversion costs as applicable or net realizable value, whichever is lower.
7.1.3.Raw materials in Transit are valued at cost or net realizable value, whichever is lower.
7.2. Finished Products and Stock-in-Trade
7.2.1.Finished products and stock in trade are valued at cost determined on âFirst in First Outâ basis or net realizable value, whichever is lower. Cost of Finished Products produced is determined based on raw material cost and processing cost.
7.3. Stores and Spares
7.3.1.Stores and spares are valued at weighted average cost.
7.3.2.Stores & Spares in transit are valued at cost.
8. PROVISIONS, CONTINGENT LIABILITIES, CONTINGENT ASSET& CAPITAL COMMITMENTS
8.1. Provisions
8.1.1 .Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
8.1.2.If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
8.2. Contingent Liabilities
Contingent liabilities is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
8.2.1. Show-cause Notices issued by various Government Authorities are not considered as Obligation.
8.2.2. When the demand notices are raised against such show cause notices and are disputed by the Company, these are classified as disputed obligations.
8.2.3. The treatment in respect of disputed obligations are as under:
a) A provision is recognized in respect of present obligations where the outflow of resources is probable;
b) All other cases are disclosed as contingent liabilities unless the possibility of outflow of resources is remote.
8.3. Contingent Assets
Contingent Assets are not recognised but are disclosed when an inflow of economic benefits is probable.
8.4. Capital Commitments
Estimated amount of contracts remaining to be executed on capital account are considered for disclosure.
9. REVENUE RECOGNITION
9.1. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The Company has assumed that recovery of excise duty flows to the Company on its own account. This is for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Since the recovery of excise duty flows to the Company on its own account, revenue includes excise duty.
However, sales tax/value added tax (VAT)/Goods and Services Tax(GST) is not received by the company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
9.2. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of returns, allowances and trade discounts.
The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement.
9.3. Interest income is accrued on a time proportion basis, by reference to the outstanding principal and at the interest rate applicable.
9.4. Claims are recognized at cost when there is reasonable certainty regarding its ultimate collection.
10. TAXES ON INCOME
10.1. Current Income tax
10.1.1.Provisionforcurrenttax is made as per the provisions of the Income Tax Act, 1961.
10.1.2.Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
10.1.3.Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
10.2. Deferred Tax
10.2.1.Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of good will or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred tax assets and liabilities are measured based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
10.2.2.The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
10.2.3.Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
10.2.4.Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11. EMPLOYEEBENEFITS
11.1. Short Term Benefits:
Short Term Employee Benefits are accounted for in the period during which the services have been rendered.
11.2. Post-Employment Benefits and Other Long Term Employee Benefits:
a) The Companyâs contribution to the Provident Fund is remitted to Provident Fund Authorities based on a fixed percentage of the eligible employeeâs salary and charged to Statement of Profit and Loss.
b) The Company operates defined benefit plan for Gratuity. The cost of providing such defined benefit is determined using the projected unit credit method of actuarial valuation made at the end of the year.
c) The Company does not have any policy in respect of other long term employee benefits, viz., leave encashment etc.
11.3. Remeasurements:
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
12. CURRENT VERSUS NON-CURRENT CLASSIFICATION
12.1. The Company presents assets and liabilities in the Balance Sheet based on current/ noncurrent classification.
12.2. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
12.3. A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Based on the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as12 months.
13. FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
13.1. Financial Assets
Initial recognition and measurement all financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent Measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial Assets at amortised cost
- Debt instruments at fair value through other comprehensive income (FVTOCI)
- Equity instruments at fair value through other comprehensive income (FVTOCI)
- Financial assets and derivatives at fair value through the Statement of Profit and Loss (FVTPL)
13.1.1.Financial Assets at Amortised Cost
A financial asset is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. This category generally applies to trade and other receivables.
13.1.2.Debt Instrument at FVTOCI
A âDebt Instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent solely payments of principal and interest (SPPI).
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
13.1.3.Equity Instrument at FVTOCI
A. Equity Investments (Other than subsidiaries, JVs and associates)
All equity investments in scope of Ind AS 109 are measured at fair value. The Company has made an irrevocable election to present subsequent changes in the fair value in other comprehensive income, excluding dividends. The classification is made on initial recognition/transition and is irrevocable.
There is no recycling of the amounts from the OCI to the Statement of Profit and Loss, even on sale of investments.
13.1.4.Debt Instruments and Derivatives at FVTPL
FVTPL is a residual category for debt instrument. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss. Interest income on such instruments has been presented under interest income.
13.1.5.Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Balance Sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; And either
(a) The Company has transferred substantially all the risks and rewards of the asset, or
(b) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. 13.1.6.Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balances.
Simplified Approach
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date. ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. The balance sheet presentation for various financial instruments is described below:
- Financial assets measured as at amortised cost: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the Balance Sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
- Financial guarantee contracts: ECL is presented as a provision in the Balance Sheet, i.e. as a liability.
- Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as âaccumulated impairment amount âin the OCI.
13.2. Financial Liabilities
13.2.1.Initial recognition and measurement.
Financial Liabilities are classified, at initial recognition, as financial liabilities at fair value through the Statement of Profit and Loss or financial liabilities at amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of liabilities measured at amortised cost net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including financial guarantee contracts and derivative financial instruments.
13.2.2.Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
A. Financial Liabilities at fair value through the Statement of Profit and Loss
Financial liabilities at fair value through the Statement of Profit and Loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through the Statement of Profit and Loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.
Profit or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
B. Financial Liabilities at Amortized Cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Profit and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
C. Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
13.2.3.Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
13.2.4.Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
14. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the Balance Sheet comprise cash at banks and in hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
15. FAIRVALUEMEASUREMENT
15.1. The Company measures financial instruments, at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
15.2. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Company.
15.3. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
15.4. A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
15.5. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
15.6. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 â Valuation techniques for which the lowest level input hat is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
In case of Level 3 valuations, External valuers are also involved in some cases for valuation of assets and liabilities, such as unquoted financial assets, loans to related parties etc. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
16. GRANTS
16.1. CAPITAL GRANTS
In case of depreciable assets, the cost of the asset is shown at gross value and grant thereon is treated as Capital Grants which are recognized as income in the Statement of Profit and Loss over the period and in the proportion in which depreciation is charged.
