A. Significant Accounting Policies
1. Basis of Accounting
The financial statements have been prepared and presented under
historical cost convention on the accrual basis of accounting in
accordance with the accounting principles generally accepted in India
(GAAP) and comply with the mandatory accounting standards (AS) as
notified by the Companies Accounting Standards (Rules), 2006 to the
extent applicable and with the relevant provisions of the Companies
2. Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of financial statements and reported amount of
revenues and expenses for the year. Actual results could differ from
these estimates. Difference between the actual result and estimates are
recognized in the period in which results are known / materialized. Any
revision to an accounting estimate is recognized prospectively in the
year of revision.
3. Revenue Recognition
a) Revenue from sale of goods is recognized when significant risk and
rewards in respect of
ownership of products are transferred to customers.
b) Export entitlements under the Duty Entitlement Pass Book (DEPB)
scheme and Other Schemes are recognized as income when the right to
receive credit as per the terms of the scheme is established in respect
of the exports made and where there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
a) Inventories are valued at lower of cost or net realizable value on
b) Work in Progress is valued at lower of cost of raw Material or Net
c) Inventories comprises of Raw Material, Stores, Spares & Consumables,
Work In Progress and Finished Goods.
d) Cost of inventories comprises of cost of purchase, cost of
conversion and other cost incurred in bringing the inventories to their
present location and condition.
5. Agricultural Activity
a) Biological Assets (Living plants of Mustard, Soya or Jatropha)
i.) All costs related to biological assets are recognized as an
expense, as and when they are incurred.
ii.) Biological assets are recognized at net realizable value only when
the future economic Benefits associated with the assets will flow to the
b) Agricultural Produce (harvested products from biological asset) is
recognized at net realizable value.
6. Commodity Hedging (Derivatives)
Pursuant to announcement on accounting for the derivatives issued by
the Institute of Chartered Accountants of India (ICAI), in accordance
with the principles of prudence as enunciated in Accounting Standard-1
(AS-1), Disclosure of Accounting policies, the Company provide for
losses in respect of all outstanding derivatives contracts at the
balance sheet date by marking them to mark to market. Any net
unrealized gains arising on such Mark to Market are not recognized as
7. Certified Emission Reductions
a) Self generated certified emission reductions ( C.E.R- also known as
carbon credit ) expected to accrue to the Company as a result of
windmills are recognized as a part of inventory, when it is certified by
United Nations Framework Convention on Climate Change (UNFCCC) and the
future economic Benefits associated with such CER''s will flow to the
b) Incidental expenses are charged to Profit and loss account.
8. Fixed Assets
a) Tangible Assets
i.) Tangible assets are carried at cost of acquisition or construction
less accumulated depreciation. The cost of fixed assets includes non
refundable taxes, duties, freight and other incidental expenses related
to the acquisition and installation of the respective assets.
Borrowing cost attributable to acquisition or construction of fixed
assets which takes substantial period of time to get ready for their
intended use is capitalized.
ii.) Advances paid towards the acquisition of the fixed assets
outstanding at each balance sheet date are disclosed under capital work
b) Intangible Assets are recorded at the consideration paid for the
9. Depreciation/Amortization a) Depreciation:
i.) Depreciation has been charged on SLM basis for:
2. Plant assets (except for oil and refinery plant located at Morena)
ii.) For all other assets depreciation is provided on WDV basis.
iii.) Depreciation is provided at the rates and in the manner specified
under schedule XIV of the Companies Act, 1956.
iv.) Depreciation is calculated on a pro-rata basis from the date of
installation / acquisition till the date the assets are sold or
v.) Individual assets costing less than Rs 5,000 are depreciated fully
in the year of acquisition.
i.) Leasehold assets are amortized over the period of lease.
ii.) Intangible assets are amortized over their estimated useful lives
on straight line basis, commencing from the date the asset is available
to the Company for its use.
iii.) Goodwill arising in the course of acquisition is amortized over a
period of five years.
iv.) Software is fully amortized in the year of capitalization.
