Mar 31, 2023
Company Overview
Ponni Sugars (Erode) Limited is a public limited company, incorporated under the Companies Act, 1956 and domiciled in India. It is an associate of Seshasayee Paper and Boards Limited. Its registered office is at âEsvin Houseâ, No. 13, Old Mahabalipuram Road, Perungudi, Chennai - 600 096. It has a sugar factory at Erode having a capacity to crush 3500 tonnes of sugarcane per day and generate 19 MW of power. The Companyâs shares are listed on BSE Ltd and National Stock Exchange of India Ltd.
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015.
The financial statements are prepared in accordance with the historical cost convention except for certain items that are measured at fair values at the end of each reporting period, as explained in the accounting policies set out below. The financial statements are prepared on a going concern basis using accrual concept except for the cash flow information.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS-2 inventories or value in use in Ind AS 36 -Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1,2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, as described hereunder:
Level 1 -Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 -Other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 - Unobservable inputs for the asset or liability.
An asset or liability is classified as current if it satisfies any of the following conditions:
(i) the asset / liability is expected to be realized / settled in the Companyâs normal operating cycle;
(ii) the asset is intended for sale or consumption;
(iii) the asset / liability is held primarily for the purpose of trading;
(iv) the asset / liability is expected to be realized / settled within twelve months after the reporting period;
(v) the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period;
(vi) in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
All other assets and liabilities are classified as non-current.
For the purpose of current / non-current classification, the Company has reckoned its normal operating cycle as twelve months based on the nature of products and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
Deferred tax assets and liabilities are classified as non-current.
Ministry of Corporate Affairs (MCA) on March 31, 2023 notified the Companies (Indian Accounting Standards) Amendment Rules, 2023 that seeks to amend certain existing standards under the Companies (Indian Accounting Standards) Rules, 2015 issued from time to time. The major amendments are as below:
Ind AS 1 - Presentation of Financial Statements - The amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies and also identify and eliminate immaterial accounting policies from disclosure.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of âaccounting estimatesâ which was absent hitherto, and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.
Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.
The effective date for adoption of the above amendments is annual periods beginning on or after April 1, 2023. The Company has evaluated these amendments and there is no impact on its financial statement.
(i) Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.
(ii) The cost of an item of property, plant and equipment is recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
(iii) For transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognised as of April 1,2016 (transition date) measured as per the previous IGAAP as its deemed cost as on the transition date.
(iv) An item of PPE that qualifies for recognition as an asset is measured on initial recognition at cost. Following initial recognition, PPEs are carried at its cost less accumulated depreciation and accumulated impairment losses.
(v) The cost of an item of PPE comprises purchase price, taxes and duties net of input tax credit entitlement and other items directly attributable to the cost of bringing the asset to its working condition for its intended use. Trade discounts and rebates are deducted. Cost includes cost of replacing a part of a PPE if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of PPE if the recognition criteria are met.
(vi) The Company identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is significant to the total cost of that item of PPE and has useful life that is materially different from that of the remaining item.
(vii) Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of PPE are capitalized at cost. Costs in the nature of repairs and maintenance are recognised in the Statement of Profit and Loss as and when incurred. All upgradation / enhancements are charged off as revenue expenditure unless they bring significant additional benefits. Borrowing Costs (net of interest earned on temporary investments of those borrowings) directly attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets till the asset is ready for its intended use.
(viii) Capital advances and capital work- in- progress
Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets. Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work- in-progress. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use. Depreciation on these assets commences when the assets are ready for their intended use which is generally on commissioning.
(ix) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives and residual values are reviewed at the end of each reporting period and changes, if any, are treated as changes in accounting estimate.The useful lives are based on technical estimates and the management believe that the useful lives are realistic and fair approximation over the period of which the assets are likely to be used.
(x) Estimated useful lives of the assets are as follows:
Asset |
Years |
Factory Buildings |
30 |
Buildings (other than factory buildings) |
60 |
Plant and Equipment (including continuous process plants) |
25 |
Furniture and Fixtures |
8 -10 |
Vehicles |
8-10 |
Office Equipment |
5 |
IT Hardware - Server |
6 |
- Other than server |
3 |
Energy saving devices and ESP |
151 |
Sugar Mill Rollers |
31 |
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognised on a straight-line basis over their estimated useful lives. The estimated useful life is reviewed annually with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
An item of tangible or intangible asset is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item is determined as the difference between the sale proceeds if any and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
The Company annually reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified,corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value other than trade receivables which is recognized at transaction value.
Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
Purchases or sales of financial assets are recognised and derecognised on a trade date basis. Purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
a. Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost. The debt instruments carried at amortised cost include Deposits, Loans and advances recoverable in cash.
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
b. Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as FVTPL. Interest income is recognised in the Statement of Profit and Loss.
c. Investments in equity instruments at FVTOCI
The Company has irrevocably designated to carry investment in equity instruments as Fair Value Through Other Comprehensive Income (FVTOCI). On initial recognition, the Company makes an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in Other Comprehensive Income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in Other Comprehensive Income and accumulated in the âReserve for equity instruments through Other Comprehensive Incomeâ. On derecognition of such Financial Assets, cumulative gain or loss previously reported in OCI is not reclassified from Equity to the Statement of Profit and Loss. However, the Company may transfer such cumulative gain or loss into retained earnings within equity.
The Company has equity investments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these investments (Note 3). Fair value is determined in the manner described in Note 1.2.
Dividends on these investments in equity instruments are recognised in the Statement of Profit and Loss when the Companyâs right to receive same is established, it is probable that the economic benefits associated with the dividend will flow to the Company, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
d. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
⢠The 12 months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
⢠Full lifetime expected credit losses (expected credit losses that result from all possible defaults events over the life of the financial instrument).
For trade receivable, Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables.
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.
e. De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
Concomitantly, if the asset is one that is measured at:
(a) Amortised cost, the gain or loss is recognised in the Statement of Profit and Loss.
(b) Fair Value through Other Comprehensive Income, the cumulative fair value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative fair value adjustments previously taken to reserves is reclassified within equity.
a. Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
b. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
c. Financial liabilities
All financial liabilities are initially recognised at the value of respective contractual obligations. Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item.
d. Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including forward contracts, futures and options.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates hedging instruments in respect of foreign currency risk as either fair value hedges or cash flow hedges.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
a. Cash Flow Hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in Other Comprehensive Income and are accumulated as âcash flow hedge reserveâ. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
The cumulative gain or loss previously recognised in Other Comprehensive Income remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in Other Comprehensive Income is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in Other Comprehensive Income is transferred to the Statement of Profit and Loss in the same period when the hedged item affects profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Profit and Loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in the Other Comprehensive Income is transferred to the Statement of Profit and Loss.
b. Fair Value Hedges
The Company designates derivative contracts as hedging instruments to mitigate the risk of change in fair value of hedged item in foreign exchange rates.
Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to Statement of Profit and Loss over the period of maturity.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date.
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
Inventories other than by-products are stated at lower of cost and net realizable value. Inventory of by-products is stated at net realizable value. Materials and other items intended for use in production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost. Cost comprises of all costs of purchase (that includes taxes and duties, net of input tax credit entitlement), costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis and includes inward freight and other direct expenses.
Net realizable value is the estimated selling price less estimated costs for completion and sale.
Obsolete, slow moving and defective inventories are periodically identified and write-down is recognised where necessary.
a. Sale of products
Revenue is recognized upon transfer of control of the products to customers at a point in time i.e. when the products are delivered to the carrier in an amount that reflects the consideration that the company expects to receive in exchange for those products (i.e.) transaction price.
b. Dividend
Dividend income from investments is recognized when the shareholderâs right to receive payment has been established.
c. Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company there exists no uncertainty in the ultimate realization of the interest income and the amount can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and using effective interest rate method.
d. Insurance Claims
Insurance claims are recognized on the basis of claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
e. Renewable Energy Certificates
Income from Renewable Energy Certificates is recognised on sale, having regard to the insignificant identifiable cost thereof.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Grants are recognised in the Statement of Profit and Loss on a systematic basis over the period in which the Company recognises as expense the related costs which the grants are intended to compensate. Specifically, Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.
Grants that are receivable as compensation for expenses or losses incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in the Statement of Profit and Loss in the period in which they become receivable.
Grants related to income are presented in the Statement of Profit and Loss as income under relevant heads or deducted in reporting the related expense. Receivables of such grants are disclosed under âOther Financial Assetsâ.
