Accounting Policies of The Sirpur Paper Mills Ltd. Company

Mar 31, 2014

A. Accounting concepts

The financial statements are prepared under the historical cost convention except for certain fixed assets which has been revalued, in accordance with the generally accepted accounting principles in India and in accordance with accounting standards as notified by Companies (Accounting Standards) Rules, 2006.

b. Use of estimates

The preparation 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 recognised in the period in which the results are known/materialised.

c. Fixed assets

Fixed assets are valued at revalued cost less depreciation, pre-operative expenses including trial run expenses (net of revenue) are capitalised. Borrowing costs during the period of construction is added to the cost of eligible fixed assets.

d. Investments

Long-term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and market value.

e. Inventories

Inventories are valued at lower of cost and net realisable value. Cost of finished goods and goods in process are ascertained on weighted average basis. Cost of raw material, chemicals and stores and spares comprises purchase price (Net of Cenvat and other deductible taxes wherever applicable), freight and handling, duties and other attributable costs and is valued on weighted average basis.

f. Sales

Income from sales is accounted for ex-mills/ex-depots on despatch. The sale value is inclusive of excise duty, but is exclusive of sales tax and is net of trade discount.

g. Employee benefits

Liability for employee benefits, both short term and long term for present and past services which are due as per terms of employment are accounted in accordance with Accounting Standard 15 ''Employee benefits'' as notified by Companies (Accounting Standards) Rules, 2006.

The Company has a defined contribution plan for its employees'' retirement benefits comprising of provident fund, superannuation fund, employees'' state insurance fund and employees'' pension scheme (under the provisions of Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company contributes to provident fund, superannuation fund and employees'' state insurance fund and employees'' pension scheme and has no further obligations to the plan beyond its contribution.

The Company has a defined benefit plan comprising of gratuity fund, compensated absences and long term service award. The lability for the gratuity, compensated absence and long term service award is determined on the basis of independent actuarial valuation. Liability for gratuity is partly funded with a recognized gratuity fund managed by Life Insurance Corporation of India.

h. Research & Development expenses

Revenue expenditure on research and development is charged to Statement of Profit and Loss of the year in which it is incurred. Capital expenditure on research & development is included in the fixed assets.

i. Government grants

Grants received against specific fixed assets are adjusted to the cost of asset and revenue grants are recognised in the Statement of Profit and Loss in accordance with the related scheme in the period in which these are accrued and are deducted in reporting the related expenses.

j. Depreciation

Fixed assets are depreciated on straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions is worked out on pro-rata basis.

Assets revalued have been depreciated on straight line basis over the balance useful lives estimated by the valuer and the excess of depreciation so calculated over the depreciation calculated above is transferred from revaluation reserve.

k. Foreign currency transaction

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of year are translated at year end rates.

The difference in translation of monetary assets and liabilities and realised gain/losses to foreign exchange transactions are recognized in the Statement of Profit and Loss.

l. Deferred tax

Deferred tax is accounted for by computing the tax effect of timing differences that arise during the year and reverse in subsequent periods.

m. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

n. Impairment of assets

The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment, if any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the assets net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values.

An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount, impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

o. Leases

Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

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Mar 31, 2013

A. Accounting concepts

The financial statements are prepared under the historical cost convention except for certain fixed assets which has been revalued, in accordance with the generally accepted accounting principles in India and in accordance with accounting standards as notified by Companies (Accounting Standards) Rules, 2006.

b. Use of estimates

The preparation 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 recognised in the period in which the results are known/materialised.

c. Fixed assets

Fixed assets are valued at revalued cost less depreciation. Pre-operative expenses including trial run expenses (net of revenue) are capitalised. Borrowing costs during the period of construction is added to the cost of eligible fixed assets.

d. Investments

Long-term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and market value.

e. Inventories

Inventories are valued at lower of cost and net realisable value. Cost of finished goods and goods in process are ascertained on weighted average basis. Cost of raw material, chemicals and stores and spares comprises purchase price (Net of Cenvat and other deductible taxes wherever applicable), freight and handling, duties and other attributable costs and is valued on weighted average basis.

f. Sales

Income from sales is accounted for ex-mills/ex-depots on despatch. The sale value is inclusive of excise duty, but is exclusive of sales tax and is net of trade discount.

g. Employee benefits

Liability for employee benefits, both short term and long term for present and past services which are due as per terms of employment are accounted in accordance with Accounting Standard 15 ''Employee benefits'' as notified by Companies (Accounting Standards) Rules, 2006.

