1) ACCOUNTING CONVENTION:
The financial statements have been prepared on the historical cost
convention in accordance with the normally accepted accounting
principles and comply in all material aspects with the notified
accounting standards by Companies Accounting Standards Rules, 2006 and
the relevant provisions of the Companies Act , 1956.
2) FIXED ASSETS:
a) Fixed Assets are stated at historical cost less depreciation. Cost
includes, taxes and duties (but does not include taxes and duties for
which CENVAT / VAT credit is available), freight and other direct or
allocated expenses during construction period, net of any income
earned. Assets acquired on hire purchase are capitalised at principal
b) Amount of provisional consideration paid on land acquired under
registered lease-cum-sale agreement for twenty one years; with option
to the Company to convert the lease into absolute sale at the expiry of
the lease; subject to fulfilment of the terms and conditions specified
and payment of additional consideration, if any, to be fixed at that
time, is capitalised and included, without being amortised over the
period of lease.
c) (i) Buildings and structures constructed on land acquired under
lease-cum- sale agreement with option to convert the lease into
absolute sale at the expiry of the lease are depreciated in the normal
way and such assets on other lease-hold land are amortised over the
period of lease.
(ii) Assets at Tiptur, Pandhurna, and Decaffeination Plant at
Vazhakulam are depreciated on written-down-value method and assets at
other locations are depreciated on Straight-line method, at the rates
specified in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation is provided at the rates specified in Schedule XIV
to the Companies Act,1956 on written down value method. Assets costing
individually less than Rs.5,000/- are depreciated at 100%. On additions
to and deductions from Fixed Assets, depreciation is provided on
Amortisation on intangible assets is charged equally over the estimated
useful life of the asset, not exceeding five years, commencing from the
year of commercialisation. The useful life is estimated based on the
evaluation of future economic benefits expected to flow from such
3) IMPAIRMENT OF ASSETS :
The Company reviews the carrying amounts of its assets for any possible
impairment at each balance sheet date. An impairment loss is recognized
when the carrying amount of an asset exceeds its recoverable amount and
the impairment loss, if any, is recognized in the Statement of Profit &
Long term Investments are stated at cost. Decline in value of long term
investments, other than temporary, is provided for. Current Investments
are stated at lower of cost and fair value.
5) INVENTORIES :
Inventories are valued at lower of cost on weighted average basis and
net realisable value, after providing for obsolescence wherever
considered necessary. Cost includes taxes and duties (other than duties
and taxes for which CENVAT / VAT credit is available), freight and
other direct expenses.
6) EMPLOYEE BENEFITS :
Gratuity liability, which is a defined benefit scheme and provision for
leave encashment is accrued and provided for on the basis of
independent actuarial valuation based on projected unit credit method
made at the end of each financial year. Actuarial gains and losses are
recognised in the Statement of profit and loss and are not deferred.
Retirement benefits in the form of Provident Fund, Family Pension Fund
and Superannuation Schemes, which are defined contribution schemes, are
charged to the Statement of profit and loss of the year when the
contribution to the respective funds accrue.
7) REVENUE RECOGNITION :
Revenue is recognised on their accrual and when no significant
uncertainty on measurability or collectability exists. Expenditure is
accounted for on their accrual.
Sale of Goods:
Revenue is recognised when all the significant risks and rewards of
ownership of the goods have been passed on to the buyer, usually on
delivery of goods. The Company collects sales taxes and value added
taxes (VAT) on behalf of the government and, therefore, these are not
economic benefits flowing to the Company. Hence, they are excluded from
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head other income in the
statement of profit and loss.
Dividend income is recognized when the Company''s right to receive
dividend is established by the reporting date.
8) FOREIGN CURRENCY TRANSACTION:
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items
denominated in foreign currency and outstanding at the Balance Sheet
date are converted at the year end exchange rates and the resultant
loss or gain other than for acquisition of fixed assets, is dealt with
in the Profit and Loss Account. The Company uses foreign exchange
forward contracts to hedge its exposure to movements in foreign
exchange rates and the resultant gain or loss is dealt with in the
Profit and Loss Account . Premium or discount on forward contracts is
amortised over the life of such contract and is recognized as income or
expense in the Profit and Loss account. Exchange differences arising on
settlement / translation of long term monetary items utilized for
acquisition of Fixed Assets are adjusted to carrying cost of Fixed
9) BORROWING COSTS:
Borrowing costs attributable to the acquisition or construction of
qualifying asset is capitalized as part of such assets. All other
borrowing costs are charged to revenue. A qualifying asset is an asset
that necessarily requires a substantial period of time to get ready for
its intended use or sale.
10) TAXES ON INCOME:
Provision for Income-tax is made for both current and deferred tax.
Provision for current income tax is made on the assessable income at
the tax rate applicable to the relevant assessment year. Deferred tax
is accounted for by computing the tax effect of the timing difference
which arise during the year and reverse out in the subsequent periods.
Deferred tax is calculated at the tax rates substantively enacted by
the Balance Sheet date. Deferred tax assets are recognized only if
there is a virtual certainty that they will be realized.
11) GOVERNMENT GRANTS:
Subsidies from government in respect of fixed assets are deducted from
the cost of respective assets as and when they accrue. Subsidies
related to revenue are recognised in the profit and loss statement to
match them with the related costs which they are intended to
12) RESEARCH & DEVELOPMENT:
Expenditure on research phase is recognised as an expense as and when
it is incurred.
Expenditure on development phase is recognized as intangible assets if
it is identifiable, capable of being controlled and from which future
economic benefits are expected to flow to the enterprise. Intangible
assets are stated at cost net of tax/duty credits availed, if any, less
accumulated amortisation and cumulative impairment.
13) EARNINGS PER SHARE:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting the preference dividends and attributable taxes) by the
weighted average number of equity share holders outstanding during the
period. The weighted average number of equity shares outstanding
during the period is adjusted for events such as bonus issue, bonus
element in a right issue, share split, and reverse share split
(consolidation of shares) that have changed the number of equity shares
outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
14) PROVISIONS & CONTINGENT LIABILITY:
Provision is recognised when the company has a present obligation as a
result of past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
Contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or non
occurrence of one or more uncertain future events beyond the control of
the Company or a present obligation that is not recognized because it
is not probable that an outflow of resources will be required to settle
the obligation. Contingent liability also arises in extremely rare
cases where there is a liability that cannot be recognized because it
cannot be measured reliably. The Company does not recognise contingent
liability but discloses its existence in financial statements.