a) Basis of preparation of Financial Statements
The Financial Statements are prepared in accordance with generally
accepted Accounting Standards in India and the provisions of the
Companies Act, 1956.
b) Basis of Accounting
The accrual basis of accounting is followed unless otherwise stated.
c) Tangible Fixed Assets
Fixed Assets (excluding Revalued Assets) are stated at cost including
cost of installation and other incidental expenses. Assets of Rs.
5,000/- and below have been fully depreciated during the year of
d) Depreciation & Amortisation
Depreciation on Fixed Assets, acquired after 31.08.1970, has been
calculated on Straight Line Method under Section 205(2)(b) of the
Companies Act, 1956 while other assets have been depreciated on Written
Down Value Method under Section 205(2)(a) of the said Act.
Investments are stated at cost. Provision for diminution in value of
investment is not made if they are long term in nature. Investments,
which are readily releasable and intended to be held for not more than
one year from the date of investment made, are classified as Current
Investments. All investments other than long term investments are
classified as Current Investments. Current Investments are valued at
lower of Cost or Fair Value.
Inventories are valued on FIFO basis as under:- i) Stores, Spares &
Others : At cost exclusive of CENVAT receivable ii) Finished Goods : At
lower of cost or market value iii)Stock-in-Process:
-Sugar and Molasses: At lower of estimated cost or realisable value
-Planted Trees, having maturity of above 18 months, are taken at
estimated realisable value.
g) Cash and Bank Balance
Cash and Bank Balance comprises of cash on hand, balances with banks in
current accounts and demand deposits with banks.
h) Foreign ExchangeTransaction
Transactions in foreign currencies are recognised at the prevailing
exchange rates on the transaction dates. Realised gains and losses on
settlement of foreign currency transactions are recognized in the
Profit & Loss Account. Foreign currency monetary items at the year-end
are reported at the year-end exchange rate, and the resultant exchange
difference is recognised in the Profit & Loss Account.
In respect of transactions covered by Forward Exchange Contracts, the
difference between the contract rate and spot rate on the date of
transaction is amortised over the life of contract.
i) Contingent Assets & Liabilities
Contingent Liabilities are shown by way of Notes to the Accounts in
respect of obligations where, based on the evidence available, their
existence at the Balance Sheet date is considered not probable.
Contingent Assets are neither recognised nor disclosed in the financial
j) Impairment of Assets
Impairment of losses, if any is recognised in accordance with the
accounting standard issued in this regard by the Institute of Chartered
Accountants of India.
k) Segmental Reporting
The company''s operating business are organised and managed as per
location of the client. Common cost is allocated to the cost based on
the Revenue Mix. Unallocated cost is disclosed separately. The company
prepares its segment information in conformity with the accounting
policy adapted for preparing and presenting the financial statement of
the Company as a whole.
l) Earning Per Share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders. m) Revenue
Recognition Sales are shown inclusive of excise duty and net of
returns. Dividend Income is recognised when right to receive is
n) Employees Benefits
Contribution of Employer''s Share to Employee''s Provident Fund are
worked on accrual basis and charged to Profit & Loss Account. The
Company also provides for gratuity and leave encashment based on
acturial valuation made by an independent actuary as per As-15.
Lease rentals on operating leases are charged on a monthly basis to
Assets taken on Finance Lease have been capitalised during the year of
Agreement and charged off in accordance with the applicable rate of
p) Borrowing cost
Borrowing costs in relation to a qualifying asset and capitalised as
part of the cost of a qualifying asset when it is probable that they
will result in future economic benefits to the enterprise and the costs
can be measured reliably. Other borrowing costs are recognised as an
expense in the period in which they are incurred.
Provision for tax is made on the taxable income for the year in
accordance with the applicable provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to consideration of prudence in
respect of deferred tax assets, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and are capable of reversal in one or more subsequent
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date.
s) Excise Duty, under expenditure, represents payments made/to be made
during the year on goods cleared/to be cleared. Payment of services
where service tax is charged and credit for the same is taken as
accounted net of service tax.
t) The expenses incurred on sugarcane and on trees are accumulated
under the caption Standing Sugarcane and Planted Trees (excluding
planted trees having maturity of over 18 months) respectively and
charged to statement of Profit & Loss in the year of harvesting.
Details of Security
1. Working Capital Term loan from IDBI was secured by Hypothecation of
Stock, Book Debts, Standing Corps, all Moveable Properties and Mortgage
of 2067.21 acres of Company''s Agriculture Land and second charge on
Fixed Assets of Sugar Division and guarantee of its one director,
overdrafts against pledge of Fixed Deposit Receipts.
2. Loan from Sugar Development Fund is secured by charge on specified
assets and guaranteed by a director of the Company.
Terms of Repayment of Secured Term Loans
1. Loan from Sugar development fund for Rs. 287.55 lacs sanctioned on
31-03-1992 to be disbursed in 3 installments upto 31-03-1995. However,
only one instalment of Rs. 132.19 lacs was disbursed. Initially rate of
interest was 9% p.a. and penal interest was 2.5% above normal rate of
interest. The interest rate was later revised to 4.5%. There was a
moratorium of 3 years and Repayment of Principal was to be made in 4
equal annual instalments after expiry of moratorium period and interest
on loan was payable annually. At present amount due on principal
account is Rs.8563117 (Previous Year Rs.8563117) and Rs.23407350.70
(Previous Year Rs.21759260) towards interest. The Company has sent a
proposal to Sugar Development Fund for concession/waiver of interest
which is pending. Inerest on loan of Rs.1648081 for the year (Previous
Year Rs.1554793) has been provided as per agreement.
The Company has defaulted in repayment of loan and interest in respect
of the following :
1. Term Loan from IDBI was to be paid in monthly instalment of Rs.10
lacs. Although the full amount has been paid but the same has not been
paid on due dates either in F.Y 2013-14; 2012-13 and 2011-12 and hence
over and above the interest, compound interest and penalty on principal
amount has been imposed.
2. The loan from Sugar Development Fund of Rs. 132.19 lacs was
repayable in 4 annual instalments by 1999. There is a continuous
default now. Principal amount of Rs. 46,56,883 has been paid and
balance amount due is Rs. 8563117 as on 31-03-2014 (F. Y. 2013-14) and
interest due is Rs.23,407,350.70 as on 31.03.2014.