Accounting Policies of Kitply Industries Ltd. Company
Mar 31, 2014
1. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by the Companies
Accounting Standards Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies applied by the Company are consistent with
those used in the previous year.
1.1 Summary of significant accounting policies
(a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible Fixed assets
Fixed Assets are stated at cost or revalued amount, as the case may be,
less accumulated depreciation/amortization and impairment losses, if
any. Cost comprises the purchase price inclusive of duties (net of
cenvat / VAT), taxes, incidental expenses, erection / commissioning
expenses etc. up to the date, the asset is ready for its intended use.
In case of revaluation of fixed assets, the original cost as written-up
by the value is considered in the accounts and the differential amount
is transferred to revaluation reserve.
Machinery spares which can be used only in connection with an item of
fixed asset and whose use as per technical assessment is expected to be
irregular, are capitalized and depreciated over the residual life of
the respective assets.
(c) Depreciation / Amortization
The classification of plant and machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
Depreciation on fixed assets is provided under Straight Line Method at
the rates prescribed in Schedule XIV of the Companies Act, 1956.
Depreciation on fixed assets added / disposed off during the period is
provided on pro-rata basis with reference to the date of
addition/disposal.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
In case of impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life of the asset. Intangible assets being
Specialized Software are amortized on a straight line basis over a
period of 3 years.
(d) Fixed Assets Acquired under Lease
Finance Lease:
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risk and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value and present value of minimum lease payment at the inception of
the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and the reduction of the lease
liability so as to achieve a constant rate of interest on the remaining
balance of their liability. Finance charges are charged directly to the
expenses account. Lease management fees, legal charges and other
initial direct costs are capitalized.
Operating Lease
Leases where the less or effectively retains substantially all the
risks and benefits of the ownership of the leased assets are classified
as operating leases. Operating lease payments are recognized as an
expense in the profit and loss account on a straight-line basis over
the lease term.
(e) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition / construction
of an asset that necessarily takes a substantial period of time to get
ready for its intended use are capitalized as a part of the cost of the
respective asset. All other borrowing costs are expensed in the period
they occur.
(f) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which
represents the greater of the net selling price and Value in use' of
the assets. In assessing the 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 risks specific to the assets.
(g) Government grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grants/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expenses item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
Government grants of the nature of promoters' contribution are credited
to capital reserve and treated as a part of shareholders' funds.
(h) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as Current investments. All other
investments are classified as Non-current / long-term investments.
Current investments are carried at lower of cost and market value on
individual investment basis. Non-current / Long Term Investments are
considered at cost, unless there is an "other than temporary" decline
in value, in which case adequate provision is made for the diminution
in the value of Investments.
(i) Inventories
Raw materials and stores and spares are valued at lower of cost and net
realizable value. However, materials and other items held for use in
the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. Cost of raw materials and stores and spares is
determined on weighted average / FIFO basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labor and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty and is determined
on annual weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
(k) Foreign currency translation
Foreign currency transactions and balances
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement / conversion of monetary
items are recognized as income or expenses in the year in which they
arise.
Forward Exchange Contracts not entered for trading or speculation
purpose
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contracts is recognized as income or
expense for the year.
(l) Premium on Redemption of Debentures
Premium payable on redemption of debentures is adjusted against the
Securities Premium Account, on a proportionate basis.
(m) Retirement and other employee benefits
Retirement benefit in the form of Provident Fund is a defined
contribution scheme and is charged to the Statement of Profit and Loss
of the year when the contributions to the fund is due. The Company has
no obligations other than the contribution payable to the respective
funds.
Gratuity liability, being a defined benefit obligation, is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation which is done as per projected unit credit method at the end
of each financial year.
Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
(n) Income taxes
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, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income for the year and reversal of timing differences of earlier
years.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been substantively enacted as of the Balance Sheet date. Deferred
tax assets 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 tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized 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. If the Company has carry forward unabsorbed depreciation and
tax losses, deferred tax assets are recognized only to the extent there
is virtual certainty supported by convincing evidence that sufficient
taxable income will be available against which such deferred tax asset
can be realized.
The carrying amounts of deferred tax assets are reviewed at each
balance sheet date. The Company writes-down the carrying amount of
deferred tax assets to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
(o) Segment reporting
Identification of segments
The Company has identified that its business segments are the primary
segments. The Company's businesses are organized and managed separately
according to the nature of products/services, with each segment
representing a strategic business unit that offers different product /
services and serves different markets. The analysis of geographical
segments is based on the areas in which the customers of the Company
are located.
Allocation of common costs
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head "Unallocated".
