The financial statements of the Company have been prepared in
accordance with Generally Accepted Accounting Principles in India.
The Company has prepared these financial statements to comply in all
material respect with the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006, (as amended) and the
relevant provisions of the Companies Act, 1956.
(i) The Company follows the mercantile system of accounting and
recognises income and expenditure on an accrual basis except in case of
(ii) Financial statements are based on historical cost except certain
fixed assets which are stated at fair value.
1.2 Use of estimates:-
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles (GAAP) requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, income
and expenses and the disclosure of contingent liabilities on the date
of the financial statements. Actual results could differ from those
estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in current and future periods.
1.3 Current-non-current classification:-
All assets and liabilities are classified into current and non-current.
An asset is classified as current when it satisfies any of the
a) it is expected to be realised in, or is intended for sale or
consumption in, the Company's normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting
d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets. All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the
a) it is expected to be settled in the Company's normal operating
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date;
d) the Company does not have an unconditional right to defer settlement
of the liability for at least 12 months after the reporting date. Terms
of a liability that could, at the option of the counterparty, result in
its settlement by the issue of equity instruments do not affect its
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
1.4 Operating cycle:-
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out above which are in accordance with the revised
Schedule VI to the Act. Based on the nature of services and the time
between the acquisition of assets for providing of services and their
realisation in cash and cash equivalents, the Company has ascertained
its operating cycle as 12 months for the purpose of current -
non-current classification of assets and liabilities.
1.5 Revenue recognition:-
(i) Revenue is recognised when the significant risk and rewards of
ownership of the goods have been passed to the buyers. Sale of goods is
exclusive of excise and sales tax/ VAT. Sales excludes captive
(ii) Sugar sold under levy quota for each season, is accounted at the
price as notified by the Government as available till such time,
pending final notification for each season. The difference in price
pending final notification is accounted on an estimation by the
management taking into account factors affecting the calculation of
levy sugar price .
(iii) Export incentive in the nature of duty draw back or "Duty
Entitlement Pass Book" under "Duty Exemption Scheme" is accounted for
in the year of Export.
(iv) Dividend income is recognised when the right to receive payment is
(v) Interest income is recognised on a time proportion basis taking
into account the amount outstanding and the interest rate applicable.
1.6 Fixed Assets and Depreciation:-
(a) Fixed Assets:-
(i) Fixed assets are carried at cost of acquisition or construction
cost and includes amount added on fair valuation, less accumulated
depreciation (except freehold land), amortisation and impairment loss,
(ii) Expenditure during construction period incurred on the projects
under implementation are treated as Pre- operative Expenses pending
allocation to the assets, and are included under "Capital Work in
Progress". These expenses are apportioned to fixed assets on
commencement of commercial production. Capital Work in Progress is
stated at the amount incurred upto the date of Balance Sheet.
(i) Depreciation on fixed assets (including on revalued portion on fair
value) has been provided as under: -
(a) Plant & Machinery & Aircraft- On straight-line method basis at the
rates and in the manner specified in Schedule XIV to the Companies Act,
(b) Other Tangible Assets-On written down value basis at the rates and
in the manner specified in Schedule XIV to the Companies Act, 1956.
(c) Intangible Assets represented by computer software is being
amortised over a period of five years. Leasehold land is amortised over
the lease period.
(ii) Depreciation on assets added, sold or discarded during the year
has been provided on pro-rata basis.
(iii) Individual assets costing Rs. 5,000 or less are depreciated in full
in the year of acquisition.
Long-term investments are stated at cost of acquisition. Diminution in
value of such long term investments is not provided for except where
determined to be of permanent nature. Current investments are stated
at lower of cost or fair market value.
(i) Stock of Raw Materials is valued at cost or net realisable value
whichever is lower. Cost is arrived at on FIFO Basis.
(ii) Stock of Materials-in-Process and Finished goods is valued at cost
or net realisable value whichever is lower
(iii) Stores, Spares and Packing material are valued at cost. Cost is
arrived at on Weighted Average Basis.
(iv) Obsolete stores and spares when identified and technically
determined, are valued at estimated realisable value.
(v) By-products-Molasses and Bagasse has been valued at estimated
(vi) Trial run inventories are valued at cost or estimated realisable
value whichever is lower.
1.9 Research and Development:-
Revenue expenditure on Research and Development is expensed out in the
Statement of Profit and Loss for the year Capital expenditure on
Research and Development is shown as an addition to Fixed Assets.
1.10 Government Grants:-
Government grants / subsidies received towards specific fixed assets
have been deducted from the gross value of the concerned fixed assets
and grant / subsidies received during the year towards revenue expenses
have been reduced from respective expenses. Capital Subsidies under
Sugar Promotion Policy, 2004 is recognised to the extent the claims are
accepted and settled.
1.11 Foreign Currency Transactions:-
Foreign Currency transactions are recorded at the rates of exchange
prevailing on the date of transaction. Monetary foreign currency assets
and liabilities outstanding at the close of the financial year are
revalorised at the exchange rates prevailing on the balance sheet date.
