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Accounting Policies of State Trading Corporation Of India Ltd. Company

Mar 31, 2018

1. General Information

The State Trading Corporation of India Ltd. (STC) is a listed entity incorporated in India in 1956. The address of its registered office and branches are disclosed in Annual Report. STC undertakes import and export of large number of bulk commodities such as rice, wheat, sugar, pulses, edible oils, fertilizers, coal, bullion, etc. It also undertakes import of mass consumption items like wheat, sugar, pulses, etc. as and when called upon by the Government to do so. STC''s corporate office is at New Delhi. It has 11 branch offices spread across the country.

The financial statements were approved for issue by the Board of Directors on May 28th, 2018.

2. First time adoption of Indian Accounting Standards (Ind-AS)

The company has adopted Ind-AS, in accordance with Notification dated February 16, 2015 issued by Ministry of Corporate Affairs, Government of India, with effect from April 01, 2017 with a transition date on April 01, 2016.

3. Significant Accounting Policies:

3.1 Statement of Compliance and basis of preparation of Financial Statements

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind-AS) as notified by Ministry of Corporate Affairs, Government of India vide Notification dated February 16, 2015. Accounting policies have been applied consistently to all periods presented in these financial statements. The Financial Statements are prepared under historical cost convention from the books of accounts maintained under accrual basis except items covered under clause 3.5(v) and for certain financial instruments and defined benefit plan - plan assets, which are measured at fair value and in accordance with the Indian Accounting Standards prescribed under the Companies

Act, 2013.

The Financial Statements up to the year ended March 31, 2017 were prepared in accordance with Indian Generally Accepted Accounting Practice (GAAP) which include Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the act.

3.2 Application of Indian Accounting Standards (Ind-AS)

As per MCA notification dated 16.02.2015, companies whose equity or debt securities are listed or are in the process of being listed on any stock exchange in India or outside India and having net worth of less than rupees five hundred crores need to comply with the requirements of Ind AS for its accounting period beginning on or after 01.04.2017.

All amounts included in the financial statements are reported in crore of Indian rupees (Rupees in Cr.) except number of equity shares and per share data, unless otherwise stated.

3.3 Use of estimates and judgment

The preparation of financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3.4 Functional and presentation currency

These financial statements are presented in Indian rupees, the national currency of India, which is the functional currency of the Company.

3.5 Revenue Recognition

i. Trading Income

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable taking into account the amounts of trade discount and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, it is probable that economic benefits associated with the transaction will flow to the entity, the associated costs incurred or to be incurred in respect of the transaction can be measured reliably and there is no continuing management involvement with the goods. The point of transfer of risks and rewards depends upon the terms of the contract of sale with individual customers.

Revenue includes only the gross inflows of economic benefits received and receivable by the entity on its own account. Amounts collected on behalf of third parties such as sales taxes, goods and services taxes and value added taxes are not economic benefits which flow to the entity and do not result in increases in equity. Therefore, they are excluded from revenue. Similarly, in an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission

ii. Cost of Sale and Sales

a) Purchases and sales are recognized on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchases and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sale and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Business Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting company''s margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

e) In case of certain commodities, import of which is canalised through the company, imported on ''government account'' against authorization letter issued by government of India, purchase/sale is booked in the name of company.

f) High Sea Sales :

Sale during the course of import by transfer of documents of title i.e. High Sea Sale is booked upon transfer of documents of title to the goods in favour of buyer before the goods cross the customs frontiers of India.

iii. Dividend and interest income

Dividend income from investments is recognized when the Company''s right to receive payment has been established and it is probable that the economic benefits associated with the transactions will flow to the Company and the amount of income can be measured reliably.

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 at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.

iv. Claims

a. Pending settlement, certain expenses/gain/losses like dispatch earned/demurrage payable etc. are accounted for on provisional basis on the best estimates of the Management .

b. Claims are recognized in the Statement of Profit & Loss if there is no uncertainty relating to its ultimate realization. Claims recognized in the Statement of Profit & Loss but on subsequently becoming doubtful are provided for through the Statement of Profit & Loss.

v Revenue Recognition on Actual Realization

Income and expenses are accounted for on accrual basis except the following which are recognized on cash basis:-

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realizable from the items handled on Government account.

e) Liquidated damages.

f) Claims lodged with Insurance Companies.

3.6 Foreign currencies

Transactions in foreign currencies are recorded at the exchange rate prevailing at the dates of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.

Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and Loss except to the extent of exchange difference which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets, are capitalized as cost of assets. Additionally, exchange gains or losses on foreign currency borrowings taken prior to April 1, 2016 which are related to the acquisition or construction of qualifying assets are adjusted in the carrying cost of such assets.

Non-monetary items that are measured in terms of historical costs in a foreign currency are recorded using the exchange rates at the date of the transaction.

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item.(i.e. translation differences on items whose fair value gain or loss is recognized in OCI or Statement of Profit and Loss are also recognized in OCI or Statement of Profit and Loss, respectively).

3.7 Property, Plant and Equipment’s

All Property, Plant and Equipment’s (PPE) are stated at carrying value in accordance with previous GAAP, which is used as deemed cost on the date of transition to Ind AS using the exemption granted under Ind AS 101.

The cost of an item of property, plant and equipment is recognized as an asset if, and only if it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The cost of an item of PPE is the cash price equivalent at the recognition date. The cost of an item of PPE comprises:

i) Purchase price, including import duties and non-refundable purchase taxes, after deducting tax recoverable, trade discounts and rebates.

ii) Costs directly attributable to bringing the PPE to the location and condition necessary for it to be capable of operating in the manner intended by management.

iii) The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which the company incurs either when the PPE is acquired or as a consequence of having used the PPE during a particular period for purposes other than to produce inventories during that period.

Subsequent expenditure related to an item of PPE is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing items of PPE, including day-to-day repair and maintenance expenditure, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from DE recognition of items of PPE are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

The company has chosen the cost model of recognition for an entire class of PPE. After recognition as an asset, an item of PPE is carried at its cost less accumulated depreciation and accumulated impairment losses, if any.

Under previous GAAP (Indian GAAP), land and buildings, were carried in the balance sheet on the basis of fair valuations performed in 2014-15. The Company has also determined that revaluation carried in 2014-15 does not differ materially from fair valuation as at 1 April 2016 (date of transition to Ind-AS). Accordingly, the Company has not revalued the property at 1 April 2016 again. The Company regards the fair value as deemed cost at the transition date, viz., 1 April 2016.

3.8 Intangible Assets

All Intangible Assets (Computer Software''s) are stated at carrying value in accordance with previous GAAP which is used as deemed cost on the date of transition to Ind AS using the exemption granted under Ind AS 101.

Identifiable intangible assets are recognized when the company controls the asset; it is probable that future economic benefits expected with the respective assets will flow to the company for more than one economic period; and the cost of the asset can be measured reliably.

Intangible assets acquired separately are measured on initial recognition at cost. Cost comprises purchase price, import duties, non-refundable purchase tax, after deducting tax recoverable, trade discount, rebate and any cost directly attributable to bringing the asset to location and condition necessary for it to be capable of operating in the manner intended by Management. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

Intangible Assets are amortized over their useful life as determined by the Management.

Computer software’s are amortized on straight line basis over a period of two and a half year beginning from the date of capitalization.

The amortization period and the amortization method are reviewed at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed prospectively. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for prospectively

i.e. change in estimate in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

3.9 Depreciation

The depreciable amount of an item of PPE and investment properties is allocated on a straight line basis over its useful life. The residual value and the useful life of an asset are reviewed at each financial year-end. Each part of an item of PPE with a cost that is significant in relation to the total cost of the asset and useful life of that part is different from remaining part of the asset; such significant part is depreciated separately. Depreciation on all such items is provided from the date they are ''Available for Use'' till the date of sale / disposal and includes amortization of intangible assets and lease hold assets. Freehold land is not depreciated. An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Depreciation on PPE other than land is provided in accordance with useful life of assets specified in Schedule II of the Companies Act, 2013 on straight-line method except intangible assets, which are depreciated over a period of 2 V2 years.

