a. Basis of preparation of financial statements:
The financial statements of The West Coast Paper Mills Ltd., have been
prepared and presented in accordance with Indian Generally Accepted
Accounting Principles (GAAP) under the historical cost convention on
the accrual basis. GAAP comprises accounting standards notified by the
Central Government of India under section 211 (3C) of the Companies
Act, 1956, other pronouncements of Institute of Chartered Accountants
of India, the provisions of Companies Act, 1956 and guidelines issued
by Securities and Exchange Board of India.
The Company has prepared these financial statements as per the format
prescribed by Revised Schedule VI to the Companies Act, 1956 (The
Schedule'') issued by Ministry of Corporate Affairs. Previous periods''
figures have been recasted/restated to conform to the classification
required by the Revised Schedule VI.
b. Use of Estimates:
The preparation of the financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as on the date of
the financial statements and the reported amount of revenues and
expenses during the reporting period. Difference between the actual
results and estimates are recognized in the period in which the results
are known/ materialized.
c. Fixed Assets:
a) Fixed Assets are stated at cost of acquisition (net of Cenvat and
VAT wherever applicable) or construction less accumulated depreciation
and impairment loss, if any. Cost includes any directly attributable
cost of bringing each asset to its working condition for intended use.
b) Assets under installation or under construction as at balance sheet
date are shown as Capital work in progress together with project
expenses and advances to suppliers/contractors.
c) Machinery spares which can be used only in connection with a
particular item of fixed asset and the use of which is irregular, are
capitalized at cost net of Modvat / Cenvat.
a) On the fixed assets, is provided at the rates and in the manner
specified in Schedule XIV to the Companies Act, 1956 on the written
down value method, other than on plant and machinery, effluent
treatment plant, roads and drainage on which depreciation is provided
on Straight Line Method.
b) On the Plant & Machinery of [FTC/Control Cable at Mysore Division
and Duplex Board Plant, New Fibreline & Chemical Recovery Island at
Paper Division at Dandeli is provided at the rates and in the manner
specified in schedule XIV to the Companies Act, 1956 on Written Down
e. Impairment of Assets:
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 whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the net selling price and value in use. In assessing the
value in use, the estimated future cash flows are discounted to their
present value based on an appropriate discount factor. The impairment
loss recognized in the prior accounting years is reversed if there has
been a change in the estimate of recoverable amount.
Current investments are carried at the lower of cost or quoted/ fair
value, computed category-wise. Long term investments are stated at cost
and provision is made for any diminution in such value, which is not
temporary in nature.
g. Valuation of Inventories:
a) Inventories of raw materials, stores, spares, machinery parts,
building materials, loose tools etc. are valued at weighted average
cost, after providing for obsolescence, if any.
b) Work in process is valued at cost.
c) Finished goods & Stock-in-trade are valued at lower of cost or net
d) Stock of scrap is valued at realizable value.
e) Standing crops intended for captive use are valued at the total
amount of expenditure incurred comprising of material, labour, interest
& overheads, less any incidental revenue realized.
h. Revenue recognition:
a) Turnover is recognized when goods are dispatched to customers and
are adjusted for Discounts (net), Sales Tax/ VAT and foreign exchange
differences. Turnover is inclusive of Excise Duty.
b) DEPB & Duty drawback income is recognized on accrual basis for the
licenses to be received.
c) Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable.
i. Research and Development Expenditure:
Revenue expenditure on research & development is charged to Profit &
Loss account and capital expenditure is added to the cost of fixed
assets in the year in which it is incurred.
j. Employee Benefits:
a) Contribution to Provident Fund is accounted for on accrual basis.
The Provident Fund contributions are made to a Trust administered by
the Company. The interest rate payable to the members of the Trust is
not lower than statutory rate of interest declared by the Central
Government under the Employees Provident Funds and Miscellaneous''
Provisions Act, 1952 and shortfall, if any, is made good by the
Company. Such shortfall on account of interest, if any, is recognized
in the Profit and Loss account.
b) Company''s defined contributions made to Pension Fund of Government
and Superannuation Scheme of Life Insurance Corporation of India are
charged to the Profit and Loss account on accrual basis.
c) Contribution to Gratuity Fund and provision for Leave Encashment is
based on actuarial valuation carried out as on the Balance Sheet date
as per Projected Unit Credit Method.
k. Foreign Currency Transactions:
Foreign currency transactions are accounted at the exchange rates
prevailing on the date of transactions. Foreign currency current assets
and current liabilities outstanding at the Balance Sheet date are
translated at the exchange rate prevailing on that date and the
resultant gain or loss is recognized in the Profit & Loss account. In
cases where they relate to the acquisition/construction of fixed
assets, they are adjusted to the carrying cost of fixed assets.
l. Borrowing Cost:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets upto the date when they are ready for their intended use
and other borrowing costs are charged to Profit & Loss account.
Provision for Taxation is determined on the basis of the Taxable
profits computed for the current accounting period in accordance with
the Income Tax Act, 1961.
Deferred Tax resulting from timing difference between book profit and
taxable profit for the year is accounted for using the tax rates and
laws that have been enacted or substantially enacted as on the Balance
Sheet date. The deferred tax asset is recognized and carried forward
only to the extent that there is a certainty that the asset will be
adjusted in future.
n. Contingent Liabilities:
Claims against the Company not acknowledged as debts are treated as
Contingent Liabilities. Provision in respect of contingent liabilities
if any, is made when it is probable that a liability may be incurred
and the amount can be reasonably estimated.
o. Earnings per share:
The basic earnings per share (EPS) is computed by dividing the net
profit after tax for the year by the weighted average number of equity
shares outstanding during the year. For the purpose of calculating
diluted earnings per share, net profit after tax for the year and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares. The
dilutive potential equity shares are deemed converted as of the
beginning of the period, unless they have been issued at a later date.
The diluted potential equity shares have been adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e. the
average market value of the outstanding shares).