16.2. REVENUE GRANTS
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Government grants is recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grants are intended to compensate.
Revenue related grants (subsidy and budgetary support towards under recoveries) are reckoned in "Revenue from operationsâ as per the respective schemes notified by Government from time to time, subject to final adjustments as per separate audit wherever applicable. In case of waiver of duty under EPCG license, such grant is considered as revenue grant and recognised in "Other Incomeâ in proportion of export obligations actually fulfilled during the accounting period. All other revenue grants has been recorded under "Other Incomeâ.
When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate or NIL interest rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value oft he loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
17. SEGMENTREPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
18. EARNINGSPERSHARE
Basic earnings per share
Basic earnings per share are calculated by dividing:
- The profit/ loss attributable to owners of the Company
- By the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
19. ACCOUNTING JUDGEMENTS ESTIMATES AND ASSUMPTIONS
The preparation of the Companyâs financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures and the disclosure of contingent liabilities. These include recognition and measurement of financial instruments, estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets, valuation of inventories, measurement of recoverable amounts of cash-generating units, measurement of employee benefits, actuarial assumptions, provisions etc.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information. Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods affected.
19.1. JUDGEMENTS
In the process of applying the Companyâs accounting policies, management has made the following judgments, which have the significant effect on the amounts recognised in the financial statements.
19.1.1.Lease classification in case of leasehold land
The Company has obtained land from the government for the purpose of setting up of factory. This land is having tenure of 99 year and at the end of lease term, the lease could be extended for another term or the land could be returned to the government authority. Since land has an indefinite economic life, the management has considered 99 years and above cases for finance lease if at the inception of the lease, the present value of minimum lease payments are substantially equal to fairvalue of leased assets. Furthers cases between 90-99 are also evaluated for finance lease on the basis of principle that present value of the minimum lease payments are substantially equal to fair value of the leased asset. In addition, other indicators such as the lesseeâs ability to renew lease for another term at substantially below market rent, lesseeâs option to purchase at price significantly below fair value are also examined for classification of land lease. Leases not meeting the finance lease criteria are classified under operating leases.
19.1.2. Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractual and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events
19.2. ESTIMATES AND ASSUMPTIONS
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
19.2.1.Defined benefit plans / Other Long term employee benefits The cost of the defined benefit plans and other long term employee benefit plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. The management considers the interest rates of government securities based on expected settlement period of various plans.
19.2.2.Fairvalue measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (DCF) model based on level-2 and level-3 inputs. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as price estimates, volume estimates, rate estimates etc. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
19.2.3. Impairment of financial assets
The impairment provisions for trade receivables are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on the Companyâs past history and other factors at the end of each reporting period.
Mar 31, 2016
(i) Basis of Preparation of Financial Statements:
The Financial Statements have been prepared on accrual basis and under the historical cost convention method and in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the Accounting Standards, notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014.
All the assets and liabilities have been classified by the Company as current or non-current as per Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements requires estimates and assumption to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which results are known/materialized.
(iii) Fixed Assets and Depreciation:
Fixed Assets are stated at cost less accumulated depreciation. Cost (net of CENVAT, VAT and Service Tax Credits) is inclusive of freight, duties and levies and any directly attributable cost of bringing the assets to their working condition for intended use. Interest and other borrowing cost on borrowed funds, wherever applicable, used to finance the acquisition of fixed assets, up to the date of assets are ready for use, are estimated and capitalized and included in the cost of the assets.
Depreciation on straight line method is provided on book value of tangible fixed assets (other than leasehold land).The residual value of all assets for depreciation purpose is considered as 5% of the original cost of the assets.
Depreciation on the assets added / disposed of during the year is provided on pro-rata basis with reference to the month of addition / disposal.
The Expenditure incurred on "CDMâ project has been considered by the Company as "Intangible Assets-CDM Projectâ and amortized on the basis of useful life method as specified in Schedule II of the Companies Act, 2013.
Cost of Leasehold Land will be amortized as and when the same will be used for business purpose.
(iv) Investments:
Non-Current Investments are stated at cost. Provision for diminution is made, other than temporary.
Current Investments are carried at cost off-air market rate whichever is lower.
(v) Excise Duty and Cenvat/VAT/Service Tax Credits:
Benefits of Cenvat/VAT and Service Tax Credits (to the extent claimed/availed) are accounted for by adjusting to the cost of relative fixed assets/ materials/expenses
(vi) Turnover/Sales:
Windmill power sales is being considered by the management as Revenue from Operations except Rate difference realized subsequent to sales of wind mill has been accounted for as other income.
(vii) Recognition of Revenue and Expenditure:
(a) Income and Expenditure are accounted for on accrual and prudent basis.
(b) Self-generated Certified Emission Reductions (CERS) under the Clean Development Mechanism (CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has registered the Companyâs "CDMâ project on 21-04-2009. Considering the "Exposure Draft of Guidance Note on Accounting for self-generated Certified Emission Reductions (CERS)â issued by the Institute of Chartered Accountants of India, "CERSâ/income are to be recognized in the financial statements only when the "CERSâ are issued/credited/sold/ certified by "UNFCCCâ.
(c) Interest on refunds of Government dues and disposal of Scrap/residual materials, if any, are intended to be accounted for as and when the amounts are finally determined and /or materials disposed off.
(viii)Foreign Currency Transactions
Transactions in Foreign Currencies are recorded in rupees by applying the rate of exchange ruling on the date of transaction.
(ix) Borrowing Costs
Borrowing costs incurred in relation to acquisition or construction of assets which necessarily takes substantial period of time to get ready for intended use are capitalized/allocated as part of such assets. Other borrowing costs are charged as expenses in the year in which the same are incurred.
(x) Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is calculated at current statutory income tax rates as applicable and recognized on timing difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets subject to consideration to prudence are recognized and carried forward only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
(xi) Impairment of Assets
The Company identifies impair able assets at the yearend in accordance with the guiding principles of Accounting Standard-28, issued by the Institute of Chartered Accountant of India, for the purpose of arriving at impairment loss thereon, being the difference in the book value and the recoverable value of the relevant assets. Impairment Loss, when crystallizes, are charged against revenues for the year.
(xii) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed by way of Notes in the Financial Statements. Contingent Assets are neither recognized nor disclosed in the Financial Statements.