Leasehold land is amortized over the lease period. Land on perpetual lease is not amortized.

Depreciation on additions to/deductions from PPE during the year is charged on pro-rata basis from the date the asset is available for use till it is de-recognized.

3.10 Investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). All of the Company''s property interests held under operating leases to earn rentals or for capital appreciation purposes are accounted for as investment properties.

Investment properties are measured initially at cost, including transaction costs after initial recognition, the company measures investment property at cost less accumulated depreciation and accumulated impairment loss, if any.

All investment property are stated at carrying value in accordance with previous GAAP which is used as deemed cost on the date of transition to Ind AS.

Investment properties to be depreciated in accordance to the class of asset that it belongs and the life of the asset shall be as conceived for the same class of asset by the Company.

Though investment property is measured using cost model, the fair value of investment property is disclosed in the notes. Fair values are determined on the basis of a valuation by an independent valuer who holds a recognized and relevant professional qualification and has recent experience in the location and category of the investment property being valued.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.

3.11 Impairment

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 recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

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.

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, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

At the end of each reporting period, the company 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.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

3.12 Leases

Lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

i. As a lessee

Finance leases are capitalized at the commencement of the lease. At the inception date leased property is recognized lower of fair value of the leased property or present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

ii. As a lessor

Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Lease income from operating leases shall be recognized in income on a straight-line basis over the lease term of relevant lease.

3.13 Inventories

Inventories are carried at lower of cost and net realizable value except by-products which are valued at net realizable value. Cost is determined as:

a) on yearly weighted average method in respect of inventories pertaining to own business and items handled on Govt. account under PDS or otherwise,

b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates,

c) Goods-in-transit is valued at CIF cost.

Cost of inventory comprises cost of purchases, cost of conversion and other cost incurred including manufacturing overheads net of recoverable taxes incurred in bringing them in their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Estimates of net realizable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize.

3.14 Employee benefits

i. Short term employee benefits expected to be paid are recognized at their undiscounted amount in the accounting period in which they are incurred.

ii. Post-retirement benefits:

a. Defined contribution plan: Employees'' benefit, under defined contribution plan comprising provident fund (administered through separate trust) and pension fund (administered through defined contribution to LIC) are recognized based on the undiscounted obligation of the company to contribute to the plan in the period in which the employee renders the related service. The same is paid to funds administered through separate Trust.

b. Defined Benefit plan:

a) Provision for gratuity, leave encashment and half pay leave are determined on the basis of actuarial valuation using the projected unit credit method.

b) Liability towards post-retirement medical benefit is provided based on actuarial valuation as at the year end.

c) Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of Actuarial Valuation undertaken at the year end.

Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognized in other comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to Statement of Profit or Loss.

iii. Termination Benefits:

Retirement benefit under Voluntary retirement scheme is written off in the year in which opted.

3.15 Borrowing Costs

Finance cost include exchange differences arising from foreign currency borrowing to the extent they are regarded as an adjustment to the interest cost.

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing cost directly attributable to the acquisition, construction or production of qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.

3.16 Financial instruments

Non-derivative financial instruments

Non-derivative financial instruments consist of:

a) financial assets, which include cash and cash equivalents, trade receivables, unbilled revenues, finance lease receivables, employee and other advances, investments in equity and debt securities and eligible current and non-current assets;

b) financial liabilities, which include long and short-term loans and borrowings, bank overdrafts, trade payables, eligible current and non-current liabilities.

Initial Recognition

Non derivative financial instruments are recognized initially at fair value including any directly attributable transaction costs. Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset.

Subsequent Measurement

Subsequent to initial recognition, non-derivative financial instruments are measured as described below:

a) Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents include cash in hand, at banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company''s cash management system. In the statement of financial position, bank overdrafts are presented under borrowings within current liabilities.

b) Investments in liquid mutual funds, equity securities (other than Subsidiaries, Joint Venture and Associates) are valued at their fair value. These investments are measured at fair value and changes

therein, other than impairment losses, are recognized in statement of profit and loss and presented within equity, net of taxes. The impairment losses, if any, are reclassified from equity into statement of income. When an available for sale financial asset is derecognized, the related cumulative gain or loss recognized in equity is transferred to the statement of income.

c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current financial assets, except for those maturing later than 12 months after the reporting date which are presented as non-current financial assets. Loans and receivables are initially recognized at fair value plus directly attributable transaction costs and subsequently measured at amortized cost using the effective interest method, less any impairment losses. Loans and receivables comprise trade receivables, unbilled revenues and other assets.

The company estimates the un-collectability of accounts receivable by analyzing historical payment patterns, customer concentrations, customer credit-worthiness and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required.

d) Security Deposits

Security Deposits are initially recognized at fair value plus directly attributable transaction costs and subsequently measured at amortized cost using the effective interest method, less any impairment losses.

e) Trade and other payables

Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short term maturity of these instruments.

f) Investments in Subsidiary, Associates and Joint Venture

The company accounts investment in subsidiary, joint ventures and associates at cost. An entity controlled by the company is considered as a subsidiary of the company. Investments in subsidiary company outside India are translated at the rate of exchange prevailing on the date of acquisition. Investments where the company has significant influence are classified as associates. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. A joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement is classified as a joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

Derivative financial instruments

The Company may uses derivative financial instruments, such as forward currency contracts, to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Derivatives are recognized and measured at fair value. Attributable transaction costs are recognized in statement of income as cost.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit or loss.

Impairment of financial assets

Financial assets, other than those at Fair Value through Profit and Loss (FVTPL), are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For Available for Sale (AFS) equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include:

- Significant financial difficulty of the issuer or counterparty;

- Breach of contract, such as a default or delinquency in interest or principal payments;

- It becoming probable that the borrower will enter bankruptcy or financial re-organization; or the disappearance of an active market for that financial asset because of financial difficulties.

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on individual basis. Objective evidence of impairment for a portfolio of receivables could include Company''s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of zero days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets that are carried at cost, the amount of impairment loss is measured as the difference between the asset''s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables; such impairment loss is reduced through the use of an allowance account for respective financial asset. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

De-recognition of financial assets

The Company de-recognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss.

3.17 Taxation

Tax expense

Tax expense for the period comprises current tax and deferred tax. Tax recognized in statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity in which case the tax is also recognized in other comprehensive income or equity.

1. Current tax

Current tax comprises the accepted tax payable / receivable only taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates and laws enacted or substantially enacted at the reporting date.

Current tax assets and liabilities are offset only if, the Company;

a. As a legal enforceable right to set off the recognized amounts and

b. Intends either to settle on a net basis, over to realize the assets and settle the liability simultaneously.

2. Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statement and corresponding tax basis used in computation of taxable profits.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax items are recognized in correlation to the underlying transaction either in profit or loss, other comprehensive income or directly in equity.

The break-up of the major components of the deferred tax assets and liabilities as at balance sheet date has been arrived at after setting off deferred tax assets and liabilities where the Company have a legally enforceable right to set-off assets against liabilities and where such assets and liabilities relate to taxes on income levied by the same governing taxation laws.

3.18 Current and Non Current Classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is current when it is

a. expected to be realized, or intended to sold or consumed in normal operating cycle;

b. held the asset primarily for the purpose of trading;

c. expected to be realized within twelve months after the reporting period; or

d. cash or a cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when-

a. expected to be settled in normal operating cycle;

b. held the liability primarily for the purpose of trading;

c. the liability is due to be settled within twelve months after the reporting period; or

d. there is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

3.19 Provisions, Contingent Liabilities and Contingent Assets General

Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects when appropriate, the risk specific to the liability. When discounting is used, the increase in provision due to passage of time is recognized as a finance cost.

Contingent liabilities

Contingent liabilities are not recognized but disclosed in Notes to the Accounts when the company has possible obligation due to past events and existence of the obligation depends upon occurrence or nonoccurrence of future events not wholly within the control of the company or when estimates cannot be made of the amount of the obligations.