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and recognised in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(b) Post-employment benefits
(i) Defined Contribution Plans
Contribution to Defined Contribution Schemes towards retirement benefits in the form of Provident fund and Superannuation fund is recognised as expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
(ii) Defined Benefit Plans
The Company operates Defined Benefit Gratuity Plan for employees. The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognised in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognised representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability/ (asset) are recognised in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liabilities / (asset) are recognised in comprehensive income and taken to âretained earningsâ.Such re-measurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability /(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary. However, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the gratuity fund within the next twelve months.
The Company is exposed to various risks in providing the above gratuity benefit which are as follows:
Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
Salary Escalation Risk: : The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future, based on past experience. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.
Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions.
(c) Other Long-term Employee Benefits
Entitlement to earned leave and sick leave is recognised when it accrue to employees. Earned leave/ sick leave can be availed or encashed either during service or on retirement subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leave using the Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date and funded with an Insurer.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, (which are assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
a. Initial Recognition
On initial recognition, transactions in foreign currencies are recorded in the functional currency (i.e. Indian Rupee), by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
b. Measurement of foreign currency items at reporting date
Foreign currency monetary items are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Nonmonetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured.
c. Recognition of exchange difference
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements is recognised in profit or loss in the period in which they arise.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Taxes on income comprise of current tax and deferred tax.
a. Current tax
Current tax is the amount of income taxes payable in respect of taxable profit for the period. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates and tax laws enacted during the reporting period together with any adjustment to taxes payable as respect of previous years.
b. Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are recognised for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the accounting profit nor the taxable profit, deferred tax liabilities are not recognised.
Deferred tax assets are recognised for all deductible temporary differences to the extent it is probable that future taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
MAT Credit Entitlement is in the form of unused tax credit and is accordingly grouped under Deferred Tax Assets.
c. Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
The Companyâs Accounting System is designed to unify the financial and cost records and also to comply with the relevant provisions of the Companies Act, 2013, and provide financial and cost information appropriate to the businesses and facilitate Internal Control.
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resource and assessing performance of the operating segments of the Company. The Managing Director is identified as the CODM.
Segment accounting policies are in line with the accounting policies of the Company.In addition, specific accounting policies followed for segment reporting are as under:
The Company has identified two business segments viz. Sugar and Cogeneration. Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallocable assets and liabilities.
Inter segment revenue / expenditure is recognised at fair value/market price.
Geographical segment - not applicable.
Inter Segment Transfer Pricing:
Bagasse and Power -At market price Steam - At cost
Basic EPS is calculated by dividing the profit / loss (after tax and before OCI) attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are based on classification made in a manner considered most appropriate to Companyâs business.
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of change in an accounting estimate is recognized prospectively by including it in profit or loss in (a) the period of the change if the change affects only that period; or (b) the period of the change and future periods, if the change affects both.
However, the change in an accounting estimate that gives rise to changes in assets and liabilities, or relates to an item of equity, is recognized by adjusting the carrying amount of the related asset, liability or equity item in the period of the change.
Key assumption concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as given below.
a. Fair value measurement and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
b. Useful life of Property, Plant and Equipment
The Company reviews the estimated useful lives of Property,plant and equipment at the end of each reporting period. Any change on review of useful life/Residual value of PPE is a change in accounting estimate and accordingly dealt with prospectively in the financial statements as per Ind AS 8.
c. Actuarial valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in the Notes to the financial statements.
d. Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various tax and regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such issues are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in the Notes to the financial statements.
Based on Technical Evaluation , the management has estimated the useful life as given above and hence the useful life of these assets are different and not longer than the useful life prescribed under Schedule II to the Companies Act,2013
(xi) Assets costing ''10,000/- and below are depreciated in full in the year of addition.
Mar 31, 2019
1. Significant Accounting Policies and key Accounting estimates and judgements
Significant Accounting Policies
1.1 Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015.
1.2 Basis of Preparation and Compliance
The financial statements are prepared in accordance with the historical cost convention except for certain items that are measured at fair values at the end of each reporting period, as explained in the accounting policies set out below. The financial statements are prepared on a going concern basis using accrual concept except for the cash flow information.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS-2 inventories or value in use in Ind AS 36 -Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, as described hereunder:
Level 1 -Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 -Other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 - Unobservable inputs for the asset or liability.
1.3 Current / Non-Current Classification
An asset or liability is classified as current if it satisfies any of the following conditions:
(i) the asset / liability is expected to be realized / settled in the Companyâs normal operating cycle;
(ii) the asset is intended for sale or consumption;
(iii) the asset / liability is held primarily for the purpose of trading;
(iv) the asset / liability is expected to be realized / settled within twelve months after the reporting period;
(v) the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period;
(vi) in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
All other assets and liabilities are classified as non-current.
For the purpose of current / non-current classification, the Company has reckoned its normal operating cycle as twelve months based on the nature of products and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
Deferred tax assets and liabilities are classified as non-current.
1.4 Recent Accounting Pronouncements Leases
On March 30, 2019 Ministry of Corporate Affairs has notified âInd AS 116, Leasesâ replacing the existing âInd AS 17 Leasesâ and related interpretations. This new standard is applicable for accounting periods commencing on or after 01-04-2019 and hence not applicable for the financial statements for the year ended 31-03-2019. However, application of this standard from 01-04-2019 does not have any significant impact for the Company.
Uncertainty over Income Tax Treatments
On March 30, 2019, Ministry of Corporate Affairs has notified Appendix C to Ind AS 12 - Uncertainty over Income Tax Treatments. This is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12.
According to the appendix, the Company needs to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the Company has used or plans to use in its income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (or tax loss), tax bases, unused tax losses, unused tax credits and tax rates.
The effective date for adoption of Appendix C to Ind AS 12 is in respect of accounting period beginning on or after April 1, 2019 and the Company will adopt the same accordingly.
1.5 Property, Plant and Equipment (PPE)
Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably
(i) An item of PPE that qualifies for recognition as an asset is measured on initial recognition at cost. Following initial recognition, PPEs are carried at its cost less accumulated depreciation and accumulated impairment losses.
(i)(a) For transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognised as of April 1, 2016 (transition date) measured as per the previous IGAAP as its deemed cost as on the transition date.
(ii) The cost of an item of PPE comprises purchase price, taxes and duties net of input tax credit entitlement and other items directly attributable to the cost of bringing the asset to its working condition for its intended use. Trade discounts and rebates are deducted. Cost includes cost of replacing a part of a PPE if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of PPE if the recognition criteria are met.
(iii) The Company identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is significant to the total cost of that item of PPE and has useful life that is materially different from that of the remaining item.
(iv) Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of PPE are capitalized at cost. Costs in the nature of repairs and maintenance are recognised in the Statement of Profit and Loss as and when incurred. All upgradation / enhancements are charged off as revenue expenditure unless they bring significant additional benefits. Borrowing Costs (net of interest earned on temporary investments of those borrowings) directly attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets till the asset is ready for its intended use.
(v) Capital advances and capital work- in- progress
Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets. Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work- in- progress. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use. Depreciation on these assets commences when the assets are ready for their intended use which is generally on commissioning.
(vi) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives and residual values are reviewed at the end of each reporting period and changes, if any, are treated as changes in accounting estimate. The useful lives are based on technical estimates and the management believe that the useful lives are realistic and fair approximation over the period of which the assets are likely to be used.
(vii) Estimated useful lives of the assets are as follows:
Assets costing Rs. 5,000/- and below are depreciated in full within the Financial Year.
1.6 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognised on a straight-line basis over their estimated useful lives. The estimated useful life is reviewed annually with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
1.7 De-recognition of tangible and intangible assets
An item of tangible or intangible asset is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item is determined as the difference between the sale proceeds and if any and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
1.8 Impairment of tangible and intangible assets
The Company annually reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
1.9 Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
1.10 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
a. Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost. The debt instruments carried at amortised cost include Deposits, Loans and advances recoverable in cash.
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
b. Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as FVTPL. Interest income is recognised in the Statement of Profit and Loss
c. Investments in equity instruments at FVTOCI
The Company has irrevocably designated to carry investment in equity instruments as Fair Value Through Other Comprehensive Income (FVTOCI). On initial recognition, the Company makes an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in Other Comprehensive Income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in Other Comprehensive Income and accumulated in the âReserve for equity instruments through Other Comprehensive Incomeâ. On derecognition of such Financial Assets, cumulative gain or loss previously reported in OCI is not reclassified from Equity to the Statement of Profit and Loss. However, the Company may transfer such cumulative gain or loss into retained earnings within equity.
The Company has equity investments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these investments (Note 3). Fair value is determined in the manner described in Note 1.2.
Dividends on these investments in equity instruments are recognised in the Statement of Profit or Loss when the Companyâs right to receive same is established, it is probable that the economic benefits associated with the dividend will flow to the Company, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
d. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12 months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible defaults events over the life of the financial instrument).
For trade receivable, Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables.
