NOTE 1 : NOTES ON ACCOUNTS SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1 SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation of Financial Statements The financial statements have been brpared under the historical cost convention (except for revaluation of certain fixed assets in earlier years) in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 2013. Use of Estimates The brparation 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 revenues and expenses during the reporting year. Difference between the actual results and estimates are recognised in the year in which the results are known/ materialised. Revenue Recognition Sales rebrsent value of goods sold and revenue from trade related activities as reduced by quality claims and rebates but includes excise duty and export benefits under DFIA Scheme and Focus Product Scheme. Fixed Assets and Debrciation Fixed Assets are recorded at cost net of CENVAT, VAT and subsidies less debrciation and impairment loss, if any. In earlier years, some of the fixed assets have been revalued at their respective fair market value and such assets are stated at revalued amount. Debrciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the management. Debrciation for assets purchased/ sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line method commencing from the date the assets is available to the company for its use. Leases relating to land are amortized equally over the period of lease. Leased mines are debrciated over the estimated useful life of the mine or lease period, which ever is lower. Assets acquired during the year whose cost does not exceed Rs. 10,000 are fully debrciated in the year of acquisition. The Management estimates the useful lives for the others fixed assets as follows. Building * 30-60 years Plant and Machinery * 15-25 years Office equipment 5 years Computers equipment 3-6 years Furniture and fixtures 10 years Vehicles 8-10 years Intangible assets 3 years * For these class of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given above best rebrsent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as brscribed under Part C of Schedule II of the Companies Act, 2013. Debrciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end Government Grants Cash Subsidies relating to specific fixed assets are recorded as deduction from the cost of the assets concerned in arriving at its book value. Impairment of Assets Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset's net selling price or its value in use. Value in use is the 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. Net selling price is the amount obtainable from the sale of an asset at an arm's length transaction between knowledgeable willing parties, less the costs of disposal. Investments Investments are classified into current and long term investments. Current investments are stated at the lower of cost or fair value. Long term investments are stated at cost. A provision for diminution is made to recognize a decline, other than temporary, in the value of long term investments. Investments in subsidiary companies are of long term strategic value and except as already provided, diminution, if any, in the value of these investments is temporary in nature. Inventories Inventories comprising Raw Materials and Finished Goods are stated at cost or net realizable value, whichever is lower. Cost of Raw Materials is arrived at mainly on weighted average basis for every month. The cost of Finished Goods include material cost, cost of conversion, debrciation, other overheads to the extent applicable and excise duty. Stock-in-process is valued at cost determined by taking material cost, labour charges, and direct expenses. Stores and Spares are stated at cost less provision, if any, for obsolescence. The cost of Loose Tools is written off equally over three years. Foreign Currency Transactions Transaction denominated in foreign currencies are normally recorded at the exchange rate brvailing at the time of the transaction. Monetary items denominated in foreign currencies at the year end are restated at year end rates. In case of monetary items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of contract is recognized as exchange difference and the brmium paid on forward contracts is recognized over the life of the contract. Non-monetary foreign currency items are carried at cost. Any income or expenses on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss . Foreign currency monetary assets and liabilities other than net investments in non integral foreign operations are translated at the exchange rate brvailing on the Balance Sheet date. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except for the exchange difference arising on translation of long term foreign currency monetary items as at the balance sheet date, which are being amortised over the maturity period of the said long term foreign currency monitory items. Exchange difference arising on a monetary item that, in substance, forms part of an enterprise's net investments in a non-integral foreign operation are accumulated in a Foreign Currency Translation Reserve. Derivative Instruments The Company enters into derivative contracts in the nature of forward contracts with an intention to hedge its firm commitments and highly probable transactions. Derivative contracts which are closely linked to the underlying transactions are recognised in accordance with the contract terms. All other contracts are marked-to-market at the reporting date and resultant losses are recognised in the financial statements and the net gains, if any, however are ignored. Retirement Benefits Contribution payable to recognized Provident Fund and Superannuation Scheme which are defined contribution scheme is charged to the Statement of Profit and Loss. Gratuity and Leave Encashment which are defined benefits are accrued based on actuarial valuation as at the Balance Sheet date. The Company has opted for a Group Gratuity Scheme and the contribution is charged to the Statement of Profit and Loss each year. Intangible Assets Intangible Assets are stated at cost of acquisition less accumulated amortization/debrciation. On amalgamation/acquisition the excess of consideration over the value of net assets acquired is treated as goodwill arising on amalgamation and is written off over a period of five years. Borrowing costs Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. The capitalization rate is the weighted average of the borrowing cost applicable to the borrowings of the Company that are outstanding during the year. All other borrowing costs are recognized as an expense in the year in which they are incurred. Leases Leases entered into before 1st April, 2001 are treated as operating leases and lease rentals paid are charged to Statement of Profit and Loss. Leases entered into on or after 1st April, 2001 are accounted for in accordance with Accounting Standard -19. Taxation Income Tax expenses comprises of current tax and deferred tax charge or credit. The deferred tax assets and/ or liabilities are calculated by applying tax rates and tax laws that have been enacted at the Balance Sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed debrciation (due to amalgamation) under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing difference are recognized only to the extent there is a reasonable certainty of its realization. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to re-assess realization. Provisions, Contingent Liabilities and Contingent Assets In accordance with Accounting Standard - 29 Provisions, Contingent Liabilities and Contingent Assets, provisions are recognised in the accounts in respect of brsent probable obligations, the amount of which can be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company. 2.1 In Accordance with the Scheme of Arrangement duly approved by Hon'ble High Court of Gujarat vide its order dated 30th November 2009, the Company has not taken any effect in the current financial statements for the year ended 31 March 2016. Consequently there is no change in Business Development Reserve. 2.2 Exceptional items rebrsent one time employees' separation cost incurred during the year on account of Voluntary Retirement Scheme (VRS) given to employees of Soda Ash division. The benefits of VRS would be accruing over a period of time 2.3 Prior Period Item of Rs..0.01 Cr. (Previous year Rs. 0.09 Cr.) is on account of short provision for consultancy services of earlier year. 2.4 Impairment of Assets In pursuance of Accounting Standard - 28, the Company has reviewed its carrying cost of assets with value in use (determined based on future earnings) / net selling price (determined based on valuation). Based on such review, management is of the view that in the current financial year impairment of assets is not considered necessary. 2.5 ESOS Trust owns total 20,46,195 shares, out of which 15,79,922 shares were illegally sold by a party against which ESOS Trust has initiated legal proceedings and 4,66,273 shares are held by Stock Exchange based on an arbitration award. Pending final decision on these shares held by Trust, the Trust will continue for the limited purpose of litigation. 2.6 The brvious year's/corresponding period's figures have been regrouped / reclassified. For and on behalf of JAYANTILAL THAKKAR & Co Chartered Accountants (Firm Reg. No. 104133W) (C. V. THAKKER) Partner Membership No: 006205 For and on behalf of RAHUL GAUTAM DIVAN & ASSOCIATES Chartered Accountants (Firm Reg. No. 120294W) (RAHUL DIVAN) Partner Membership No: 100733 For and on behalf of the Board Sanjay Dalmia Chairman Dr. B. C. Jain Director R. S. JalanManaging Director Raman ChopraCFO & Executive Director - Finance Bhuwneshwar Mishra General Manager & Company Secretary Place: New Delhi Date: 19 May 2016 |