Mar 31, 2016
{1} COMPANY INFORMATION:
REI Agro Limited (âthe Company7â) is a public company domiciled in India. It is incorporated under the Companies Act, 1956 and its shares are listed in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Company has been the global leader in the processing of Basmati rice and market its products under the Brand name âRaindropsâ
{2} SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES:
The Accounting Policies set out below have been consistently applied by the Company and are consistent with those used in the previous year.
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
These financial statements have been prepared and presented on the accrual basis of accounting and comply with the Accounting Standards referred to in section 133 of the Companies Act,2013(hereinafter to be referred as âthe actâ) read with the rule 7 of Companies (Accounts) Rules,2014 and other accounting principles generally accepted in India, to the extent applicable. The financial statements are presented in millions of Indian Rupees and rounded off to one decimal unless otherwise stated.
B. USE OF ESTIMATES:
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.
C. CURRENT AND NON-CURRENT CLASSIFICATION:
All Assets & Liabilities have been classified as current or noncurrent as per the Companyâs normal operating cycle and other criteria. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current & non-current classification of Assets & Liabilities. Current Liabilities include the current portion of non-current financial Liabilities.
D. TANGIBLE ASSETS:
a) Freehold and Leasehold Land are stated at cost of acquisition inclusive of incidental expenses thereto.
b) Fixed Assets are recorded at cost of acquisition or construction inclusive of inward freight, duties, taxes and other directly attributable incidental expenses relating thereto less accumulated depreciation/ amortization and impairment loss, if any.
c) Tangible Assets not ready for the intended use, if any, as on the date of Balance Sheet are disclosed as âCapital Work in Progressâ
d) When assets are sold or discarded, their cost and accumulated depreciation are removed from fixed asset and any gain/ loss resulting there from is reflected in the statement Profit & Loss.
E. INTANGIBLE ASSETS
Intangible Assets is recorded at its cost and related expenses thereon and amortized on straight line basis over its estimated useful life which is reviewed by the management at each Balance Sheet date.
F. DEPRECIATION / AMORTISATION
a) Cost of Lease hold land is amortized over the period of respective leases.
b) Freehold land is not depreciated.
c) Depreciation is provided on the basis of Useful Life of the assets as specified in Schedule II of the Companies Act, 2013.
G. BORROWING COST
Borrowing Costs directly attributable to the acquisition and construction of an asset which takes a substantial period of time to get ready for its intended use are capitalized as a part of the cost of such assets, until such time the asset is substantially ready for its intended use. All other borrowing costs are usually recognized in the Statement of Profit and Loss in the period they occur but wherever it is not provided it has been reported by way of Notes. Borrowing Costs consist of Interest and other costs incurred in connection with borrowing of funds.
H. INVESTMENTS:
a) Investments are either classified as current or long term based on Managementâs intention at the time of purchase. Current Investments are carried at the lower of cost or fair value of each investment individually.
b) Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered to be other than temporary in nature.
c) Investment made in overseas subsidiary have been valued at cost at the respective exchange rate prevailing on the date of investments.
I. INVENTORIES:
Inventories are valued as under:
a) Raw Materials are valued at lower of cost or net realizable value.
b) Finished goods are valued at cost or net realizable value whichever is lower. Cost includes cost of raw materials, direct, indirect and finance cost which are incurred to bring the inventories to their present location and condition.
c) By-Products are valued at estimated realizable value.
d) Stores & Spares, Packing Material etc, are valued at lower of cost and net realizable value.
J. CASH AND CASH EQUIVALENTS:
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash in hand, demand deposits with banks and other short-term highly liquid investment that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. The company also maintains account in foreign currency with banks which has been built up out of the proceeds from Foreign Currency Convertible Bonds (FCCB) since 2009 and this is revalued at the exchange rate prevailing on the balance sheet date.
