Mar 31, 2015
Change in Accounting Policy
Depreciation on Fixed Assets
Till the year ended 31st March 2014, Schedule XIV to the Companies Act,
1956 prescribed requirements concerning depreciation of fixed assets.
From the current year, Schedule XIV has been replaced by Schedule II to
the Companies Act, 2013. Effective from 1st April, 2014, the Company
has provided depreciation on fixed assets based on useful lives as
provided in Schedule II of the Companies Act, 2013 or as re-assessed by
the Company. The management believes that depreciation rates currently
used fairly reflect its estimate of the useful lives and residual value
of fixed assets, though these rates in certain cases are different from
the rates based on the useful lives prescribed under Schedule II.
Further, on application of Schedule II to the Companies Act, 2013, the
Company has changed the manner of providing depreciation for its fixed
assets. Now, the Company identifies and determines separate useful life
for each major component of the fixed asset, if they have useful life
that is materially different from that of the remaining asset.
Based on transitional provision given in Schedule II to the Companies,
2013, the carrying value of assets whose useful lives are already
exhausted amounting to Rs. 243.90 Lacs (net of deferred tax of Rs. 125.60
Lacs) has been added to opening debit balance of the Statement of
Profit and Loss. Had there been no change in useful lives of fixed
assets, the charge to the Statement of Profit and Loss would have been
higher by Rs. 1,307.41 Lacs.
(a) Use of Estimates
The preparation of financial statements inconformity 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 and the results from operations during 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 less accumulated depreciation and
impairment losses determined, if any. The cost comprises the purchase
price inclusive of duties (net of CENVAT Credit), taxes, incidental
expenses, erection / commissioning expenses and borrowing costs if
capitalisation criteria are met and directly attributable cost of
bringing the assets to its working condition for the intended use. Each
part of an item of property, plant and equipment with a cost that is
significant in relation to the total cost of the item is depreciated
separately. This applies mainly to components for machinery. When
significant parts of fixed assets are required to be replaced at
intervals, the company recognizes such
parts as individual assets with specific useful lives and depreciates
them accordingly.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on an existing fixed asset, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of tangible fixed assets are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
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 on Tangible Fixed Assets
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 basis
using the rates arrived at based on the useful lives estimated by the
management. The company has used the following rates to provide
depreciation on its fixed assets.
Depreciation on fixed assets added / disposed off during the year is
provided on pro-rata basis with reference to the date of addition /
disposal.
The management has estimated, supported by independent assessment by
professionals, the useful lives of certain plant and equipment as 5 to
18 years. These lives are lower than those indicated in Schedule II.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
(d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets being Specialized Software are amortised on a
straight line basis over a period of 5 years.
(e) Leases 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 statement of profit and loss on straight line basis over the
lease term.
Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risks and benefits incidental to
ownership of the leased items, are capitalized at the lower of the fair
value of the leased property 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.
(f) Borrowing Costs
Borrowing cost includes interest, amortisation 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 or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalized as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they occur.
(g) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognized wherever
the carrying amount of an asset exceeds its recoverable amount which is
the greater of the asset's net selling price and value in use. 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 asset.
Depreciation is provided on the revised carrying amount of the assets
over its remaining useful life.
(h) Government Grants and Subsidies
Grants and subsidies from the government are recognized when there is
reasonable certainty that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense 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
I nvestments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
(j) Inventories
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 of raw materials and stores
and spares is determined on annual weighted average method / moving
average method.
Goods under process, finished goods (including Power Banked), traded
goods and standing
crops, are valued at lower of cost and net realizable value. Finished
goods, Goods under process and Standing Crops include cost of
conversion and other costs incurred in bringing the inventories to
their present location and condition based on normal operating
capacity. Cost is determined on weighted average basis.
By products, Country crop and Saleable scraps, whose cost is not
identifiable, are valued at estimated net realizable value.
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 recognised 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,
which usually coincides with delivery of the goods. The Company
collects Sales Tax(s) and Value Added Taxes (VAT) on behalf of the
government and, therefore, these not being economic benefits flowing to
the Company. Hence, they are excluded from revenue. Excise duty and
Cess deducted from revenue (gross) is the amount that is included in
the revenue (gross) and not the entire amount of liability arising
during the period.
Income from Renewable Energy Certificates (RECs) is recognised at
estimated realisable value on confirmation of RECs by the concerned
Authorities.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
Dividend income is recognized when the shareholders' right to receive
the payment is established by the reporting date.
