I BASIS OF ACCOUNTING:
The financial statements are prepared in conformity with Generally
Accepted Accounting Principles in India, the applicable Accounting
Standards notified by the Companies (Accounting Standards) Rules, 2006
and the other relevant provisions of the Companies Act, 1956. The
Accounts have been prepared on the basis of historical cost. The
Company follows the mercantile system of accounting for recognising
income and expenditure on accrual basis.
II USE OF ESTIMATES:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenue and expenses during the reporting period. Difference
between the actual and estimates are recognised in the period in which
the results are known/ materialised.
III REVENUE RECOGNITION:
a} Sale of goods are recognised when risk and rewards of ownership of
the products are passed on to the customers which is generally on
despatch of goods. Service revenue is recognised as per terms of
contract. Sales include amounts recovered towards Excise Duty, and are
net of returns.
b} Revenue from sale of power from wind operated generators is
accounted when the same is transmitted / confirmed by the Electricity
c} Revenue from letting out of storage facilities are accounted on
d} Duty free imports of raw materials under Advance Licence for imports
as per the Import and Export Policy are matched with the exports made
against the said licences and the net benefit/obligation is accounted
by making suitable adjustments in raw material consumption. The
benefits accrued under the Duty Drawback and Duty Entitlement Pass Book
Benefits as per the Import and Export Policy in respect of exports made
under the said scheme have been included under the head ''Duty
Drawback and Duty Entitlement Pass Book Benefits''.
e} Revenue from sale of scrap is recognised as and when scrap is sold.
f} Revenue from interest is recognised on a time proportion basis
taking into account the amount outstanding and the rate applicable.
g} Revenue from dividend is recognised when the shareholders'' right
to receive payment is established by the balance sheet date.
IV FIXED ASSETS:
Fixed Assets are recorded at cost of acquisition or construction /
erection including taxes, duties, freight and other incidental expenses
related to acquisition and installation. Interest incurred during
construction period on borrowings to finance qualifying fixed assets is
capitalised. Fixed Assets which are not in active use are scrapped and
Depreciation on Plant and Machinery and Building is provided on
Straight Line method except on Maleic Anhydride plant and all assets of
CMC division, which has been provided on Written Down Value method. The
rates at which depreciation is provided as above, are as prescribed by
Schedule XIV to the Companies Act, 1956 and in terms of relevant
circulars issued by the Department of Company Affairs.
Investments which are all long-term are stated at cost of acquisition
and related expenses. Provision is made for any diminution, other than
temporary, in the value of investments.
VIII EMPLOYEE BENEFITS :
1. Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, performance incentive paid annual leave,
bonus, leave travel assistance, medical allowance, contribution to
provident fund and superannuation etc. recognised as actual amounts due
in period in which the employee renders the related services.
2. Post-employment benefits
a. Defined contribution plan
Payment made to defined contribution plans such as Provident is charged
as expenses as they fall due.
b. Defined Benefit Plans
The cost of providing benefits i.e. gratuity is determined using the
Projected Unit Credit Method, with actuarial valuation carried out as
at the balance sheet date. Actuarial gains and losses are recognised
immediately in the Profit and Loss Account.
3. Other Long - term employee benefits
Other Long term employee benefit is recognised as an expenses in the
profit and loss account as and when it accrues. The Company determines
the liability using the Projected Unit Credit Method, with actuarial
valuation carried out as at the balance sheet date. The actuarial gains
and losses in respect of such benefit are charged to the profit and
IX FOREIGN CURRENCY TRANSLATION:
a} Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction.
b} Monetary items denominated in foreign currency at the year end are
translated at year end rates. In respect of Monetary items which are
covered by foreign exchange contracts, the difference between the year
end rates and the rate on the date of contract is recognised as
exchange difference and the premium on such forward contracts is
recognized over the life of the forward contract. The exchange
differences arising on settlement / translation are recognised in the
profit and loss statement.
c} Exchange differences arising on long term foreign currency loans
given to non-integral foreign subsidiaries is accumulated in Foreign
Currency Translation Reserve and reversed to profit and loss statement
as and when the loans are repaid/settled.
X BORROWING COSTS:
Borrowing costs that are directly attributable to the acquisition of
qualifying assets are capitalised for the period until the asset is
ready for its intended use. A qualifying asset is an asset that
necessarily takes substantial period of time to get ready for its
intended use. Other borrowing costs are recognised as an expense in the
period in which they are incurred.
XI LEASE RENTALS:
Lease rentals paid in respect of assets taken on lease are charged to
revenue over the estimated life of the assets.
Current tax is determined as the amount of tax payable to the taxation
authorities in respect of taxable income for the period. Deferred tax
is recognised, subject to the consideration of prudence, on timing
difference being differences between taxable incomes and accounting
income, that originate in one period and are capable of reversal in one
or more subsequent periods.
XIII PROVISIONS, CONTINGENT LIABILITES AND CONTINGENT ASSETS:
Provisions are recognised only when there is present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liabilities disclosed for:-
(i) possible obligations which will be confirmed only by future events
not wholly within the control of the company, or
(ii) present obligations arising from past events where it is not
probable that an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount of obligation cannot be
made.Contingent assets are not recognised in the financial statements,
since this may result in recognition of income that may never be
XIV CASH AND CASH EQUIVALENTS
The Company considers all highly liquid financial instruments, which
are readily convertible into and cash and have original maturities of
three months or less from the date of purchase, to be cash equivalents.