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.
e. De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
Concomitantly, if the asset is one that is measured at:
(a) Amortised cost, the gain or loss is recognised in the Statement of Profit and Loss.
(b) Fair Value through Other Comprehensive Income, the cumulative fair value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative fair value adjustments previously taken to reserves is reclassified within equity.
1.11 Financial liabilities and equity instruments
a. Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
b. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
c. Financial liabilities
All financial liabilities are initially recognised at the value of respective contractual obligations. Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item.
d. Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
1.12 Derivative financial instruments & Hedge Accounting
The Company enters intoderivative financial instruments to manage its exposure to foreign exchange rate risks, including forward contracts, futures and options.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates hedging instruments in respect of foreign currency risk as either fair value hedges or cash flow hedges.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
a. Cash Flow Hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in Other Comprehensive Income and are accumulated as âcash flow hedge reserveâ. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
The cumulative gain or loss previously recognised in Other Comprehensive Income remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in Other Comprehensive Income is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in Other Comprehensive Income is transferred to the Statement of Profit and Loss in the same period when the hedged item affects profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Profit and Loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in the Other Comprehensive Income is transferred to the Statement of Profit and Loss.
b. Fair Value Hedges
The Company designates derivative contracts as hedging instruments to mitigate the risk of change in fair value of hedged item in foreign exchange rates.
Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to Statement of Profit and Loss over the period of maturity.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date.
1.13 Inventories
Inventories other than by-products are stated at lower of cost and net realizable value. Inventory of by-products is stated at net realizable value. Materials and other items intended for use in production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.
Cost comprises of all costs of purchase (that includes taxes and duties, net of input tax credit entitlement), costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis and includes inward freight and other direct expenses.
Net realizable value is the estimated selling price less estimated costs for completion and sale.
Obsolete, slow moving and defective inventories are periodically identified and write- down is recognised where necessary.
1.14 Revenue Recognition
Effective from April 01, 2018 the Company has adopted Ind AS 115 âRevenue from Contracts with Customersâ that does not have any significant impact on the revenue recognition and measurement.
a. Sale of products
Revenue is recognized upon transfer of control of the products to customers at a point in time i.e. when the products are delivered to the carrier in an amount that reflects the consideration that the company expects to receive in exchange for those products.
b. Dividend
Dividend income from investments is recognized when the shareholderâs right to receive payment has been established.
c. Interest Income
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and using effective interest rate method.
d. Insurance Claims
Insurance claims are recognised on the basis of claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
e. Renewable Energy Certificates
Income from Renewable Energy Certificates is recognised on sale, having regard to the insignificant identifiable cost thereof.
1.15 Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Grants are recognised in the Statement of Profit and Loss on a systematic basis over the period in which the Company recognises as expense the related costs which the grants are intended to compensate. Specifically, Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.
Grants that are receivable as compensation for expenses or losses incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in the Statement of Profit and Loss in the period in which they become receivable.
Grants related to income are presented in the Statement of Profit and Loss as âother incomeâ or deducted in reporting the related expense.
1.16 Employee Benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and recognised in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(b) Post employment benefits
(i) Defined Contribution Plans
Contribution to Defined Contribution Schemes towards retirement benefits in the form of Provident fund and Superannuation fund is recognised as expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
(ii) Defined Benefit Plans
The Company operates Defined Benefit Gratuity Plan for employees. The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognised in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognised representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability/ (asset) are recognised in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liabilities / asset) are recognised in comprehensive income and taken to âretained earningsâ. Such re-measurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability /(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary. However, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the gratuity fund within the next twelve months.
The Company is exposed to various risks in providing the above gratuity benefit which are as follows:
Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future, based on past experience. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.
Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions
(c) Other Long-term Employee Benefits
Entitlement to earned leave and sick leave is recognised when it accrue to employees. Earned leave/ sick leave can be availed or encashed either during service or on retirement subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leave using the Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date.
1.17 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, (which are assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
1.18 Foreign Currency Transactions
a. Initial Recognition
On initial recognition, transactions in foreign currencies are recorded in the functional currency (i.e. Indian Rupee), by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
b. Measurement of foreign currency items at reporting date
Foreign currency monetary items are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Nonmonetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured.
c. Recognition of exchange difference
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements is recognised in profit or loss in the period in which they arise.
1.19 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
1.20 Taxes on Income
Taxes on income comprise of current tax and deferred tax.
a. Current tax
Current tax is the amount of income taxes payable in respect of taxable profit for the period. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates and tax laws enacted during the reporting period together with any adjustment to taxes payable as respect of previous years.
b. Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are recognised for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the accounting profit nor the taxable profit, deferred tax liabilities are not recognised.
Deferred tax assets are recognised for all deductible temporary differences to the extent it is probable that future taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
MAT Credit Entitlement is in the form of unused tax credit and is accordingly grouped under Deferred Tax Assets.
c. Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
1.21 Events after reporting period
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
1.22 Financial and Management Information System
The Companyâs Accounting System is designed to unify the financial and cost records and also to comply with the relevant provisions of the Companies Act, 2013, and provide financial and cost information appropriate to the businesses and facilitate Internal Control.
1.23 Segment Reporting
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resource and assessing performance of the operating segments of the Company. The Managing Director is identified as the CODM.
Segment accounting policies are in line with the accounting policies of the Company. In addition, specific accounting policies followed for segment reporting are as under:
The Company has identified two business segments viz. Sugar and Cogeneration. Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallocable assets and liabilities.
Inter segment revenue / expenditure is recognised at fair value/market price.
Geographical segment - not applicable.
Inter Segment Transfer Pricing:
Bagasse and Power - At market price Steam - At cost
1.24 Earnings per Share (EPS)
Basic EPS is calculated by dividing the profit / loss(after tax and before OCI)attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
1.25 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are based on classification made in a manner considered most appropriate to Companyâs business.
Key Accounting estimates and judgments
1.26 Use of Estimates
The preparation of financial statements in conformity with IndAS requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.
1.27 Changes in estimates
The estimates and underlying assumptions are reviewed on an ongoing basis. The effect of change in an accounting estimate is recognized prospectively by including it in profit or loss in (a) the period of the change if the change affects only that period; or (b) the period of the change and future periods, if the change affects both.
However, the change in an accounting estimate that gives rise to changes in assets and liabilities, or relates to an item of equity, is recognized by adjusting the carrying amount of the related asset, liability or equity item in the period of the change.
1.28 Key sources of estimation uncertainty
Key assumption concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as given below.
a. Fair value measurement and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
b. Useful life of Property, Plant and Equipments
The Company reviews the estimated useful lives of Property, plant and equipment at the end of each reporting period. During the current year, there has been no change in useful life considered for the assets.
c. Actuarial valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in the Notes to the financial statements.
d. Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various tax and regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such issues are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in the Notes to the financial statements.
Mar 31, 2018
A. Significant Accounting Policies and key Accounting estimates and judgements
1. Significant Accounting Policies
1.1 Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015.
Up to the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the requirements of previous Indian Generally Accepted Accounting Principles (IGAAP) that includes Standards notified under the Companies (Accounting Standards) Rules, 2006.
These are the Companyâs first Ind AS financial statements. The date of transition to Ind AS is 01.04.2016. Please refer Note No. 1.27 for the details of exceptions and optional exemptions availed by the Company and principal adjustments along with related reconciliations.
1.2 Basis of Preparation and Compliance
The financial statements are prepared in accordance with the historical cost convention except for certain items that are measured at fair values at the end of each reporting period, as explained in the accounting policies set out below. The financial statements are prepared on a âgoing concernâ basis using accrual concept except for the cash flow information.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS-2 inventories or value in use in Ind AS 36 -Impairment of Assets.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, as described hereunder:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 - Other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 - Unobservable inputs for the asset or liability
1.3 Current / Non-Current Classification
An asset or liability is classified as current if it satisfies any of the following conditions:
(i) the asset / liability is expected to be realized / settled in the Companyâs normal operating cycle;
(ii) the asset is intended for sale or consumption;
(iii) the asset / liability is held primarily for the purpose of trading;
(iv) the asset / liability is expected to be realized / settled within twelve months after the reporting period;
(v) the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period;
(vi) in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
All other assets and liabilities are classified as non-current.
For the purpose of current / non-current classification, the Company has reckoned its normal operating cycle as twelve months based on the nature of products and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
Deferred tax assets and liabilities are classified as non-current.
1.4 Property, Plant and Equipment (PPE)
Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.
The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
(i) An item of PPE that qualifies for recognition as an asset is measured on initial recognition at cost. Following initial recognition, PPEs are carried at its cost less accumulated depreciation and accumulated impairment losses.