Insurance and other claims, Interest on doubtful loans and advances to
cane growers and Compensation receivable in respect of land surrendered
to / acquired by the Government due to uncertainty in realisation, are
accounted for on acceptance basis.
(l) Foreign Currency Transactions 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 period in which they
arise.
(m) Retirement and other Employee Benefits
Retirement benefits in the form of Provident and Pension Funds are
defined contribution schemes and are charged to the statement of profit
and loss of the period when the contributions to the respective funds
are due. The Company has no obligation other than contributions to the
respective funds. The Company recognises contribution payable to the
provident fund
scheme as an expenditure, when an employee renders the selected
service.
Gratuity liability being a defined benefit obligation is provided for
on the basis of 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.
The Company treats accumulated leaves expected to be carried forward
beyond twelve months, as long term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
end of each financial year. The company does not have an unconditional
right to defer its settlement for the period beyond 12 months and
accordingly entire leave liability is shown as current liability.
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 tax authorities in
accordance with Income Tax Act, 1961 enacted in India. Deferred income
tax reflects the impact of current year timing differences between
taxable income and accounting income for the period and reversal of
timing differences of earlier years.
The deferred tax for timing differences between the book and tax profit
for the period is accounted for using the tax rates and laws that have
been enacted or substantively enacted as of the reporting date.
Deferred tax asset is recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax asset can be realized. If
the company has carry forward unabsorbed
depreciation and tax losses, deferred tax asset is recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient taxable income will be available in future
against which such deferred tax asset can be realized.
The carrying amount of deferred tax assets is reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write- down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient taxable income will be available in future.
At each reporting date, the Company re- assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent that there is convincing evidence that the
company will pay normal income tax during the specified period. In the
period in which the MAT credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in the guidance
Note issued by the Institute of Chartered Accountants of India, the
said asset is created by way of a credit to the statement of profit and
loss and shown as MAT Credit Entitlement. The Company reviews the same
at each reporting date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that the Company will pay normal Income Tax during the
specified period.
(o) Segment Reporting Identification of segments
The Company has identified that its operating segments are the primary
segments. The Company's operating businesses are organized and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The analysis of geographical segments is
based on the areas in which the customers of the Company are located.
Inter Segment Transfers
The Company accounts for inter segment transfers at mutually agreed
transfer prices.
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 segments on a reasonable basis are included under the head
"Unallocated".
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(p) Earnings Per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per share, net profit or
loss for the period
attributable to equity share holders and the weighted average number of
shares outstanding during the period are adjusted for the effect of all
dilutive potential equity shares.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise of cash
at bank and on hand and short-term investments with an original
maturity of three months or less.
(r) Excise Duty
Excise duty is accounted for at the point of manufacture of goods and
accordingly, is considered for valuation of stocks as on the reporting
date.
(s) Provisions
A provision is recognized when the company 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 the best estimate required to settle the obligation, at the
reporting date. These are reviewed at each reporting date and adjusted
to reflect the current management estimates.
(t) 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.
Mar 31, 2014
(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 and the results from operations during 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) Fixed Assets and Depreciation on Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses determined, if any. The cost comprises the purchase
price inclusive of duties (net of CENVAT Credit), taxes, incidental
expenses, erection / commissioning expenses and borrowing costs if
capitalisation criteria are met and directly attributable cost of
bringing the assets to its working condition for the intended use.
Machinery spares which can be used only in connection with an item of
tangible 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.
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 tangible fixed assets is provided under Straight Line
Method at the rates prescribed in Schedule Xiv of the Companies Act,
1956 or at the rates based on the useful lives of the assets estimated
by the management, whichever is higher. Based on this, the Company has
depreciated its assets based on the rates prescribed in the Schedule
Xiv of the Companies Act, 1956.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
Intangible assets are amortised on a straight line basis over the
estimated useful economic life of the asset. The Company uses a
rebuttable presumption that the useful life of an intangible asset will
not exceed ten years from the date when the asset is available for use.
Intangible assets being Specialised Software are amortised on a
straight line basis over a period of 5 years.
(c) Leases
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 recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term.
Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risks and benefits incidental to
ownership of the leased items, are capitalised at the lower of the fair
value of the leased property 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.
(d) Borrowing Costs
Borrowing cost includes interest 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 or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalised as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they occur.
(e) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount which is
the greater of the asset''s net selling price and value in use. 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 asset.