The Company has a defined contribution plan for its employees'' retirement benefits comprising of provident fund, superannuation fund, employees'' state insurance fund and employees'' pension scheme (under the provisions of Employees'' Provident Funds and Miscellaneous Provisions Act, 1952). The Company contributes to provident fund, superannuation fund and employees'' state insurance fund and employees'' pension scheme and has no further obligations to the plan beyond its contribution.

The Company has a defined benefit plan comprising of gratuity fund, compensated absences and long term service award. The liability for the gratuity, compensated absence and long term service award is determined on the basis of independent actuarial valuation. Liability for gratuity is partly funded with a recognized gratuity fund managed by Life Insurance Corporation of India.

h. Research & Development expenses

Revenue expenditure on research and development is charged to Statement of Profit and Loss of the year in which it is incurred. Capital expenditure on research & development is included in the fixed assets.

i. Government grants

Grants received against specific fixed assets are adjusted to the cost of asset and revenue grants are recognised in the Statement of Profit and Loss in accordance with the related scheme in the period in which these are accrued and are deducted in reporting the related expenses.

j. Depreciation

Fixed assets are depreciated on straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions is worked out on pro-rata basis.

Assets revalued have been depreciated on straight line basis over the balance useful lives estimated by the valuer and the excess of depreciation so calculated over the depreciation calculated above is transferred from revaluation reserve.

k. Foreign currency transaction

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of year are translated at year end rates.

The difference in translation of monetary assets and liabilities and realised gain/losses to foreign exchange transactions are recognized in the Statement of Profit and Loss.

l. Deferred tax

Deferred tax is accounted for by computing the tax effect of timing differences that arise during the year and reverse in subsequent periods.

m. Provisions and contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

n. Impairment of assets

The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment, if any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the assets net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values.

An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount, impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

o. Leases

Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

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Mar 31, 2012

A. Accounting concepts

The financial statement are prepared under the historical cost convention except for certain fixed assets which has been revalued, in accordance with the generally accepted accounting principles in India and in accordance with Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006.

b. Use of estimates

The preparation 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 recognised in the period in which the results are known/materialised.

c. Fixed assets

Fixed assets are valued at revalued cost less depreciation, pre-operative expenses including trial run expenses (net of revenue) are capitalised. Borrowing costs during the period of construction is added to the cost of eligible fixed assets.

d. Investments

Long term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and market value.

e. Inventories

Inventories are valued at lower of cost and net realisable value. Cost of finished goods and goods in process are ascertained on weighted average basis. Cost of raw material, chemicals and stores and spares comprises purchase price (Net of Cenvat and other deductible taxes wherever applicable), freight and handling, duties and other attributable costs and is valued on weighted average basis.

f. Sales

Income from sales is accounted for ex-mills/ex-depots on despatch. The sale value is inclusive of excise duty, but is exclusive of sales tax and is net of trade discount.

g. Employee benefits

Liability for employee benefits, both short term and long term for present and past services which are due as per terms of employment are accounted in accordance with Accounting Standard 15 - Employee Benefits as notified by Companies (Accounting Standards) Rules, 2006.

The Company has a defined contribution plan for its employees' retirement benefits comprising of provident fund, superannuation fund, employees' state insurance fund and employees' pension scheme (under the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952). The Company contributes to provident fund, superannuation fund and employees' state insurance fund and employees' pension scheme and has no further obligations to the plan beyond its contribution.