K. REVENUE RECOGNITION:
a) Domestic sale is recognized on dispatch to customers and are recorded net of trade discounts, rebates, etc. Export sale is recognized on the date, company ships the goods as evidenced by their bill of lading. Sale of energy is accounted on electricity generation plus claims for short generation wherever applicable and includes income from Lease Rent of WTGâs.
b) Sale of Certified Emission Reduction (CER) is recognized as income on the delivery of the CER to the customerâs account as evidenced by the receipt of confirmation of execution of delivery instructions.
c) Interest income is recognized on time proportion base taking into account the amount outstanding and the rates applicable.
d) Profit / loss on sale of investments is booked on the basis of contract notes/delivery of shares etc.
e) Dividend income is recognized when the right to receive dividend is established.
f) Income from operating lease is recognized on accrual basis.
g) Other items of revenue are recognized in accordance with the Accounting Standard (AS-9). Accordingly, wherever there are uncertainties in the ascertainment / realization of income, the same is accounted when it is measured with certainty.
L. OPERATING LEASE:
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating lease. Lease payments are recognized as an expense in the Statement of Profit and Loss over the lease term.
M. FOREIGN CURRENCY TRANSACTIONS:
a) Initial Recognition :
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of the transaction.
b) Conversion :
Foreign currency monetary items are reported using the closing rate. Non Monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
c) Exchange Differences:
Exchange difference arising on the settlement /conversion of monetary items, are recognized as income or expenses in the year in which they arise.
N. ACCOUNTING OF CLAIMS:
a) Claims receivable are accounted at the time when certainty of receivable is established.
b) Claims raised by the Government Authorities regarding taxes & duties, which are disputed by the company, are accounted based on the merits of each claim.
O. EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
The undiscounted amount of short term employee benefit expected to be paid in exchange for the services rendered by employee is recognized during the year when the employee remain under the service. This benefit includes salary, wages, short term compensatory absences and bonus.
b) Long Term Employee Benefits:
i) Defined Contribution Scheme- This benefit includes contribution to Employeeâs State Insurance Corporation {ESI} and Provident Fund Contribution {PF} to the Regional Provident Fund Commissioner. These contributions are defined as an expense in the Statement Profit & Loss as and when such contributions are due.
ii) Defined Benefit Scheme- For Gratuity and compensated leave-
The Company records its liability for Gratuity and compensated leave to its employees based on actuarial valuation, at Balance Sheet date at the end of financial year using the projected unit credit method. Effects of changes in actuarial valuations are immediately recognized in the Statement of Profit & Loss. The retirement benefit obligation recognized in the balance sheet represents value of defined benefit obligation as reduced by the fair value of planned assets. Actuarial gains/losses are recognized in full during the year in which they occur.
P. CASH FLOW STATEMENT:
Cash flows are reported using the indirect method, whereby Profit Before Tax (PBT) is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities of the company is segregated based on the available information.
Q. TAXATION:
a) Current tax is determined on the profit of the year in accordance with the provisions of Income Tax Act, 1961.
b) Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted at the balance sheet date and is recognized on timing differences that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.
R. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:
a) Provision is created when there is a present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of obligation. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
b) Contingent liability is disclosed, unless the possibility of an outflow of resources embodying the economic benefit is remote.
c) Contingent Assets are neither recognized nor disclosed in Financial Statements.
S. EARNINGS PER SHARE:
Basic earnings per Share (EPS) is computed by dividing, the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted Earnings per Share are computed after adjusting the effects of all dilutive potential equity shares, if any.
T. IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at end of the Financial year on balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized whenever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is the greater of the assetâs net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Previously recognized impairment loss is further provided or reversed depending on changes in circumstances.