Contingent liabilities are assessed continuously to determine whether outflow of economic resources have become probable. If the outflow becomes probable then relative provision is recognized in the financial statements.

Where an entity is jointly and severally liable for an obligation, the part of the obligation that is expected to be met by other parties is treated as a contingent liability. The entity recognizes a provision for the part of the obligation for which an outflow of resources embodying economic benefits is probable, except in the extremely rare circumstances where no reliable estimate can be made.

Contingent Assets

Contingent Assets are not recognized in the financial statements. Such contingent assets are assessed continuously and are disclosed in Notes when the inflow of economic benefits becomes probable. If it is virtually certain that inflow of economic benefit will arise then such assets and the relative income will be recognized in the financial statements.

Provision for Doubtful Debts/Advances/Claims

Provision for doubtful debts / advances /claims is made where there is uncertainty of realization irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realizable as per management estimate.

3.20 Earnings per share

A basic earnings per equity is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares.

3.21 Segment Information

The Chief Operational Decision Maker monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on their revenue growth and operating income.

The Company has identified its Operating Segments as Exports, Imports and Domestic.

The Assets and liabilities used in the Company''s business that are not identified to any of the operating segments are shown as unallocable assets/liabilities.

Exemption from retrospective application:

i) Fair Value as deemed cost exemption:

The company has elected to measure items of property, plant and equipment and intangible assets at its carrying value at the transaction date except for certain class of assets which are measured at fair value as deemed cost.

ii) Cumulative translation differences:

The company has elected to apply Ind AS 21 - The effects of changes in foreign exchange rate prospectively. Accordingly all cumulative gain/losses recognized are reset to Zero by transferring it to retained earnings.

iii) Investment in subsidiaries, joint ventures and associates:

The company has elected to measure investment in subsidiaries, joint Ventures and associate at cost.

4.1 L & DO allotted a plot of land measuring 2.599 acres for constructing of office building vide lease agreement signed on 15.12.1975. In order to execute the perpetual lease, matter has been taken up with L&DO who has indicated an expenditure of Rs 1 32.83crore on various account for facilitating execution of perpetual lease. The demand raised by L&DO is not acceptable to STC and is being disputed in view of verification of actual facts. The actual liability is therefore not ascertainable at present. Hence no provision was considered necessary.

4.2 LEASE

1. JawaharVyaparBhawan (JVB ): This has been considered as finance lease as per the last executed lease and current discussions provide for perpetuity of lease.

a. The land has been allotted by L&DO.

b. The property to be used as office building of STC and in case of any portion of building is given on rent 25% of the rental income is payable to L&DO.

c. The STC would be liable to pay ground rent on half yearly basis to L&DO.

d. The property cannot be sold/ mortgage or put to any other use without written consent of L&DO.

2. STC''s Housing Colony: This has been considered as finance lease in view of perpetuity of earlier lease deed.

a. The property has been allotted by land and Building Delhi Administration.

b. It is to be used as residential quarters for Staff.

c. STC to pay agreed ground rent annually.

3. Asian Games Village Complex (AGVC)

a. Lease deed has not been executed. However in view of perpetuity as per allotment letter, it has been considered as finance lease.

b. The property has been allotted by DDA.

c. STC to pay ground rent annually.

4.3 Gross fixed assets and accumulated depreciation includes Rs. NIL (Rs,1.48 crore) in respect of electric installation & vehicle of Chennai STC destroyed due to flood during the previous year.

4.4 The process of issuance of sub divided lease deeds in respect of STC''s Office Complex at New Delhi, residential land and flats at Mehrauli Road, Delhi separately in the name of company and its co-owners is pending. Deemed cost of land & Building is Rs,581.93 crore (Rs,581.93 crore) of office complex and Rs,1 32.36 crore (Rs,1 32.36 Crore) of Housing Colony Execution of lease deed in respect of flats at AGVC complex is pending. The Deemed cost of such flats is Rs,28.42 crore (Rs,28.42 crore).

4.5 Formal lease deed in respect of Lease hold plot (Mallet Bunder) at Mumbai Port Trust where company hastankfarm installation is yet to be executed though lease has been extended by way of allotment letter. Registration of deed of conveyance in respect of 7 flats at Mumbai is pending. Total Deemed cost of such flats is Rs,33.60 crore (Rs,33.60 crore).

4. Property, Plant and Equipment

for the year ended March 31, 201 7 (Amount in t Crore)

Explanatory Note

Fair value measurement of investment properties:

The fair value of the Company''s investment property as at 31 March 2018 has been determined by External, independent property valuers having appropriate recognized professional qualifications and recent experience in the location and category of the property being valued. The company has obtained independent valuations for its investment properties as on 31.03.2018 and fair value measurement has been categorized as level III. The fair value was determined based on the market comparable approach that reflects recent transaction prices for similar properties/capitalization of net income method, where the market rentals of all lettable units of the properties are assessed by reference to the rentals achieved in the lettable units as well as other lettings of similar properties in the neighborhood. The capitalization rate adopted is made by reference to the yield rates observed by the valuers for similar properties in the locality and adjusted based on the valuers'' knowledge of the factors specific to the respective properties/other methods. In estimating the fair value of the properties, the highest and best use of the properties is their current use.

9.1 Current Trade receivable include ''3.91 crore (''9.95 crore) towards balance 9.90% of the export proceeds to be recovered and transferred to FCI subsequent to deduction of charge, if any. Matter pending subject to resolving of the claim of GASC, Egypt amounting to USD 603,357.75 towards fumigation and other charges at port. The same has been refuted by STC as per contract terms and matters has been taken up with MEA for early resolution.

9.2 Current Trade receivables include Rs,89.75 Crore (Rs,84.96 crore) which is overdue on account of pending reconciliation issues / performance guarantee. No provision has been considered necessary since the outstanding amount is secured by corresponding credit balance available in sundry creditors.

9.3 Non-Current trade receivables includes Rs,122.95 Crore (Rs,122.95 Crore), excluding contingent assets of Rs,477.09 crore (Rs,378.73 crore) recoverable from one of the business associates for goods sold in earlier years which is overdue. STC has filed complaint for commission of offences under section 405, 406, 409, 415 & 420 read with sec. 107, 120-B, 34 of Indian Penal Code in the court of Judicial Magistrate (First Class) against the associate. As a matter of prudence, full provision for Rs,122.95 crore has already been created during the financial year 2016-17.

9.4 Non current Trade receivable include Rs,NIL (Rs,3.47 crore) being 3.5% of invoice value retained by one of the business associates as performance guarantee which is secured by corresponding credit balance available in sundry creditors.

9.5 Current Trade receivables include Rs,2076.70 crore (Rs,1904.24 crore) (excludes contingent asset Rs,248.06 crore (Rs,230.43 crore) for goods sold during previous years to one of the business associate. Dues are secured by EMD of Rs,29.73 crore and the personal guarantee of Chairman of its holding company. The business associate and its holding company (Guarantor) had signed a Conciliation Agreement dated 15.11.2011 and further settlement agreement dated 17.05.2012 with STC for payment of entire dues by 10.11.2012 under Indian Arbitration and Conciliation Act and has been held as final decree by Hon''ble Supreme Court. The case for enforcement of decree is continuing with Hon''ble Supreme Court. During the year, the business associate remitted an amount of Rs,100.00 crore with the knowledge of Hon''ble Supreme Court. Considering the status of case in the Hon''ble Supreme Court, the management is hopeful that the associate may come out with settlement proposal for repayment of entire dues to STC. Next date of hearing is 04.07.2018. Hence the debt is good and recoverable.