Segment accounting policies
The accounting policies adopted for segment reporting are in line with
those of the Company's accounting policies.
(p) Earnings Per Share
Basic Earnings per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, net profit or
loss for the year attributable to equity share holders and the weighted
average number of shares outstanding during the year are adjusted for
the effect of all dilutive potential equity shares.
(q) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to their present value and are determined based on best estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Excise Duty
Excise duty on finished goods stock lying at the factories is accounted
for at the point of manufacture of goods and accordingly, is considered
for valuation of finished goods stock lying in the factories as on the
balance sheet date.
(b) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs,10 per share. Each holder of equity shares is entitled to one vote
per share.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
As per records of the Company, including its register of
shareholders/members, the above shareholding represents legal
ownerships of shares
Mar 31, 2013
1. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by the Companies
Accounting Standards Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies applied by the Company are consistent with
those used in the previous year.
1.1 Summary of significant accounting policies
(a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible Fixed Assets
Fixed Assets are stated at cost or revalued amount, as the case may be,
less accumulated depreciation/ amortization and impairment losses, if
any. Cost comprises the purchase price inclusive of duties (net of
cenvat / VAT), taxes, incidental expenses, erection / commissioning
expenses etc. up to the date, the asset is ready for its intended use.
In case of revaluation of fixed assets, the original cost as written-up
by the valuer is considered in the accounts and the differential amount
is transferred to revaluation reserve.
Machinery spares which can be used only in connection with an item of
fixed asset and whose use as per technical assessment is expected to be
irregular, are capitalised and depreciated over the residual life of
the respective assets.
(c) Depreciation / Amortization
The classification of plant and machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
Depreciation on fixed assets is provided under Straight Line Method at
the rates prescribed in Schedule XIV of the Companies Act, 1956.
Depreciation on fixed assets added / disposed off during the period is
provided on pro-rata basis with reference to the date of
addition/disposal.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
In case of impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life of the asset. Intangible assets being
Specialized Software are amortized on a straight line basis over a
period of 3 years.
(d) Fixed Assets Acquired under Lease
Finance Lease:
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risk and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value and present value of minimum lease payment at the inception of
the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and the reduction of the lease
liability so as to achieve a constant rate of interest on the remaining
balance of their liability. Finance charges are charged directly to
the expenses account. Lease management fees, legal charges and other
initial direct costs are capitalized.
Operating Lease :
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the profit and loss account on a straight-line basis over the lease
term.
(e) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition /construction
of an asset that necessarily takes a substantial period of time to get
ready for its intended use are capitalized as a part of the cost of the
respective asset. All other borrowing costs are expensed in the period
they occur.
(f) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which
represents the greater of the net selling price and 'Value in use' of
the assets. In assessing the 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 risks specific to the assets.
(g) Government grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grants/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expenses item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
Government grants of the nature of promoters' contribution are credited
to capital reserve and treated as a part of shareholders' funds.
(h) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as Current investments. All other
investments are classified as Non-current / Long Term investments.
Current investments are carried at lower of cost and market value on
individual investment basis. Non-current / Long Term Investments are
considered at cost, unless there is an "other than temporary" decline
in value, in which case adequate provision is made for the diminution
in the value of Investments.
(i) Inventories
Raw materials and stores and spares are valued at lower of cost and net
realizable value. However, materials and other items held for use in
the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. Cost of raw materials and stores and spares is
determined on weighted average / FIFO basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labor and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty and is determined
on annual weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic benefits flowing to the Company. Hence, they are
excluded from revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
(k) Foreign currency translation
Foreign currency transactions and balances
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using
the closing rate. Non-monetary items which are carried in terms of
historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction, and non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
Exchange differences
Exchange differences arising on the settlement / conversion of monetary
items are recognized as income or expenses in the year in which they
arise.
Forward Exchange Contracts not entered for trading or speculation
purpose
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contracts is recognized as income or
expense for the year.
(l) Premium on Redemption of Debentures
Premium payable on redemption of debentures is adjusted against the
Securities Premium Account, on a proportionate basis.
(m) Retirement and other employee benefits
Retirement benefit in the form of Provident Fund is a defined
contribution scheme and is charged to the Statement of Profit and Loss
Account of the year when an employee renders the related service. The
Company has no obligations other than the contribution payable to the
respective funds. If the contribution payable to the scheme for service
received before the balance sheet date exceeds the contribution already
paid, the deficit payable to the scheme is recognized as a liability
after decocting the contribution already paid. If the contribution
already paid exceeds the contribution due for services received before
the balance sheet date then exceeds is recognized as an assets to the
extent that the pre-payment will lead to, for example, a reduction in
future payment or a cash refund.
