a) Basis of Preparation of accounts :
The accounts have been prepared based on ''historical cost'' (except
for certain fixed assets which are revalued) and governing statutes of
India except otherwise stated.
b) Use of Estimates :
The preparation of financial statements requires management to make
estimates and assumption that affect the reported amount of assets and
liabilities and disclosures relating to contingent assets and
liabilities as at the balance sheet date and the reported amount of
income and expenditure during the year.
c) Revenue :
Revenue are recognized on the basis of certainty of their ultimate
d) Provisions :
Provisions are recognized where realiable estimates can be made for
probable outflow of resources to settle present obligation as a result
of past event and the same is reviewed at each balance sheet date.
e) Prior Period Items :
Prior period expenses/income are accounted under the respective heads.
Material items, if any, are disclosed separately by way of a note,
except the items which are necessitated by circumstances although
related to prior period but are determined in current period.
f) Sales :
Sales include Excise Duty, Inter-divisional transfers but excludes sale
g) Governments Grants and subsidies :
Government grants and subsidies identifiable with specific fixed assets
are adjusted against the value of those fixed assets. Government grants
and subsidies not identifiable with any fixed assets are credited to
Capital Reserve. Government grants and subsidies identifiable with
specific revenue expenses are adjusted with such revenue expenses.
Government grants and subsidies not identifiable with any specific
revenue expenses, are accounted for as other income.
h) Research & Development :
Revenue Expenditure is charged to Profit & Loss Account and Capital
Expenditure is added to the cost of Fixed Assets in the accounting year
in which it is incurred.
i) Expenditure on Modernisation and Expansion :
Expenses directly related to the Modernisation/Expansion Project are
capitalised. Interest and financial Charges during construction period
are also capitalised. Expenses incurred for arranging finance for
capital project are amortized over the period of 10 years. j)
Borrowing Cost :
Borrowing cost attributable to the acquisition and construction of
fixed assets/projects are capitalized till it is put into use for
intended future benefit. k) Fixed Assets :
Fixed Assets are stated at their original cost comprising purchase
price, taxes and duties but net of Modvat/Cenvat credit allowed. All
costs attributed to bring such assets to working condition and relative
borrowing costs attributable to the acquisition and construction of
fixed assets are capitalized till put into use for intended use.
Capital subsidy received is reduced from cost of relevant fixed assets.
The cost of fixed assets may undergo changes subsequent to its
acquisition or construction on account of exchange fluctuation, price
adjustments, changes in duties or similar factors.
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment, if any.
Impairment losses, if any, are recognized in accordance with the
Accounting Standard notified under the Companies Act, 1956. l)
Depreciation on Fixed Assets is provided at the rate and in the manner
specified in Schedule XIV to the Companies Act, 1956 considering the
Sugar Mill, Ethyl Alcohol, Ethanol & Fertilisers Plants as ''continuous
process'' Plants. Depreciation is charged on ''Straight Line Method'' but
for the Fixed Assets acquired during the period from 1986-87 to
1988-89, it is charged on Written Down Value Method''. Discarded assets
are depreciated fully. Intellectual Property Rights is amortized over a
period of ten years. m) Inventory :
The cost of inventory comprises cost price and all cost attributed to
bring such inventory to its location including taxes and duties (net of
credit) and is computed on weighted average basis. n) Employee
(a) Short Term employee benefits :
These are recognized as an expense at undiscounted amount in the year
in which the related services are rendered.
(b) Post employment benefits :
(i) Provident Fund :
Contributions under this defined benefit plan are being deposited to
the government administered/trust formed exclusively for maintaining
the provident fund related activities of the company, which is an
exempted organization under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 and charged to profit and loss
account on accrual basis.
(ii) Gratuity and Leave Encashment :
Liabilities annually determined by Actuary are provided for.
(iii) Actuarial Gain/Loss :
Liabilities annually determined by Actuary are accounted for.
o) Insurance Claim :
These are accounted for on settlement of claim basis.
p) Foreign Currency Transaction :
Transactions in Foreign Currency covered under ''Forward Contract'' are
recorded at the exchange rate prevailing at the time of transaction.
The difference between forward rate and exchange rate on the date of
the Forward Contract is recognised as income or expense over the life
of the contract and is taken to Profit and loss account.
q) Taxes on Income :
Income tax expenses comprise current tax and deferred tax. Deferred tax
liabilities and assets are recognized for all timing differences using
the taxable rates substantively enacted by the balance sheet date and
are reviewed at 31st March. Recognition of deferred tax assets is
subject to consideration of prudence set out in AS-22 of the Companies
r) Earning Per Share :
Computed in accoudance with the AS-20 the Companies Act, 1956.
s) Contingent Liabilities & Assets :
Contingent liabilities are not provided for and are disclosed in the
Notes on Accounts. Contingent assets are neither recognized nor
disclosed in the accounts.