Mar 31, 2015
(i) Basis of Preparation of Financial Statements:
The Financial Statements have been prepared on accrual basis and under
the historical cost convention method and in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP). The Company has
prepared these financial statements to comply in all material respects
with the Accounting Standards, notified under section 133 of the
Companies Act, 2013 read together with paragraph 7 of the Companies
(Accounts) Rules, 2014.
All the assets and liabilities have been classified by the Company as
current or non current as per Company's normal operating cycle and
other criteria set out in the Schedule III to the Companies Act, 2013.
The Company has ascertained its operating cycle as 12 months for the
purpose of current or non-current classification of assets and
liabilities.
(ii) Use of Estimates:
The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known/materialized.
(iii) Fixed Assets and Depreciation:
Fixed Assets are stated at cost less accumulated depreciation. Cost
(net of CENVAT, VAT and Service Tax Credits) is inclusive of freight,
duties and levies and any directly attributable cost of bringing the
assets to their working condition for intended use. Interest and other
borrowing cost on borrowed funds, wherever applicable, used to finance
the acquisition of fixed assets, upto date the assets are ready for
use, are estimated and capitalized and included in the cost of the
assets.
Effect due to change in Accounting Policy in respect of Depreciation:
Till the year ended 31st March, 2014, Schedule-XIV to the Companies
Act, 1956, prescribed requirements concerning depreciation on Tangible
and Intangible Fixed Assets was enforced. From the Current Year
Schedule-XIV has been replaced by Schedule-II to the Companies Act,
2013 where depreciation is the systematic allocation of the depreciable
amount of an asset over its useful life. The depreciable amount of an
asset is the cost of the asset or other amount substituted for cost,
less residual value. Considering the applicability of Schedule-II, the
management has re-estimated useful lives and residual value of all its
fixed assets. The applicability of Schedule-II has resulted in the
changes related to depreciation of tangible and intangible fixed
assets. Unless stated otherwise, the impact mentioned for the current
year is likely to be hold good for future years also.
The Expenditure incurred on "CDM" project has been considered by the
Company as "Intangible Assets-CDM Project" and amortised on the basis
of useful life method as specified in Schedule II of the Companies Act,
2013.
Cost of Leasehold Land will be amortised as and when the same will be
used for business purpose.
(iv) Investments:
Non-Current Investments are stated at cost. However, provision for
diminution is made to recognize a decline, other than temporary, in the
value of investments, such reduction being determined and made for each
investments.
Current Investments are carried at cost or fair market rate whichever
is lower.
(v) Excise Duty and Cenvat/VAT/Service Tax Credits:
Benefits of Cenvat/VAT and Service Tax Credits (to the extent
claimed/availed) are accounted for by adjusting to the cost of relative
fixed assets/ materials/expenses.
(vi) Turnover/Sales:
Windmill power sales is being considered by the management as Revenue
from Operations.
(vii) Recognition of Revenue and Expenditure:
(a) Income and Expenditure are accounted for on accrual and prudent
basis.
(b) Self-generated Certified Emission Reductions (CERS) under the Clean
Development Mechanism (CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has
registered the Company's "CDM" project on 21-04-2009. Considering the
"Exposure Draft of Guidance Note on Accounting for self-generated
Certified Emission Reductions (CERS)" issued by The Institute of
Chartered Accountants of India (ICAI), "CERS"/income are to be
recognized in the financial statements only when the "CERS" are
issued/credited/ sold/ certified by "UNFCCC".
(c) Interest on refunds of Government dues and disposal of
Scrap/residual materials, if any, are intended to be accounted for as
and when the amounts are finally determined and /or materials disposed
off.
(viii) Foreign Currency Transactions
Transactions in Foreign Currencies are recorded in rupees by applying
the rate of exchange ruling on the date of transaction.
(ix) Borrowing Costs
Borrowing cost incurred in relation to acquisition or construction of
assets which necessarily takes substantial period of time to get ready
for intended use are capitalized/allocated as part of such assets.
Other borrowing costs are charged as expenses in the year in which they
are incurred.
(x) Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is calculated at current statutory income tax rates as
applicable and is recognised on timing difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent period. Deferred tax assets subject
to consideration to prudence are recognised and carried forward only to
the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
(xi) Impairment of Assets
The Company identifies impairable assets at the year end in accordance
with the guiding principles of Accounting Standard-28, issued by ICAI,
for the purpose of arriving at impairment loss thereon, being the
difference in the book value and the recoverable value of the relevant
assets. Impairment Loss, when crystalises, are charged against revenues
for the year.
(xii) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
Notes. Contingent Assets are neither recognized nor disclosed in the
Financial Statements.
Mar 31, 2014
(i) Basis Of Preparation Of Financial Statements:
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India. The financial
statements have been prepared to comply in all material respects with
the notified Accounting Standards issued by Companies Accounting
Standard Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The Financial Statements are prepared under the
historical cost convention on an accrual basis (subject to Note (viii)
below).
All the assets and liabilities have been classified by the company as
current or non current as per Company''s normal operating cycle and
other criteria set out in the Schedule VI to the Companies Act,1956.
The company has ascertained its operating cycle as 12 months for the
purpose of current-non current classification of assets and
liabilities.
(ii) Use of Estimates:
The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known/materialized.
(iii) Fixed Assets and Depreciation
a. Tangible Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost
(net of CENVAT, VAT and Service Tax credits) is inclusive of freight,
duties and levies and any directly attributable cost of bringing the
assets to their working condition for intended use. Interest and other
borrowing costs on borrowed funds, wherever applicable, used to finance
the acquisition of fixed assets, upto date the assets are ready for
use, are estimated and capitalised and included in the cost of the
asset.
b. Depreciation on Tangible Assets -
(i) The cost of leasehold land and development is to be amortised
yearly over the balance period of the lease proportionately from the
date of commercial production.
(ii) Depreciation on other fixed assets is provided pro-rata to the
period of use on straight line method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
(iii) Assets of value not exceeding Rs. 5,000/- are fully depreciated
in the period of purchase.
c. Intangible Assets and Amortisation of Intangible Assets
(i) Computer Software is recognized at cost and amortised over a period
of five years.