9.6 Non-current unsecured trade receivables include Rs,568.44 crore (Rs,568.44 crore) on account of export of pharma products to foreign buyers through Indian business associates. The Indian business associate drew bills of exchange on the company which were accepted by the company on back to back basis upon receipt of overseas buyers pre-acceptance to company''s bills of exchange. However, the foreign buyers defaulted in making payment against the export bills and have gone into liquidation. A claim of Rs,527.86 crore has been admitted by the liquidator of one of the foreign buyer i.e Loben Trading Co. Pte Ltd. . A decree of Rs,62.47 crore has been passed by Hon''ble Mumbai High Court in favour of company against the dues from one of the foreign buyer i.e Sweetland Trading Pte Ltd. As of current date, the indian business associate had gone into liquidation and official liquidator is appointed by Hon''ble High Court Mumbai. The matter is also under investigation by CBI. Considering the legal enforceability of back to back agreement and corresponding credit of Rs,568.44 crore (Rs,568.44 crore) in the opinion of management, no further provision is required for outstanding receivables of similar amount. The Indian business associate also discounted the bills of exchange conditionally accepted by the company from their bankers by utilizing their own credit limits. Legal proceedings have been initiated by the associate''s bankers against the associate and the company. Banks & Financial Institutions have filed legal suit against indian business associate before DRT making the company also a party to the case claiming Rs,476.47 crore. The company contended that under the back to back agreement, amount due to the banks are payable only after receipt of export realization from the foreign buyers. However as a matter of prudence, amount of Rs,476.47 crore (Rs,476.47 crore) as claimed has been shown as contingent liability.

9.7 Non-Current trade receivables include Rs,9.83 crore (Rs,9.83 crore) (net of provision for diminution in value of stock), excluding contingent assets of Rs,19.80 crore (Rs,14.41 crore) recoverable from one of the business associates for goods sold in earlier years. The overdue is secured by pledge of stocks in favour of STC. Upon non-payment of overdue receivables, legal actions have been initiated against the business associate u/s 138 of Negotiable Instruments Act, 1881 and civil hearings are in progress. Another PSU company Metal and Scrap Trading Corporation (MSTC) had made a claim in respect of ownership of some of the pledged stock sold by the STC to business associate. As per the direction of the Mumbai High Court, the STC and MSTC have jointly appointed approved valuer to carry out the valuation of the stock. As on balance sheet date, the pledged stock has been valued at Rs,9.95 crore (Rs,9.83 crore) by approved valuer. The Mumbai High Court has directed to dispose off the cargo with the condition that the proceeds be kept in Escrow Account or with some Bank FD till the ownership of cargo is decided. As per the direction of Mumbai High Court, STC jointly with MSTC is in the process of appointment of auctioneer and is awaiting further direction from Hon''ble Mumbai High Court. Considering the value of pledge stock, in the opinion of management, no further provision is considered necessary.

9.8 Non-Current trade receivables includes Rs,17.28 crore (Rs,17.28 crore), excluding contingent assets of Rs,126.00 crore (Rs,101.94 crore) recoverable from one of the business associates for goods sold in earlier years. Criminal complaints u/s 138 of Negotiable Instruments Act, 1881 and contempt application filed before HonRs,ble High Court, New Delhi are under progress against the business associate. As a matter of prudence, provision for full amount of Rs,17.28 crore has been created during year 2016-17. Arbitration proceedings are also going on before ICA, New Delhi. Further, STC has filed application with National Company Law Tribunal (NCLT) under Insolvency & Bankruptcy Code (IBC), 2016 against business associate. STC is in the process of reviewing reply of business associate and its impact of ongoing recovery proceedings. Company is expecting settlement offer in view of criminal proceedings against business associate.

9.9 Non-Current trade receivables include Rs,787.65 crore (Rs,787.65 crore), excluding contingent assets of Rs,221.97 crore (Rs,198.25 crore) under the Credit Linked Insurance Scheme (CLIS) for export of gold jewellery etc. to foreign buyers through various Indian business associates. Against said trade receivables, corresponding balances of Rs,342.19 crore (Rs,342.19 crore) is payable to business associates under agreed arrangement leaving net receivable of Rs,445.46 crore (Rs,445.46 crore) and is disclosed under long term doubtful trade receivable. Since the foreign buyers defaulted in making payment and as per the terms & conditions of agreement, the post dated cheques given by the business associates were encashed and were subsequently dishonoured by payee banks. Accordingly action against the business associates has been initiated u/s 138 of Negotiable Instruments Act, 1881 and proceedings are in progress. Summary suits & winding up petitions have been filed by the STC against the business associates for recovery of amount due before Hon''ble High Court Mumbai. As on date, winding up orders have been passed against most of the business associates. The matter is also under investigation by CBI. The legal proceedings are being pursued by STC. However, as a matter of prudence and measure of abandon caution, full provision of Rs,445.46 crore (Rs,445.46 crore) has been made in the earlier years to the extent of doubtful net trade receivables. Considering the legal enforceability of back to back agreement and corresponding credit of Rs,342.19 crore (Rs,342.19 crore), in the opinion of management, no further provision is required for outstanding receivables of similar amount.

9.10 Other trade receivables include Rs,41.92 crore (Rs,41.92 crore) excluding contingent assets of Rs,149.64 crore (Rs,112.10 crore) on account of export of agri commodities to foreign buyers through Indian business associates against which credit balance of Rs,41.92 crore (Rs,41.92 crore) under back to back arrangement is available under trade payable. The foreign buyer defaulted in making payment and upon non-receipt of the dues from business associate, the Company has initiated necessary legal steps against business associate for recovery. The matter is also under investigation by CBI. Considering the legal enforcibility of the agreement and corresponding credit of Rs,41.92 crore (Rs,41.92 crore), no further provision is considered necessary.

9.11 Other trade receivables include Rs,10.21 crore (Rs,10.21 crore) recoverable from MARKFED, Govt. of Maharashtra (GOM) towards supply of RBD Palmolien under PDS Scheme during the year 2010-11 and 2011-12. All amounts relating to this supply were received by Company except the outstanding balance of Rs,10.21 crore (Rs,10.21 crore) pending for final reconciliation at the end of MARKFED and Govt. of Maharashtra. Matter is being constantly taken up with GOM and MARKFED for recovery. However, as a matter of prudence, provision of Rs,10.21 crore has been made during the previous year 2016-17.

9.12 Non-Current trade receivables includes Rs,3.22 crore (Rs,3.22 crore), excluding contingent assets of Rs,4.11 crore recoverable from one of the business associates towards import of pet bottle material which are pledged with the company. The company has initiated necessary legal steps to recover the dues , a provision of Rs,1.76 crore (Rs,1.76 crore) has been made to the extent dues not covered by pledged stock.

9.13 Non-current trade receivables includes Rs,0.02 crore (Rs,48.57 crore), excluding contingent assets of Rs,111.66 crore (Rs,90.30 crore) recoverable from one of the business associate for goods sold in earlier years. The Arbitration case filed before ICA is being pursued vigorously, as result of which Rs,48.55 crore have been received during the year 2017-18 from the associate. For the balance amount an application under section 9 of Arbitration and Conciliation Act 1996 is filed before Hon''ble Delhi High Court. Criminal proceedings u/s 138 of NI Act are also being pursued vigorously

9.14 Non-current trade receivables includes Rs,5.63 crore (Rs,5.63 crore), excluding contingent assets of Rs,7.36 crore (Rs,5.05 crore) recoverable from one of the business associate for goods sold in earlier years. The company has filed arbitration proceedings against the business associate at ICC Kolkata, which is under process. The company has also initiated the legal proceedings for recovery u/s 138 of the Negotiable Instrument Act against the business associate. 2682 MT stock of raw jute valued Rs,7.52 crore (approx.) was pledged by the associate against outstanding. After physical verification of the stocks on 04.04.2017 by High Court appointed Receiver, stock of only 156.92 MT was found. STC lodged FIR no. 160/17 against officials of business associates. Charge sheet No. 88/18 dated 28.02.2018 has been filed by the Investigating Officer at the Hon''ble Howrah Court which is pending trial. As a matter of prudence, full provision for Rs,5.63 crore has been created duri ng the current year.