Mar 31, 2012
A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The Financial Statements have been prepared and presented under the
historical cost convention using the accrual basis of accounting and
comply with all mandatory Accounting Standards {AS} as specified in the
Companies (Accounting Standard) Rules 2006 , the relevant provisions of
Companies Act, 1956 and guidelines issued by the Securities and
Exchange Board of India (SEBI). 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.
b) USE OF ESTIMATES:
The preparation of Financial Statements is in conformity with the
Generally Accepted Accounting Principles {GAAP} requires management to
make estimates and assumptions that affects the amounts reported in the
financial statements and accompanying notes. Although these estimates
are based on management's best knowledge of current events and actions
the Company may undertake in future, actual results ultimately may
differ from the estimates. Any revision to the accounting estimates is
recognized in current and future periods.
c) FIXED ASSETS:
a) Free Hold Land / Lease Hold Land is stated at cost of acquisition
inclusive of incidental expenses thereto.
b) Fixed Assets are recorded at cost of acquisition or construction
inclusive of inward freight, duties, taxes and other directly
attributable incidental expenses relating thereto less accumulated
depreciation.
c) Capital Work-in-Progress includes Advances paid to acquire Fixed
Assets and the cost of Fixed Assets together with incidental Expenses
and attributable interest on borrowed Fund for the purpose of acquiring
these assets that were not put to use for their intended use.
d) When assets are sold or discarded, their cost and accumulated
depreciation are removed from fixed asset and any gain/loss resulting
therefrom is reflected in Profit & Loss account.
d) INTANGIBLE ASSETS
Acquired Intangible Assets represented Software is recorded at its
acquisitions price and related expenses thereon is amortised over its
estimated useful life on straight-line basis, commencing from the date,
the asset is available for its use. The Management has estimated the
useful life for such software as 3 {Three} Years. The useful life of
the Assets shall be reviewed by the management at each Balance Sheet
Date.
e) DEPRECIATION / AMORTISATION
a) Cost of Lease Hold land is amortized over the period of the lease on
Straight-Line Method.
b) Depreciation is provided on the Straight Line Method (SLM) as per
rates specified in Schedule XIV of the Companies Act, 1956 (as
amended).
f) INVESTMENTS:
Investments are either classified as current or long term based on
Management's intention at the time of purchase. Current Investments are
carried at the lower of cost and fair value of each investment
individually. Cost of Overseas investments comprises the Indian Rupees
value of the consideration paid for the investment translated at the
exchange rate prevalent at the date of investment. Long Term
Investments are carried at cost after deducting provision, if any, for
diminution in value considered to be other than temporary in nature.
g) INVENTORIES:
Inventories are valued as under:
a) Raw Materials are valued at lower of cost computed on FIFO basis and
net realizable value less VAT where applicable.
b) Finished goods are valued at cost (less realizable value of
by-products) or net realizable value whichever is lower.
c) Stores & Spares, Packing Material etc, are valued at cost less VAT
wherever applicable.
d) By-Products are valued at estimated realizable value.
h) REVENUE RECOGNITION:
a) Domestic sale is recognized on dispatch to customers and are
recorded net of trade discounts, rebates, etc. Export sale is
recognized on the date, Company ships the goods as evidenced by their
bill of lading. Sale of energy is accounted on actual net billing plus
claims for short generation wherever applicable and includes income
from Lease Rent of WTG.
b) Export incentives are recognized when the right to receive credit as
per the terms of incentive is established in respect of Export made and
when there is no significant uncertainty regarding the ultimate
collection of the relevant Export Proceeds.
c) Sale of Certified Emission Reduction (CER) is recognized as income
on the delivery of the CER to the customer's account as evidenced by
the receipt of confirmation of execution of delivery instructions.
d) Other items of revenue are recognized in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment / realization of income, the same is
accounted when it is measured with certainty.
e) Interest income is recognized on time proportion base taking into
account the amount outstanding and the rates applicable.
f) Profit / Loss on sale of investments is booked on the basis of
contract notes/delivery of shares.
g) Dividend income is recognized when the right to receive Dividend is
established.
h) Income from Operating Lease is recognized as rentals, as accrued
during the year.
i) GOVERNMENT GRANTS:
a) Government Grants and subsidies from the Government are reconginsed
when there is reasonable certainty that the grant/subsidy will be
received and all attaching conditions will be complied with.
b) Capital Grant/subsidy against specific fixed assets is set off
against the cost of those fixed assets. j) FOREIGN CURRENCY
TRANSACTIONS:
a) Foreign currency transactions are recorded by applying the relevant
exchange rates. Exchange differences arising on foreign currency
transactions settled during the year are recognized in the Profit &
Loss account for the year.
b) All foreign currency denominated monetary Assets & Liabilities are
translated at the Exchange rates prevailing on the Balance Sheet date.