Gratuity liability, being a defined benefit obligation, is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year.
Short term compensated absences are provided
for based on estimates. Long term compensated absences are provided for
based on actuarial valuation which is done as per projected unit credit
method at the end of each financial year.
Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
(n) Income taxes
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, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income for the year and reversal of timing differences of earlier
years.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been substantively enacted as of the Balance Sheet date. Deferred
tax assets 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 tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized 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. If the Company has carry forward unabsorbed depreciation and
tax losses, deferred tax assets are recognized only to the extent there
is virtual certainty supported by convincing evidence that sufficient
taxable income will be available against which such deferred tax asset
can be realized.
The carrying amounts of deferred tax assets are reviewed at each
balance sheet date. The Company writes-down the carrying amount of
deferred tax assets to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
(o) Segment reporting
Identification of segments
The Company has identified that its business segments are the primary
segments. The Company's businesses are organized and managed separately
according to the nature of products/services, with each segment
representing a strategic business unit that offers different product /
services and serves different markets. The analysis of geographical
segments is based on the areas in which the customers of the Company
are located.
Allocation of common costs
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head "Unallocated".
Segment accounting policies
The accounting policies adopted for segment reporting are in line with
those of the Company's accounting policies.
(p) Earnings Per Share
Basic Earnings per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit
or loss for the year attributable to equity share holders and the
weighted average number of shares outstanding during the year are
adjusted for the effect of all dilutive potential equity shares.
(q) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to their present value and are determined based on best estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Excise Duty
Excise duty on finished goods stock lying at the factories is accounted
for at the point of manufacture of goods and accordingly, is considered
for valuation of finished goods stock lying in the factories as on the
balance sheet date.
(b) Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs,10 per share. Each holder of equity shares is entitled to one vote
per share.
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
Series A debentures are redeemable at a premium,on March 31, 2012 (20%)
and March 31, 2013 (80%), which however is extended up to June 15, 2013
by the debenture holders. The above debentures carry interest @12.00%
(10.00%).
Series B and C Debentures were proposed to be converted into equity as
envisaged in the Scheme of arrangement as mentioned in note 34(a).
All the above debentures are secured as under:
(i) First Exclusive Priority Charge on Immovable property at,
Margherita, Art Margherita, Long Island, Rampur and Gondia, Godown /
Immovable Property at Thane, Trade mark 'Kitply', Movable and Current
Assets (Inventories & Debtors), IFCI, IDBI and IIBI Financed equipments
and Insurance contracts.
(ii) Third party Assets i.e. all that piece and parcel of agricultural
land admeasuring 52.96 acres at Bhaiya Nagla, Muradabad.
(iii) Pledge of new promoter's shares proposed to be issued under the
Scheme of Arrangement and a Second Pari Passu Charge on Third Party
Assets I i.e. Office premises at 119, Park Street, Kolkata - 700 016.
Further, of the above, series A debentures amounting to Rs,
1,000,000,000 are also secured by a First Exclusive Priority Charge on
Agro Immovable Property, Agro Movable assets and pledge of existing
promoters shares.
Further, 5,440 Secured redeemable non-convertible debentures of the
face value of Rs,10,000/- each aggregating to Rs, 54,400,000 are
convertible into Equity as envisaged in the Scheme of Arrangement.
Out of above, 13,160 debentures amounting to Rs,131,600,000 are secured
by a Second Pari-Passu Charge on Agro Immovable and Movable Assets and
Third Exclusive Priority Charge on the Godown / Immovable Property at
Thane. Further 5,440 debentures are secured by:
First Exclusive Charge on Third party Assets I i.e. premises at 119,
Park Street, Kolkata - 700 016.
Second Pari-Passu Charge on pledge of existing promoter shares.
Besides, 42,680 debentures amounting to Rs,426,800,000 and 5,440
debentures amounting to Rs, 54,400,000 are further secured by:
Second exclusive priority Charge on the trade mark, Third Party Assets
1 i.e. Office premises at 119, Park Street, Kolkata - 700 016 and Third
Party Asset 2 i.e. all that piece and parcel of agricultural land
admeasuring 52.96 acres at Bhaiya Nagla, Muradabad. (Provided that the
claim should not exceeds Rs,17.76 crores).
Second parri-Passu Charge on Movable Assets, Current Assets and
Immovable property at Margherita, Art-Margherita, Long Island, Rampur,
Gondia (Provided that the claim should not exceeds Rs,19.46 crores) &
other current assets of the Company.