Depreciation is provided on the revised carrying amount of the assets
over its remaining useful life.
(f) Government Grants and Subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognised
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.
(g) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term investments.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. however, provision for
diminution in value is made to recognise a decline other than temporary
in the value of the investments.
(h) Inventories
Raw Materials, stores and spares are valued at lower of cost and net
realisable value. However, these items are considered to be realisable
at cost if the finished products, in which they will be used, are
expected to be sold at or above cost. Cost of raw materials and stores
and spares is determined on annual weighted average method / moving
average method.
Goods under process, finished goods (including Power Banked), traded
goods and standing crops, are valued at lower of cost and net
realisable value. Finished goods, Goods under process and Standing
Crops include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition based on normal
operating capacity. Cost is determined on weighted average basis.
By products, Country crop and Saleable scraps, whose cost is not
identifiable, are valued at estimated net realisable value.
Net realisable 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.
(i) Revenue Recognition
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.
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
which usually coincides with delivery of the goods. The Company
collects Sales Tax(s) and value Added Taxes (VAT) on behalf of the
government and, therefore, these not being economic benefits flowing to
the Company. Hence, they are excluded from revenue. Excise duty and
Cess deducted from revenue (gross) is the amount that is included in
the revenue (gross) and not the entire amount of liability arising
during the period.
Income from Renewable Energy Certificates (RECs) is recognised at
estimated realisable value on confirmation of RECs by the concerned
Authorities.
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
Dividend income is recognised when the shareholders'' right to receive
the payment is established by the reporting date.
Insurance and other claims, Interest on doubtful loans and advances to
cane growers and Compensation receivable in respect of land surrendered
to / acquired by the Government due to uncertainty in realisation, are
accounted for on acceptance basis.
(j) Foreign Currency Transactions
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 recognised as income or expenses in the period in which they
arise.
(k) Retirement and other Employee Benefits
Retirement benefits in the form of Provident and Pension Funds are
defined contribution schemes and are charged to the statement of profit
and loss of the period when the contributions to the respective funds
are due. The Company has no obligation other than contributions to the
respective funds. The Company recognises contribution payable to the
provident fund scheme as an expenditure, when an employee renders the
selected service.
Gratuity liability being a defined benefit obligation is provided for
on the basis of 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.
The Company treats accumulated leaves expected to be carried forward
beyond twelve months, as long term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based
on the actuarial valuation using the projected unit credit method at
the end of each financial year. The company does not have an
unconditional right to defer its settlement for the period beyond 12
months and accordingly entire leave liability is shown as current
liability.
Actuarial gains / losses are immediately taken to the statement of
profit and loss and are not deferred.
(l) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to tax authorities in
accordance with income Tax Act, 1961 enacted in india. deferred income
tax reflects the impact of current year timing differences between
taxable income and accounting income for the period and reversal of
timing differences of earlier years.
The deferred tax for timing differences between the book and tax profit
for the period is accounted for using the tax rates and laws that have
been enacted or substantively enacted as of the reporting date.
Deferred tax asset is recognised only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax asset can be realised. If the
company has carry forward unabsorbed depreciation and tax losses,
deferred tax asset is recognised only to the extent that there is
virtual certainty supported by convincing evidence that sufficient
taxable income will be available in future against which such deferred
tax asset can be realised.
The carrying amount of deferred tax assets is reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient taxable income will be available in future.
At each reporting date, the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent that there is convincing evidence that the
company will pay normal income tax during the specified period. in the
period in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in the guidance
Note issued by the institute of Chartered Accountants of India, the
said asset is created by way of a credit to the statement of profit and
loss and shown as MAT Credit Entitlement. The Company reviews the same
at each reporting date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that the Company will pay normal income Tax during the
specified period.
(m) Segment Reporting
Identification of Segments
The Company has identified that its operating segments are the primary
segments. The Company''s operating businesses are organised and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The analysis of geographical segments is
based on the areas in which the customers of the Company are located.
Inter Segment Transfers
The Company accounts for inter segment transfers at mutually agreed
transfer prices.
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 segments on a reasonable basis are included under the head
"unallocated".
Unallocated Items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment Accounting Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(n) Earnings Per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per share, net profit or
loss for the period attributable to equity share holders and the
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
(o) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise of cash
at bank and on hand and short-term investments with an original
maturity of three months or less.