The resultant exchange differences are recognized in the Profit & Loss
Account for the year.
c) The Company uses Derivative financial instruments such as forward
exchange contracts to hedge its risk associated with foreign currencies
fluctuations. Profit / loss on derivatives and financial instruments
such as forward exchange contracts and interest rate swap to hedge
risks associated with foreign currency fluctuations and interest rates
are considered as revenue items on maturity of the contracts.
d) Gain or Loss on restatement of forward exchange contracts for
hedging underlying outstanding if any, at the Balance Sheet date are
recognized for the year in which it occurs. The Premium or Discounts on
such contracts is recognized in the Profit
& Loss account over the period of the contract.
k) ACCOUNTING OF CLAIMS:
a) Insurance claims receivable are accounted at the time when certainty
of receivable is established.
b) Claims raised by the Government Authorities regarding taxes & duties
which are disputed by the company are accounted based on the merits of
each claim.
l) BORROWING COST:
Borrowing costs are recognized as an expense in the year in which they
are incurred, except cost that are directly attributable to the
acquisition, construction or installation of qualifying assets which
are either kept in Capital work in progress or being capitalized as
part of the cost of the asset.
m) SECURITIES ISSUE EXPENSE:
Right Issue, & Debenture issue expenses incurred are adjusted against
the Securities Premium Account in the year in which they are incurred
in terms of Section 78 (2) of the Companies Act, 1956. n) IMPAIRMENT
OF ASSETS:
The company tests on annual basis the carrying amount of the asset for
impairment so as to determine -
a) The provision for impairment loss, if any, or
b) The reversal, if any, required on account of impairment loss
recognized in previous periods. o) EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
The undiscounted amount of short term employee benefit expected to be
paid in exchange for the services rendered by employee is recognized
during the year when the employee remain under the service. This
benefit includes salary, wages, short term compensatory absences and
bonus.
b) Long Term Employee Benefits:
i) Defined Contribution Scheme- This benefit includes contribution to
Employee's State Insurance Corporation {ESI} and Provident Fund
Contribution {PF} to the Regional Provident Fund Commissioner. These
contributions are defined as an expense in the Profit & Loss account as
and when such contributions are due.
ii) Defined Benefit Scheme- For Gratuity and compensated leave- The
Company records its liability for Gratuity and compensated leave to its
employees based on actuarial valuation as at the balance Sheet date,
using the projected unit credit method. Effects of changes in actuarial
valuations are immediately recognized in the Profit & Loss account.
The retirement benefit obligation recognized in the balance sheet
represents value of defined benefit obligation as reduced by the fair
value of planned assets. Actuarial gains/losses are recognized in full
during the year in which they occur.
p) PROPOSED DIVIDEND:
Dividend proposed by the Board of Directors is adjusted in Statement of
Profit & loss under the head Reserve & Surplus, pending approval at the
Annual General Meeting.
q) CASH FLOW STATEMENT:
Cash flows are reported using the indirect method, whereby Profit
Before Tax (PBT) is adjusted for the effects of transactions of a
non-cash nature, any deferrals or accruals of past or future operating
cash receipts or payments and items of income or expenses associated
with investing or financing cash flows. The cash flow from operating,
investing and financing activities of the company is segregated.
r) TAXATION:
Current Tax is determined on the profit of the year in accordance with
the provisions of Income Tax Act, 1961. Deferred tax is calculated at
the tax rates and laws that have been enacted or substantively enacted
by the Balance sheet date and is recognised on timing differences that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets, subject to consideration of
prudence, are recognized and carried forward only to the extent that
they can be realized. s) PROVISIONS, CONTINGENT LIABILITIES &
CONTINGENT ASSETS:
a) Provision is created when there is present obligation as a result of
past events that probably requires an outflow of resources and a
reliable estimate can be made of the amount of obligation.
b) Contingent Liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
c) Contingent Assets are neither recognized nor disclosed in Financial
Statements.
t) EARNING PER SHARE:
Basic Earning Per Share (EPS) is computed by dividing, the net profit
for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Diluted
Earnings Per Share are computed after adjusting the effects of all
dilutive potential equity shares, if any.