9.15 Trade receivables include an amount of Rs,3.44 crore (Rs,8.14 crore) recoverable from one of the business associates for sale of edible oil. The dues are secured by pledged stock valuing approx Rs,12.14 crore as per valuation report. In view of above, no provision is required in the books of accounts.

9.16 Trade receivables includes an amount of Rs,10.53 crore (Rs,10.53 crore), excluding contingent assets of Rs,16.15 crore (Rs,9.86 crore) recoverable from one of the business associate for sale of met coke. A provision of Rs,3.58 crore (Rs,3.33 crore) has been made against the dues. The balance dues are secured by mortgage of free hold land. For recovery of the balance dues, claim has been filed with NCLT through IRP The company has filed legal and criminal case against the business associate which are being followed up.

9.17 Trade receivables, loans & advances and other current & non-current assets include Rs,9.27 crore (Rs,21.22 crore) which are under dispute/litigation etc. In some cases, there are corresponding payments withheld or receivables relating to commodities handled on account of Government of India. Hence no provision is considered necessary.

11.1 Claim recoverable includes Rs,7.32 crore (Rs,7.33 crore) and Rs. 8.29 crore (Rs,8.22 crore) due from CCIC and HHEC respectively on account of common maintenance charges, property tax. Etc. These are Government of India Undertakings. The Company has received Rs,2.68 crore from CCIC and Rs,1.17 crore from HHEC during the year 2017-18. Further, provision of Rs,4.79crore has been created against recoverable from HHEC and for the balance, matter has been taken up at higher level and the company is hopeful of receiving its entire dues from above organization.

11.2 Claims recoverable (Govt. of India) include Rs,73.55 crore (Rs,73.55 crore) towards import of pulses under Govt. A/c during the years 2006-07 to 2010-11 which was fully provided during the year 2013-14. As approved by Department of Consumer Affairs, reimbursement limit was enhanced from 15% to 20% of the landed cost and period of claim was extended up to 30.09.2011 (i.e. by 6 months). During the financial 2015-16 and 201617,. STC have received an amount of Rs,41.40 crore from DOCA. Further, the reimbursement of remaining claims beyond 20% is being taken up with the DOCA by STC, on actual basis.

11.3 Current Claim recoverable includes Rs,5.48 crore (Rs,Nil) recoverable from a supplier of Urea imported on Government Account. Upon inspection of Urea at discharge port, some variations in particle size were observed as compared to agreement provisions. As per the agreement the supplier is liable to pay to STC the claims on account of quality variations. Considering the current status, no provision is required.

11.4 Non Current Claim Recoverable includes Rs,3.92 Crore (Rs,3.92 Crore) excluding contingent asset of Rs,37.61 crore (Rs,30.99 crore) recoverable from one of the business associate .The company has filed a legal case against the associate for recovery of the said amount. As per the legal opinion obtained the ultimate outcome of the case may be in favour of company. Hence no provision has been made. Simultaneously there is counter claim against company for an amount of Rs,39.41 crore (Rs,39.41 crore) by an associate. Legal proceedings are going on, As per the legal opinion obtained the ultimate outcome of the case may be in favour of company. Hence no liability has been recognized.

22.1 Deposit includes Rs,3.69 Crore (Rs,4.19 Crore) from STCL Limited, a wholly owned subsidiary company.

22.2 On the basis of judgment dated 03.02.2016 of Honorable Supreme Court , NDMC vide Assessment orders dated 30.12.2016 and dated 02.01.2017 has re-assessed the rate-able value of Jawahar Vyapar Bhawan. As per the assessment order, STC has to pay Rs,80.03 Crore. However, STC has made an interim payment of Rs. 20.00 Crore and Rs,2.12 Crore towards revised property tax return for the F.Y. 2016-17.STC represented to NDMC for review of the property tax assessment and also filed two appeals before the District Judge, Patiala House, New Delhi to get the property tax assessment done correctly by NDMC since an incorrect property tax assessment has been done by NDMC As the matter is sub-judice, against NDMC property tax bill dated 10.12.2017 for the year 2017-18, an amount of Rs. 12.69 crore (Rs,0.98 & 0.76 recoverable from CCIC & HHEC ) is provided towards unpaid property tax in the current year accounts.

22.3 The company has not serviced the due interest and principal on borrowings of Rs,157.30 crore for more than 90 days from one Bank, therefore the bank had classified borrowings of Rs,157.30 crore to STC account as Non Performing Assets (NPA) during current Financi


Mar 31, 2016

2.4 Bonus reserve represents "Set On" available under the Payment of Bonus Act, 1965.

2.5 Deductions from Bonus Reserve represents amount transferred to Statement of Profit & Loss being "Set Off" as per the Payment of Bonus Act, 1965.

10.1 Interest accrued and due on borrowings includes Rs. 43.80 crore (Rs. 44.70 crore) against which bank guarantee of Rs. 56.00 crore (Rs. 44.70 crore) have been issued to Bank.

10.2Deposit includes Rs. 4.19 Crore (Rs. 4.24 Crore) from wholly owned subsidiary company.

10.3The liability for CSR outstanding as on 31.03.2016 for the earlier years budgeted amount is Rs. 0.22 crore (Rs. 0.41 crore), out of which unspent fund of Rs. 0.05 crore is outstanding for more than 3 years.

10.4Gross amount required to be spent by the company during the year Rs. NIL (0.40 crore)

10.5Other liabilities include an amount of Rs. 0.03 crore (negligible) appearing as unclaimed dividend for the year 2008 09 (Interim) which could not be transferred to Investor Education & Protection Fund (IEPF) as on 31.03.2016. The said amount has been deposited in April 2016.

1 2.1 The process of issuance of sub divided lease deeds in respect of STC''s Office Complex at New Delhi, residential land and flats at Mehrauli Road, Delhi separately in the name of company and its co owners is pending. Original cost of land is Rs. 1.04 crore (Rs. 1.04 crore) and of Building for housing colony and office complex is Rs. 1 8.66 crore (Rs. 18.66 crore). Gross Block after revaluation of such land is Rs. 548.33 crore (Rs. 548.33 crore) and of such Building is Rs. 1 85.91 crore (Rs. 1 85.65 crore).

Execution of lease deed in respect of flats at AGVC complex is pending. The original cost of such flats is Rs. 1.25 crore (Rs. 1.25 crore) and the Gross Block after revaluation is Rs. 28.42 crore (Rs. 28.42 crore).

1 2.2 Formal lease deed in respect of Lease hold plot where company has tank farm installation at Mumbai Port Trust is yet to be executed though lease has been extended

by way of allotment letter. Registration of deed of conveyance in respect of 7 flats at Mumbai is pending. Total original cost of such flats is Rs. 0.41 crore (Rs. 0.41 crore) and revalued amount is Rs. 33.1 9 crore (Rs. 33.1 9 crore).

12.3 The company has revalued its immovable properties during 2014-15 consequently an amount of Rs. 914.25 crore was credited to revaluation reserve. As a result of revaluation additional depreciation amounting Rs. 1 2.89 crore (Rs. 16.74 crore) is transferred from revaluation reserve to general reserve during the year.

1 2.4 Cost of flats include cost of land also where flats are purchased or constructed on land. Depreciation has been charged on total value of flats in absence of breakup of value between land and building.

12.5 Gross fixed assets and accumulated depreciation includes Rs. 1.06 crore and Rs. 0.42 crore respectively in respect of electric installation & vehicle of Chennai branch destroyed due to flood during the year against which an adhoc claim of Rs. 0.26 crore has been received from insurance company and the same is kept as sundry deposit till the final settlement of claim.

16.1 Other investment includes Rs. 2.82 crore (Rs. 2.82 crore) in its 100% subsidiary company namely STCL. The subsidiary company was having negative net worth as on 31st March 2016 (Audited). Full provision for diminution in the value of investment has been made in the earlier years.

17.1 In accordance with the Accounting Standard 22 on "Accounting for Taxes on Income" , the company has Deferred Tax Assets (Net) of Rs. 73.01 crore (Rs. 73.01 crore). As a matter of prudence & conservative principle of accounting, Deferred Tax Asset (Net) relating to losses and other temporary differences amounting to Rs. 183.41 crore (Rs. 188.75 crore) has not been recognized.