42,680 debentures are further secured by Third Exclusive Priority
Charge on the Godown / Immovable property at Thane.
Further, 55,840 debentures are also secured by a personal guarantee of
Mr. P. K. Goenka (Chairman & Managing Director).
(c) 31,551 secured redeemable non-convertible debentures of the face
value of Rs, 10,000/- each aggregating to Rs, 315,510,000 which carry
interest @6.00% (6.00%) are redeemable at par along with interest in
two equal installments on 31st March, 2013 & 31st March, 2014 and are
secured by:
Second Pari-Passu Charge on Agro Immovable Property, Agro movable
assets and pledge of existing promoter shares.
Second Exclusive Priority Charge on the Godown / Immovable property at
Thane and IDBI Financed Equipments.
(d) 8,404 secured redeemable non-convertible debentures of the face
value of Rs,10,000/- each aggregating to Rs, 84,040,000 which carry
interest @ 6.00% (6.00%) are redeemable at par along with interest in
two equal installments of Rs, 40,485,000 31st March, 2013 & of Rs,
43,555,000 on 31st March, 2014.
400 secured redeemable non-convertible debentures valuing Rs, 4,000,000
(interest free) are redeemable at par in three yearly installments on
15th September, 2013, 15th September, 2014 & 15th September, 2015. The
above debentures are secured by:
Second Pari-Passu Charge on the Movable Assets, Current Assets and
Immovable property at Margherita, Art-Margherita, Gondia, Rampur & Long
Island and other current assets of the Company.
Fourth Pari-Passu Charge on the Godown / Immovable property at Thane.
(e) 278 secured redeemable non-convertible debentures aggregating to
Rs, 2,780,000 will be converted into equity as envisaged in Scheme of
Arrangement and 1,436 secured redeemable non-convertible debentures
aggregating to Rs,14,360,000 which carry interest @ 8.40% (8.40%) are
redeemable at par along with interest in three yearly installments on
30th September, 2013, 30th September, 2014 & 30th September, 2015. The
above debentures are secured by:
Second Exclusive Priority Charge on IFCI Financed Equipments.
Fourth Pari-Passu Charge on the Godown immovable property at Thane.
(f) 1,111 secured redeemable non-convertible debentures aggregating to
Rs, 11,110,000 which carry interest @ 6.00% (6.00%) are redeemable at
par along with interest in two equal installments on 31st March, 2013 &
31st March, 2014 and are secured by:
Second Pari-Passu Charge on Agro Immovable Property and Agro movable
assets.
Second Exclusive Priority Charge on IIBI Financed Equipments.
(g) 166 secured redeemable non-convertible debentures aggregating to
Rs, 1,660,000 will be converted into equity as envisaged in Scheme of
Arrangement and 860 secured redeemable non-convertible debentures
aggregating to Rs, 8,600,000 which carry interest @ 8.40% (8.40%) are
redeemable at par along with interest in three yearly installments on
30th September, 2013, 30th September, 2014 & 30th September, 2015. The
above debentures are secured by:
Second Pari-Passu Charge on Movable Assets, Current Assets and
Immovable property at, Margherita, Art-Margherita, Gondia, Rampur, &
Long Island and other current assets of the Company.
Fourth Pari-Passu Charge on the Godown/Immovable property at Thane.
B. 8,800 unsecured redeemable non-convertible debentures aggregating
to Rs, 88,000,000 will be converted into equity as envisaged in Scheme
of Arrangement.
C. Unsecured loan from a scheduled bank (interest free) is repayable
in eight quarterly installments of Rs, 4,887,000 each starting from
July 01, 2015.
D. Unsecured loans from bodies corporate includes Rs, 70,300,000 which
were proposed to be converted into equity as envisaged in the Scheme of
Arrangement. The lender has recalled the loan in earlier years.
However, since the Company's suit against the above lender for specific
performance is pending before Hon'ble Calcutta High Court as stated in
Note 34 (c), the above loan has been considered as Non-current.
E. Finance lease obligations are secured by hypothecation of the
assets purchased there against and carry interest @10.00% to 13.00%
(10.00% to 13.00%).
F. In the absence of profit, Debenture Redemption Reserve of Rs,
452,915,275 (including Rs, 79,917,180 for the year) has not been
created.
G. Period and amount of continuing default as on the balance sheet
date in repayment of debentures, loans, interest and premium on
debentures thereon:
(a) Debentures aggregating to Rs, 378,088,014 (including interest which
has become due on 31st March, 2013, has not been paid by the Company.