Mar 31, 2011
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared and presented under the
historical cost convention using the accrual basis of accounting and
comply with all mandatory Accounting Standards [AS] as specified in the
Companies (Accounting Standard) Rules 2006 and the relevant provisions
of Companies Act, 1956.
2. USE OF ESTIMATES:
The preparation of financial statements is in conformity with the
Generally Accepted Accounting Principles {GAAP} requires management to
make estimates and assumptions that affects the amounts reported in the
financial statements and accompanying notes. Although these estimates
are based on management's best knowledge of current events and actions
the Company may undertake in future, actual results ultimately may
differ from the estimates. Any revision to the accounting estimates is
recognized in current and future periods.
3. FIXED ASSETS:
a) Free Hold Land / Lease Hold Land is stated at cost of acquisition
inclusive of incidental expenses thereto.
b) Fixed Assets are recorded at cost of acquisition or construction
inclusive of inward freight, duties, taxes and other directly
attributable incidental expenses relating thereto less accumulated
depreciation.
c) Capital Work-in-Progress includes Advances paid to acquire Fixed
Assets and the cost of Fixed Assets together with incidental Expenses
and attributable interest on borrowed Fund for the purpose of acquiring
these assets that were not put to use for their intended use.
d) When assets are sold or discarded, their cost and accumulated
depreciation are removed from fixed asset and any gain/loss resulting
therefrom is reflected in Profit 8c Loss account.
4. INTANGIBLEASSETS
Acquired Intangible Assets represented Software is recorded at its
acquisitions price and related expenses thereon is amortised over its
estimated useful life on straight-line basis, commencing from the date,
the asset is available for its use. The Management has estimated the
useful life for such software as 3 (Three) Years.The useful life of the
Assets shall be reviewed by the management at each Balance Sheet Date.
5. DEPRECIATION /AMORTISATION
a) Cost of Lease Hold land is amortized over the period of the lease on
straight-line Method.
b) Depreciation is provided on the Straight Line Method (SLM) as per
rates specified in Schedule XIV of the Companies Act, 1956 (as
amended).
6. INVESTMENTS:
Long Term Investments are carried at cost after deducting provision, if
any, for diminution in value considered to be other than temporary in
nature.
7. INVENTORIES:
Inventories are valued as under:
a) Raw Materials are valued at lower of cost computed on FIFO basis and
net realizable value less VAT where applicable.
b) Finished goods are valued at cost (less realizable value of
by-products) or net realizable value whichever is lower.
c) Stores & Spares, Packing Material etc, are valued at cost less VAT
wherever applicable.
d) By-Products are valued at estimated realizable value.
8. REVENUE RECOGNITION:
a) Domestic sale is recognized on dispatch to customers and are
recorded net of trade discounts, rebates, etc. Export sale is
recognized on the date, Company ships the goods as evidenced by their
bill of lading. Sale of energy is accounted on actual net billing plus
claims for short generation wherever applicable and includes income
from Lease Rent of WTG.
b) Export incentives are recognized when the right to receive credit as
per the terms of incentive is established in respect of Export made and
when there is no significant uncertainty regarding the ultimate
collection of the relevant Export Proceeds.
c) Sale of Certified Emission Reduction (CER) is recognized as income
on the delivery of the CER to the customer's account as evidenced by
the receipt of confirmation of execution of delivery instructions.
d) Other items of revenue are recognized in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment / realization of income, the same is
accounted when it is measured with certainty.
e) Interest income is recognized on time proportion base taking into
account the amount outstanding and the rates applicable.
f) Profit / Loss on sale of investments is booked on the basis of
contract notes/delivery of shares.
g) Dividend income is recognized when the right to receive Dividend is
established.
h) Income from Operating Lease is recognized as rentals, as accrued
during the year.
