Notes forming part of the financial statements Note No : 1 Significant accounting policies 1. Basis of préparation of financial statements The Financial Statements of the Company are brpared in accordance with the Generally Accepted Accounting Principles (GAAP) in India. The Financial Statements have been brpared on accrual basis and under the historical cost convention except for certain tangible fixed assets which are carried at revalued amounts. GAAP comprises applicable Accounting Standards specified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India (ICAI), relevant applicable provisions of the Companies Act, 1956, and Companies Act, 2013 to the extent applicable and the applicable guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued Accounting Standard is initially adopted or a revision to an existing Accounting Standard requires a change in the accounting policy hitherto in use. 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 in Schedule III to the Companies Act, 2013. The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities. 2. Use of estimates The brparation of the Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets, liabilities and disclosures relating to contingent liabilities as at the date of the Financial Statements and reported amounts of revenue and expenses during the period. Actual results might differ from the estimates. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialise. 3. Fixed assets and capital work-in-progress a) Tangible fixed assets are stated at their original cost (net of accumulated debrciation and impairment) adjusted by revaluation of certain assets. Cost, net of cenvat, includes acquisition price, import duties, other non- refundable taxes and levies, directly attributable expenses and br-operational expenses including finance costs, wherever applicable for bringing the asset to its working condition for the intended use. b) Intangible assets acquired separately which are expected to provide future enduring economic benefits are stated at their original cost (net of accumulated amortisation and impairment, if any). Cost, net of cenvat, includes acquisition price, licence fees and costs of implementation/system integration services and any directly attributable expenditure, wherever applicable for bringing the asset to its working condition for the intended use. c) Expenditure during construction period: Directly attributable expenditure (including finance costs relating to borrowed funds for construction or acquisition of fixed assets) incurred on projects under implementation are treated as Pre-operative expenses pending allocation to the assets and are shown under "Capital work-in-progress". Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet for the cost of fixed assets that are not yet ready for their intended use. 4. Debrciation and amortisation a) Debrciation on tangible fixed assets is provided on straight line basis so as to charge the cost of the assets or the amount substituted for costs in case of revalued assets less its residual value over the useful life of the respective asset as brscribed under Part C of Schedule II to the Companies Act, 2013, other than Mobile Phones. The management is of the view that the estimated useful life of Mobile Phones are three years. Hence, Mobile Phones are debrciated over a period of three years on straight line basis. Tangible fixed assets individually costing less than Rs.5000/- are debrciated over the period of one year from the date the assets are available for use. Residual value has been considered as 5% of the cost of the respective asset. b) Freehold land is not debrciated. Leasehold land are amortised over the period of the lease on straight line basis. c) Computer Software (Acquired) are amortised on straight line basis over estimated useful lives of five years. d) Debrciation/amortisation on assets added, sold or discarded during the year is provided on pro-rata basis. 5. Investments Investments are either classified as current or long-term based on Managements intention at the time of acquisition. Investments that are not readily realisable and are intended to be held for more than one year from the date, on which such investments are made, are classified as non-current investments. All other investments are classified as current investments. Short term highly liquid investments with an original maturity of three months or less which carry insignificant risk of changes in value are classified as cash and cash equivalents. Long - term investments are carried at cost less provision for diminution recorded to recognise any decline, other than temporary, in the carrying value of each investment. Cost includes acquisition price and directly attributable acquisition charges such as brokerage, fee and duties. 6. Inventories a) Inventories (other than By-products and Standing crop) are valued at lower of cost and net realisable value after providing for obsolescence, if any. Cost of inventory comprises of purchase price, cost of conversion and other directly attributable costs that have been incurred in bringing the inventories to their respective brsent location and condition. Interest costs are not included in value of inventories. The cost of Inventories is computed on weighted average basis. b) By-products and Standing crop are valued at net realisable value. 7. Revenue recognition Sale of goods is recognised at the time of transfer of substantial risk and rewards of ownership to the buyer for a consideration. Gross turnover includes excise duty and excludes sales tax/VAT, trade discounts and rebates. Income from sale of Renewable Energy Certificates (RECs) is recognised on the delivery of the RECs to the customers' account. Dividend income is recognised when the Company's right to receive dividend is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the applicable interest rate. Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that there is no uncertainty in receiving the claims. g) All other income are accounted for on accrual basis. 8. Expenses All the expenses are accounted for on accrual basis. 9. Government grants a) Grants and subsidies from the Government are recognised when there is reasonable assurance that the Company would comply with the conditions attached with them and the grant/subsidy would be received. b) Government grants related to specific fixed assets are adjusted with the value of the fixed asset. Government grants in the nature of promoter's contribution i.e., grants received with reference to the total investment or by way of contribution towards total capital outlay by the Company, are credited to Capital Reserve. c) Government grants related to revenue items are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income. 10. Provisions, contingent liabilities and contingent assets A provision is recognised in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable as a result of a past event, and the Company has a brsent legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are measured by best estimate of the outflow of economic benefits required to settle the obligation at the Balance Sheet date. Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date. Re-imbursement expected in respect of expenditure to settle a provision is recognised only when it is virtually certain that the re-imbursement will be received. A Contingent Asset is neither recognised nor disclosed in the Financial Statements. 11. Impairment of assets An asset is treated as impaired when the carrying amount of the asset exceeds its recoverable value. The Company assesses at each Balance Sheet date whether there is an indication that an asset may be impaired. Impairment loss, if any, is recognised to the extent, the carrying amount of the asset exceed its recoverable value being higher of an asset's net selling price and its value in use. Value in use is computed at net brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The Company also assesses at each Balance Sheet date whether there is an indication that the impairment losses recognised in earlier years no longer exist or have decreased. If such indication is there, the impairment losses recognised in prior years are reversed. Such reversals are recognised as an increase in carrying amount of the assets to the extent that it does not exceed the carrying amount that would have been determined (net of debrciation or amortization) had no impairment loss been recognised in brvious years. 12. Foreign currency transactions and translations a) Transactions in Foreign currency are initially recorded at the exchange rate at which the transaction is carried out. Monetary Assets and Liabilities related to foreign currency transactions remaining outstanding at the year-end are translated at theyear-end rate. Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Any income or expense on account of exchange difference either on seulement or on translation is recognised in the Statement of Profit and Loss. c) In case of monetary assets and liabilities which are covered by forward exchange contracts, the difference between the year-end rate and the rate on the date of the contract is recognised as exchange difference. The brmium or discount on forward exchange contracts is recognized over the period of the respective contract. 13. Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset is capitalized as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to Statement of Profit and Loss in the period in which they are incurred. 14. Employee benefits a) Short-term employee benefits Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss for the year in which the related service is rendered. b) Post-employment benefits Defined contribution plan Employee benefits in the form of Provident Fund, Employee State Insurance and Labour Welfare Fund are considered as defined contribution plan. The Company's contributions to defined contribution plans are recognised in the Statement of Profit and Loss for the year as they fall due. The Company has no further obligations under these plans beyond its periodic contributions. Defined benefit plan The Company provides for retirement benefits in the form of Gratuity which are in the nature of Defined Benefit Plans. Such benefits are provided for on the basis of an independent actuarial valuation done at the year-end using Projected Unit Credit Method. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in the actuarial assumptions which are recognized in the Statement of Profit and Loss in the year in which they arise. c) Other long term employee benefits The employees of the Company are also entitled for long-term benefits in the form of compensated absences as per policy of the Company. The Company's liability is actuarially determined (using Projected Unit Credit Method) at the end of each year. Actuarial losses/gains are recognized in the statement of Profit and Loss in the year in which they arise. d) Expenditure on voluntary retirement scheme is charged to the Statement of Profit and Loss in the year in which it is incurred. 