(ii) The Expenditure incurred on "CDM" project has been considered by
the company as "Intangible Assets-CDM Project" and amortised over a
period of Ten years (life of the CDM Project) (also refer Note (viii)
(e) below).
(iv) Investments
Investments that are readily realizable and are intended by the
management to be held for not more than one year from the date, on
which such investments are made are classified as current investments
(also refer Note (a) in Note 10). All other investments are classified
as non-current investments. Current investments are carried at cost or
fair (market) value whichever is lower. Non-current investments are
carried at cost. However, provision for diminution is made to recognize
a decline, other than temporary, in the value of investments, such
reduction being determined and made for each investments.
(v) Inventories
The Company had no inventories either as on 31.3.2014 or as on
31.3.2013.
(vi) Excise Duty and Cenvat/VAT/Service Tax Credits
Benefits of Cenvat/VAT and Service Tax Credits (to the extent
claimed/availed) are accounted for by adjusting to the cost of relative
fixed assets/ materials/expenses.
(vii) Turnover/Sales:
Windmill power sales is being considered by the management as Revenue
from Operations and
accordingly disclosed in Note 15.
(viii) Recognition of Revenue and Expenditure
(a) Income and Expenditure considered receivable and payable
respectively, are accounted for on accrual and prudent basis.(Subject
to Notes Below)
(b) Export Benefits - Consideration/Benefits for transfer of DEPB
licences and benefits (including for entitlements in hand as on the
close of the period and/or to be received) in previous year were
accounted for on accrual basis and were being valued at estimated
and/or at net estimated realizable value. Adjustments for short/excess
realizations, out of Rs. 4,63,033/- outstanding as on 31.3.2014 and
brought forward from earlier years are intended to be made on actual
dates of realization. No recoveries against such receivable amount was
made during the year. As the management considers such amount as fully
receivable, no provision has been against such receivable amount. In
case there will be any short recovery the results of the company will
get affected to that extent.
(c) Interest on refunds of Government dues and disposal of
Scrap/residual materials, if any, are intended to be accounted for as
and when the amounts are finally determined and /or materials disposed
off.
(d) Profit from Commodities (futures) is recognized when payment is due
at the end of the settlement period. (also refer Note 3 below).
(e) Self-generated Certified Emission Reductions (CERS) under the Clean
Development Mechanism (CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has
registered the Company''s "CDM" project on 21.04.2009. Considering the
"Exposure Draft of Guidance Note on Accounting for self-generated
Certified Emission Reductions (CERS)" issued by ICAI, "CERS"/ income
are to be recognized in the accounts only when the "CERS" are
issued/credited/sold/ certified by "UNFCCC".
(f) Income tax demands of Rs. 93,74,869/- for an earlier year (against
which appeals for non allowability of, brought forward losses relating
to certain earlier years to such earlier year, are still pending
disposal) and compensation and/or disputed labour demands of Rs.
8,12,967/- relating to earlier years had been paid and/or debited to
Statement of Profit and Loss during the earlier years. Refunds /
reliefs, if any (including interest) against such payments / debits,
the amount whereof are not presently ascertainable, are intended to be
accounted for as and when the pending appeals / matters are settled and
or refunds received.
Income Tax Assessment after financial year 31.3.2011 are still pending.
However there are no outstanding demands in respect of such Assessment
years.
(g) Adjustments out of Rs. 23,20,012/- included under trade payables
and current liabilities and brought forward since earlier year(s) and
not since paid/adjusted are intended to be made as and when such
amounts are determined.
(h) Interest not adjusted in accounts since 1.4.2012 on loans of Rs.
2,75,01,331/- from a related party is intended to be accounted for on
cash basis (also refer notes 2 and 11).
(i) Also refer notes 1(ix), 1(xii) to (xiv), 2, 3 and 11 (iii) below.
(ix) Retirement benefits (gratuity and leave encashment)
(a) The management has certified that there is no liability (except as
stated under (b) below) for gratuity/retirement benefits/leave
encashment benefits as on 31.3.2014 and therefore provisions of
Accounting Standard (AS-15) issued by ICAI is not applicable for the
year. In absence of evidence the auditors have relied on such
certificate of the management.
(b) The liability for gratuity and other retirement benefits etc.
payable to the Managing Director and certain other employees for the
period upto 31.3.2013 and for the year ended 31.3.2014 has neither been
provided nor amount ascertained and stated which is not in accordance
to the Accounting Standard (AS-15) issued by ICAI.
(c) During the year ended 31.03.2013, the company had provided for
these liabilities till 14.10.2011. Any future liability in this regard
will be accounted for as and when ascertained and paid. The amounts are
presently not ascertainable and hence could not be stated.
(x) Foreign Currency Transactions
(a) There were no foreign currency transactions (either on capital or
revenue account) either during this year or in previous Year.
(b) The management has certified that there were no outstanding foreign
exchange contracts as on 31.03.2014 and as on 31.3.2013.
(xi) Borrowing Costs
(a) Interest and other costs on borrowed funds, wherever applicable,
used to finance the acquisition of fixed assets, upto date the assets
are ready for use, are estimated and capitalised under respective fixed
assets.
(b) Other interest and costs incurred on borrowed funds are recognised
as expense in the period in which they are incurred.
(xii) Taxation
(a) Current Tax - Provision for tax Rs. 2,25,000/- (MAT) (P.Y. Rs.
45,00,000/- (MAT) is as estimated and certified by the management and
has been made at prevailing tax rates. Adjustments for short/excess
provisions will be determined only on filing of Tax return and or
assessments are completed.
(b) The company is entitled to credit in respect of Minimum Alternate
Tax (MAT) under the provisions of Income Tax Act, 1961 for the year as
well as for earlier years. However, keeping in view the consideration
of prudence and probability of availability/availing the MAT credit
(which is based on convincing evidence of realization as envisaged by
the Guidance Note issued by ICAI), MAT credits, the amount, whereof is
not presently ascertainable, has not been considered by the company.
(c) Deferred Tax - The deferred tax liabilities or assets are
recognised using current tax rates, to the extent the management feels
that there is virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets/liabilities
can be realized/adjusted. Such assets/liabilities are reviewed as at
each Balance Sheet date, to reassess realizations/ liabilities.