9. FOREIGN CURRENCY TRANSACTIONS:
a) Foreign currency transactions are recorded by applying the relevant
exchange rates. Exchange differences arising on foreign currency
transactions settled during the year are recognized in the Profit &
Loss account for the year.
b) All foreign currency denominated monetary Assets 8c Liabilities are
translated at the Exchange rates prevailing on the Balance Sheet date.
The resultant exchange differences are recognized in the Profit & Loss
Account for the year.
c) The Company uses Derivative financial instruments such as forward
exchange contracts to hedge its risk associated with foreign currencies
fluctuations. Profit / loss on derivatives and financial instruments
such as forward exchange contracts and interest rate swap to hedge
risks associated with foreign currency fluctuations and interest rates
are considered as revenue items on maturity of the contracts.
d) Gain or Loss on restatement of forward exchange contracts for
hedging underlying outstanding if anyat the Balance Sheet date are
recognized for the year in which it occurs. The Premium or Discounts on
such contracts is recognized in the Profit & Loss account over the
period of the contract.
10. ACCOUNTING OF CLAIMS:
a) Insurance claims receivable are accounted at the time when certainty
of receivable is established.
b) Claims raised by the Government Authorities ' regarding taxes &
duties which are disputed by the company are accounted based on the
merits of each claim.
11. BORROWING COST:
Borrowing costs are recognized as an expense in the year in which they
are incurred, except cost that are directly attributable to the
acquisition, construction or installation of qualifying assets which
are either kept in Capital work in progress or being capitalized as
part of the cost of the asset.
12. SECURITIES ISSUE EXPENSE:
Foreign Currency Convertible Bonds (FCCBs), Qualified Institutional
Placement (QIP's) , Right Issue, &, Debenture issue expenses incurred
are adjusted against the Securities Premium Account in the year in
which they are incurred in terms of Section 78 (2) of the Companies
Act, 1956.
13. IMPAIRMENT OF ASSETS:
The company tests on annual basis the carrying amount of the asset for
impairment so as to determine -
a) The provision for impairment loss, if any, or
b) The reversal, if any, required on account of impairment loss
recognized in previous periods.
14. EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
The undiscounted amount of short term employee benefit expected to be
paid in exchange for the services rendered by employee is recognized
during the year when the employee remain under the service. This
benefit includes salary, wages, short term compensatory absences and
bonus.
b) Long Term Employee Benefits:
i) Defined Contribution Scheme- This benefit includes contribution to
Employee's State Insurance Corporation {ESI} and Provident Fund
Contribution {PF} to the Regional Provident Fund Commissioner. These
contributions are defined as an expense in the Profit & Loss account as
and when such contributions are due.
ii) Defined Benefit Scheme- For Gratuity and compensated leave-
The Company records its liability for Gratuity and compensated leave to
its employees based on actuarial valuation as at the balance Sheet
date, using the projected unit credit method. Effects of changes in
actuarial valuations are immediately recognized in the Profit & Loss
account. The retirement benefit obligation recognized in the balance
sheet represents. value of defined benefit obligation as reduced by the
fair value of planned assets. Actuarial gains/losses are recognized in
full during the year in which they occur.
15. PROPOSED DIVIDEND:
Dividend proposed by the Board of Directors is provided for in the
books of accounts pending approval at the Annual General Meeting.
16. TAXATION:
Current Tax is determined on the profit of the year in accordance with
the provisions of Income Tax Act, 1961. Deferred tax is calculated at
the tax rates and laws that have been enacted or substantively enacted
by the Balance sheet date and is recognised on timing differences that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets, subject to consideration of
prudence, are recognized and carried forward only to the extent that
they can be realized.