The Company has a defined benefit plan comprising of gratuity fund, compensated absences and Long term service award. The liability for the gratuity, compensated absence and long term service award is determined on the basis of independent actuarial valuation. Liability for gratuity is partly funded with a recognized gratuity fund managed by Life Insurance Corporation of India.

h. Research & Development expenses

Revenue expenditure on research and development is charged to Statement of Profit and Loss of the year in which it is incurred. Capital expenditure on research & development is included in the fixed assets.

i. Government grants

Grants received against specific fixed assets are adjusted to the cost of asset and revenue grants are recognised in the Statement of Profit and Loss in accordance with the related scheme in the period in which these are accrued and are deducted in reporting the related expenses.

j. Depreciation

Fixed assets are depreciated on straight line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions is worked out on pro-rata basis.

Assets revalued have been depreciated on straight line basis over the balance useful lives estimated by the valuer and the excess of depreciation so calculated over the depreciation calculated above is transferred from revaluation reserve.

k. Foreign currency transaction

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the time of transaction.

Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of year are translated at year end rates.

The difference in translation of monetary assets and liabilities and realised gain/losses to foreign exchange transactions are recognized in the Statement of Profit and Loss.

l. Deferred tax

Deferred tax is accounted for by computing the tax effect of timing differences that arise during the year and reverse in subsequent periods.

m. Provisions and contingencies

Provisions involving substantial degrees of estimation in measurement are recognized when there is present obligation as a result of past events and it is probable that there will an outflow of resources. Contingent liabilities are not recognized but disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

n. Impairment of assets

The carrying amount of assets, other than inventories is reviewed at each Balance Sheet date to determine whether there is any indication of impairment, if any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the assets net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount, impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

o. Leases

Lease payments under operating lease are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the lease term.

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Mar 31, 2011

1. Accounting Concepts

The financial statements are prepared under the historical cost convention except for certain fixed assets, which has been revalued, in accordance with the generally accepted accounting principles in India and in accordance with Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates

The preparation 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 recognised in the period in which the results are known / materialized.

3. Fixed Assets

Fixed Assets are valued at revalued cost less depreciation. Pre-operative expenses including trial run expenses (net of revenue) are capitalized. Borrowing costs during the period of construction is added to the cost of eligible fixed assets.

4. Investments

Long-term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and market value.

5. Inventories

a. Inventories are valued at lower of cost and net realizable value.

b. Cost of Finished goods and Goods in Process are ascertained on weighted average basis.

c. Cost of Raw materials, chemicals and stores and spares comprises purchase price (Net of CENVAT and other deductible taxes wherever applicable), freight and handling, duties and other attributable costs and is valued on weighted average basis.

d. Excise duty on finished goods awaiting despatch is added to inventory.

6. Sales

Income from Sales is accounted for ex-Mills/ex-depots on despatch. The sale value is inclusive of excise duty, but is exclusive of sales tax and is net of trade discount.

7. Employee Benefits

Liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are accounted in accordance with Accounting Standard (AS) 15 "Employee Benefits" as notified by Companies (Accounting Standard) Rules, 2006.

The Company has a Defined Contribution Plan for its employees' Retirement benefits comprising of Provident Fund, Superannuation Fund, Employees' State Insurance Fund and Employees' Pension Scheme (Under the provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952). The Company contributes to Provident Fund, Superannuation Fund and Employees' State Insurance Fund and Employees' Pension Scheme and has no further obligations to the plan beyond its contribution.

The Company has a Defined Benefit Plan comprising of Gratuity Fund, Compensated absence and Long Service Award. The liability for the Gratuity, Compensated absence and Long Service Award is determined on the basis of independent actuarial valuation. Liability for Gratuity is partly funded with a recognized Gratuity Fund managed by Life Insurance Corporation of India.

8. Research & Development Expenses

Revenue expenditure on research and development is charged to the Profit and Loss account of the year in which it is incurred. Capital expenditure on research & development is included in fixed assets.

9. Government Grants

Grants received against specific fixed assets are adjusted to the cost of assets and revenue grants are recognised in the Profit & Loss Account in accordance with the related scheme in the period in which these are accrued and are deducted in reporting the related expenses.

10. Depreciation

(a) Fixed assets are depreciated on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions is worked out on pro-rata basis.

