1. (a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The company prepares its accounts on accrual basis following the
historical cost convention and on the basis of going concern in
compliance with the provisions of Section 211 (3C) [Companies
(Accounting Standards) Rules, 2006, as amended] and the other relevant
provisions of the Companies Act, 1956.
(b) PRESENTATION AND DISCLOSURE OF FINANCIAL STATEMENTS
During the year ended 31st March, 2012 the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the company for
preparation and presentation of financial statements. The adoption of
revised schedule VI does not impact recognition and measurement
principles followed for preparation of these financial statements.
However it has significant impact on presentation and disclosures made
in the financial statements.
2. USE OF ESTIMATES
The preparation of financial statements requires the use of estimates
and assumptions to be made that affect the reported amount of assets,
liabilities and disclosure of contingent liabilities on the date of
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 /
3. FIXED ASSETS
Fixed assets are capitalised at cost of acquisition including directly
attributable costs such as freight, insurance and specific installation
charges for bringing the assets to their working condition for intended
Emergency machinery spares of irregular use and critical insurance
machinery spares are capitalised as part of relevant plant & machinery.
Pre-operative expenditure incurred upto the date of commencement of
commercial production is capitalized as part of fixed assets.
Current investments are stated at lower of cost and fair value.
Long-term investments are stated at cost after providing for diminution
in value where in the opinion of the management such diminution is not
temporary in nature.
Depreciation is provided for on Straight Line Method at the rates and
in the manner specified in Schedule XIV of the Companies Act, 1956
except in respect of computers (including accessories and peripherals),
which are depreciated fully in the year of addition. Depreciation on
other additions/deletions is provided pro-rata from/ upto the month of
Emergency machinery spares of irregular use and critical insurance
spares are depreciated over the balance useful life of the parent
All assets costing Rs. 5,000 or below are depreciated in full by way of a
one time depreciation charge.
6. INVENTORY VALUATION
Inventories are valued at lower of cost or net realisable value except
in case of scrap which is taken at net realizable value. Cost for
various items of inventory is determined as under:
Net realizable value is the estimated selling price in the ordinary
course of the business, less estimated cost necessary to make the sale.
7. REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
Sale of goods
Sales includes excise duty and is accounted for upon dispatch of goods
from the factory. Gross sales and net sales are disclosed separately in
Statement of Profit & Loss.
Carbon Credit Entitlement (CERs)
Insurance and other claims are accounted for as and when admitted by
the appropriate authorities in view of uncertainty involved in
ascertainment of final claim.
In process of production, the Company also generates carbon emission
reduction units which may be negotiated for price in international
market under Clean Development Mechanism (CDM) subject to completing
certain formalities and obtaining certificate of Carbon Emission
Reduction (CER) as per Kyoto Protocol. Revenue from CER is recognized
as and when the CER''s are certified and it is probable that the
economic benefits will flow to the Company.
Late Payment Surcharge
Late payment surcharge on delayed payments is recognized as income in
accordance with the terms of power purchase agreement (PPA) entered
into with UPPCL and its associates.
Interest is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Revenue in respect of dividends is recognised when the Shareholders
rights to receive payment is established by the balance sheet date.
8. CONTINGENCIES AND EVENTS OCCURING AFTER THE BALANCE SHEET DATE
Events occurring after the date of the Balance sheet, which provide
further evidence of conditions that existed at the Balance Sheet date
or that arose subsequently, are considered upto the date of approval of
accounts by the Board of Directors, where material.
9. GOVERNMENT GRANTS
Grants relating to specific fixed assets are deducted from the original
cost of specified assets.
10. EMPLOYEES BENEFITS
a) Provident Fund
Company''s contribution to provident fund, being in the nature of
defined contribution plan, are being charged to Statement of Profit &
Loss in the period during which services are rendered by employees.
b) Gratuity & Leave Encashment
Provision for gratuity and leave encashment in the nature of defined
benefit obligation is considered on the basis of Accounting Standard
AS-15 on actuarial valuation using projected unit credit method. The
discount rate and other financial assumptions are based on the
parameters defined in the accounting standard.
c) Other Short term benefits
Expenses in respect of other short term benefits are recognized on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
11. EXCISE DUTY
Excise duty in respect of finished goods (including molasses) is
accounted for at the end of period and is included in the value of
closing stock as per ''Guidance Note on Accounting Treatment of Excise
Duty'' issued by the Institute of Chartered Accountants of India.
12. INTANGIBLE ASSETS
Items of expenditure that meet the recognition criteria as mentioned in
Accounting Standard are classified as intangible assets and are
amortized over the period of economic benefits not exceeding ten years.
13. BORROWING COSTS
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets. A qualifying asset is an asset that necessarily requires a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
14. FOREIGN CURRENCY TRANSACTIONS
Transactions denominated in foreign currency are accounted for at the
exchange rate prevailing on the date of transaction. Exchange
differences arising on account of forward contracts are dealt with in
the Statement of Profit & Loss over the period of the contracts.
Monetary assets and liabilities relating to foreign currency
transactions are converted at the year end rate or at forward contract
rate, as applicable. Gains or losses arising on cross currency forex
swap transactions are accounted for over the period of contract.
15. TAXES ON INCOME
Tax on income for the current period is determined on the basis of
taxable income & tax credits computed in accordance with the provisions
of the Income Tax Act 1961, and based on expected outcome of
Deferred Tax is recognized on timing differences between the accounting
income and the taxable income for the year and reversal/adjustment of
earlier year deferred tax assets / liabilities which are quantified
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
Deferred tax assets on account of unabsorbed losses and depreciation
are recognized and carried forward to the extent that there is a
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
Deferred tax assets are reassessed at each Balance Sheet date.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal Income Tax during the
16. IMPAIRMENT OF ASSETS
Where the recoverable amount of the fixed asset is lower than its
carrying amount, a provision is made for the impairment loss. Post
impairment, depreciation is provided for on the revised carrying value
of the asset over its remaining useful life. The impairment loss
recognized in prior accounting period is reversed if there is a
favourable change in the estimate of recoverable amount.
17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS
Contingent liabilities, if material, are disclosed by way of notes,
contingent assets are not recognized or disclosed in the financial
statements. A provision is recognized when an enterprise has a present
obligation as a result of past event(s) and it is probable that an
outflow of resources embodying economic benefits will be required to
settle the obligation(s), in respect of which a reliable estimate can
be made for the amount of obligation.
18. EARNING PER SHARE (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting year.
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.
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognised as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognised immediately in the Statement of Profit and Loss.
20. SEGMENT ACCOUNTING & REPORTING Identification of segments
The company''s operating business are organized and managed separately
according to the nature of products manufactured and services provided,
with each segment representing a strategic business unit that offers
Allocation of common costs
Common allocable costs are allocated to each segment on reasonable
Unallocable assets & liabilities represents the assets & liabilities
not allocable to any segment as identified as per the Accounting
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
21 CASH & CASH EQUIVALENTS
Cash & Cash Equivalents comprise cash at bank and cash/cheque in hand
and term deposits with banks.