18.1 Trade advances include a sum of Rs. 87.39 crore (Rs. 87.39 crore) recoverable from one of the parties, against which the company has initiated legal actions including criminal proceedings. In this regard, full provision has been made in earlier years. The Company was successful in getting arbitration award for Rs. 110.00 crore in its favour along with 12% interest per annum from 1st May 2006 till realization of award. In order to secure above award amount, the company sought the detail of assets from party through court which have been submitted by the party. The company is in process of verifying the status and valuation of the properties. Next date of hearing is 19.07.2016.

19.1 Long term unsecured trade receivables include Rs. 568.44 crore (Rs. 568.44 crore) on account of export of pharma products to foreign buyers through Indian business associates against which credit balance of Rs. 568.44 crore (Rs. 568.44 crore) is available under trade payables. As corresponding credit of Rs. 568.44 crore (Rs. 568.44 crore) is available under back to back arrangement, no provision is considered necessary. The local business associates drew bills of exchange which were accepted by the company on back to back basis. The foreign buyer defaulted in making payment against the export bills and one of the business associates having outstanding of Rs. 536.86 crore (Rs. 536.86 crore) has gone into liquidation and litigation proceedings have been initiated by the company as well as by Indian business associates and their bankers. A claim of Rs. 527.86 crore (Rs. 527.86 crore) has been admitted by the liquidator. Regarding other business associates, decree have been awarded for Rs. 63.00 crore by Hon''ble Mumbai High Court in favour of the company. Indian business associates also discounted the bills of exchange conditionally accepted by the company from their bankers by utilizing their own credit limits. Banks & Financial Institutions have filed legal suit against business associate before Hon''ble High Court Mumbai and DRT making company also a party to the case claiming Rs. 476.47

NOTE NO. 19

OTHER NON CURRENT ASSETS (Contd.)

Crore. However the company contended that under the Agreement amount to Indian business associates is payable only after receipt from foreign buyer. "

19.2 Long term unsecured trade receivables include Rs. 787.65 crore (Rs. 788.47 crore) under the Credit Linked Insurance Scheme (CLIS) for export of gold jewellery etc. to foreign buyers through Indian business associates against which corresponding credit balances of Rs. 342.18 crore (Rs. 342.18 crore) are available under back to back arrangement, leaving net receivable of Rs. 445.47 crore (Rs. 446.29 crore). The foreign buyer defaulted in making payment and accordingly action against the business associates has been initiated u/s 138 of Negotiable Instruments Act, 1881 and civil hearings are in progress. The matter is being pursued legally. However, as a matter of prudence and measure of abundant caution, full provision of Rs. 445.47 crore (Rs. 446.29 crore) has been made in the earlier years to the extent of net trade receivables.

19.3 Long term unsecured trade receivables include Rs. 41.92 crore (Rs. 41.92 crore) on account of export of agro commodities to foreign buyers through Indian business associates against which credit balance amounting Rs. 41.92 crore (Rs. 41.92 crore) is available under trade payable. The foreign buyer defaulted in making payment and upon non-receipt of the dues from the business associate; the company has initiated necessary legal steps for its recovery. As corresponding credit of Rs. 41.92 crore (Rs. 41.92 crore) is available under back to back arrangement, no provision is considered necessary.

19.4 Long term trade receivables include Rs. 12.05 crore (Rs. 11.85 crore) recoverable from one of the business associate for goods sold in the earlier years. The entire overdue is secured by duly insured pledged stocks in favour of the company valuing Rs. 10.19 crore under CWC custody. Further, cases u/s 138 of Negotiable Instrument Act, 1881 for Rs. 8.62 crore have been filed against the associate. Provision for Rs. 1.86 crore has been created during the current financial year.

19.5 Long term trade receivable includes Rs. 3.22 crore (Rs. 3.21 crore) recoverable from one of the associates towards import of pet bottle material, which are pledged with the company. Steps have been taken to recover the dues. A provision of Rs. 1.75 crore (Rs. 1.28 crore) has been made to the extent dues not covered by pledged stock.

19.6 Long term trade receivables include Rs. 58.55 Crore (Rs. 58.55 crore) recoverable from one of the business associates for goods sold in earlier years. The entire balance overdue is secured by pledge of stocks in favour of the company. The company has invoked risk sale clause of the agreement and twice floated tenders for sale of pledged stocks -both faced interim injunction for stay, out of which the first one got vacated. The company has also filed winding up petition and criminal complaints i.e. cases u/s 138 of Negotiable Instruments Act, 1881 and contempt application for misleading the court against the business associate. The company has also filed transfer application before the Hon''ble Supreme Court of India for transfer of all the pending cases since there is an admitted liability by business associate as per the arbitration clause of the MOA dated 17.07.2006, which describes the jurisdiction as Delhi.

19.7 Claims recoverable (Govt. of India) include Rs. 100.70 crore (Rs. 114.95 crore) towards import of pulses under Govt. A/c during the year 2006-07 to 2010-11 which was fully provided during the year 2013-14. As approved by Ministry of Consumer Affairs, reimbursement limit has been enhanced from 15% to 20% of the landed cost, resulting in admissible claims to the tune of Rs. 60.47 crore against which Rs. 14.25 crore has already been received during F.Y. 2015-16. Balance of Rs. 46.22 crore is expected to be received during F.Y. 2016-17. In addition, claim of Rs. 18.80 crore on account of interest deducted by Ministry is also being taken up vigorously. Further, the reimbursement of remaining claims beyond 20% is being taken up with the Ministry of Consumer Affairs by the company.

19.8 Long Term unsecured trade receivables include Rs. 10.21 crore (Rs. 10.21 crore) recoverable from MARKFED, Govt. of Maharashtra (GOM) towards supply of RBD Palmolien under PDS Scheme during the year 2010-11 and 2011

12. All amounts relating to this supply were received by company except the outstanding balance of Rs. 10.21 crore (Rs. 10.21 crore) pending for final reconciliation at their end. Matter is being constantly taken up with GOM and MARKFED for recovery. The company is confident of recovering the dues in due course of time and hence no provision is considered necessary.

19.9 Claim recoverable includes Rs. 2.13 crore due from CCIC and HHEC which are Govt. of India undertakings on account of common maintenance charges. The company has received Rs. 1.18 Crore from CCIC and Rs. 0.55 crore from HHEC during the year 2015-16. Further, the matter has been taken up at higher level and the company is hopeful of receiving its entire dues from above organization. Hence, no provision in respect of above is considered necessary.

22.1 Trade receivables include Rs. 122.77 crore (Rs. 122.46 crore) recoverable from one of the business associate for goods sold in the earlier years which are overdue. The entire amount is secured by duly insured pledged stocks to the company procured under advance license (with export obligation) for a value of Rs. 264.47 crore under custody of CWC. Negotiation with a PSU for selling of the stocks, which has acquired the plant and machinery, is under progress. The business associate is under liquidation. The company is a secured creditor and where company has also solely staked claim on an industrial (mortgaged) land of about 90 acres at Alibagh, Maharashtra before Hon''able Gujarat High Court. In view of above, no provision is considered necessary.

NOTE NO. 22

TRADE RECEIVABLES (Contd.)

22.2 Trade receivables include Rs. 1740.42 crore (Rs. 1640.53 Crore) for goods sold during previous years to one of the business associates. Dues are secured by EMD of Rs. 29.73 crore, corporate guarantee of its holding company and the personal guarantee of Chairman of its holding company. The business associate and its holding company (Guarantor) had signed a Conciliation Agreement dated 15.11.2011 and further settlement agreement dated 17.05.2012 with the company for payment of entire dues by 10.11.2012 under Indian Arbitration and Conciliation Act and is legally enforceable as decree. The business associate has confirmed on various occasions its commitment to repay the entire dues along with interest. The case for enforcement of decree is continuing with Hon''ble Supreme Court. During the year, the business associate remitted an amount of Rs. 144.90 crore on the direction of Hon''ble Supreme Court. Considering the financial strength of guarantors and status of case in the Hon''ble Supreme Court, the debt has been considered good and fully recoverable.