(p) Derivative Instruments
As per the announcement made by the Institute of Chartered Accountants
of India, Derivative contracts, other than those covered under AS-11,
are marked to market on a portfolio basis, and the net loss after
considering the offsetting effect of the underlying hedged item is
charged to the statement of profit and loss. Net gains are ignored as a
matter of prudence.
(q) Excise Duty
Excise duty is accounted for at the point of manufacture of goods and
accordingly, is considered for valuation of stocks as on the reporting
date.
(r) Shares Issue Expenses
Shares issue expenses are adjusted against Securities Premium Account.
(s) Provisions
A provision is recognised when the company 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 the best estimate required to settle the obligation, at the
reporting date. These are reviewed at each reporting date and adjusted
to reflect the current management estimates.
(t) 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 recognised
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
recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the
financial statements.
Mar 31, 2013
(a) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
reguires 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 and the results from operations during 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
reguiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(b) Tangible Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation and
impairment losses determined, if any. The cost comprises the purchase
price inclusive of duties (net of CENVAT Credit), taxes, incidental
expenses, erection/commissioning expenses and borrowing costs if
capitalisation criteria are met and directly attributable cost of
brining the assets to its working condition for the intended use.
Machinery spares which can be used only in connection with an item of
tangible 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 on Tangible Fixed Assets
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 tangible fixed assets is provided under Straight Line
Method at the rates prescribed in Schedule XIV of the Companies Act,
1956 or at the rates based on the useful lives of the assets estimated
by the management, whichever is higher. Based on this, the comapny has
depreciated its assets based on the rates prescribed in the Schedule
XIV of the Comapnies Act, 1956.
Leasehold properties are depreciated over the primary period of lease
or their respective useful lives, whichever is shorter.
In case of impairment, if any, depreciation is provided on the revised
carrying amount of the assets over its remaining useful life.
(d) Intangible Assets
Intangible assets acguired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortisation and accumulated
impairment losses, if any. Internally generated intangible assets,
excluding capitalised development costs, are not capitalised and
expenditure thereof, are reflected in the statement of profit and loss
in the year in which the expenditure are incurred.
Intangible assets are amortised on a straight line basis overthe
estimated useful economic life of the asset. The Company uses a
rebuttable presumption that the useful life of an intangible asset will
not exceed ten years from the date when the asset is available for use.
If the persuasive evidence exists to the affect that useful life of an
intangible asset exceeds ten years, the Company amortises the
intangible asset over the best estimate of its useful life. Such
intangible assets and intangible assets not yet available for use are
tested for impairment annually, either individually or at the
cash-generating unit level. All other intangible assets are assessed
for impairment whenever there is an indication that the intangible
asset may be impaired.
The amortisation period and the amortisation method are reviewed at
least at each financial year end. If the expected useful life of the
asset is significantly different from previous estimates, the
amortisation period is changed accordingly. If there has been a
significant change in the expected pattern of economic benefits from
the asset, the amortisation method is changed to reflect the changed
pattern. Such changes are accounted for in accordance with AS 5 Net
Profit or Loss for the Period, Prior Period Items and Changes in
Accounting Policies.
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 derecognised.
Intangible assets being Specialised Software are amortised on a
straight line basis over a period of 5 years.
(e) Leases
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 recognised as an expense
in the statement of profit and loss on straight line basis over the
lease term.
Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risks and benefits incidental to
ownership of the leased items, are capitalised at the lower of the fair
value of the leased property 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.
(f) Borrowing Costs
Borrowing cost includes interest 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 or
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalised as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they occur.
(g) Impairment of Tangible and Intangible Assets
The carrying amounts of assets are reviewed at each balance sheet date
to determine, if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount which is
the greater of the asset''s net selling price and value in use. 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 asset.
(h) Government Grants and Subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognised
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, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as long-term/non-current investments.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term/Non-current investments are carried at cost. However,
provision for diminution in value is made to recognise a decline other
than temporary in the value of the investments.
(j) Inventories
Raw Materials, stores and spares are valued at lower of cost and net
realisable value. However, these items are considered to be realisable
at cost if the finished products, in which they will be used, are
expected to be sold at or above cost. Cost of raw materials and stores
and spares is determined on annual weighted average method.
Goods under process, finished goods (including Power Banked), traded
goods and standing crops, are valued at lower of cost and net
realisable value. Finished goods, Goods under process and Standing
Crops include cost of conversion and other costs incurred in bringing
the inventories to their present location and condition based on normal
operating capacity. Cost is determined on weighted average basis.