(xiii) Impairment of Assets
As required by AS-28 issued by The Institute of Chartered Accountants
of India, provision for impairment loss of assets is not required to be
made as in view of the management, the estimated realizable value of
such assets will be more or equal to the carrying amount stated in the
Balance Sheet and the auditors have relied on the certificate of the
management in this regard. (Subject to Note 2 below).
(xiv) Provisions, Contingent Liabilities and Contingent Assets
a) Provisions are recognised in respect of obligations where, based on
the evidences available and their existence at the Balance Sheet date
are considered probable.
b) Contingent liabilities are shown by way of Notes on Accounts in
respect of obligations where, based on the evidences available, their
existence at the balance sheet date are considered not probable.
The management has certified that there are no pending cases /claims
against the company by employees, income tax and other government
authorities, which need to be disclosed by way of Notes on accounts or
need to be provided in Accounts.
c) Contingent Assets are neither recognized nor disclosed in Accounts.
Mar 31, 2013
(i) Basis Of Preparation of Financial Statements:
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India. The financial
statements have been prepared to comply in all material respects with
the notified Accounting Standards issued by Companies Accounting
Standard Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The Financial Statements are prepared under the
historical cost convention on an accrual basis.
All the assets and liabilities have been classified as current or non
current as per Company''s normal operating cycle and other criteria set
out in the Schedule VI to the Companies Act,1956. The Company has
ascertained its operating cycle as 12 months for the purpose of
current-non current classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known/materialized.
(iii) Fixed Assets and Depreciation
a. Tangible Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost
(net of CENVAT, VAT and Service Tax credits) is inclusive of freight,
duties and levies and any directly attributable cost of bringing the
assets to their working condition for intended use. Interest and other
borrowing costs on borrowed funds, wherever applicable, used to finance
the acquisition of fixed assets, upto date the assets are ready for
use, are estimated and capitalised and included in the cost of the
asset.
b. Depreciation on Tangible Assets Â
(i) The cost of leasehold land and development is to be amortised
yearly over the balance period of the lease proportionately from the
date of commercial production.
(ii) Depreciation on other fixed assets is provided pro-rata to the
period of use on straight line method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
(iii) Assets of value not exceeding Rs.5000/- are fully depreciated in
the period of purchase.
c. Intangible Assets and Amortisation of Intangible Assets
(i) Computer Software is recognized at cost and amortised over a period
of five years.
(ii) The Expenditure incurred on "CDM" project has been considered by
the Company as "Intangible Assets-CDM Project" and amortised over a
period of Ten years (life of the CDM Project) (also refer Note (vii)
below).
(iv) Investments
Investments that are readily realizable and are intended to be held for
not more than one year from the date, on which such investments are
made are classified as current investments. All other investments are
classified as non-current investments. Current investments are carried
at cost or fair value whichever is lower. Non-current investments are
carried at cost. However, provision for diminution is made to recognize
a decline, other than temporary, in the value of investments, such
reduction being determined and made for each investments.
(v) Inventories
The Company had no inventories either as on 31.3.2013 or as on
31.3.2012.
(vi) Excise Duty and Cenvat/VAT/Service Tax Credits
Benefits of Cenvat/VAT and Service Tax Credits (to the extent
claimed/availed) are accounted for by adjusting to the cost of relative
fixed assets/ materials/expenses.
(vii) Recognition of Revenue and Expenditure
(a) Income and Expenditure considered receivable and payable
respectively, are accounted for on accrual and prudent basis.
(b) Turnover/Sales
(i) There were no sales of products during the year.
(ii) Windmill power sales has this year been considered by the
management as Revenue from Operations and accordingly disclosed in Note
16. In previous year such sales were adjusted with Power & Fuel in Note
22.
(iii) In previous year :
a) Domestic sales were recognized on despatch of goods and were
inclusive of excise duty but excluding sales tax/vat.
b) Export Sales were recognized on the basis of dates of Bills of
Lading and were exclusive of excise duty as such Export Sales were
being made without payment of excise duty.
(c) Export Benefits - Consideration/Benefits for transfer of DEPB
licences and benefits (including for entitlements in hand as on the
close of the period and/or to be received) were accounted for on
accrual basis and were being valued at estimated and/or at net
estimated realizable value. Adjustments for short / excess
realizations, if any, are to be made on actual dates of realizations.
(d) Interest on refunds of Government dues and disposal of
Scrap/residual materials, if any, are intended to be accounted for as
and when the amounts are finally determined and /or materials disposed
off.
(e) Profit from Commodities (futures) is recognized when payment is due
at the end of the settlement period. (also refer Note 3 below).
(f) Self-generated Certified Emission Reductions (CERS) under the Clean
Development Mechanism (CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has
registered the Company''s "CDM" project on 21-04-2009. Considering the
"Exposure Draft of Guidance Note on Accounting for self-generated
Certified Emission Reductions (CERS)" issued by ICAI, "CERS"/income are
to be recognized in the accounts only when the "CERS" are
issued/credited/sold/ certified by "UNFCCC".
(g) Income tax demands of Rs.Nil (P.Y. Rs.9374869/-) for an earlier
year(against which appeals for non allowability of, brought forward
losses relating to certain earlier years are pending) and compensation
and/or disputed labour demands of Rs.5,00,000/- (P.Y. Rs.312967/-)
relating to earlier years have been paid and/or debited to Statement of
Profit and Loss during the year. Refunds / reliefs, if any (including
interest) against such payments / debits, the amount whereof are not
presently ascertainable, are intended to be accounted for as and when
the pending appeals / matters are settled and or refunds received.
(h) Provision for long and short term loans and Advances, Trade
Receivables and Other current assets including trade receivables and
loan due from a body corporate (related party) brought forward from
earlier year(s) and or not since realised /adjusted, and outstanding as
on 31.03.2013, which may not be recoverable, the amounts whereof has
not been ascertained and stated, is intended to be made as and when
such amounts are found to be irrecoverable and or the amounts are
determined.
(i) Adjustments relating to amounts included under current/non-current
liabilities and brought forward since earlier year(s) and not since
paid/adjusted are intended to be made as and when such amounts are
determined.
(j) Unlike as in previous year, interest of Rs.33,65,233/- receivable
on loan of Rs.2,75,01,331/- from a related party (refer Note 14) is
intended to be accounted for as and when the same is received. Due to
such change in accounting the profit for the year is reduced by
Rs.33,65,233/-.