10. Foreign Currency Transactions
a) Foreign exchange transactions are recorded at the closing rates
prevailing on the date of the respective transactions. Exchange
difference arising on foreign exchange transactions settled during the
year is recognized in the Profit and loss account.
b) Monetary assets and liabilities denominated in foreign currencies
are converted at the closing rates as on Balance Sheet date. The
resultant exchange difference is recognized in the Profit and loss
c) Exchange rate differences arising on a monetary item that, in
substance, forms part of the Company''s net investment in a non-integral
foreign operation are accumulated in a foreign currency translation
reserve in the company''s financial statements until the disposal of the
d) Non monetary assets and liabilities denominated in foreign
currencies are carried at the exchange rate prevalent on the date of
e) In respect of transactions covered by forward exchange contracts,
the difference between the year end closing rate and rate prevailing on
the date of contract is recognized as exchange difference and the
premium paid on forward contract is recognized over the life of the
11. Operating Leases
Lease payments under operating leases have been recognized as an
expense in the Profit and loss account on a straight line basis over the
12. Employee Benefits
a) Short term Employee Benefits
Short term employee Benefits are recognized as an expense at the
undiscounted amount in Profit and loss account of the year in which the
related service is rendered.
b) Post Employment Benefits
Contribution to Provident Fund and Gratuity Fund are charged against
revenue. Gratuity liability is paid to the Life Insurance Corporation
of India through a Trust created for the purpose under Group Gratuity
Scheme. The Premium paid/payable is being charged to Profit and Loss
Account on accrual basis.
c) Other Long Term Employees Benefits
Company''s liability towards earned leave is determined by an
independent actuary using Projected Unit Credit Method. Past services
are recognized on a straight line basis over the average period until
the Benefits become vested. Actuarial gains and losses are recognized
immediately in the Profit and loss account as income or expenses.
Obligation is measured at the present value of the estimated future
cash flows using a discounted rate that is determined by reference to
the market yields at the balance sheet date on Government Bonds where
the currency and terms of the Government Bonds are consistent with the
currency and estimated terms of the defined benefit obligation.
Long-term investments are carried at cost less any other then temporary
diminution in value. Current investments are carried at the lower of
cost or fair value.
Tax expenses are the aggregate of current tax and deferred tax charged
or credited in the statement of Profit and loss for the period.
a) Current Tax
The current charge for income tax is calculated in accordance with the
relevant tax regulations applicable to the company.
b) Minimum Alternate Tax [ MAT]:
In case the Company is liable to pay income tax u/s 115JB of income tax
Act,1961 (i.e. MAT), the amount of tax paid in excess of normal income
tax is recognized as an asset (MAT Credit Entitlement) only if there is
convincing evidence for realization of such asset during the specified
period. MAT credit entitlement is reviewed at each balance sheet date.
c) Deferred Tax
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the
period. The deferred tax charge or credit and the corresponding
deferred tax liabilities or assets are recognized using the tax rates
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward of
losses, deferred tax assets are recognized only if there is virtual
certainty of realization of such assets. Deferred tax assets are
reviewed at each balance sheet date.
15. Government Grant
a) Capital Grant
Government grant related to specific fixed assets which are depreciable
are treated as deferred income which is recognized in the Profit and
loss statement on systematic and rational basis over the useful life of
the respective asset. Such allocation to income is usually made over
the periods and in the proportions in which depreciation on related
assets is charged.
b) Revenue Grant
Revenue grant related to specific tax exemptions is recognized in the
Profit and Loss Account on a systematic and rational basis in the year
in which it accrues.
16. Borrowing Cost
Borrowing cost attributable to acquisition or construction of a
qualifying asset is capitalized as part of the cost of asset up to the
date such asset is ready for its intended use. Other borrowing costs
are charged to Profit and loss account in the year in which they are
17. Employee Stock Option
Employee Compensation Cost, if any, arising on account of option
granted to employees is recognized in the financial statements. It is
the difference between the intrinsic value and exercise price of
18. Impairment of Assets
The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the assets. If
such recoverable amount of the assets or the recoverable amount of the
cash generating unit to which the as- sets belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
19. Provisions and Contingent Liabilities
The Company creates a provision when there is a present obligation as a
result of past events that probably requires an outflow of resources and
reliable estimates can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. Contingent assets are neither
recognized nor disclosed.