(i)(a) For transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognised as of April 1, 2016 (transition date) measured as per the previous IGAAP as its deemed cost as on the transition date.
(ii) The cost of an item of PPE comprises purchase price, taxes and duties net of input tax credit entitlement and other items directly attributable to the cost of bringing the asset to its working condition for its intended use. Trade discounts and rebates are deducted. Cost includes cost of replacing a part of a PPE if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of PPE if the recognition criteria are met.
(iii) The Company identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is significant to the total cost of that item of PPE and has useful life that is materially different from that of the remaining item.
(iv) Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of PPE are capitalized at cost. Costs in the nature of repairs and maintenance are recognised in the Statement of Profit and Loss as and when incurred. All upgradation / enhancements are charged off as revenue expenditure unless they bring significant additional benefits. Borrowing Costs (net of interest earned on temporary investments of those borrowings) directly attributable to acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets till the asset is ready for its intended use.
(v) Capital advances and capital work- in- progress
Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets. Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work- in- progress. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use. Depreciation on these assets commences when the assets are ready for their intended use which is generally on commissioning.
(vi) Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives and residual values are reviewed at the end of each reporting period and changes, if any, are treated as changes in accounting estimate. The useful lives are based on technical estimates and the management believe that the useful lives are realistic and fair approximation over the period of which the assets are likely to be used.
Assets costing Rs. 5,000/- and below are depreciated in full within the Financial Year.
1.5 Intangible assets
a. Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognised on a straight-line basis over their estimated useful lives. The estimated useful life is reviewed annually with the effect of any changes in estimate being accounted for on a prospective basis.
b. Useful lives of intangible assets
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
1.6 De-recognition of tangible and intangible assets
An item of tangible or intangible asset is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item is determined as the difference between the sale proceeds and if any and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
1.7 Impairment of tangible and intangible assets
The Company annually reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
1.8 Financial instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the relevant instrument and are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
1.9 Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
a. Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost. The debt instruments carried at amortised cost include Deposits, Loans and advances recoverable in cash.
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
b. Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as FVTPL. Interest income is recognised in the Statement of Profit and Loss.
c. Investments in equity instruments at FVTOCI
The Company has irrevocably designated to carry investment in equity instruments as Fair Value Through Other Comprehensive Income (FVTOCI). On initial recognition, the Company makes an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in Other Comprehensive Income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in Other Comprehensive Income and accumulated in the âReserve for equity instruments through Other Comprehensive Incomeâ. On derecognition of such Financial Assets, cumulative gain or loss previously reported in OCI is not reclassified from Equity to the Statement of Profit and Loss. However, the Company may transfer such cumulative gain or loss into retained earnings within equity.
The Company has equity investments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these investments (Note 3). Fair value is determined in the manner described in Note 1.2.
Dividends on these investments in equity instruments are recognised in the Statement of Profit or Loss when the Companyâs right to receive same is established, it is probable that the economic benefits associated with the dividend will flow to the Company, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
d. Impairment of Financial Assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at Fair Value Through Profit and Loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
- The 12 months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible defaults events over the life of the financial instrument).
For trade receivable, Company applies âsimplified approachâ which requires expected life time losses to be recognised from initial recognition of the receivables.
For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk, full lifetime ECL is used.
e. De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
Concomitantly, if the asset is one that is measured at:
(a) Amortised cost, the gain or loss is recognised in the Statement of Profit and Loss.
(b) Fair Value through Other Comprehensive Income, the cumulative fair value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative fair value adjustments previously taken to reserves is reclassified within equity.
1.10 Financial liabilities and equity instruments
a. Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
b. Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received, net of direct issue costs.
c. Financial liabilities
All financial liabilities are initially recognised at the value of respective contractual obligations. Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item.
d. Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
1.11 Derivative financial instruments & Hedge Accounting
The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including forward contracts, futures and options.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
The Company designates hedging instruments in respect of foreign currency risk as either fair value hedges or cash flow hedges.
At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.
a. Cash Flow Hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in Other Comprehensive Income and are accumulated as âcash flow hedge reserveâ. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Profit and Loss.
The cumulative gain or loss previously recognised in Other Comprehensive Income remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in Other Comprehensive Income is transferred to the carrying amount of the asset when it is recognised. In other cases the amount recognised in Other Comprehensive Income is transferred to the Statement of Profit and Loss in the same period when the hedged item affects profit or loss.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognised in Other Comprehensive Income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Profit and Loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in the Other Comprehensive Income is transferred to the Statement of Profit and Loss.
b. Fair Value Hedges
The Company designates derivative contracts as hedging instruments to mitigate the risk of change in fair value of hedged item in foreign exchange rates.
Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to Statement of Profit and Loss over the period of maturity.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to profit or loss from that date.
1.12 Inventories
Inventories other than by products are stated at lower of cost and net realizable value. Inventory of by products is stated at net realizable value. Materials and other items intended for use in production of inventories are not written down below cost if the finished goods in which they will be incorporated are expected to be sold at or above cost.
Cost comprises of all costs of purchase (that includes taxes and duties, net of input tax credit entitlement), costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis and includes inward freight and other direct expenses.
Net realizable value is the estimated selling price less estimated costs for completion and sale.
Obsolete, slow moving and defective inventories are periodically identified and provision is made where necessary.
1.13 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable for supply of goods or services net of returns, discounts, rebates and allowances.
a. Sale of products
Revenue from sale of products is recognised when the Company transfers all significant risks and rewards of ownership to the buyer, and retains neither continuing managerial involvement nor effective control over the products sold. It is mainly upon delivery and the amount of revenue can be measured reliably and recovery of the consideration is probable.
b. Dividend
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established.
c. Interest Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and using effective interest rate method.
d. Insurance Claims
Insurance claims are recognised on the basis of claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
e. Renewable Energy Certificates
Income from Renewable Energy Certificates entitlement is recognised on sale, having regard to the insignificant identifiable cost thereof.
f. Ind AS 115 - Revenue from Contracts with Customers
The standard notified on 28.03.2018 is applicable for the accounting periods commencing on or after 01.04.2018. Accordingly, this standard is not applicable for preparation of the financial statement for the year ended 31.03.2018. However, application of this standard from 01.04.2018 does not have any material impact in the revenue recognition of the Company.
1.14 Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Grants are recognised in the Statement of Profit and Loss on a systematic basis over the period in which the Company recognises as expense the related costs which the grants are intended to compensate. Specifically, Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the Balance Sheet and transferred to the Statement of Profit and Loss on a systematic and rational basis over the useful lives of the related assets.
Grants that are receivable as compensation for expenses or losses incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in the Statement of Profit and Loss in the period in which they become receivable.
Grants related to income are presented in the Statement of Profit and Loss as âother incomeâ or is deducted from the related expense.
1.15 Employee Benefits
(a) Short term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and recognised in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(b) Post employment benefits
(i) Defined Contribution Plans
Contribution to Defined Contribution Schemes towards retirement benefits in the form of Provident Fund and Superannuation Fund is recognised as expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
(ii) Defined Benefit Plans
The Company operates Defined Benefit Gratuity Plan for employees. The cost of providing defined benefits is determined using the Projected Unit Credit Method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognised in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognised representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability/ (asset) are recognised in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability/ (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liabilities / asset) are recognised in comprehensive income and taken to âretained earningsâ. Such re-measurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability /(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary. However, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the gratuity fund within the next twelve months.
The Company is exposed to various risks in providing the above gratuity benefit which are as follows:
Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
Salary Escalation Risk: The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future, based on past experience. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.
Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions
(c) Other Long-term Employee Benefits
Entitlement to earned leave and sick leave is recognised when it accrue to employees. Earned leave/ sick leave can be availed or encashed either during service or on retirement subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leave using the Projected Unit Credit Method with actuarial valuation being carried out at each Balance Sheet date.
1.16 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, (which are assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
1.17 Foreign Currency Transactions
a. Initial Recognition
On initial recognition, transactions in foreign currencies are recorded in the functional currency (i.e. Indian Rupee), by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
b. Measurement of foreign currency items at reporting date
Foreign currency monetary items are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Nonmonetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured.
c. Recognition of exchange difference
Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements is recognised in profit or loss in the period in which they arise.
1.18 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
1.19 Taxes on Income
Taxes on income comprise of current tax and deferred tax.
a. Current tax
Current tax is the amount of income taxes payable in respect of taxable profit for the period. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates and tax laws enacted during the reporting period together with any adjustment to taxes payable as respect of previous years.
b. Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are recognised for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the accounting profit nor the taxable profit, deferred tax liabilities are not recognised.