(viii) Employee benefits
(a) The management has certified that there is no liability (except as
stated under (b) below) for gratuity/ retirement benefits/leave
encashment benefits as on 31.3.2013 and therefore provisions of
Accounting Standard (AS-15) issued by ICAI is not applicable for the
year.
(b) The liability for gratuity and other retirement benefits etc.
payable to the Managing Director and certain other employees for the
period upto 31.3.2013 has neither been provided nor amount ascertained
and stated which is contrary to Accounting Standard (AS-15) issued by
ICAI.
(c) In previous year, the Company had provided for these liabilities
till 14.10.2011. Any future liability in this regard will be accounted
for as and when ascertained and paid. The amounts are presently not
ascertainable and hence not stated.
(ix) Foreign Currency Transactions
(a) In previous year :
(i) All transactions in foreign currency were recorded at the rates of
exchange prevailing on the dates when the relevant transactions took
place.
(ii) Foreign currency monetary items at the Balance Sheet date were
translated at the exchange rate prevailing on the date of the Balance
Sheet.
(iii) Exchange rate differences resulting from foreign exchange
transactions on revenue account, settled during the period, including
on period end translation of monetary items, were recognized in the
statement of Profit and Loss.
(b) There were no exchange rate differences resulting on capital
account either during this year or in previous year.
(c) There were no outstanding foreign exchange contracts as on
31.03.2013 and as on 31.3.2012.
(x) Borrowing Costs
(a) Interest and other costs on borrowed funds, wherever applicable,
used to finance the acquisition of fixed assets, upto date the assets
are ready for use, are estimated and capitalised under respective fixed
assets.
(b) Other interest and costs incurred on borrowed funds are recognised
as expense in the period in which they are incurred.
(xi) Taxation
(a) Current Tax - Provision for tax Rs.45.00 Lacs (MAT) (P.Y. Rs.13.61
crores - including capital gain tax on slump sales) is as estimated and
certified by the management and has been made at prevailing tax rates
and in previous year was after adjusting available MAT Credit and tax
benefits. Final tax liability is to be determined only at the time of
filing Tax return.
(b) The Company is entitled to further credit in respect of Minimum
Alternate Tax (MAT) under the provisions of Income Tax Act, 1961.
However, keeping in view the consideration of prudence and probability
of availability/availing the MAT credit (which is based on convincing
evidence of realization as envisaged by the Guidance Note issued by
ICAI), MAT credits, the amount, whereof is not presently ascertainable,
has not been considered by the Company.
(c) Deferred Tax  The deferred tax liabilities or assets are
recognised using current tax rates, to the extent the management feels
that there is virtual certainty that sufficient future taxable income
will be available against which such deferred tax assets/liabilities
can be realized/adjusted. Such assets/liabilities are reviewed as at
each Balance Sheet date, to reassess realizations/liabilities.
(xii) Impairment of Assets
As required by AS-28 issued by The Institute of Chartered Accountants
of India, provision for impairment loss of assets is not required to be
made as in view of the management, the estimated realizable value of
such assets will be more or equal to the carrying amount stated in the
Balance Sheet and the auditors have relied on the certificate of the
management in this regard.
(xiii) Provisions, Contingent Liabilities and Contingent Assets
a) Provisions are recognised in respect of obligations where, based on
the evidences available and their existence at the Balance Sheet date
are considered probable.
b) Contingent liabilities are shown by way of Notes on Accounts in
respect of obligations where, based on the evidences available, their
existence at the balance sheet date is considered not probable.
c) Contingent Assets are neither recognized nor disclosed in Accounts.
Mar 31, 2012
(i) Basis of Preparation of Financial Statements:
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India. The financial
statements have been prepared to comply in all material respects with
the notified Accounting Standards issued by Companies Accounting
Standard Rules,2006(as amended) and the relevant provisions of the
companies Act, 1956. The Financial Statements are prepared under the
historical cost convention on an accrual basis.
All the assets and liabilities have been classified as current or non
current as per Company's normal operating cycle and other criteria
set out in the Schedule VI to the Companies Act,1956. The company has
ascertained its operating cycle as 12 months for the purpose of
current-non current classification of assets and liabilities.
(ii) Use of Estimates:
The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known/materialized.
(iii) Fixed Assets and Depreciation
a. Tangible Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost
(net of CENVAT, VAT and Service Tax credits) is inclusive of freight,
duties and levies and any directly attributable cost of bringing the
assets to their working condition for intended use. Interest and other
borrowing costs on borrowed funds used to finance the acquisition of
fixed assets, upto date the assets are ready for use, are estimated and
capitalised and included in the cost of the asset.
b. Depreciation on Tangible Assets -
(i) The cost of leasehold land is amortised yearly over the balance
period of the lease proportionately from the date of commercial
production.
(ii) Depreciation on other fixed assets is provided pro-rata to the
period of use on straight line method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
(iii)Assets of value not exceeding Rs.5000/- are fully depreciated in
the period of purchase.
c. Intangible Assets and Amortisation of Intangible Assets
(i) Computer Software is recognized at cost and amortised over a period
of five years.
(ii) The Expenditure incurred on "CDM" project has been considered
by the company as "Intangible Assets-CDM Projecf and amortised over a
period of Ten years (life of the CDM Project)
(iv) Investments
Investments that are readily realizable and are 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. Current investments are carried at
cost or fair value whichever is lower. Long term investments are
carried at cost. However, provision for diminution is made to recognize
a decline, other than temporary, in the value of investments, such
reduction being determined and made for each investments.
(v) Inventories
a. There are no inventories at 31.03.2012.
b. Inventories were valued at lower of cost (net of Cenvat/VAT
Credits), and net realizable value as certified by the management. Net
realizable value is the estimated selling price in the ordinary course
of business, less the estimated costs of completion and estimated cost
necessary to make the sale. Cost for the purpose of valuation of:
(i) Raw-materials and stores and spare parts etc., is computed on
weighted average method.
(ii) Finished goods and Work-in-process is computed on the basis of
estimated cost of materials, labour, conversion and other costs for
bringing the inventories to their present location and condition.
(ili) Stock in Trade is computed on the basis of actual cost paid.