22.3 Trade receivable includes Rs. 20.56 crore (Rs. 59.23 crore) recoverable from one of the business associate for goods sold in the earlier years. The amount is secured by pledge of stocks of Rs. 4.17 crore. Additionally, company is also holding duly insured stock of coal valuing approx. Rs. 39 crore under CWC custody of a family concern of the associate. On dishonour of cheques, legal action u/s 138 of Negotiable Instrument Act, 1881 has been initiated for an amount of Rs. 85 crore wherein the summons has been issued. The company''s receivables are being monitored by court and the company has received Rs. 10.50 crore during the current year. Court has directed the company and the associate to submit their up to date account for recovery of balance dues. In view of above, no provision is considered necessary.

22.4 Trade receivables include an amount of Rs. 10.28 crore (Rs. 12.95 crore) recoverable from one of the business associates for sale of coal. The business associate has paid an amount of Rs. 0.10 crore during the year. The entire dues are secured by mortgage of free hold land. The business associate has undertaken to repay all dues along with interest on receipt of CDR package. The company has filed legal and criminal case against party which are being followed up vigorously. In view of this, no provision is considered necessary.

22.5 Trade receivable includes Rs. 96.99 Crore (Nil) being 3.5% of invoice value retained by one of the business associates as Performance Bank Guarantee (PBG) which is secured by corresponding credit balance available in sundry creditors.

25.1 Claims recoverable include Rs. 2.72 crore (Rs. 8.01 crore) towards import of pulses on behalf of different State Governments for sale under PDS scheme. This is towards carrying costs for delayed lifting of pulses by State Govts. (UP Govt. Rs. 2.61crore, Punjab Govt. Rs. 0.06 crore, HP Govt. Rs. 0.04 crore). Claim for the same was lodged during the year 2011-12 and the same is being followed up with the State Govt. Since, there is credit balance available from UP Govt. Rs. 8.64 crore, Punjab Govt. Rs. 0.20 crore, HP Govt. Rs. 0.06 crore, no provision is considered necessary.

27.1 Other income include interest of Rs. 224.33 crore (Rs. 203.61 crore) and prior period interest income includes Rs. 4.00 crore (Nil) recoverable from one of the business associates with whom conciliation agreement has been signed which has been held as final by Hon''ble Supreme Court. Dues are secured by corporate guarantee of its holding company and the personal guarantee of Chairman of its holding company. The business associate has confirmed on various occasions its commitment to repay the entire dues along with interest. The case for enforcement of decree is continuing with Hon''ble Supreme Court. During the year, the business associate remitted an amount of Rs. 144.90 crore on the direction of Hon''ble Supreme Court. Considering the financial strength of guarantors and status of case in the Hon''ble Supreme Court, the debt has been considered good and interest accrued thereon is recognised as income.

29.1 Exchange fluctuation-loss (net) of Rs. 28.20 crore (loss Rs. 26.20 crore) incudes loss Rs. 27.14 crore (loss Rs. 25.98 crore) on account of business associates for which necessary adjustment has been made in Purchases/ Sales Account and to that extent there is no impact on the profit for the year.

31.1 As per Accounting Standard-15(Revised) "Employee Benefits", the disclosure as defined in the Accounting Standard are given in Note No. 53.

31.2 Value of Bonus paid Rs. 18,531 (Rs. 5,306).

31.3 Whole time directors are allowed use of company car for non-duty journey up to 1000 km per month on payment of Rs. 2000 per month as per DPE OM dated 21st January, 2013.

31.4 Actual medical expenses incurred towards retired employees including retired directors is Rs. 9.91 crore (Rs. 8.67 crore) and provision for post-retirement medical benefits on actuarial basis is Rs. 2.37 crore (Rs. 0.61 crore).


Mar 31, 2015

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis. GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts ) Rules, 2014, the provisions of the Act (to the extent notified) 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.

2. REVENUE RECOGNITION - INCOME/EXPENSES

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investments.

f) Liquidated damages.

g) Claims lodged with Insurance Companies.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Statement of Profit & Loss. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS - TANGIBLE

Fixed Assets other than land & building are stated at historical cost less accumulated depreciation and impairment. Land & building are stated at revalued amount less amortization/depreciation.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets (computer software), resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method over a period of two and a half years beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

a. Depreciation on tangible fixed assets other than land is provided in accordance with useful life of assets specified in Schedule II of Companies Act, 2013 on straight-line method.

b. Leasehold land is amortised over the lease period. Land on perpetual lease is not amortised.

c. Depreciation on additions to/deductions from fixed assets during the year is charged on pro-rata basis from/up to the date the asset is available for use/disposed.

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

a) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

b) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on Govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates, (c) Goods–in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after the balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALE AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchases and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sale and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Business Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Statement of Profit & Loss if there is no uncertainty relating to its ultimate realization. Claims recognized in the Statement of Profit & Loss but subsequently becoming doubtful are provided for through the Statement of Profit & Loss.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a) Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b) Employees'' benefit, under defined contribution plan comprising provident fund and pension fund are recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to funds administered through separate Trust.

c) Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of Actuarial Valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on Actuarial Valuation as at the year end.

d) Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of Actuarial Valuation undertaken at the year end.

e) Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS/ADVANCES/CLAIMS

Provision for doubtful debts / advances /claims is made where there is uncertainty of realization irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realizable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets up to the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Minimum Alternative Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward.

c) Deferred tax is recognized, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW STATEMENT

a) Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

b) Cash Flow Statement is prepared in accordance with the on Indirect Method prescribed in Accounting Standard – 3 on Cash Flow Statement issued by ICAI.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation, and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote and,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2014

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

f) Liquidated damages

g) Claims lodged with Insurance Companies

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs. 5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

Depreciation rates adopted by the Company are as under:

Rates adopted Rates as per Schedule by the XIV to the Assets Company Companies Act, 1956 (SLM basis) (SLM)

1.Building - Factory 3.34% 3.34% - Other than Factory 2.50% 1.63%

2.Road, Culverts, Sewerage and Water Supply System 2.50% 1.63%

i) Railway siding 12.5% 4.75%

ii) Plant & Machinery 10% 4.75%

iii) Furniture fittings 10% 6.33%

iv) Air-conditioning & Office Equipments 12.50% 4.75%

v) Computer, data processor and communication equipments 40% 16.21%

vi) Vehicle 20% 9.50%

vii) Warehouse 4% 1.63%

viii) Land-lease hold Over lease period -

ix) Capital items purchased upto Rs. 5000/- 100% 100% x) Assets having W.D.V upto Rs. 5000/-at the beginning of the year. 100% -

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Provision for doubtful debts / advances /claims is made where there is uncertainty of realization irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realizable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2013

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

f) Liquidated Damages

g) Claims lodged with Insurance Companies

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs.5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier''s credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government''s Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ''Other Income (Trade)''. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company''s contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Provision for doubtful debts / advances / claims is made where there is uncertainty of realisation irrespective of the period of its dues. For outstanding over three years (except government dues), provision is made unless the amount is considered realisable as per management estimate.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2012

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs.5000/- are depreciated at 100% retaining a nominal value of Rs.1/-.

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value and impairment loss is charged to Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in- transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier's credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government's Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head 'Other Income (Trade)'. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company's contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Debtors, Loans and Advances wherever considered doubtful are fully provided for.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2011

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/ disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/ disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs. 5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods-in- transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on supplier's credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Government's Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head 'Other Income (Trade)'. No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Company's contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Debtors, Loans and Advances wherever considered doubtful are fully provided for.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/ payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated.

Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.


Mar 31, 2010

1. FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost basis and conform to generally accepted accounting practices and policies in India. These statements have been prepared in accordance with applicable mandatory Accounting Standards and relevant presentation requirements under the Companies Act, 1956 except specified otherwise.