Deferred tax assets are recognised for all deductible temporary differences to the extent it is probable that future taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
MAT Credit Entitlement is in the form of unused tax credit and is accordingly grouped under Deferred Tax Assets.
c. Current and deferred tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
1.20 Events after reporting period
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
1.21 Financial and Management Information System
The Companyâs Accounting System is designed to unify the financial and cost records and also to comply with the relevant provisions of the Companies Act, 2013, and provide financial and cost information appropriate to the businesses and facilitate Internal Control.
1.22 Segment Reporting
Operating segments are reported in a manner consistent with internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resource and assessing performance of the operating segments of the Company. The Managing Director is identified as the CODM.
Segment accounting policies are in line with the accounting policies of the Company. In addition, specific accounting policies followed for segment reporting are as under:
The Company has identified two business segments viz. Sugar and Cogeneration. Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallocable assets and liabilities.
Inter segment revenue / expenditure is recognised at fair value/market price.
Geographical segment - not applicable.
Inter Segment Transfer Pricing:
Bagasse and Power - At market price
Steam - At cost
1.23 Earnings per Share (EPS)
Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
1.24 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are based on classification made in a manner considered most appropriate to Companyâs business.
Key Accounting estimates and judgments
1.25 Use of Estimates
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.
1.26 Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Key assumption concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as given below.
a. Fair value measurement and valuation processes
Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
b. Useful life of Property, Plant and Equipments
The Company reviews the estimated useful lives of Property, plant and equipment at the end of each reporting period. During the current year, there has been no change in useful life considered for the assets.
c. Estimate on Sugarcane Pricing
The Central Government fixes the Fair and Remunerative Price (FRP) for sugarcane under the Sugarcane (Control Order) 1960 for each sugar season. The Company recognizes the cost of sugar cane at FRP that is mandatory. Any additional cane price based on market conditions and agreement with cane suppliers is recognised in the period in which agreement is reached there for.
d. Actuarial valuation
The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognised in the Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in the Notes to the financial statements.
e. Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various tax and regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such issues are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in the Notes to the financial statements.
1.27 First-time adoption - mandatory exceptions, optional exemptions
a. Overall principle
The Company has prepared the opening Balance Sheet as per Ind AS as of 1st April 2016 (the transition date) by recognising all assets and liabilities whose recognition is required by Ind AS, not recognising items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous IGAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognised assets and liabilities. However, this principle is subject to the certain exceptions and certain optional exemptions availed by the Company as detailed below.
b. Materiality
The Company has applied the standards only to items / transactions which are material.
Transactions and balances with values below the rounding off norm adopted by the Company have been reflected as â-â in these financial statements.
c. Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
d. Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognised in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101. The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
e. Deemed cost for property, plant and equipment
The Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as of 1st April 2016 (transition date) measured as per the previous IGAAP and use that carrying value as its deemed cost as of the transition date.
Mar 31, 2017
a) Basis of Preparation of Financial Statements
The Financial Statements have been prepared on historical cost convention and on accrual basis in accordance with generally accepted accounting principles and applicable accounting standards. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Transactions and balances with values below the rounding off norm adopted by the company have been reflected as â--â in these financial statements.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of Financial Statements have a bearing on reported amounts of Financial Results, Assets & Liabilities and the disclosure of Contingent Liabilities. Actual results could differ from those estimates. Changes in estimate are reflected in the financial statements in the period in which changes are made and their effects, if material, are disclosed.
c) Inventories
Inventories other than molasses and bagasse are valued at lower of cost and net realizable value. Cost includes taxes and duties, net of input tax credit entitlement.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis and includes inward freight and other direct expenses.
Cost of work in progress and finished goods includes material, direct labour and production overheads and is determined in accordance with applicable cost accounting standards.
Molasses and bagasse are valued at net realizable value, since the cost is not determinable.
Slow moving and obsolete items are adequately provided for.
d) Depreciation / Amortization
The management considers it appropriate to adopt the useful life and residual value of assets specified in Schedule II to the Companies Act, 2013. Depreciation on Property, Plant and Equipment is provided under straight line method. The Depreciation method, residual value and useful life of assets are reviewed at each financial year end and the effect of any change arising thereon is accounted for as a change in accounting estimate.
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognised and expenditure is accounted for on their accrual.
Excise duty recovery from customer is deducted from Turnover (Gross). Excise duty differential between closing and opening stock of excisable goods is included under Other Expenses.
Sale is recognized on transfer of significant risk and rewards of ownership to the buyer, which generally coincides with delivery of goods to the buyer.
Dividend income is recognized when the right to receive payment is established.
Renewable Energy Certificates are recognized upon sale considering the insignificant identifiable cost thereof.
Other items of income are recognized when there is no significant uncertainty as to measurability or collectability.
f) Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less depreciation / amortization. Cost includes taxes and duties (other than those for which input tax credit is available), freight, installation and other direct or allocated expenses and interest on related borrowing during the period of construction.
Capital Work in Progress comprises of the cost of Property, Plant and Equipment that are not yet ready for their intended use on the reporting date.
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognised at the rates prevailing on the dates of transactions.
The Company enters in to forward exchange contract to hedge exchange risk which are not intended for trading or speculation purpose. Premium or discount arising at the inception of such forward exchange contract is amortised as income or expense over the life of the contract. Exchange difference on such contracts is recognised in the reporting period in which exchange rates change.
All monetary assets and liabilities are restated at each Balance Sheet date using the closing rate. Resultant exchange difference is recognized as income or expense in that period.
h) Government Grants
Government Grants and subsidies are recognised when there is reasonable assurance that the company becomes eligible to receive same.
Government Grants related to capital subsidy being in the nature of promotersâ contribution are credited to capital reserve.
Government Grants related to revenue are recognized on accrual to match them with related costs that are intended to be compensated. Such grants towards subsidizing specific expenses are deducted from related expenses. Other grants are shown separately under other income.
i) Investments
Trade investments are those made to enhance the companyâs business interests. Classification of investments as current or long-term is based on the managementâs intention at the time investment is made.
Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.
Current investments are valued at lower of cost and fair value.
j) Employee Benefits
Short term employee benefits are charged at the undiscounted amount to profit and loss statement in the year in which related service is rendered.
Contributions to defined contribution schemes towards retirement benefits in the form of provident fund and superannuation fund for the year are charged to profit and loss statement as incurred.
Liabilities in respect of defined benefit plans are determined based on actuarial valuation made by an independent actuary using Projected Unit Credit Method as at the balance sheet date.
Actuarial gains or losses are recognized immediately in the profit and loss statement. Obligation for leave encashment is recognized in the same manner.
k) Borrowing Costs
Borrowing costs (net of income) directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets.
Other borrowing costs are recognized as expense as and when incurred.
l) Segment Reporting
Segment accounting policies are in line with the accounting policies of the company. In addition, the specific accounting policies have been followed for segment reporting as under:
The Company has identified two business segments viz. Sugar and Cogeneration.
Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallocable assets and liabilities.
Inter segment revenue / expenditure is recognized at fair value/market price.
Geographical segment - not applicable.
m) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961. Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.
n) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount.
o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Contingent Liabilities are disclosed, unless the possibility of any outflow in settlement is remote, in the notes on accounts. Contingent Assets are neither recognised nor disclosed.
Outstanding contracts are reviewed at close of the year and material diminution in value provided for or disclosed as Contingent Liability as appropriate.
p) Derivatives
The Company enters into Futures Contracts in sugar to hedge price risk consistent with its Risk Management Policy. The Company does not use these contracts for speculative purposes.
Mar 31, 2016
1 SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation of Financial Statements
The Financial Statements have been prepared on historical cost convention and on accrual basis in accordance with generally accepted accounting principles and applicable accounting standards. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Transactions and balances with values below the rounding off norm adopted by the company have been reflected as â--â in these financial statements.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of Financial Statements have a bearing on reported amounts of Financial Results, Assets & Liabilities and the disclosure of Contingent Liabilities. Actual results could differ from those estimates. Changes in estimate are reflected in the financial statements in the period in which changes are made and their effects, if material, are disclosed.
c) Inventories
Inventories other than molasses and bagasse are valued at lower of cost and net realizable value. Cost includes taxes and duties, net of input tax credit entitlement.
Cost of raw materials, consumables, stores and spares is determined on weighted average basis and includes inward freight and other direct expenses.
Cost of work in progress and finished goods includes material, direct labour and production overheads and is determined in accordance with applicable cost accounting standards.
Molasses and bagasse are valued at net realizable value, since the cost is not determinable.
Slow moving and obsolete items are adequately provided for.
d) Depreciation / Amortization
Depreciation on Fixed Assets is provided under Straight line method in accordance with Schedule II to the Companies Act, 2013 adopting the useful life for assets as specified therein and reckoning the residual value at 5% of the original cost of the asset.