17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:
a) Provision is created when there is present obligation as a result of
past events that probably requires an outflow of resources and a
reliable estimate can be made of the amount of obligation.
b) Contingent Liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
c) Contingent Assets are neither recognized nor disclosed in Financial
Statements.
18. EARNING PER SHARE:
Basic Earning Per Share (EPS) is computed by dividing, the net profit
for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Diluted
Earning per Share are computed after adjusting the effects of all
dilutive potential equity shares, if any.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The financial statements have been prepared and presented under the
historica) cost convention using the accrual basis of accounting and
comply with all mandatory accounting standards as specified in the
Companies (Accounting Standard) Rules 2006 and the relevant provisions
of Companies Act, 1956.
2. USE OF ESTIMATES:
The preparation of financial statements is in conformity with the
generally accepted accounting principles which requires management to
make estimates and assumptions that affects the amounts reported in the
financial statements and accompanying notes. Although these estimates
are based on managements best knowledge of current events and actions
the Company may undertake in future, actual results ultimately may
differ from the estimates.
3. FIXED ASSETS:
a) Free Hold Land/ Lease Hold Land is stated at cost of acquisition
inclusive of incidental expenses thereto.
b) Fixed Assets are recorded at cost of acquisition or construction
inclusive of freight, duty, taxes and incidental expenses relating
thereto less accumulated depreciation.
c) Project under commissioning and Capital Work-in-Progress are carried
at cost comprising Direct Cost, Advance to Supplier and related
incidental Expenses and attributable Interest on Borrowed Fund for
project, if any.
d) When assets are sold or discarded, their cost and accumulated
depreciation are removed from fixed asset and any gam/loss resulting
there from is reflected in Profit & Loss account.
4. DEPRECIATION:
a) Cost of Lease Hold land is amortized over the year of the lease on
straight-line basis.
b) Depreciation on Fixed Assets has been charged in accordance with
Straight Line Method (SLM) as per rates specified in Schedule XIV of
the Companies Act, 1956 (as amended) on a pro-rata basis.
5. INVESTMENTS:
Long Term Investments are carried at cost after deducting provision, if
any, for diminution in value considered to be other than temporary in
nature.
6. INVENTORIES: Inventories are valued as under:
a) Raw Materials are valued at lower of cost computed on FIFO basis and
net realizable value less VAT where applicable.
b) Finished goods are valued at cost (less realizable value of
by-products) or net realizable value whichever is lower.
c) Stores & Spares, Packing Material etc. are valued at cost less VAT
wherever applicable.
d) By-Products are valued at estimated realizable value.
7. FOREIGN CURRENCY TRANSACTIONS:
a) Foreign currency transactions are accounted at the exchange rates
prevailing on the date of the relevant transactions. Gain/ Losses
arising out of fluctuation in the exchange rate are recognized in
Profit & Loss account in the year in which they arise
b) Monetary items (i.e. receivables, payable, loans etc.) denominated
in foreign currencies are reported using the closing exchange rate on
Balance Sheet date.
c) In case of items covered by the foreign exchange rates, the
difference between the year end rates and the rate on the date of the
contract is recognized as exchange difference and the premium paid on
forward contract is recognized over the life of the contract. Any
profit or loss arising on cancellation or renewal of forward exchange
contract is recognized as income or as expense of the year.
d) Profit/ loss on derivatives and financial instruments such as
forward exchange contracts and interest rate swap to hedge risks
associated with foreign currency fluctuations and interest rates are
considered as revenue items on maturity of the contracts.
8. REVENUE RECOGNITION:
a) Domestic sales are accounted when goods are dispatched to customers
and are recorded net of trade discounts, rebates, etc. Export sales
are recognized on the date, Company ships the goods as evidenced by
their bill of lading. Sale of energy is accounted on actual net billing
plus claims for short generation wherever applicable and includes
income from Lease Rent of WTG.
b) Export entitlements in respect of Export made under Duty Entitlement
Pass Book (DEPB) Scheme are recognized in the Profit & Loss account
when the right to receive credit as per the terms of the scheme is
established.
c) Sale of Certified Emission Reduction (CER) is recognized as income
on the delivery of the CER to the customers account as evidenced by
the receipt of confirmation of execution of delivery instructions.
d) Other items of revenue are recognized in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realization of income, the same is
accounted when it is measured with certainty.
e) Inrerest on Fixed Deposits is booked on rime proportion basis taking
into account the amount invested and the rate of interest.
f) Profit/Loss on sale of investments is booked on the basis of
contract notes for sale of shares.
g) Dividend income on Investments is accounted for when the right to
receive the payment is established.