(b) Debentures amounting to Rs, 4,163,934 (including interest and loans
of Rs, 70,300,000 have been recalled by the lenders, but the same is
disputed by the Company as stated in Notes 33, 34 (c) and accordingly,
not considered as a continuing default as on the Balance Sheet date.
Mar 31, 2012
(a) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended 31st March, 2012, revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on the presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements of revised Schedule VI applicable in the current year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) Fixed assets
Fixed Assets are stated at cost or revalued amount,
as the case may be, less accumulated depreciation/ amortization and
impairment losses, if any. Cost comprises the purchase price inclusive
of duties (net of cenvat / VAT), taxes, incidental expenses, erection /
commissioning expenses etc. up to the date, the asset is ready for its
intended use. In case of revaluation of fixed assets, the original cost
as written-up by the valuer is considered in the accounts and the
differential amount is transferred to revaluation reserve.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life of the asset. Intangible assets being
Specialized Software are amortised on a straight line basis over a
period of 3 years.
Machinery spares which can be used only in connection with an item of
fixed asset and whose use as per technical assessment is expected to be
irregular, are capitalised and depreciated over the residual life of
the respective assets.
(d) Depreciation / Amortization
The classification of plant and machinery into continuous and
non-continuous process is done as per technical certification and
depreciation thereon is provided accordingly.
Depreciation on fixed assets is provided under Straight Line Method at
the rates prescribed in Schedule XIV of the Companies Act, 1956.
Depreciation on fixed assets added / disposed off during the period is
provided on pro-rata basis with reference to the date of
addition/disposal.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
In case of impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
(e) Fixed Assets Acquired under Lease
Finance Lease:
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risk and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value and present value of minimum lease payment at the inception of
the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and the reduction of the lease
liability so as to achieve a constant rate
of interest on the remaining balance of their liability. Finance
charges are charged directly to the expenses account. Lease management
fees, legal charges and other initial direct costs are capitalized.
Operating Lease :
Leases where the lesson effectively retains substantially all the risks
and benefits of the ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the profit and loss account on a straight-line basis over the lease
term.
(f) Borrowing costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition /construction
of an asset that necessarily takes a substantial period of time to get
ready for its intended use are capitalized as a part of the cost of the
respective asset. All other borrowing costs are expensed in the period
they occur.
(g) Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which
represents the greater of the net selling price and ÃValue in use' of
the assets. In assessing the 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 risks specific to the assets.
(h) Government grants and subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grants/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expenses item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
Government grants of the nature of promoters' contribution are credited
to capital reserve and treated as a part of shareholders' funds.
(i) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as Current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and market value on individual
investment basis. Long Term Investments are considered at cost, unless
there is an "other than temporary" decline in value, in which case
adequate provision is made for the diminution in the value of
Investments.
(j) Inventories
Raw materials and stores and spares are valued at lower of cost and net
realizable value. However, materials and other items held for use in
the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. Cost of raw materials and stores and spares is
determined on weighted average / FIFO basis.
Work-in-progress and finished goods are valued at lower of cost and net
realizable value. Cost includes direct materials and labor and a
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty and is determined
on annual weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the goods. The Company collects sales taxes and
value added taxes (VAT) on behalf of the government and, therefore,
these are not economic
benefits flowing to the Company. Hence, they are excluded from revenue.
Excise duty deducted from revenue (gross) is the amount that is
included in the revenue (gross) and not the entire amount of liability
arising during the year.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
(l) Foreign currency translation
Foreign currency transactions and balances
Initial recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences
Exchange differences arising on the settlement / conversion of monetary
items are recognized as income or expenses in the year in which they
arise.
Forward Exchange Contracts not entered for trading or speculation
purpose
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contracts is recognized as income or
expense for the year.
(m) Premium on Redemption of Debentures
Premium payable on redemption of debentures is adjusted against the
Securities Premium Account, on a proportionate basis.
(n) Retirement and other employee benefits
Retirement benefit in the form of Provident Fund is
a defined contribution scheme and is charged to the Profit and Loss
Account of the year when the contributions to the respective funds are
due. The Company has no obligations other than the contribution payable
to the respective funds.
Gratuity liability, being a defined benefit obligation, is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation which is done as per projected unit credit method at the end
of each financial year.
Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
(o) Income taxes
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, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income for the year and reversal of timing differences of earlier
years.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been substantively enacted as of the Balance Sheet date. Deferred
tax assets 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 tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized 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. If the Company has carry forward unabsorbed depreciation and
tax losses, deferred tax assets are recognized only to the extent there
is virtual certainty supported by convincing evidence that sufficient
taxable income will be available against which such deferred tax asset
can be realized.