By products, Country crop and Saleable scraps, whose cost is not
identifiable, are valued at estimated net realisable value.
Net realisable 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 recognised 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 recognised when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
which usually coincides on delivery of the goods. The Company collects
Sales Tax(s) and Value Added Taxes (VAT) on behalf of the government
and, therefore, these not being economic benefits flowing to the
Company. Hence, they are excluded from revenue. Excise duty and Cess
deducted from revenue (gross) is the amount that is included in the
revenue (gross) and not the entire amount of liability arising during
the period.
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head "other income" in the
statement of profit and loss.
Dividend income is recognised when the shareholders'' right to receive
the payment is established by the reporting date.
Insurance and other claims, Interest on doubtful loans and advances to
cane growers and Compensation receivable in respect of land surrendered
to/acquired by the Government due to uncertainty in realisation, are
accounted for on acceptance/ actual receipt basis.
(I) Foreign Currency Transactions
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 recognised as income or expenses in the period in which they
arise.
Forward Exchange Contracts entered into hedge foreign currency risk of
an existing asset/liability
The premium or discount arising at the inception of forward exchange
contracts is amortised as expenses or income over the life of the
respective contracts. Exchange differences on such contracts are
recognised 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 recognised as income or
expense for the period.
(m) Retirement and other Employee Benefits
Retirement benefits in the form of Provident and Pension Funds are
defined contribution schemes and are charged to the statement of profit
and loss of the period when the contributions to the respective funds
are due. The Company has no obligation other than contributions to the
respective funds.
Gratuity liability being a defined benefit obligation is provided for
on the basis of 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.
The Company treats accumulated leaves expected to be carried forward
beyond twelve months, as long term employee benefit for measurement
purposes. Such long-term compensated absences are provided for based on
the actuarial valuation using the projected unit credit method at the
end of each financial year. The company presents the leave as current
liability in the Balance Sheet, to the extent it does not have an
unconditional right to defer its settlement beyond 12 months after the
reporting date. Where the company has unconditional legal and
contractual right to defer the settlement for the period beyond 12
months, the same is presented as non current liability.
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 tax authorities in
accordance with Income Tax Act, 1961 enacted in India. Deferred income
tax reflects the impact of current year timing differences between
taxable income and accounting income for the period and reversal of
timing differences of earlier years.
The deferred tax for timing differences between the book and tax profit
for the period is accounted for using the tax rates and laws that have
been enacted or substantively enacted as of the reporting date.
Deferred tax asset is recognised only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax asset can be realised. If the
company has carry forward unabsorbed depreciation and tax losses,
deferred tax asset is recognised only to the extent that there is
virtual certainty supported by convincing evidence that sufficient
taxable income will be available in future against which such deferred
tax asset can be realised.
The carrying amount of deferred tax assets is reviewed at each
reporting date. The company writes-down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient taxable income will be available in future.
At each reporting date, the Company re- assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax assets to the
extent that it has become reasonably certain or virtually certain, as
the case may be that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent that there is convincing evidence that the
company will pay normal income tax during the specified period. In the
period in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in the guidance
Note issued by the Institute of Chartered Accountants of India, the
said asset is created by way of a credit to the statement of profit and
loss and shown as MAT Credit Entitlement. The Company reviews the same
at each reporting date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that the Company will pay normal Income Tax during the
specified period.
(o) Segment Reporting
Identification of segments The Company has identified that its
operating segments are the primary segments. The Company''s operating
businesses are organised and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The analysis of geographical segments is
based on the areas in which the customers of the Company are located.
Inter Segment Transfers
The Company accounts for inter segment transfers at mutually agreed
transfer prices
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 segments on a reasonable basis are
included under the head "Unallocated"
Unallocated items
Unallocated items include general corporate income and expense items
which are not allocated to any business segment.
Segment accounting policies The Company prepares its segment
information in conformity with the accounting policies adopted for
preparing and presenting the financial statements of the Company as a
whole.
(p) Earnings Per Share
Basic Earning per Share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
number of equity shares outstanding during the period.
For the purpose of calculating diluted earning per share, net profit or
loss for the period attributable to equity share holders and the
weighted average number of shares outstanding during the period are
adjusted for the effect of all dilutive potential equity shares.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise of cash
at bank and on hand and short-term investments with an original
maturity of three months or less.