Intangible assets are amortized equally over the estimated useful life not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognized and expenditure is accounted for on their accrual.
Excise duty recovery from customer is deducted from Turnover (Gross). Excise duty differential between closing and opening stock of excisable goods is included under Other Expenses.
Sale is recognized on transfer of significant risk and rewards of ownership to the buyer, which generally coincides with delivery of goods to the buyer.
Dividend income is recognized when the right to receive payment is established.
Renewable Energy Certificates are recognized upon sale considering the insignificant identifiable cost thereof.
Other items of income are recognized when there is no significant uncertainty as to measurability or collectability.
f) Fixed Assets
Fixed Assets are stated at cost less depreciation / amortization. Cost includes taxes and duties (other than those for which input tax credit is available), freight, installation and other direct or allocated expenses and interest on related borrowing during the period of construction.
Capital Work in Progress comprises of the cost of fixed assets that are not yet ready for their intended use on the reporting date.
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognized at the rates prevailing on the dates of transactions.
The Company enters in to forward exchange contract to hedge exchange risk which are not intended for trading or speculation purpose. Premium or discount arising at the inception of such forward exchange contract is amortized as income or expense over the life of the contract. Exchange difference on such contracts is recognized in the reporting period in which exchange rates change.
All monetary assets and liabilities are restated at each Balance Sheet date using the closing rate. Resultant exchange difference is recognized as income or expense in that period.
h) Government Grants
Government Grants and subsidies are recognized when there is reasonable assurance that the company becomes eligible to receive same.
Government Grants related to capital subsidy being in the nature of promotersâ contribution are credited to capital reserve.
Government Grants related to revenue are recognized on accrual to match them with related costs that are intended to be compensated. Such grants towards subsidizing specific expenses are deducted from related expenses. Other grants are shown separately under other income.
i) Investments
Trade investments are those made to enhance the companyâs business interests. Classification of investments as current or long-term is based on the managementâs intention at the time investment is made.
Long-term investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.
Current investments are valued at lower of cost and fair value.
j) Employee Benefits
Short term employee benefits are charged at the undiscounted amount to profit and loss statement in the year in which related service is rendered.
Contributions to defined contribution schemes towards retirement benefits in the form of provident fund and superannuation fund for the year are charged to profit and loss statement as incurred.
Liabilities in respect of defined benefit plans are determined based on actuarial valuation made by an independent actuary using Projected Unit Credit Method as at the balance sheet date.
Actuarial gains or losses are recognized immediately in the profit and loss statement. Obligation for leave encashment is recognized in the same manner.
k) Borrowing Costs
Borrowing costs (net of income) directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of the assets.
Other borrowing costs are recognized as expense as and when incurred.
l) Segment Reporting
Segment accounting policies are in line with the accounting policies of the company. In addition, the specific accounting policies have been followed for segment reporting as under:
The Company has identified two business segments viz. Sugar and Cogeneration. Revenue and expenses have been identified to respective segments on the basis of operating activities of the enterprise. Revenue and expenses which relate to the enterprise as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in respective segments. Other assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed as unallocable assets and liabilities.
Inter segment revenue / expenditure is recognized at fair value/market price.
Geographical segment - not applicable.
m) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961. Deferred tax is recognized, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses.
n) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount of assets exceeds their recoverable amount.
o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. Contingent Liabilities are disclosed, unless the possibility of any outflow in settlement is remote, in the notes on accounts. Contingent Assets are neither recognized nor disclosed.
Outstanding contracts are reviewed at close of the year and material diminution in value provided for or disclosed as Contingent Liability as appropriate.
p) Derivatives
The Company enters into Futures Contracts in sugar to hedge price risk consistent with its Risk Management Policy. The Company does not use these contracts for speculative purposes.
(d) Rights preferences and restrictions
The Company has one class of shares ie. Equity shares having par value of Rs. 10 and ranking pari passu in all respects including voting rights and dividend.
Micro and Small enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 have been determined to the extent such parties have been identified on the basis of information available with the company. There are no over dues to parties on account of principal amount and/ or interest and accordingly no additional disclosures have been made.
Mar 31, 2015
A) Basis of Preparation of Financial Statements
The financial statements have been prepared on historical cost
convention and in accordance with generally accepted accounting
principles and applicable accounting standards.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of
Financial Statements have a bearing on reported amounts of Financial
Results, Assets & Liabilities and the disclosure of Contingent
Liabilities. Actual results could differ from those estimates. Any
revision to accounting estimate is recognized prospectively.
c) Inventories
Inventories other than molasses and bagasse are valued at lower of cost
and net realizable value. Cost includes taxes and duties, net of input
tax credit entitlement.
Cost of raw materials, consumables, stores and spares is determined on
weighted average basis and includes inward freight and other direct
expenses.
Cost of work in progress and finished goods includes material, direct
labour and production overheads and is determined in accordance with
applicable cost accounting standards.
Molasses and bagasse are valued at net realizable value, since the cost
is not determinable.
Slow moving and obsolete items are adequately provided for.
d) Depreciation / Amortization
Depreciation on Fixed Assets is provided under Straight line method in
accordance with Schedule II to the Companies Act, 2013 adopting the
useful life for assets as specified therein and reckoning the residual
value at 5% of the original cost of the asset.
Intangible assets are amortized equally over the estimated useful life
not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognised and expenditure is accounted for on their
accrual.
Excise duty recovery from customer is deducted from Turnover (Gross).
Excise duty differential between closing and opening stock of excisable
goods is included under Other Expenses.
Sale is recognized on transfer of significant risk and rewards of
ownership to the buyer, which generally coincides with delivery of
goods to the buyer.
Dividend income is recognized when the right to receive payment is
established.
Other items of income are recognized when there is no significant
uncertainty as to measurability or collectability.
f) Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost includes taxes
and duties (other than those for which input tax credit is available),
freight, installation and other direct or allocated expenses and
interest on related borrowing during the period of construction.
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognised at the rates
prevailing on the dates of transactions.
The Company enters in to forward exchange contract to hedge exchange
risk which are not intended for trading or speculation purpose. Premium
or discount arising at the inception of such forward exchange contract
is amortised as income or expense over the life of the contract.
Exchange difference on such contracts is recognised in the reporting
period in which exchange rates change.
All monetary assets and liabilities are restated at each Balance Sheet
date using the closing rate. Resultant exchange difference is
recognized as income or expense in that period.
h) Government Grants
Government Grants and subsidies are recognised when there is reasonable
assurance that the company becomes eligible to receive same.
Government Grants related to revenue are recognized on accrual to match
them with related costs that are intended to be compensated. Such
grants towards subsidizing specific expenses are deducted from related
expenses. Other grants are shown separately under other income.
i) Investments
Long-term investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
Current investments are valued at lower of cost and fair value.
j) Employee Benefits
Short term employee benefits are charged at the undiscounted amount to
profit and loss statement in the year in which related service is
rendered.
Contributions to defined contribution schemes towards retirement
benefits in the form of provident fund and superannuation fund for the
year are charged to profit and loss statement as incurred.
Liabilities in respect of defined benefit plans are determined based on
actuarial valuation made by an independent actuary using Projected Unit
Credit Method as at the balance sheet date.
Actuarial gains or losses are recognized immediately in the profit and
loss statement. Obligation for leave encashment is recognized in the
same manner.
k) Borrowing Costs
Borrowing costs (net of income) directly attributable to the
acquisition,construction or production of qualifying assets are
capitalized as part of the cost of the assets.
Other borrowing costs are recognized as expense as and when incurred.
l) Segment Reporting
Segment accounting policies are in line with the accounting policies of
the company. In addition, the specific accounting policies have been
followed for segment reporting as under:
The Company has identified two business segments viz. Sugar and
Cogeneration. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
Inter segment revenue / expenditure is recognized at fair value/market
price.
Geographical segment - not applicable.
m) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act,
1961. Deferred tax is recognised, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognised if there is virtual certainty
that there will be sufficient future taxable income available to
realise such losses.
n) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount.
o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. Contingent Liabilities are disclosed,
unless the possibility of any outflow in settlement is remote, in the
notes on accounts. Contingent Assets are neither recognised nor
disclosed.
Outstanding contracts are reviewed at close of the year and material
diminution in value provided for or disclosed as Contingent Liability
as appropriate.
p) Derivatives
The Company enters into Futures Contracts in sugar to hedge price risk
consistent with its Risk Management Policy. The Company does not use
these contracts for speculative purposes.