The carrying amounts of deferred tax assets are reviewed at each
balance sheet date. The Company writes-down the carrying amount of
deferred tax assets to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized.
Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
(p) Segment reporting
Identification of segments
The Company has identified that its business segments are the primary
segments. The Company's businesses are organized and managed separately
according to the nature of products/services, with each segment
representing a strategic business unit that offers different product /
services and serves different markets. The analysis of geographical
segments is based on the areas in which the customers of the Company
are located.
Allocation of common costs
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head "Unallocated".
Segment accounting policies
The accounting policies adopted for segment reporting are in line with
those of the Company's accounting policies.
(q) Earnings Per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, net profit or
loss for the year attributable to equity share holders and the weighted
average number of shares outstanding during the year are adjusted for
the effect of all dilutive potential equity shares.
(r) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to their present value and are determined based on best estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
(s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(t) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(u) Excise Duty
Excise duty on finished goods stock lying at the factories is accounted
for at the point of manufacture of goods and accordingly, is considered
for valuation of finished goods stock lying in the factories as on the
balance sheet date.
Mar 31, 2011
(i) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by the Companies
Accounting Standards Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
except in respect of insurance and other claims, which on the grounds
of prudence or uncertainty in realization, are accounted for as and
when accepted/received. The accounting policies applied by the Company
are consistent with those used in the previous year.
(ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent liabilities at the date of
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
(iii) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized upon passage of title which
generally coincides with delivery of materials to the customers.
(iv) Fixed Assets
Fixed Assets are stated at cost or revalued amount, as the case may be,
less accumulated depreciation and impairment, if any. Cost comprises
the purchase price inclusive of duties (net of cenvat / VAT), taxes,
incidental expenses and erection / commissioning expenses etc. up to
the date, the asset is ready for its intended use. In case of
revaluation of fixed assets, the original cost as written-up by the
valuer, is considered in the accounts and the differential amount is
transferred to revaluation reserve.
Expenditure directly attributable to growth of plantations have been
capitalized.
Machinery spares which can be used only in connection with an item of
fixed assets and whose use as per technical assessment is expected to
be irregular are capitalized and depreciated over the residual life of
the respective assets.
(v) Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which
represents the greater of the net selling price and ''Value in use'' of
the assets. 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
risks specific to the assets.
(vi) Depreciation / Amortization
(a) Depreciation on fixed assets is provided under Straight Line method
at the rates prescribed in Schedule XIV of the Companies Act, 1956.
(b) Depreciation on revalued assets is provided at the rates specified
under section 205 (2) (b) of the Companies Act, 1956. However, in case
of fixed assets whose life is determined by the valuer to be less than
their useful life under section 205, depreciation is provided at higher
rate, to ensure the write off of these assets over their useful life.
(c) Depreciation on fixed assets added / disposed off during the year
is provided on pro-rata basis with reference to the date of addition /
disposal.
(d) Leasehold land is depreciated over the primary period of lease.
(e) In case of impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
(vii) Foreign Currency Transactions
(a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
(c) Exchange Differences
Exchange differences arising on the settlement / conversion of monetary
items are recognized as income or expenses in the year in which they
arise.
(d) Forward Exchange Contracts not entered for trading or speculation
purpose
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contracts is recognized as income or
expense for the year.
(viii) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as Current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and market value on individual
investment basis. Long Term Investments are considered at cost, unless
there is an "other than temporary" decline in value, in which case
adequate provision is made for the diminution in the value of
Investments.
(ix) Inventories
(a) Raw Materials, stores and spares are valued at lower of cost and
net realizable value. However, these items are considered to be
realizable at cost if the finished products, in which they will be
used, are expected to be sold at or above cost. Cost is determined on a
weighted average/FIFO basis.
(b) Work in progress and finished goods are valued at lower of cost and
net realisable value. The cost comprises of conversion and other costs,
based on normal operating capacity, incurred in bringing the
inventories to their present location and condition. Cost of
inventories is computed on annual weighted average basis.
(c) Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(x) Government Grants and Subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grants/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expenses item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
Government grants of the nature of promoters'' contribution are credited
to capital reserve and treated as a part of shareholders'' funds.
(xi) Retirement and other employee benefits
(a) Retirement benefit in the form of Provident Fund is a defined
contribution scheme and is charged to the Profit and Loss Account of
the year when the contributions to the respective funds are due. The
Company has no obligations other than the contribution payable to the
respective funds.
(b) Gratuity liability, being a defined benefit obligation, is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
(c) Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation which is done as per projected unit credit method
at the end of each financial year.