9. ACCOUNTING OF CLAIMS:
a) Insurance claims receivable are accounted at the time when certainty
of receivable is established.
b) Claims raised bv the Government Authorities regarding taxes & duties
which are disputed bv the company are accounted based on the merits of
each claim.
10. BORROWING COST:
Borrowing costs are recognized as an expense in the year in which they
are incurred, except cost that are directly attributable to the
acquisition, construction or installation of qualifying assets which
are capitalized as part of the cost of the asset.
11. SECURITIES ISSUE EXPENSE:
Foreign Currency Convertible Bonds (FCCBs), Qualified Institutional
Placement (QIPs) & Debenture issue expenses incurred arc adjusted
against the Securities Premium Account in the year in which thev are
incurred in terms of Section 78 (2) of the Companies Act, 1956.
12. IMPAIRMENT OF ASSETS:
The company tests on annual basis the carrying amount of the asset for
impairment so as to determine -
a) The provision for impairment loss, if any, or
b) The reversal, if any, required on account of impairment loss
recognized in previous years.
13. EMPLOYEE BENEFITS:
a) Short Term Employee Benefits:
The undiscounted amount of short term employee benefit expected to be
paid in exchange for the services rendered by employee is recognized
during the year when the employee remain under the service. This
benefit includes salary, wages, short term compensatory absences and
bonus.
b) Long Term Employee Benefits:
i) Defined Contribution Scheme- This benefit includes contribution to
Employees State Insurance Corporation and provident fund scheme. The
contribution is recognized during the year in which the employee
rendered service.
ii) Defined Benefit Scheme- For defined benefit scheme the cost of
providing benefit is determined using the projected unit credit method
with actuarial valuation being carried out at each balance sheet date.
The retirement benefit obligation recognized in the balance sheet
represents value of defined benefit obligation as reduced bv the fair
value of planned assets. Actuarial gains and losses are recognized in
full during the year in which they occur.
14. PROPOSED DIVIDEND:
Dividend proposed bv the Board of Directors is provided for in the
books of accounts pending approval at the Annual General Meeting.
15. TAXES ON INCOME:
Income Tax expense comprises current tax as per Income Tax Act, 1961,
and deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the year)
and the corresponding deferred tax liabilities or assets are recognized
using the tax rates that have been enacted or substantively enacted by
the Balance Sheet date. Deferred tax assets are recognized only to the
extent, there is reasonable certainty that the assets can be realized
in future; however where there is unabsorbed depreciation or carried
forward losses under taxation laws, deferred tax assets are recognized
only if there is a virtual certainty of realization of such assets.
Deferred tax assets are reviewed at each Balance Sheet date and written
down to reflect the amount that is reasonably/ virtually certain (as
the case may be) to be realized.
16. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS:
a) Provision is created when there is present obligation as a result of
past events that probably requires an outflow of resources and a
reliable estimate can be made of the amount of obligation.
b) Contingent Liability is disclosed, unless the possibility of an
outflow of resources embodying the economic benefit is remote.
c) Contingent Assets are neither recognized nor disclosed in Financial
Statements.
17. EARNING PER SHARE:
Basic Earning Per Share (EPS) is computed by dividing, the net profit
for the year attributable to equity shareholders bv the weighted
average number of equity shares outstanding during the year. Diluted
Earning per Share are computed after adjusting the effects of all
dilutive potential equity shares, if any.
18. INCOME FROM OPERATING LEASE:
It is recognized as rentals, as accrued over the year of lease.
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