(r) Derivative Instruments
As per the announcement made by the Institute of Chartered Accountants
of India, Derivative contracts, other than those covered under AS-11,
are marked to market on a portfolio basis, and the net loss after
considering the offsetting effect of the underlying hedged item is
charged to the statement of profit and loss. Net gains are ignored as a
matter of prudence.
(s) Excise Duty
Excise duty is accounted for at the point of manufacture of goods and
accordingly, is considered for valuation of stocks as on the reporting
date.
(t) Shares Issue Expenses
Shares issue expenses are adjusted against Securities Premium Account.
(u) Provisions
A provision is recognised when the company 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 the best estimate required to settle the obligation, at the
reporting date. These are reviewed at each reporting date and adjusted
to reflect the current management estimates.
(v) 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 recognised 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 recognised because it
cannot be measured reliably. The Company does not recognise a
contingent liability but discloses its existence in the financial
statements.
Jun 30, 2010
(i) Basis of Preparation:
The financial statements have been prepared to comply in all material
respects with the Accounting Standards Notifi ed 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.
(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 fi
nancial statements and the results of operations during the reporting
year end. Although these estimates are based upon the managements best
knowledge of current events and actions, actual results could differ
from these estimates.
(iii) Revenue Recognition:
(a) Revenue from sale of goods is recognized upon passage of title to
the customers which generally coincides with delivery thereof.
(b) Dividend Income is recognised when the shareholders right to
receive the payment is established by the balance sheet date. Dividend
from subsidiaries is recognised even if the same is declared after the
balance sheet date but pertains to period on or before the date of
balance sheet as per the requirement of Schedule VI of the Companies
Act, 1956.
(c) Due to uncertainty in realization, following incomes are accounted
for on acceptance / actual receipt basis:- (i) Insurance and other
claims
(ii) Interest on doubtful loans and advances to cane growers.
(iii) Compensation receivable in respect of land surrendered to /
acquired by the Government.
(iv) Fixed Assets:
Fixed assets are stated at cost less accumulated depreciation and
impairment, if any. Cost comprises the purchase price inclusive of
duties (net of cenvat credit), taxes, incidental expenses and erection
/ commissioning expenses etc. upto the date the asset is ready for its
intended use.
Machinery spares which can be used only in connection with an item of
fi xed assets and whose use as per technical assessment is expected to
be irregular, are capitalised and depreciated over the residual life of
the respective assets.
Assets awaiting disposal are valued at the lower of written down value
and net realisable value.
(v) Impairment of Assets:
The carrying amounts of assets are reviewed at each balance sheet date
to determine whether 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. The estimated future cash fl ows considered for determining
the value in use, are discounted to their present value at the weighted
average cost of capital.
(vi) Depreciation:
(a) The classifi cation of plant and machinery into continuous and non
continuous process is done as per technical certifi cation and
depreciation thereon is provided accordingly.
(b) Depreciation on fi xed assets is provided as per straight line
method, at the rates prescribed in schedule XIV of the Companies Act,
1956, or at the rates based on the useful lives of the assets estimated
by the management, whichever is higher.
(c) Depreciation on fi xed assets added / disposed off during the year
is provided on pro-rata basis, with reference to the date of addition /
disposal.
(d) Leasehold properties are depreciated over the primary period of
lease or their respective useful lives, whichever is shorter.
(e) In case of impairment, if any, depreciation is provided on the
revised carrying amount of the assets over its remaining useful life.
(vii) Government Grants and subsidies:
Government Grants and subsidies are recognised when there is reasonable
assurance that the same will be received. Revenue grants / subsidies
are recognised in the Profit & Loss Account. Capital grants relating
to specifi c fi xed assets are reduced from the gross value of the
respective fi xed assets. Other capital grants are credited to capital
reserve.
(viii) 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.
(ix) Investments:
Investments that are readily realisable and intended to be held for not
more than a year are classifi ed as Current Investments. All other
Investments are classifi ed as Long term Investments. Current
Investments are stated at lower of cost and market rate on individual
investment basis. Long term investments are considered "at cost" on
individual investment basis, unless there is a decline other than
temporary in the value, in which case adequate provision is made
against such diminution in the value of investments.
(x) 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 fi nished products, in which they will be
used, are expected to be sold at or above cost.
Goods under process, fi nished goods (including Power Banked) and
traded goods, are valued at lower of cost and net realizable value.
Finished goods and Goods under process include cost of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
Cost of inventories is computed on a weighted average basis.