(b) Assets revalued have been depreciated on straight line basis over the balance useful lives estimated by the valuer, and the excess of depreciation so calculated over the depreciation calculated in (a) above is transferred from Revaluation Reserve.

11. Foreign Currency Transactions

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

ii) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates.

iii) The difference in translation of monetary assets and liabilities and realized gains/losses to foreign exchange transactions are recognized in Profit & Loss Account.

12. Deferred Tax

Deferred Tax is accounted for by computing the tax effect of timing differences that arise during the year and reverse in subsequent periods.

13. Provisions and Contingencies

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

14. Impairment of Assets

The carrying amount of assets, other than inventories is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. The recoverable amount is the greater of the asset's net selling price and value in use which is determined based on the estimated future cash flow discounted to their present values. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

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Mar 31, 2010

1. Accounting Concepts

The financial statements are prepared under the historical cost convention except for certain fixed assets, which has been revalued, in accordance with the generally accepted accounting principles in India and in accordance with Accounting Standards as notified by Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates

The preparation 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 recognised in the period in which the results are known / materialised.

3. Fixed Assets

Fixed Assets are valued at revalued cost less depreciation. Pre-operative expenses including trial run expenses (net of revenue) are capitalised. Borrowing costs during the period of construction is added to the cost of eligible fixed assets.

4. Investments

Long-term investments are carried at cost less provision for diminution other than temporary, if any, in value of such investments. Current investments are carried at lower of cost and market value.

5. Inventories

a. Inventories are valued at lower of cost and net realisable value.

b. Cost of Finished goods and Goods in Process are ascertained on weighted average basis.

c. Cost of Raw materials, chemicals and stores and spares comprises purchase price (Net of CENVAT and other deductible taxes wherever applicable), freight and handling, duties and other attributable costs and is valued on weighted average basis.

d. Excise duty on finished goods awaiting despatch is added to inventory.

6. Sales

Income from Sales is accounted for Ex-Mills/Ex-depots on despatch. The Sale value is inclusive of excise duty, but is exclusive of sales tax and is net of trade discount.

7. Employee Benefits

Liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are accounted in accordance with Accounting Standard (AS) 15 “Employee Benefits” as notified by Companies (Accounting Standard) Rules, 2006.

The Company has a Defined Contribution Plan for its employees’ Retirement benefits comprising of Provident Fund, Superannuation Fund, Employees’ State Insurance Fund and Employees’ Pension Scheme (Under the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952). The Company contributes to Provident Fund, Superannuation Fund and Employees’ State Insurance Fund and Employees’ Pension Scheme and has no further obligations to the plan beyond its contribution.

The Company has a Defined Benefit Plan comprising of Gratuity Fund, Compensated absence and Long Service Award. The liability for the Gratuity, Compensated absence and Long Service Award is determined on the basis of independent actuarial valuation. Liability for Gratuity is partly funded with a recognised Gratuity Fund managed by Life Insurance Corporation of India.

8. Research & Development Expenses

Revenue expenditure on research and development is charged to the Profit and Loss account of the year in which it is incurred. Capital expenditure on research & development is included in fixed assets.

9. Government Grants

Grants received against specific fixed assets are adjusted to the cost of assets and revenue grants are recognised in the Profit & Loss Account in accordance with the related scheme in the period in which these are accrued and are deducted in reporting the related expenses.

10. Depreciation

(a) Fixed assets are depreciated on straight-line method at the rates specified in Schedule XIV to the Companies Act, 1956. Depreciation on additions/deletions is worked out on pro-rata basis.

(b) Assets revalued have been depreciated on straight line basis over the balance useful lives estimated by the valuer, and the excess of depreciation so calculated over the depreciation calculated in (a) above is transferred from Revaluation Reserve.

11. Foreign Currency Transactions

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

ii) Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates.

iii) The difference in translation of monetary assets and liabilities and realised gains/losses to foreign exchange transactions are recognised in Profit & Loss Account.

12. Deferred Tax

Deferred Tax is accounted for by computing the tax effect of timing differences that arise during the year and reverse in subsequent periods.