15. Employee stock option scheme In respect of employee stock options granted pursuant to the Company's Employee Stock Option Scheme, the intrinsic value of the options (excess of market price of the share on the date of grant over the exercise price of the option) is treated as discount and amortised as employee compensation cost on a straight line basis over the vesting period in accordance with the Guidelines announced by SEBI from time to time and the Guidance Note on Accounting of Employee Share Based Payments issued by ICAI. 16. Taxes on income Tax expense for the period comprises of current income tax and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realized in future. However, when there is a brought forward loss or unabsorbed debrciation under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed at each Balance Sheet date and written down or written up to reflect the amount that is reasonably/virtually certain to be realized. The deferred tax for timing differences between the book and tax profit for the period is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date. 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. In the year in which the Minimum Alternate tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance Note issued by ICAI, 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 the Company will pay normal Income Tax during the specified period. 17. Derivative instruments The Company uses derivative contracts to hedge the interest rate and currency risks. The Company does not use these contracts for trading or speculation purposes. Derivative contracts outstanding at the Balance Sheet date for firm commitment or highly probable forecast transactions are marked to market and the losses, if any, are recognised in the Statement of Profit and Loss and gains, if any, are ignored in accordance with the announcement of ICAI on "Accounting of Derivatives" issued in March, 2008. 18. Segment reporting Segments are identified based on the dominant source and nature of risks and returns and the internal organisation and management structure. The accounting policies adopted for segment reporting are in line with the accounting policies adopted for brparing and brsenting the Financial Statements of the Company as a whole. In addition, the following specific accounting policies have been followed for segment reporting: a) Segment revenue includes sales and other income directly identifiable with/allocable to the segment including inter segment transfers. Inter segment transfers are accounted for based on the transaction price agreed to between the segments which is at cost in case of transfer of Company's intermediate and final products and estimated realisable value in case of by-products. b) Revenue, expenses, assets and liabilities are identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on direct and/or on a reasonable basis, have been disclosed as "Unallocable". 19. Earnings per share Basic earnings per share are computed by dividing the net profit/(loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share are computed by dividing the net profit/(loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares which could be issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are determined as at the end of each period brsented. 20. Cash flow statement Cash flows are reported using the indirect method, whereby profit/loss before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing flows. The cash flows from operating, investing and financing activities of the Company are segregated. 21. Cash and cash equivalents Cash and cash equivalents include cash on hand, cheques on hand, balance with banks on current accounts and short term highly liquid investments with an original maturity of three months or less which carry insignificant risk of changes in value. 22. Commercial papers Commercial papers are recognised as a liability at the face value at the time of issuance of instrument. The discount is amortised as an interest cost over the period of commercial paper at the rate implicit in the transaction. 1. Sugarcane Price Accounting State Government of Uttar Pradesh vide its Press Release dated 18th January, 2016 announced certain financial assistances including Rs.23.30 per quintal of cane for the sugar season 2015-16 linked to average selling price and recovery percentage of sugar and its by-products during the specified period which is to be recommended by the Committee constituted by the Government of Uttar Pradesh. However, in view of the brvelant sugar prices, the Company has not accounted for the said sugarcane subsidy of Rs.23.30 per quintal of cane for the sugar season 2015-16. The Cane Subsidy of Rs.28.60 per quintal of cane paid by the Government of Uttar Pradesh for the sugar season 2014-15 aggregating to Rs.1238.75 lacs (Previous year Rs.20875.45 lacs ) has been accounted for by the Company and has been included under line item "Sugar cane" under Note No. 23 - "Cost of material consumed". 2. Export and Production Subsidy: The Central Government vide its Notification No. 1(10)/2015-SP-I dated 18th September, 2015 announced Minimum Indicative Export Quota (MIEQ) under tradeable export scrip scheme in order to export surplus sugar inventory out of the country. Under the said scheme, the Company was allocated quota of 115642.40 MT for export of sugar in respect of its ten sugar units. Further, the Central Government vide its Notification No. 20(43)/2015-SP - I dated 2nd December, 2015 has announced a scheme for extending production subsidy @ Rs.4.50 per quintal of actual cane crushed during sugar season 2015-16 or the proportionate cane crushed for the average sugar production of the Company's each unit in last three sugar seasons, whichever is lower. As the Company has substantially complied with the eligibility criteria, the aforesaid subsidy @ Rs.4.50 per quintal of cane crushed amounting to Rs.3113.15 lacs has been accounted for during the year and adjusted with line item "Sugar cane" under Note No. 23 - "Cost of material consumed". Further, the expenses incurred by the Company till 31st March, 2016 towards fulfilment of export obligation amounting to Rs.2620.41 lacs has been included under line item "Professional expenses" under Note No. 28 - "Other expenses". 