(vi) Excise Duty and Cenvat/VAT/Service Tax Credits
a) In previous year, the value of closing stock of finished goods lying
in factory premises was inclusive of excise duty.
b) Benefits of Cenvat/VAT and Service Tax Credits (to the extent
claimed/Availed) are accounted for by adjusting to the cost of relative
fixed assets/ materials/expenses.
(vii) Recognition of Revenue and Expenditure
(a) Income and Expenses considered receivable and payable respectively,
are accounted for on accrual and prudent basis.
(b) Turnover/Sales -
(i) Domestic Sales are recognized on dispatch of goods and are
inclusive of excise duty but excluding sales tax/Vat.
(ii) Export Sales are recognized on the basis of dates of Bills of
Lading and are exclusive of excise duty as such Export Sales are being
made without payment of excise duty.
(c) Export Benefits - Consideration/Benefits for transfer of DEPB
licences and benefits (including for entitlements in hand as on the
close of the period and to be received) are accounted for on accrual
basis and are being valued at estimated and/or at net estimated
realizable value. Adjustments for short / excess realizations, if any,
are to be made on actual dates of realizations.
(d) Interest on refunds of Government dues and disposal of
Scrap/residual materials are accounted for when the amounts are finally
determined and /or materials disposed off.
(e) Profit from Commodities (futures) is recognized when payment is due
at the end of the settlement period.
(f) Self-generated Certified Emission Reductions (CERS) under the Clean
Development Mechanism (CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has
registered the Company's "CDM" project on 21 -04-2009.
Considering the "Exposure Draft of Guidance Note on Accounting for
self-generated Certified Emission Reductions (CERS)" issued by ICAI,
"CERS'Yincome are to be recognized in the accounts only when the
"CERS" are issued/ credited/sold/ certified by "UNFCCC".
(g) Income tax demands of Rs. 93,74,869/-, for an earlier year(against
which appeals for non allowability of, brought forward losses relating
to certain earlier years to such earlier year, are pending) and
disputed labour demands of Rs. 3,12,967/- relating to earlier years
have been paid and/or debited to Statement of Profit and Loss during
the year. Refunds / reliefs, if any (including interest) against such
payments / debits, the amount whereof are not presently ascertainable,
are intended to be accounted for as and when the pending appeals /
matters are settled and or refunds received.
(h) Provision for long and short term loans and Advances, Trade
Receivables and Other current assets brought forward from earlier
year(s) and or not since realised /adjusted, and outstanding as on
31.03.2012, which may not be recoverable, the amounts whereof has not
been ascertained and stated, is intended to be made as an when such
amounts are found to be irrecoverable and or the amounts are
determined.
(viii) Employee benefits
(a) Gratuity - The liability for Gratuity is covered under Group
Gratuity Scheme with Life Insurance Corporation of India. Liability up
to 14.10.2011 has been provided for on basis of actuarial valuation.
The company has not made any provision thereafter. Any future liability
in this regard will be accounted for as and when ascertained and paid.
(b) Leave Encashment - Liability for Leave Encashment benefits is
accounted for on basis of actuarial valuation up to 14.10.2011. The
company has not made any provision thereafter. Any future liability in
this regard will be accounted for as and when ascertained and paid.
(c) Provident Fund - The Company has not deducted and contributed any
amount towards provident Fund after 14.10.2011, as it has been advised
that after such date it is not obliged to deduct/contribute any amount.
Any future liability in this regard will be accounted for as and when
ascertained and paid.
(ix) Foreign Currency Transactions
(a) All transactions in foreign currency, are recorded at the rates of
exchange prevailing on the dates when the relevant transactions take
place.
(b) Foreign currency monetary items at the Balance Sheet date are
translated at the exchange rate prevailing on the date of the Balance
Sheet.
(c) Exchange rate differences resulting from foreign exchange
transactions on revenue account, settled during the period, including
on period end translation of monetary items, are recognized in the
statement of Profit and Loss.
(d) There were no exchange rate differences resulting on capital
account.
(e) There were no outstanding foreign exchange contracts as on
31.03.2012.
(x) Borrowing Costs
Interest and other costs on borrowed funds used to finance the
acquisition of fixed assets, upto date the assets are ready for use,
are estimated and capitalised under respective fixed assets.
Other interest and costs incurred on borrowed funds are recognised as
expense in the period in which they are incurred.
(xi) Taxation
Current Tax - Provision for tax(including capital gain tax on slump
sales) has been made at prevailing tax rates after adjusting available
MAT Credit and tax benefits. Final tax liability is to be determined
only at the time of filing Tax return.
Deferred Tax - The deferred tax liabilities or assets are recognised
using current tax rates, to the extent the management feels that there
is virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets/liabilities can be
realized/adjusted.
(xii) Research and Development
Routine expenditure considered as of revenue nature is charged to
revenue under the natural heads of account in the year in which it is
incurred. The Expenditure of capital nature, if any, is capitalized as
fixed assets.
(xiii)Impairment of Assets
As required by AS-28 issued by The Institute of Chartered Accountants
of India, provision for impairment loss of assets is not required to be
made as in view of the management, the estimated realizable value of
such assets will be more or equal to the carrying amount stated in the
Balance Sheet and the auditors have relied on the certificate of the
management in this regard.
(xiv)Provisions, Contingent Liabilities and Contingent Assets
a) Provisions are recognised in respect of obligations where, based on
the evidences available and their existence at the Balance Sheet date
are considered probable.
b) Contingent liabilities are shown by way of Notes on Accounts in
respect of obligations where, based on the evidences available, their
existence at the balance sheet date is considered not probable.
c) Contingent Assets are neither recognized nor disclosed in Accounts.
Mar 31, 2010
(i) Basis of Preparation of Financial Statements
The Financial Statements are prepared on going concern assumption and
under the historical cost convention, in accordance with generally
accepted Accounting principles in India and the provisions of the
Companies Act, 1956.
(ii) Use of Estimates
The preparation of financial statements requires estimates and
assumption to be made that effect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which results are known/materialized.
(iii) Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. Cost
(net of CENVAT, VAT and Service Tax credits) is inclusive of freight,
duties and levies and any directly attributable cost of bringing the
assets to their working condition for intended use. Interest and other
borrowing costs on borrowed funds used to finance the acquisition of
fixed assets, upto date the assets are ready for use, are estimated and
capitalised and included in the cost of the asset.