(d) Actuarial gains / losses are immediately taken to profit and loss
account and are not deferred.
(xii) Earning per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, net profit or
loss for the year attributable to equity share holders and the weighted
average number of shares outstanding during the year are adjusted for
the effect of all dilutive potential equity shares.
(xiii) Premium on Redemption of Debentures
Premium payable on redemption of debentures is adjusted against the
Securities Premium Account, on a proportionate basis.
(xiv) Borrowing Costs
Borrowing costs relating to acquisition /construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to revenue in the period they occur.
(xv) Taxation
Tax expenses 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, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income for the year and reversal of timing differences of earlier
years.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been substantially enacted as of the Balance Sheet date. 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 tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized 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. If the company has carry forward unabsorbed depreciation and
tax losses, all deferred tax assets are recognized only to the extent
there is virtual certainty supported by convincing evidence that
sufficient taxable income will be available against which such deferred
tax asset can be realized.
The carrying amounts of deferred tax assets are reviewed at each
balance sheet date. The company writes-down the carrying amount of
deferred tax assets to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
(xvi) Segment Reporting
a) Identification of segments:
The company has identified that its business segments are the primary
segments. The Company''s businesses are organized and managed separately
according to the nature of products / services, with each segment
representing a strategic business unit that offers different product /
services and serves different markets. The analysis of geographical
segments is based on the areas in which the customers of the company
are located.
b) Allocation of Common Costs:
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head "Unallocated".
The accounting policies adopted for segment reporting are in line with
those of the Company''s accounting policies.
(xvii) Fixed Assets Acquired under Lease
(a) Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risk and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value and present value of minimum lease payment at the inception of
the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and the reduction of the lease
liability so as to achieve a constant rate of interest on the remaining
balance of their liability. Finance charges are charged directly to the
expenses account. Lease management fees, legal charges and other
initial direct costs are capitalised.
(b) Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the profit and loss account on a straight-line basis over the lease
term.
(xviii) Cash and Cash equivalents
Cash and cash equivalents in the cash flow statement comprise of cash
at bank and in hand and short-term investments with an original
maturity of three months or less.
(xix) Provision
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on best estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
(xx) Contingencies
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of notes to the accounts.
Mar 31, 2010
(i) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by the Companies
Accounting Standards Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
except for land where revaluation is carried out in previous year &
investment where provision for diminution is made and in respect of
insurance and other claims, which on the grounds of prudence or
uncertainty in realization, are accounted for as and when
accepted/received. The accounting policies applied by the Company are
consistent with those used in the previous year.
(ii) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
(iii) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognized upon passage of title which
generally coincides with delivery of materials to the customers.
(iv) Fixed Assets
Fixed Assets are stated at cost or revalued amount, as the case may be,
less accumulated depreciation and impairment, if any. Cost comprises
the purchase price inclusive of duties (net of cenvat / VAT), taxes,
incidental expenses and erection / commissioning expenses etc. up to
the date, the asset is ready for its intended use. In case of
revaluation of fixed assets, the original cost as written-up by the
valuer, is considered in the accounts and the differential amount is
transferred to revaluation reserve.
Expenditure directly attributable to growth of plantations has been
capitalized.
Machinery spares which can be used only in connection with an item of
fixed assets and whose use as per technical assessment is expected to
be irregular are capitalized and depreciated over the residual life of
the respective assets.
(v) Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine if there is any indication of impairment based on
external/internal factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which
represents the greater of the net selling price and ÃValue in useà of
the assets. The estimated future cash flows considered for determining
the value in use, are discounted to their present value at the weighted
average cost of capital.
(vi) Depreciation / Amortization
(a) Depreciation on fixed assets is provided under Straight Line method
at the rates prescribed in Schedule XIV of the Companies Act, 1956.
(b) Depreciation on revalued assets is provided at the rates specified
under section 205 (2) (b) of the Companies Act, 1956. However, in case
of fixed assets whose life is determined by the valuer to be less than
their useful life under section 205, depreciation is provided at higher
rate, to ensure the write off of these assets over their useful life.
(c) Depreciation on fixed assets added / disposed off during the year
is provided on pro-rata basis with reference to the date of addition /
disposal.
(d) Leasehold land are depreciated over the primary period of lease.
(e) In case of impairment, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
(vii) Foreign Currency Transactions
(a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount, the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non- monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction, and non- monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
(c) Exchange Differences
Exchange differences arising on the settlement / conversion of monetary
items are recognized as income or expenses in the year in which they
arise.