Mar 31, 2013
A) Basis of Preparation of Financial Statements
The financial statements have been prepared on historical cost
convention and in accordance with generally accepted accounting
principles and applicable accounting standards.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of
Financial Statements have a bearing on reported amounts of Financial
Results, Assets & Liabilities and the disclosure of Contingent
Liabilities. Actual results could differ from those estimates. Any
revision to accounting estimate is recognized prospectively.
c) Inventories
Inventories other than molasses and bagasse are valued at lower of cost
and net realizable value. Cost includes taxes and duties, net of cenvat
credit entitlement.
Cost of raw materials, consumables, stores and spares is determined on
weighted average basis and includes inward freight and other direct
expenses.
Cost of work in progress and finished goods includes material, direct
labour and production overheads and is determined in accordance with
applicable cost accounting standards.
Molasses and bagasse are valued at net realizable value, since the cost
is not determinable.
Slow moving and obsolete items are adequately provided for.
d) Depreciation / Amortization
Depreciation on fixed assets is provided under Written Down Value
Method for Cogeneration Segment and under Straight Line Method for
other assets in accordance with Schedule XIV to the Companies Act, 1956
at the rates specified therein.
Intangible assets are amortized equally over the estimated useful life
not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognised and expenditure is accounted for on their
accrual.
Excise duty recovery from customer is deducted from Turnover (Gross).
Excise duty differential between closing and opening stock of excisable
goods is included under Other Expenses.
Sale is recognized on transfer of significant risk and rewards of
ownership to the buyer, which generally coincides with delivery of
goods to the buyer.
Dividend income is recognized when the right to receive payment is
established.
Other items of income are recognized when there is no significant
uncertainty as to measurability or collectability.
f) Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost includes taxes
and duties (other than excise duty for which CENVAT credit is
available), freight, installation and other direct or allocated
expenses and interest on related borrowing during the period of
construction.
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognised at the rates
prevailing on the dates of transactions.
The company enters in to forward exchange contract to hedge exchange
risk which are not intended for trading or speculation purpose. Premium
or discount arising at the inception of such forward exchange contract
is amortised as income or expense over the life of the contract.
Exchange difference on such contracts is recognised in the reporting
period in which exchange rates change.
All monetary assets and liabilities are restated at each Balance Sheet
date using the closing rate. Resultant exchange difference is
recognized as income or expense in that period.
h) Government Grants
Government Grants and subsidies are recognised when there is reasonable
assurance that the company becomes eligible to receive same.
Government Grants related to revenue are recognized on accrual to match
them with related costs that are intended to be compensated. Such
grants towards subsidizing specific expenses are deducted from related
expenses. Other grants are shown separately under other income.
i) Investments
Long-term investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
Current investments are valued at lower of cost and fair value.
j) Employee Benefits
Short term employee benefits are charged at the undiscounted amount to
profit and loss statement in the year in which related service is
rendered.
Contributions to defined contribution schemes towards retirement
benefits in the form of provident fund and superannuation fund for the
year are charged to profit and loss statement as incurred.
Liabilities in respect of defined benefit plans are determined based on
actuarial valuation made by an independent actuary using Projected Unit
Credit Method as at the balance sheet date.
Actuarial gains or losses are recognized immediately in the profit and
loss statement. Obligation for leave encashment is recognized in the
same manner.
k) Borrowing Costs
Borrowing costs (net of income) directly attributable to the
acquisition, construction or production of qualifying assets are
capitalized as part of the cost of the assets.
Other borrowing costs are recognized as expense as and when incurred.
l) Segment Reporting
Segment accounting policies are in line with the accounting policies of
the company. In addition, the specific accounting policies have been
followed for segment reporting as under:
The company has identified two business segments viz. Sugar and
Cogeneration. Revenue and expenses have been identified to respective
segments on the basis of operating activities of the enterprise.
Revenue and expenses which relate to the enterprise as a whole and are
not allocable to a segment on a reasonable basis have been disclosed as
unallocable revenue and expenses.
Segment assets and liabilities represent assets and liabilities in
respective segments. Other assets and liabilities that cannot be
allocated to a segment on a reasonable basis have been disclosed as
unallocable assets and liabilities.
Inter segment revenue / expenditure is recognized at fair value/market
price.
Geographical segment - not applicable.
m) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act
1961. Deferred tax is recognised, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognised if there is virtual certainty
that there will be sufficient future taxable income available to
realise such losses.
n) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount.
o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. Contingent Liabilities are disclosed,
unless the possibility of any outflow in settlement is remote, in the
notes on accounts. Contingent Assets are neither recognised nor
disclosed.
Outstanding contracts are reviewed at close of the year and material
diminution in value provided for or disclosed as Contingent Liability
as appropriate.
p) Derivatives
The Company enters into Futures Contracts in sugar to hedge price risk
consistent with its Risk Management Policy. The Company does not use
these contracts for speculative purposes.
Mar 31, 2012
A) Basis of Preparation of Financial Statements
The financial statements have been prepared on historical cost
convention and in accordance with generally accepted accounting
principles and applicable accounting standards.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of
Financial Statements have a bearing on reported amounts of Financial
Results, Assets & Liabilities and the disclosure of Contingent
Liabilities. Actual results could differ from those estimates. Any
revision to accounting estimate is recognized prospectively.
c) Inventories
Inventories other than molasses and bagasse are valued at lower of cost
and net realizable value. Cost includes taxes and duties, net of cenvat
credit entitlement.
Cost of raw materials, consumables, stores and spares is determined on
weighted average basis and includes inward freight and other direct
expenses.
Cost of work in progress and finished goods includes material, direct
labour and production overheads and is determined in accordance with
applicable cost accounting standards.
Molasses and bagasse are valued at net realizable value, since the cost
is not determinable.
Slow moving and obsolete items are adequately provided for.
d) Depreciation / Amortization
Depreciation on fixed assets is provided under Straight Line Method in
accordance with Schedule XIV to the Companies Act, 1956 at the rates
specified therein.
Intangible assets are amortized equally over the estimated useful life
not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognised and expenditure is accounted for on their
accrual.
Excise duty recovery from customer is deducted from Turnover (Gross).
Excise duty differential between closing and opening stock of excisable
goods is included under Other Expenses.
Revenue from domestic sale is recognized on delivery to the carrier,
when risk and rewards of ownership pass on to the customer.
Revenue from Export sales is recognized when risk and rewards are
passed on to the customer in accordance with the terms of the contract.
Dividend income is recognized when the right to receive payment is
established.
Other items of income are recognized when there is no significant
uncertainty as to measurability or collectability.
f) Fixed Assets
Fixed Assets are stated at cost less depreciation. Cost includes taxes
and duties (other than excise duty for which CENVAT credit is
available), freight, installation and other direct or allocated
expenses and interest on related borrowing during the period of
construction.
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognised at the rates
prevailing on the dates of transactions.
The company enters in to forward exchange contract to hedge exchange
risk which are not intended for trading or speculation purpose. Premium
or discount arising at the inception of such forward exchange contract
is amortised as income or expense over the life of the contract.
Exchange difference on such contracts is recognised in the reporting
period in which exchange rates change.
All monetary assets and liabilities are restated at each Balance Sheet
date using the closing rate. Resultant exchange difference is
recognized as income or expense in that period.
h) Government Grants
Government Grants related to revenue are recognized on accrual to match
them with related costs that are intended to be compensated. Such
grants towards subsidizing specific expenses are deducted from related
expenses. Other grants are shown separately under other income.
i) Investments
Long-term investments are stated at cost. Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
Current investments are valued at lower of cost and fair value. j)
Employee Benefits
Short term employee benefits are charged at the undiscounted amount to
profit and loss statement in the year in which related service is
rendered.
Contributions to defined contribution schemes towards retirement
benefits in the form of provident fund and superannuation fund for the
year are charged to profit and loss statement as incurred.
Liabilities in respect of defined benefit plans are determined based on
actuarial valuation made by an independent actuary using Projected Unit
Credit Method as at the balance sheet date.
Actuarial gains or losses are recognized immediately in the profit and
loss statement. Obligation for leave encashment is recognized in the
same manner.
Terminal benefits are recognized as expense as and when incurred. k)
Borrowing Costs
Borrowing costs (net of income) directly attributable to the
acquisition, construction or production of qualifying assets are
capitalized as part of the cost of the assets.
Other borrowing costs are recognized as expense as and when incurred.
l) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act
1961. Deferred tax is recognised, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognised if there is virtual certainty
that there will be sufficient future taxable income available to
realise such losses.
m) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount.
n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimate can be made. Contingent Liabilities are disclosed,
unless the possibility of any outflow in settlement is remote, in the
notes on accounts. Contingent Assets are neither recognised nor
disclosed.
Outstanding contracts are reviewed at close of the year and material
diminution in value provided for or disclosed as Contingent Liability
as appropriate.
o) Derivatives
The Company enters into Futures Contracts in sugar to hedge price risk
consistent with its Risk Management Policy. The Company does not use
these contracts for speculative purposes.
