(a) CHANGE IN ACCOUNTING POLICY
Presentation and disclosure of financial statements
During the year ended March 31, 2012, the Revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of Revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements, however,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
(b) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
(c) tangible fixed assets
Fixed assets, are stated at cost, net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase
price, borrowing costs if capitalization criteria are met and directly
attributable cost of bringing the asset to its working condition for
the intended use. Any trade discounts and rebates are deducted in
arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) depreciation on tangible fixed assets
Depreciation on leasehold land is provided over the unexpired period of
lease, which is 20 years and depreciation on leasehold improvements
which includes temporary structures is provided over unexpired period
of lease or estimated useful life whichever is lower.
Depreciation on all other fixed assets is provided on straight line
method as per rates computed based on estimated useful lives, which are
equal to the corresponding rates prescribed in Schedule XIV to the
Companies Act, 1956. Assets costing below Rs. 5,000 are depreciated at
the rate of 100%.
(e) INTANGIBLE ASSETS
Intangible assets amortized on a straight line basis over the estimated
useful economic life. The Company uses a rebuttable presumption that
the useful life of software will not exceed five years from the date
when the assets is available for use.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset.
Where the Company is the lessee
where the lesser 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 lease
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
Inventories are valued as follows:
Raw materials, goods purchased for resale, stores and spare parts
Lower of cost and net realizable value. Materials and other items held
for use in the production of inventories are not written down below
cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. Cost is determined on weighted
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on
Work-in-progress and finished goods normal operating capacity. Cost of
finished goods includes excise duty, wherever applicable. Cost is
determined on a weighted average basis.
Waste Net realizable value
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
cost necessary to make sale.
(j) 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
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized.
(i) SALE OF GOODS
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer,
usually on delivery of the 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 revenue. Excise duty deducted from revenue (gross) is the
amount that is included in the revenue (gross) and not the entire
amount of liability arising during the year.
(ii) INCOME FROM SERVICES
Revenue from services is accounted for in accordance with the terms of
contracts, as and when these services are rendered.
(iii) POWER GENERATION INCOME
Revenue from sale of power is recognized on accrual basis in accordance
with the provisions of the the agreements with the respective state
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(v) EXPORT BENEFITS
Export benefits under Duty Exemption Pass Book Schemes (DEPB) and Duty
Drawback are accrued when no significant uncertainties as to the amount
of consideration that would be derived and as to its ultimate
Revenue is recognized on an accrual basis in accordance with the terms
of the relevant agreement.
(k) BORROWING COST
Borrowing costs include interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(l) FOREIGN CURRENCY TRANSACTIONS
(i) INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
Foreign currency monetary items are reported using the exchange rate
prevailing at the reporting date. Non-monetary items which are carried
in terms of historical cost denominated in a foreign currency are
reported using the exchange rate at the date of the transaction and
non-monetary items which are carried at fair value or other similar
valuation denominated in a foreign currency are reported using the
exchange rates that existed when the values were determined.
(iii) EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) FORWARD EXCHANGE CONTRACTS ENTERED INTO TO HEDGE FOREIGN CURRENCY
RISK OF AN ASSET / LIABILITY
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for
(m) DERIVATIVE INSTRUMENTS
In accordance with the ICAI announcement, derivative contracts, other
than foreign currency forward contracts covered under AS 11, are marked
to market on a portfolio basis, and the net loss, if any, after
considering the offsetting effect of gain on the underlying hedged
item, is charged to the statement of profit and loss. Net gain, if any,
after considering the offsetting effect of loss on the underlying
hedged item, is ignored.
(n) RETIREMENT AND OTHER BENEFITS
(i) Retirement benefits in the form of provident fund is a defined
contribution scheme and the contributions are charged to the statement
of profit and loss for the year when the contributions to respective
funds are due. There are no other obligations other than the
contribution payable to the fund.
(ii) Gratuity liability is defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
(PUC) method made at the end of each financial year.
(iii) Short term compensated absences are measured at the expected cost
of such absences that is expected to be paid as a result of the unused
entitlement that has accumulated at the reporting date.
(iv) Actuarial gains/losses are immediately taken to the statement of
profit and loss and are not deferred.
(o) income taxes
Tax expense comprises of current and deferred taxes. Current income tax
is measured at the amount expected to be paid to the income tax
authorities in accordance with Income Tax Act, 1961. Deferred income
taxes reflect the impact of current year timing differences between
taxable income and accounting income for the year and reversal of
timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. If the Company
has unabsorbed depreciation or carry forward tax losses, entire
deferred tax assets are recognized only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realized against future taxable profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the Company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtual certain, as
the case may be, that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in during a year is charged to the
statement of profit and loss as current tax. MAT credit is recognised
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
i.e. for the period for which MAT credit is allowed to be carried
forward. In the year in which the 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 specified period.
(p) SEGMENT REPORTING POLICIES
Identification of segments Business Segment
The Company''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
The Company generally accounts for intersegment sales and transfers as
if the sales or transfers were to third parties at current market
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Allocation of other income
Other income are allocated to each segment according to the relative
contribution of each segment to the other income as per the
requirements of AS-17.
General corporate income and expense items are not allocated to any
The company prepares segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(q) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit
or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at
each Balance Sheet date and adjusted to reflect the current best
(s) CASH AND CASH EQUIVALENT
Cash and cash equivalents comprise cash at bank, cash/cheques in hand
and short-term investments with an original maturity of three months or
(t) CONTINGENT LIABILITY
A 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. The company does not recognize a
contingent liability but discloses its existence in the financial