(d) Forward Exchange Contracts not entered for trading or speculation
purpose
The premium or discount arising at the inception of forward exchange
contracts is amortized as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognized in the statement of profit and loss in the period in which
the exchange rates change. Any profit or loss arising on cancellation
or renewal of forward exchange contracts is recognized as income or
expense for the year.
(viii) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as Current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and market value on individual
investment basis. Long Term Investments are considered at cost, unless
there is an "other than temporary" decline in value, in which case
adequate provision is made for the diminution in the value of
Investments.
(ix) Inventories
(a) Raw Materials, stores and spares are valued at lower of cost and
net realizable value. However, these items are considered to be
realizable at cost if the finished products, in which they will be
used, are expected to be sold at or above cost. Cost is determined on a
weighted average / FIFO basis.
(b) Work in progress and finished goods are valued at lower of cost and
net realisable value. The cost comprises of conversion and other costs
incurred in bringing the inventories to their present location and
condition. Cost of inventories is computed on annual weighted average
basis.
(c) Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(x) Government Grants and Subsidies
Government Grants and subsidies are recognised when there is a
reasonable assurance that the same will be received. Revenue grants/
subsidies are recognised in the Profit & Loss Account. Capital Grants
relating to specific fixed assets are reduced from the gross value of
the respective fixed assets. Other capital grants by way of promoterÃs
contribution are credited to Capital Reserve.
(xi) Retirement and other employee benefits
(a) Retirement benefit in the form of Provident Fund is a defined
contribution scheme and is charged to the Profit and Loss Account of
the year when the contributions to the respective funds are due. The
Company has no obligations other than the contribution payable to the
respective funds.
(b) Gratuity liability, being a defined benefit obligation, is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
(c) Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation which is done as per projected unit credit method
at the end of each financial year.
(d) Actuarial gains / losses are immediately taken to profit and loss
account and are not deferred.
(xii) Earning per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, net profit or
loss for the year attributable to equity share holders and the weighted
average number of shares outstanding during the year are adjusted for
the effect of all dilutive potential equity shares.
(xiii) Premium on Redemption of Debentures
Premium payable on redemption of debentures, is adjusted against the
Securities Premium Account, on a proportionate basis.
(xiv) Borrowing Costs
Borrowing costs relating to acquisition / construction of qualifying
assets are capitalized until the time all substantial activities
necessary to prepare the qualifying assets for their intended use are
complete. A qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing
costs are charged to revenue in the period they occur.
(xv) Taxation
Tax expenses 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, 1961. Deferred income taxes
reflect the impact of current year timing differences between taxable
income for the year and reversal of timing differences of earlier
years.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been substantially enacted as of the Balance Sheet date. Deferred
tax assets are recognized 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. If the company
has carry forward unabsorbed depreciation and tax losses, all deferred
tax assets are recognized only to the extent there is virtual certainty
supported by convincing evidence that sufficient taxable income will be
available against which such deferred tax asset can be realized.
The carrying amounts of deferred tax assets are reviewed at each
balance sheet date. The company writes-down the carrying amount of
deferred tax assets to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
(xvi) Segment Reporting
a) Identification of segments:
The company has identified that its business segments are the primary
segments. The CompanyÃs businesses are organized and managed separately
according to the nature of products/services, with each segment
representing a strategic business unit that offers different product /
services and serves different markets. The analysis of geographical
segments is based on the areas in which the customers of the company
are located.
b) Allocation of Common Costs:
Common allocable costs are allocated to each segment on case to case
basis applying the ratio, appropriate to each relevant case. Revenue
and expenses, which relate to the enterprise as a whole and are not
allocable to segment on a reasonable basis, have been included under
the head ÃUnallocated".
The accounting policies adopted for segment reporting are in line with
those of the CompanyÃs accounting policies.
(xvii) Fixed Assets Acquired under Lease
(a) Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risk and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value and present value of minimum lease payment at the inception of
the lease term and disclosed as leased assets. Lease payments are
apportioned between the finance charges and the reduction of the lease
liability so as to achieve a constant rate of interest on the remaining
balance of their liability. Finance charges are charged directly to the
expenses account.
(b) Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased assets are classified as
operating leases. Operating lease payments are recognized as an expense
in the profit and loss account.
(xviii) Cash and Cash equivalents
Cash and cash equivalents in the cash flow statement comprise of cash
at bank and in hand and short-term investments with an original
maturity of three months or less.
(xix) Provision
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 are not discounted
to its present value and are determined based on best estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
(xx) Contingencies
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty are treated as contingent and
disclosed by way of notes to the accounts.
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