3. Employee Benefits : As per Accounting Standard - 15 " Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are as follows: Defined Contribution Plan : Employee benefits in the form of Provident Fund, Employee State Insurance and Labour Welfare Fund are considered as defined contribution plan. However, upto 31st March, 2015, Provident fund in respect of certain employees was contributed to a fund set up by the Company which was treated as a defined benefit plan since the Company had to meet the interest shortfall Defined Benefit Plan: On Company's request, in exercise of the powers conferred under section 17(4) of the Employees' Provident Fund & Miscellaneous Provisions Act, 1952, the Hon'ble Ministry of Labour and Employment, Government of India, has cancelled the exemption granted to the Company with effect from 1 st April, 2014 vide its order dated 29th April, 2015. Accordingly, Employees Provident Fund set up by the Company ceases to exist. After cancellation, contribution to the provident fund of the related employees is being deposited with Government Provident Fund w.e.f 1 st April, 2015. Long-term employee benefits in the form of gratuity and leave encashment are considered as defined benefit obligation. The brsent value of the obligation is determined based on actuarial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognised in the Balance Sheet rebrsent the brsent value of the obligation as adjusted for unrecognised past service cost and as reduced by the fair value of plan assets. 4. In view of inadequacy of profits, the Remuneration paid during the year and during the brvious year to the Managing Director and Joint Managing Director is/was the minimum remuneration in accordance with terms and conditions approved by the shareholders. Necessary approval has been obtained from the Central Government in this regard. 5. Khalilabad Sugar unit, a unit of Company was incurring losses for the last several years and getting low recovery. Further, the Sugar Mill was old and expenses on wear and tear were abnormally high. Since, even the most efficient and integrated plants were incurring losses, it was impossible for the said Sugar unit to survive in long term. Therefore, the Board of Directors of the Company in its meeting held on 27th May, 2015 discussed and decided to close the said sugar unit of the Company. As a result of closure of the said unit, the Company announced voluntary retirement scheme (VRS scheme) for the employees of the said unit pursuant to which, the Company has paid compensation of Rs.409.84 lacs (Previous year: nil) to those who availed the said VRS scheme. 5. The Hon'ble Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 7th January, 2014 had permitted transfer of 20% equity shares of Indo Gulf Industries Ltd. (IGIL) held by the Company as well as induction of co-promoter /strategic investor in IGIL, under a Modified Draft Rehabilitation Scheme (MDRS) to be approved by the Hon'ble BIFR. However, the Hon'ble BIFR vide its order dated 4th August, 2014, reviewed its directions and directed the Operating Agency to submit its report after conducting due-diligence of co-promoter/strategic investor and reserved its order for pronouncement. The order in the subject matter was pronounced on 23rd January, 2015, whereby the concerned Bench observed that induction of co-promoter/strategic investor was not in transparent manner and was not in accordance with the Law. Aggrieved by the said order IGIL brferred an Appeal before the Hon'ble AAIFR which was disposed of by the Hon'ble AAIFR on 14th September, 2015 by setting aside the observation of the Hon'ble BIFR and remanding the matter back to the Hon'ble BIFR with a direction to consider the MDRS in accordance with law. In the meantime, net-worth of IGIL turned positive to Rs.12.15 lacs as per its Audited Balance Sheet as at 31st March, 2016. Accordingly, IGIL has filed an application with the Hon'ble BIFR on 29th April, 2016 for deregistration from the purview of the Sick Industrial Companies (Special Provisions) Act, 1985. The Hon'ble BIFR passed an order on 6th May, 2016 wherein it directed the Operating Agency to file status reports (1) on the business of the strategic investor after evaluating the induction of strategic investor and conducting due diligence, (2) whether the induction of the strategic investor results in change of management of IGIL and (3) on the operation /function of IGIL after visiting the unit of IGIL. 6. Call Option Agreement A Call Option Agreement dated 30th March, 2015 has been entered by the Company with Talma Chemical Industries Private Limited (Talma), a company having 100% interest in the Equity Share Capital of Visual Percept Solar Projects Private Limited (VPSPPL) to acquire at a future date, 8914500 Equity Shares of Rs.10/- each fully paid at a mutually agreed price of Rs.25/- per Equity Share of Rs.10/- each. 7. The Company has not incurred any cost in respect of RECs. The value of RECs remaining unsold and lying in inventory as at the balance sheet date has been considered as Nil in the accounts. 8. The brvious year's figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the brceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year. As per our report of even date attached. For G. P. AGRAWAL & CO. Chartered Accountants Firm's Registration No. - 302082E For and on behalf of the Board of Directors Sd/- (CA. Sunita Kedia) Partner Membership No. 60162 Sd/- Nitin Bagaria Company Secretary Sd/- Pramod Patwari Chief Financial Officer Sd/- Dr. Arvind Krishna Saxena Whole-time Director DIN - 00846939 Sd/- Vivek Saraogi Managing Director DIN - 00221419 Place of Signature: Kolkata Date: 20th May, 2016 |