By products, Country crop and Saleable scraps, whose cost is not
identifi able, are valued at estimated net realizable value.
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.
(b) In case of inter-transferred materials, the transfer price is
considered as cost for the purpose of valuation of closing stock.
(xi) 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.
(xii) Retirement Benefits:
(a) Retirement benefits in the form of Provident and Pension Funds are
defi ned contribution schemes and are charged to 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 trusts / funds.
(b) Gratuity liability being a defi ned benefit obligation is provided
for on the basis of actuarial valuation on projected unit credit method
made at the end of each year.
(c) Long term compensated absences are provided for based on actuarial
valuation on projected unit credit method made at the end of each year.
(d) Actuarial gains / losses are immediately taken to profit and loss
account and are not deferred.
(xiii) Taxation:
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to tax authorities in
accordance with Income Tax Act, 1961. Deferred income tax refl ects the
impact of current year timing differences between taxable income and
accounting income for the year and reversal of timing differences of
earlier years.
The deferred tax for timing differences between the book and tax profi
t for the year is accounted for using the tax rates and laws that have
been enacted or substantively enacted as of the Balance Sheet date.
Deferred tax asset is recognized only to the extent that there is
reasonable certainty that suffi cient future taxable income will be
available against which such deferred tax asset can be realized. If the
company has carry forward unabsorbed depreciation and tax losses,
deferred tax asset is recognized only to the extent that there is
virtual certainty supported by convincing evidence that suffi cient
taxable income will be available in future against which such deferred
tax asset can be realized.
The carrying amounts of deferred tax assets is reviewed at each balance
sheet date. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suffi cient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that suffi cient taxable income will be available in future.
At each balance sheet date, the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that suffi cient future taxable income will be
available against which such deferred tax assets can be realised.
Minimum Alternative Tax (MAT) credit is recognised as an asset only
when and to the extent that there is convincing evidence that the
company will pay normal income tax during the specifi ed period. In the
year in which the MAT credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in the guidance
Note issued by the Institute of Chartered Accountants of India, the
said asset is created by way of a credit to the profit and loss
account and shown as MAT Credit Entitlement. The Company reviews the
same at each balance sheet date and writes down the carrying amount of
MAT Credit Entitlement to the extent there is no longer convincing
evidence to the effect that the Company will pay normal Income Tax
during the specifi ed period.
(xiv) Segment Reporting:
(a) Identifi cation of Segments:
The Company has identified that its business segments are the primary
segments. The Companys operating businesses are organized and managed
separately according to the nature of products, with each segment
representing a strategic business unit that offers different products
and serves different markets. The analysis of geographical segments is
based on the areas in which the customers of the Company are located.
(b) Inter Segment Transfers:
The Company accounts for inter segment transfers at mutually agreed
transfer prices.
(c) 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 segments on a reasonable basis, are included under the
head "Unallocated à Common".
The accounting policies adopted for segment reporting are in line with
those of the Company.
(xv) Fixed Assets Acquired under Lease
(a) Finance Lease
Assets acquired under lease agreements which effectively transfer to
the company substantially all the risks 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 fi nance 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 classifi ed as
operating leases. Operating lease payments are recognized as an expense
in the profit and loss account.
(xvi) Share Issue Expenses:
Share issue expenses are adjusted against Securities Premium Account.
(xvii) 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.
(xviii) Excise Duty:
Excise Duty is accounted for at the point of manufacture of goods and
accordingly, is considered for valuation of stocks as on the Balance
Sheet date.
(xix) Research Costs:
Research costs are expensed as incurred. Development expenditure
incurred on individual project is carried forward when its future
recoverability can reasonably be regarded as assured. Any expenditure
carried forward is amortised over the period of expected future sale
from the related project, not exceeding ten years. The carrying value
of development cost is reviewed for impairment annually when the asset
is not yet in use and otherwise when events or changes in circumstances
indicates that the carrying value may not be recoverable.
(xx) 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.
(xxi) Provisions:
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outfl ow 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 management estimate required to settle the
obligation, at the Balance Sheet date. These are reviewed at each
Balance Sheet date and adjusted to refl ect the current management
estimates.
(xxii) Derivative Instruments:
As per the announcement made by the Institute of Chartered Accountants
of India, Derivative contracts, other than those covered under AS-11,
are marked to market on a portfolio basis, and the net loss after
considering the offsetting effect of the underlying hedged item is
charged to the income statement. Net gains are ignored as a matter of
prudence.
(xxiii) 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.