Exchange differences arising on account of fluctuation in the rate of
exchange is recognised in the Statement of Profit and Loss. However, in
respect of long-term foreign currency monetary items, the exchange
difference relating to acquisition of capital assets, has been adjusted
to the capital assets.
In case of items which are covered by forward exchange contracts, the
difference between the year end rate and rate on the date of the
contract is recognised as exchange difference and the premium paid on
forward contract is recognised over the life of the contract. In case
of other financial derivative contracts, premiums paid, gains/losses on
settlement and provision for losses, are recognised in the Statement of
Profit and Loss.
1.12 Employee Benefits:-
(a) Short Term Employee Benefits:
(i) Short term employee benefits are recognised as expenditure at the
undiscounted value in the Statement of Profit and Loss of the year in
which the related service is rendered.
(b) Post Employment Benefits:
(i) Defined Contribution Plans:
Company's contribution to the superannuation scheme, pension under
Employees' Pension Scheme, 1995 etc. are recognised during the year in
which the related service is rendered.
(ii) Defined Benefit Plans:
Gratuity liability is covered under the Gratuity-cum-Insurance Policy
of Life Insurance Corporation of India (LIC). The present value of the
obligation is determined based on an actuarial valuation, using the
Projected Unit Credit Method. Actuarial gains and losses arising on
such valuation are recognised immediately in the Statement of Profit
and Loss. The amount funded by the Trust administered by the Company
under the aforesaid Policy, is reduced from the gross obligation under
the defined benefit plan, to recognise the obligation on a net basis.
- Provident Fund:
Monthly contributions are made to a Trust administered by the Company
The interest rate payable by the Trust to the beneficiaries is notified
by the Government. The Company has an obligation to make good the
shortfall, if any, between the return on the investments of the Trust
and the notified interest rate.
(c) Long term compensated absences are provided on the basis of
(d) Compensation to employees under Voluntary Retirement Scheme is
charged to Statement of Profit and Loss in the year of accrual.
1.13 Borrowing Cost-
Borrowing cost attributable to acquisition and construction of assets
are capitalised as part of the cost of such assets upto the date when
such assets are ready for intended use and other borrowing costs are
charged to Statement of Profit and Loss.
1.14 Operating Leases:-
Assets acquired under leases other than finance leases are classified
as operating leases. The total lease rentals (including scheduled
rental increases) in respect of an asset taken on operating lease are
charged to the Statement of Profit and Loss on a straight line basis
over the lease term unless another systematic basis is more
representative of the time pattern of the benefit. Initial direct costs
incurred specifically for an operating lease are deferred and charged
to the Statement of Profit and Loss over the lease term.
Assets given by the Company under operating lease are included in fixed
assets. Lease income from operating leases is recognised in the
Statement of Profit and Loss on a straight line basis over the lease
term unless another systematic basis is more representative of the time
pattern in which benefit derived from the leased asset is diminished.
Costs, including depreciation, incurred in earning the lease income are
recognised as expenses. Initial direct costs incurred specifically for
an operating lease are deferred and recognised in the Statement of
Profit and Loss over the lease term in proportion to the recognition of
1.15 Earnings per share (EPS):-
Basic EPS 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 Diluted EPS is computed using
the weighted average number of equity and dilutive equity equivalent
shares outstanding during the year
1.16 Provision for Current and Deferred Tax:-
(i) Provision for current tax is made with reference to taxable income
computed for the accounting period for which the financial statements
are prepared by applying the tax rates relevant to the respective
'Previous Year'. Minimum Alternate Tax (MAT) eligible for set-off in
subsequent years (as per tax laws), is recognised as an asset by way of
credit to the Statement of Profit and Loss only if there is convincing
evidence of its realisation. At each Balance Sheet date, the carrying
amount of MAT Credit Entitlement receivable is reviewed to reassure
(ii) Deferred tax resulting from 'timing difference' between book and
taxable profit for the year is accounted for using the current tax
rates. The deferred tax asset is recognised and carried forward only to
the extent that there is a reasonable certainty that the assets will be
adjusted in future. However, in case of deferred tax assets
(representing unabsorbed depreciation or carry forward losses) are
recognised, if and only if there is a virtual certainty that there
would be adequate future taxable income against which such deferred tax
assets can be realised, or to the extent of deferred tax liabilities.
1.17 Impairment of Assets:-
The carrying amount of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/ external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset is
identified as impaired. An impairment loss recognised in prior
accounting periods is reversed if there has been change in the estimate
of the recoverable amount.
1.18 Provisions, Contingent Liabilities and Contingent Assets:-
Provisions involving a substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
Financial Statements. Contingent Assets are neither recognised nor
disclosed in the Financial Statements.
1.19 Employee Stock Options and Shares Plan (ESOP):-
In accordance with SEBI guidelines, the excess of the market price of
the shares, at the date of grant of options under the ESOP, over the
exercise price, is treated as Employee Compensation Expense.