2. BASIS OF ACCOUNTING

Income and expenses are accounted for on accrual basis except the following which are recognised on cash basis:

a) Claims for refund of excess insurance premium on open policies.

b) Interest on loans to subsidiaries and on delayed payments of sales/ trade finance where realization is doubtful.

c) Export benefits.

d) Interest realisable from the items handled on Government account.

e) Dividend on investment.

3. USE OF ESTIMATES

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

4. TRANSACTIONS IN FOREIGN CURRENCIES

a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of the transaction.

b) All monetary items denominated in foreign currencies at the year-end are translated at year-end rates. In case of monetary items where the closing rate is unrealistic, translation rate is estimated based on past trend and expected realization/disbursement.

c) Non-monetary items other than fixed assets denominated in foreign currencies are reported on exchange rate at the transaction date. Fixed Assets are reported on exchange rate as at the transaction date as increased/reduced by the exchange difference arising on the corresponding foreign currency liability.

d) Income or expense on account of exchange difference on settlement or translation is recognized in the Profit & Loss Account. Premium or Discount on forward exchange contracts is recognized on pro-rata basis with reference to the life of the forward contract except for forward covers taken at the behest of Business Associates, in which case the premium or discount is recognized at the inception of the forward exchange contract on matching principles since the corresponding transactions with the Associate are carried out based on the forward rate.

5. FIXED ASSETS

Fixed Assets are stated at historical cost less accumulated depreciation and impairment.

6. INTANGIBLE ASSETS

Cost incurred on Intangible assets, resulting in future economic benefits are capitalized as Intangible Assets and amortized on straight-line method beginning from the date of capitalization.

7. DEPRECIATION AND AMORTISATION

Fixed Assets other than land are depreciated on straight-line method on pro-rata basis with reference to the month of acquisition/disposal at rates approved by the Board of Directors based on technical evaluation of estimated useful life, which are equal to or higher than those provided in Schedule XIV to the Companies Act, 1956. Premium on Leasehold land is amortised over the lease period. Assets with cost/written down value at the beginning of the year upto Rs. 5000/- are depreciated at 100% retaining a nominal value of Re. 1/-.

Depreciation rates adopted by the Company are as under:

8. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value and impairment loss is charged to Profit and Loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.

9. INVESTMENTS

(i) Long term investments are carried at cost. When there is a decline (other than temporary) in the value of long term investments, the carrying amount is reduced to recognise the decline.

(ii) Current investments are carried at the lower of cost and fair value.

10. INVENTORIES

Inventories are carried at lower of cost and net realizable value. Cost is determined as (a) on weighted average method in respect of inventories pertaining to own business and items handled on govt. account under PDS or otherwise, (b) on actual cost as per specific identification method in respect of items handled on back to back arrangement with business associates. (c) Goods–in-transit valued at CIF cost. Cost includes cost of procurement (excluding element of self-insurance, if any), duties, taxes and cess and all direct and indirect costs incurred to bring the stocks to the condition as at the time of valuation. Net realizable value is the estimated price realizable in the ordinary course of business less further costs to be incurred for completing the sale. Estimates of net realisable value are based on the most reliable evidence available at the time of estimation as to the amount the inventories are expected to realize and also take into consideration fluctuations of price or other factors affecting the realizable value including events occurring after balance sheet date to the extent that such events confirm the conditions existing at the balance sheet date.

11. COST OF SALES AND SALES

a) Purchases and sales are recognised on the performance of contracts.

b) In cases where contracts provide for crystallization of price or for price adjustment on a subsequent date, corresponding purchase and sales are booked on the basis of expected settlement price and any differential determined subsequently is accounted for at the time of final settlement. Cost of Sales and Sales are accounted for considering all costs and elements including usance interest on suppliers credit as provided for in the contract and incurred till the date of recognition including expenses incurred by and surplus accruing to Associates as per contract terms.

c) In respect of back-to-back / tripartite / joint-execution / third party arrangements, purchases and sales are booked on the basis of documents furnished by the Business Associate as adjusted for the fixed trade margin accruing to the Company.

d) Sales include transactions under third party arrangements and counter-trade obligations met by exports through the Company.

e) In case of dealings on behalf of the Government (including consignments under Governments Gift / Grant Scheme), purchases and sales and incidental expenses or income thereof are accounted for under the respective head of accounts. Surplus or deficit to Government Account, after adjusting service margin accruing to the Company, is adjusted in Cost of Sales or Trade Income respectively.

12. CLAIMS

Claims are recognized in the Profit & Loss Account if there is no uncertainty relating to its ultimate realization. Claims recognized in Profit & Loss Account but subsequently becoming doubtful are provided for through the Profit & Loss Account.

13. SELF INSURANCE

The Company covers certain commodities handled by it on selective basis under its self-insurance scheme. The surplus of premia realised to cover the risk of commodities over the related claims and reinsurance premia paid to outside agencies to cover the risk of claims is included under the head ‘Other Income (Trade). No provision is made in respect of unexpired risks and claims are accounted as expenditure when reported.

14. EMPLOYEE BENEFITS

a. Short term employee benefits are recognized at their undiscounted amount in the accounting period in which they are incurred.

b. Employees benefit under defined contribution plan comprising provident fund, recognized based on the undiscounted obligation of the company to contribute to the plan. The same is paid to a fund administered through a separate trust.

c. Retirement Benefits:

i) Companys contributions to Gratuity Trust Fund and liability towards Leave Encashment and Half Pay Leave are provided on accrual basis. Gratuity, Leave Encashment and Half Pay Leave are determined on the basis of actuarial valuation undertaken as at the year end.

ii) Liability towards Post-retirement Medical Benefits is provided based on actuarial valuation as at the year end.

d. Other Long Term Benefits:

Other long term benefits i.e. Long Service Award are determined on the basis of actuarial valuation undertaken at the year end.

e. Termination Benefits:

Retirement benefits under voluntary retirement scheme is written off in the year in which opted.

15. PROVISION FOR DOUBTFUL DEBTS

Debtors, Loans and Advances wherever considered doubtful are fully provided for.

16. RESERVES

a) Exchange Fluctuation Reserve represents exchange fluctuation gains on treasury operations set aside to meet future losses, if any.

b) Export/Import Contingency Reserve is appropriated out of the profits to meet unforeseen losses in respect of export/import operations.

17. EXHIBITIONS AND FAIRS

The cost of samples and other items acquired for various exhibitions and fairs in India and abroad are charged to revenue in the year in which incurred.

18. EXPENSES ON COMMON SERVICES

Recovery of expenses in respect of certain common services between the Company and its erstwhile subsidiaries is based on turnover/contract concluded/occupancy/ utilisation of manpower as is considered appropriate to the nature of expense recovered.

19. BORROWING COSTS

Borrowing costs attributable to acquisition or construction of qualifying assets upto the date the assets are ready for their intended use are capitalized as part of cost of such asset. All other borrowing costs are recognized as expense of the year in which incurred.

20. TAXES ON INCOME

a) Current tax is provided on the basis of taxable income determined under the Income Tax Act, 1961.

b) Deferred tax is recognised, subject to the consideration of prudence, on timing difference. Deferred Tax Assets and Liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

21. CASH FLOW FROM OPERATING ACTIVITIES

Cash Flows relating to trade finance provided by Business Associates or the Company for execution of trading contracts including utilization of the finance towards fixed deposits with banks for opening letters of credit in favour of suppliers and refund/payment/recovery of interest thereon as per the terms of Contract are treated as part of Operating Activities.

22. PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if the following conditions are satisfied:

i) The company has a present obligation as a result of past event,

ii) A probable outflow of resources is expected to settle the obligation and

iii) The amount of the obligation can be reliably estimated. Contingent liability is disclosed, if

i) The company has a possible obligation as a result of past event,

ii) The Probability of out flow of resources is not remote,

iii) No reliable estimation of such obligation is possible.

Contingent assets are neither recognized nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date.

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