Mar 31, 2011
BASIS OF PREPARATION OF ACCOUNTS
The financial statements have been prepared on the basis of going
concern, under the historic cost convention, (with the exception of
land and buildings, which have been revalued), to comply in all
material aspects with applicable accounting principles in India, the
applicable Accounting Standards notified under Section 211 (3C) of the
Companies Act, 1956 ("the Act") and the relevant provisions of the Act.
REVENUE RECOGNITION
Sales are recognised when the property in the goods is transferred and
are recorded net of trade discounts, rebates and value added tax. Sales
are inclusive of excise duty.
Income from investments is accounted for when accrued.
FIXED ASSETS INCLUDING INTANGIBLES
Fixed Assets are stated at historic cost except so far as they relate
to the revaluation of Land and Buildings. Historical cost is inclusive
of freight, installation cost, duties and taxes, interest on specific
borrowings utilised for financing the assets and other incidental
expenses.
Rights on time shares are amortised over a period of 20 years.
Assets costing less than Rs. 5,000 are fully depreciated in the year of
purchase. Depreciation on the revalued assets is calculated on the
revalued costs and the Revaluation Reserve is adjusted with the
difference between the depreciation calculated on such revalued costs
and historic costs. All the fixed assets are assessed for any
indication of impairment, at the end of each financial year.
On such indication, the impairment loss, being the excess of carrying
value over the recoverable value of the assets, is charged to the
Profit and Loss Account in the respective financial years. The
impairment loss recognised in the prior years is reversed in cases
where the recoverable value exceeds the carrying value, upon re-
assessment in the subsequent years.
INVENTORIES
Inventories are valued at cost or below. Cost is computed based on the
weighted average cost per unit after taking into account receipts at
actual cost net of CENVAT credit availed. Consumption and/or other
stock diminution is accounted for at the aforesaid weighted average
cost. In the case of finished goods, cost comprises of material, direct
labour, applicable overhead expenses, applicable excise duty and taxes
paid/payable thereon.
Goods in transit/with third parties are valued at cost which represents
the costs incurred upto the stage at which the goods are in
transit/with third parties.
TAXES ON INCOME
Current tax is determined as the amount of tax payable in respect of
taxable income for the period.
Deferred tax is recognised on timing differences between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods, subject to consideration of
prudence.
INVESTMENTS
Long term investments are valued at cost net of provision, for
permanent diminution, if any. Current investments are stated at lower
of cost and fair value.
EMPLOYEE BENEFITS
Contribution to various recognised provident funds/approved pension and
gratuity funds and contributions to secured retiral benefits are
charged to revenue. Liability for gratuity and leave encashment is
determined on the basis of actuarial valuation as at the end of the
accounting period.
Payments under Voluntary Retirement Scheme are charged to revenue on
accrual basis in the year in which they become due for payment.
RESEARCH AND DEVELOPMENT
Revenue expenditure on Research and Development is charged to Profit
and Loss Account in the year it is incurred.
Capital expenditure on research and development is included under fixed
assets.
FOREIGN EXCHANGE TRANSACTIONS
The transactions in foreign currency are accounted for at the exchange
rate prevailing at the date of the transaction. Gains and losses
resulting from the settlement of such transactions and from translation
of monetary assets and liabilities denominated in foreign curriencies
are recognised in the Profit and Loss Account.
Forward exchange contracts outstanding as at the period end on account
of firm commitment/highly probable forecast transaction are marked to
market and the resultant gain/loss is dealt in the Profit and Loss
Account.
Difference between the forward exchange contract rate and the exchange
rate as at the date of transaction is recognised as income or expense
over the life of the said contract.
PROPOSED DIVIDEND
Dividend proposed by the Directors, pending approval at the Annual
General Meeting, is provided for in the books of account.
LEASES
Assets acquired by way of finance lease are capitalised at the lower of
the fair value and the present value of the minimum lease payments at
the inception of the lease term and disclosed as leased assets. Lease
payments are apportioned between finance charge and reduction of the
lease liability based on the implicit rate of return. Finance charges
are charged in the Profit and Loss Account.
Lease rentals paid in respect of operating leases are charged to Profit
and Loss Account.
Mar 31, 2010
A) Basis of Preparation of Financial Statements
The financial statements have been prepared on historical cost
convention and in accordance with generally accepted accounting
principles and applicable accounting standards.
b) Use of Estimates
Estimates and assumptions made by management in the preparation of
Financial Statements have a bearing on reported amounts of Financial
Results, Assets & Liabilities and the disclosure of Contingent
Liabilities. Actual results could differ from those estimates. Any
revision to accounting estimate is recognized prospectively.
c) Inventories
Inventories other than molasses are valued at lower of cost and net
realizable value. Cost includes taxes and duties, net of cenvat credit
entitlement. Cost of raw materials, consumables, stores and spares is
determined on weighted average basis and includes inward freight and
other direct expenses Cost of work in progress and stock in trade
includes material direct labour and production overheads Molasses is
valued at net realizable value since the cost is not determinable Slow
moving and obsolete items are adequately provided for
d) Depreciation / Amortization
Depreciation on fixed assets is provided under Straight Line Method in
accordance with Schedule XIV to the Companies Act, 1956 at the rates
specified therein.
Intangible assets are amortized equally over the estimated useful life
not exceeding three years.
e) Revenue and Expenditure Recognition
Revenue is recognised and expenditure is accounted for on their accrual
Excise duty recovery from customer is deducted from Turnover (Gross)
Excise duty differential between closing and opening stock of excisable
goods is included under Other Expenses
Revenue from domestic sale is recognized on delivery to the carrier
when risk and rewards of ownership pass on to the customer
Revenue from Export sales is recognized when risk and rewards are
passed on to the customer in accordance with the terms of the contract
Dividend income is recognized when the right to receive payment is
established
Other items of income are recognized when there is no significant
uncertainty as to measurability or collectability.
f) Fixed Assets
Fixed Assets are stated at cost less depreciation Cost includes taxes
and duties (other than excise duty for which CENVAT credit is
available) freight installation and other direct or allocated expenses
and interest on related borrowing during the period of construction ,
g) Foreign Exchange Transaction
Transactions in foreign exchange are initially recognised at the rates
prevailing on the dates of transactions
Premium or discount arising at the inception of forward contract is
amortised as income or expense over the life of the contract Exchange
difference on such contracts is recognised in the reporting period in
which exchange rates change
All monetary assets and liabilities are restated at each Balance Sheet
date using the closing rate Resultant exchange difference is recognized
as income or expense in that period
h) Government Grants
Government Grants related to revenue are recognized on accrual to match
them with related costs that are intended to be compensated Such grants
towards subsidizing specific expenses are deducted from related
expenses Other grants are shown separately under other income
i) Investments
Long-term investments are stated at cost Provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management
Current investments are valued at lower of cost and fair value.
j) Employee Benefits
Short term Employee benefits are charged at the undiscounted amount to
P&L a/c in the year in which related service is rendered.
Contributions to defined contribution schemes towards retirement
benefits in the form of provident fund and superannuation fund for the
year are charged to profit and loss account as incurred.
Liabilities in respect of defined benefit plans are determined based on
actuarial valuation made by an independent actuary using Projected Unit
Credit Method as at the balance sheet date. Actuarial gains or losses
are recognized immediately in the profit and loss account. Obligation
for leave encashment is recognized in the same manner.
Terminal benefits are recognized as expense as and when incurred.
k) Taxes on Income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of Income Tax Act
1961 Deferred tax is recognised on timing differences being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
periods Deferred tax assets in respect of unabsorbed depreciation and
carry forward of losses are recognised if there is virtual certainty
that there will be sufficient future taxable income available to
realise such losses.
l) Impairment of Assets
Impairment loss, if any, is provided to the extent the carrying amount
of assets exceeds their recoverable amount.
m) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation as a
result of a past event it is probable that an outflow of resources will
be required to settle the obligation and in respect of which reliable
estimate can be made Contingent Liabilities are disclosed unless the
possibility of any outflow in settlement is remote in the Notes on
Accounts Contingent Assets are neither recognised nor disclosed.
Outstanding contracts are reviewed at the Balance Sheet date and any
diminution in value if material is provided for or disclosed as
Contingent Liability as appropriate.
n) Derivatives
The Company enters into Futures Contracts in Sugar to hedge price risk
consistent with its Risk Management Policy. The Company does not use
these contracts for speculative purposes
Gains / losses on these futures contracts are recognized on settlement
and adjusted against sales Provision is made for losses in respect of
all outstanding derivative contracts at the balance sheet date by
marking them to market while gains are ignored ,
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