Note 1 : Significant Accounting Policies i) Basis of Preparation of financial statements These financial statements have been brpared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies(Accounts) Rules 2014,and the relevant provisions of the Companies Act,2013. The financial statements have been brpared under the historical cost convention on accrual basis. ii) Revenue Recognition Revenue and expenses are recognised on accrual basis with the exception of insurance claims, which are accounted on cash basis. Dividend Income on investments is accounted for when the right to receive the payment is established iii) Fixed Assets Fixed Assets are stated at cost (net of CENVAT wherever applicable) less accumulated debrciation. All major acquisitions of Fixed Assets are capitalised at cost and operative expenses directly attributable to cost for bringing assets to working conditions for intended use. iv) Treatment of Expenditure During Construction Period Expenditure during construction period is grouped under "Capital work-in-progress" and the same is allocated to respective Fixed Assets on the completion their construction. v) Debrciation Cement Division: Debrciation is provided on Straight Line Method in respect of Buildings, Plant & Machinery (other than Quarry Equipment) and Electrical Installations and in respect of all other assets debrciation is provided on Written Down Value Method over the useful life as specified in schedule-II of the Companies Act, 2013. Sugar and Power divisions: Debrciation is provided on Straight Line Method over the useful life as specified in schedule-II of the Companies Act, 2013. The debrciation is provided as per schedule II of the companies act 2013 w.e.f. 01.04.2014. vi) Inventories Inventories are valued at the lower of weighted average cost and net realizable value except waste/scrap which is valued at net realisable value. Finished and process stock include cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. Obsolete, defective and unserviceable inventories are duly provided for. vii) Employee Benefits a) Provident Fund is administered through Regional Provident Fund Commissioner. The contribution to the Provident Fund is charged against revenue. b) Gratuity Liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation on Projected unit credit method. The company has created an approved gratuity fund, which has taken a group gratuity cum insurance policy with life Insurance Corporation of India (LIC) for future payment of gratuity to the employees. The company accounts for gratuity liability of its employees on the basis of Independent Actuarial valuation carried out by an Actuary. c) The company accounts for Leave Encashment liability of its employees on the basis of Independent Actuarial valuation carried out by an Actuary. viii) Borrowing Cost Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. All other barrowing costs are recognised as an expense in the period in which they are incurred. ix) Taxes on Income Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with Indian Income Tax Act, 1961. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. x) Investments All investments are stated at cost. Provision for diminution in value of investments is made only if such a decline is other than temporary. xi) Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent 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, while Contingent Assets are neither recognised nor disclosed, in the financial statements. xii) Impairment The management periodically assesses using , external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is higer of the assets net selling price and value in use. which means the brsent value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectvely to an event occuring after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined(net of any accumulated amortization or debrciation)had no impairment loss been recognized for the asset in prior year. Note: 2. Provisions, Contingent Liabilities and Contingent Assets: Disclosures required by AS-29 "Provisions, Contingent Liabilities & Contingent Assets" i) Disputes with regard to Power purchase Tariff and PLF with regard to sale of power to APTRANSCO amounting to Rs. 1772.05 Lacs, out of which Rs. 1042.27 Lacs was considered as income, matter is pending before APERC. ii) Claims against the company by APCPDCL/APSPDCL amounting to Rs. 907.41 Lacs towards wheeling charges for energy wheeled from company's bagasse based co-generation unit to cement division for which writ petition filed in the High court of Andhra Pradesh and stay obtained. iii) Duty on Electricity generated and consumed was levied by the A.P.Govt. at Rs. 0.25 paise per unit from 17.07.2003. The High Court has stayed the operation of A.P. Electricity Duty Amendment Act, but asked to submit monthly returns of generation. The duty amount as on 31.03.2015 was Rs. 1228.78 Lacs. iv) For the Asst. years 1999-00, 2000-01 and 2001-02 Income tax paid Rs. 123.98 Lacs under protest against the demand of Rs. 136.40 Lacs towards disallowance of un-absorbed debrciation/losses. The matter pending in appeal before the High Court of Andhra Pradesh. v) For the Asst. Year 2011-12 and 2012-13 there was a demand of Rs. 64.45 and 120.68 Lacs towards denial of exemption u/s. 80-IA to Company's Power Division and other disallowances in Sugar and Cement Divisions. The matter is pending before CIT (Appeals). iv) Sales tax paid under protest for the Asst. years 2001-02,2002-03 of Rs. 188.56 Lacs against a demand of Rs. 188.56 Lacs regarding disputed sales tax on Molasses sales. The matter is under appeal before the High Court of Andhra Pradesh. vii) The Company has paid Rs. 1.00 crore as per the directions of Hon'ble High Court against demand of Rs. 850.22 Lacs from the forest department towards Net Present Value (NPV) in respect of diverted forest land for renewal of Mining lease under Forest (Conservation) Act, 1980. The matter is pending in appeal before the High Court of Andhra Pradesh. Note 3 : CLASSIFICATION Previous Year figures have been regrouped wherever necessary to conform to current Year's groupings / classification. As per our report of even date for M. ANANDAM & CO. Chartered Accountants A.V. Sadasiva Partner M. No. 018404 For and on behalf of the Board of Directors P. Venkateswarlu Chairman & Managing Director DIN: 00276684 P. Veeraiah Joint Managing Director DIN: 00276769 M. Bhavani Dattu Chief Financial Officer R. Ramakrishna Company Secretary Place : Hyderabad Date :28th May 2015 |