(iv) Depreciation
a) The cost of leasehold land is amortised yearly over the balance
period of the lease proportionately from the date of commercial
production.
b) Depreciation on other fixed assets is provided pro-rata to the
period of use on straight line method in the manner and at the rates
specified in Schedule XIV of the Companies Act, 1956.
c) Assets of value not exceeding Rs. 5,000/- are fully depreciated in
the year of purchase.
(v) Investments
a) Investments are stated at cost.
b) Provision of temporary diminution (amount not ascertained and
stated) in the value of long term investments is made only if such a
decline is other than temporary, in the opinion of the management.
(vi) Valuation of Inventories
a) Inventories are valued at lower of cost (net of Cenvat/VAT Credits)
and net estimated realisable value, as certified by the management.
Cost for the purpose of valuation of:
(i) Raw-materials and stores and spare parts etc., is computed on
weighted average method.
(ii) Finished goods and Stock-in-process is computed on the basis of
estimated cost of materials, labour, conversion and other costs for
bringing the inventories to their present location and condition.
(iii) Traded goods is computed on the basis of actual cost paid.
b) There are no significant machinery spares lying in stock which can
be specifically used to a particular item of fixed assets or their use
is expected to be irregular.
c) There are no obsolete/slow moving stocks for which provisions need
to be made in accounts.
(vii) Excise Duty and Cenvat/VAT/Service Tax Credits
a) The value of closing stock of finished goods lying in factory
premises are inclusive of excise duty.
b) Benefits of Cenvat/VAT and Service Tax Credits (to the extent
claimed/availed) are accounted for by adjusting to the cost of relative
fixed assets/materials/expenses.
(viii) Revenue Recognition
a) Expenses and income considered payable and receivable respectively,
are accounted for on accrual and prudent basis.
b) Interest on refunds of Government dues and disposal of
Scrap/residual materials are accounted for when the amounts are finally
determined and or materials disposed off.
c) Self-generated Certified Emission Reductions (CERS) under the Clean
Development Mechanism(CDM):
United Nations Framework Convention on Climate Change (UNFCCC) has
Registered the Companys "CDM" project on 21-04-2009. Considering the
"Exposure Draft of Guidance Note on Accounting for Self-generated
Certified Emission Reductions (CERS)" issued by ICAI, "CERS" are to be
recognised in the accounts only when the "CERS" are
issued/credited/certified by "UNFCCC". The Expenditure of Rs.
10,67,719/- incurred on "CDM" project has been considered by the
company as "Intangible Assets-CDM Project" and included in Schedule 6
of Fixed Assets and amortised over a period of Ten years. The relative
figures/value, if any, of "CERS" is presently not ascertainable and
stated.
(ix) Retirement benefits
a) The liability for Gratuity is covered under Group Gratuity Scheme
with Life Insurance Corporation of India.
b) Liability for Leave Encashment benefits is accounted for on basis of
actuarial valuation
c) The disclosures required under AS-15 (revised) are set out in Note
11 below.
(x) Turnover/Sales
a) Sales (including exports) are recognized on despatch of goods.
b) Local Sales are inclusive of excise duty but excluding sales
tax/Vat.
c) Export Sales are exclusive of excise duty as such Export Sales are
being made without payment of excise duty.
(xi) Foreign Currency Transactions
a) Transactions arising in foreign currency are accounted for at rates
of exchange prevailing on the dates of transactions.
b) Foreign currency monetary items at the Balance Sheet date are
translated at the exchange rate prevailing on the date of the Balance
Sheet.
c) Exchange rate differences resulting from foreign exchange
transactions on revenue account, settled during the year, including on
year end translation of monetary items, are recognized in the Profit &
Loss Account.
d) There were no exchange rate differences resulting on capital
account.
(xii) Export Benefits
Consideration/Benefits for transfer of DEPB licences and benefits
(including for entitlements in hand as on the close of the year and to
be received) are accounted for on accrual basis and are being valued at
estimated and or net estimated realizable value. Adjustments for
short/excess realizations, if any, are to be made on actual dates of
realizations.
(xiii) Borrowing Costs
Interest and other costs on borrowed funds used to finance the
acquisition of fixed assets, upto date the assets are ready for use,
are estimated and capitalised under respective fixed assets.
Other interest and costs incurred on borrowed funds are recognised as
expense in the year in which they are incurred.
(xiv) Taxation
a) (i) Provision for taxation (this year MAT) Rs.115 lacs (P.Y. Rs.59
lacs) made in accounts is as estimated.
The final tax liability is to be determined only on filing of Tax
returns.
(ii) The Company is entitled to credit in respect of Minimum Alternate
Tax (MAT) under the provisions of the Income Tax Act, 1961. However,
read with Note 3(v)below and keeping in view the consideration of
prudence and the probability of availability/availing the MAT Credit
(which is based on convincing evidence of realization as envisaged by
the Guidance Note issued by ICAI), MAT Credits (including for earlier
years), the amount, whereof is not presently ascertainable, has not
been considered by the Company.
b) The deferred tax liabilities or assets are recognised using current
tax rates, to the extent the management feels that there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets/liabilities can be realised.
Such assets/liabilities are reviewed as at each balance sheet date, to
reassess realization / liabilities.
(xv) Research and Development
Routine expenditure considered as of revenue nature are charged to
revenue under the natural heads of account in the year in which it is
incurred. The Expenditure of capital nature, if any, is capitalized as
fixed assets.
(xvi) Intangible Assets
Intangible assets (Computer Software) are recognized at cost and
amortized over a period of five years (read also para (viii)(c) above).
(xvii) Impairment of Assets
As required by AS-28 issued by the Institute of Chartered Accountants
of India, provision for impairment loss of Assets is not required to be
made as in view of the management, the estimated realizable value of
such assets will be more or equal to the carrying amount stated in the
Balance Sheet and the Auditors have relied on the certificate of the
management in this regard.
(xviii) Provisions, Contingent Liabilities and Contingent Assets
a) Provisions are recognised in respect of obligations where, based on
the evidences available and their existence at the Balance Sheet date
are considered probable.
b) Contingent liabilities are shown by way of Notes on Accounts in
respect of obligations where, based on the evidences available, their
existence at the balance sheet date are considered not probable.
c) Contingent Assets are neither recognized nor disclosed in Accounts.
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