NOTES TO FINANCIAL STATEMENTS for the year ended 31st March, 2016 1. Significant Accounting Policies 1.1 Basis of Accounting The financial statements are brpared under the historical cost convention, except stated otherwise, on an accrual basis and in accordance with the generally accepted accounting principles in India, the applicable mandatory Accounting Standards as brscribed under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been brpared and brsented as per the requirement of Schedule III as notified under Companies Act, 2013. 1.2 Use of Estimates The brparation of financial statements require judgements, estimates and assumptions to be made that affect the reported amount of assets and liabilities including contingent liabilities on the date of the finanacial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/materialised. 1.3 Fixed Assets Tangible Fixed Assets a) Fixed Assets, other than those which have been revalued, are stated at their original cost which includes expenditure incurred in the acquisition and construction/installation and other related expenses. In respect of qualifying assets as defined by Accounting Standard 16, related br-operational expenses including borrowing cost are also capitalised and included in the cost. Claims in respect of capital assets are adjusted as and when settled. b) From accounting period commencing on or after 1st April, 2011, the company adjusts exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset and debrciates the same over the remaining life of the asset. c) Revalued assets are stated at the values determined on revaluation. d) Assets acquired under finance lease are recognised at lower of fair value or brsent value of minimum lease payments. Intangible Fixed Assets Intangible Assets are stated at cost on initial recognition, after which the same are stated at cost less accumulated amortisation and accumulated impairment loss, if any. 1.4 Debrciation and Amortisation a) Debrciation on tangible fixed assets is provided on straight-line method at the rates determined based on the useful lives of respective assets as brscribed in the Schedule II of the Companies Act, 2013. b) In case the cost of part of a tangible asset is significant to the total cost of the assets and useful lives of that part is different from the remaining useful lives of the asset, debrciation has been provided on straight line method based on internal assessment and independent technical evaluation carried out by external valuers which the management believes that the useful lives of the component best rebrsent the period over which the management expects to use those components. c) Debrciation for assets purchased / sold during the year is proportionately charged. d) Leasehold land is amortised over the period of lease. e) On amount added on revaluation, debrciation is provided on straight-line method at the rates determined based on the useful lives of respective assets as brscribed in the Schedule II of the Companies Act. f) Debrciation on assets built on leasehold land, which is transferable to the lessor on expiry of lease period, is amortised over the period of lease. g) Intangible Assets are amortised over a period of three years. The amortisation period and the amortisation method are reviewed atleast at the end of each financial year. If the expected useful life of the assets is significantly different from brvious estimates, the amortisation period is changed accordingly. 1.5 Capital Work-in-Progress and Intangible assets under Development a) Capital Work-in-Progress is stated at cost which includes expenses incurred during construction period, interest on amount borrowed for acquisition of qualifying assets and other expenses incurred in connection with project implementation in so far as such expenses relate to the period prior to the commencement of commercial production. b) Intangible Assets under development is stated at cost which includes expenses incurred in connection with development of Intangible Assets in so far as such expenses relate to the period prior to the getting the assets ready for use. 1.6 Investments a) Investments, which are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.The portion of long term investments expected to be realised within twelve months after the reporting date are disclosed under current investments as per the requirement of Schedule III of Companies Act, 2013. b) On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees & duties. c) Long-Term Investments are stated at cost. Provision for diminution is made if the decline in value, in the opinion of the management, is other than temporary. d) Current Investments, other than the portion of long term investments disclosed under current investments, are stated at lower of cost or fair value. 1.7 Inventories Inventories are valued at Cost or Net Realisable Value, whichever is lower. Cost comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their brsent location and condition and is determined on weighted average basis. Net Realisable Value is the estimated selling price in the ordinary course of business less estimated cost of completion and the estimated cost necessary to make the sale. However materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. 1.8 Employee Benefits a) Employee benefits of short term nature are recognized as expense as and when it accrues. b) Employee benefits of long term nature are recognized as expense based on actuarial valuation using projected unit credit method. c) Post employment benefits in the nature of Defined Contribution Plans are recognized as expense as and when it accrues and that in the nature of Defined Benefit Plans are recognized as expenses based on actuarial valuation using projected unit credit method. d) Actuarial gains and losses are recognized immediately in the Statement of Profit & Loss as income or expense. e) Expenditure incurred on Voluntary Retirement Scheme is charged to the Statement of Profit & Loss immediately. 1.9 Foreign Currency Transactions and Derivatives a) Transactions in foreign currency are recorded at the rate of exchange brvailing on the date of transaction. Year-end balance of foreign currency transactions is translated at the year-end rates. b) The company has opted to avail the option provided under paragraph 46A of Accounting Standard-11 i.e The Effects of Changes in Foreign Exchange Rates inserted vide Notification dated December 29, 2011. Consequently, exchange differences arising on settlement of long-term monetary items or on period end reporting of long term monetary items at rates different from those at which they were initially recorded during the period or reported in brvious financial statements in so far as they relate to the acquisition of the debrciable capital asset, are added to/ deducted from the cost of the asset and debrciated over the balance useful life of the asset and in other cases, accumulated in "Foreign Currency Monetary Item Translation Difference Account" and amortised over the balance period of such long term asset or liability. c) All other exchange differences are recognized as income or expense in the period in which they arise. d) In respect of transactions covered by Forward/Future Contracts (except against firm commitments and highly probable forecast transactions), the brmium or discount arising at the inception of Forward/Future Contracts entered into to hedge an existing asset/liability, is amortised over the life of the contract. Exchange differences on such contracts between rate at the inception of such contracts and rate on the reporting date are recognised as income or expense for the period. e) Outstanding Forward/Future contracts against firm commitments and highly probable forecast transactions and derivative contracts, other than those stated above, are marked to market and the resulting loss, if any, is charged to the Statement of Profit & Loss. Gain, if any, on such marking to market is not recognised as a prudent accounting policy. 1.10 Recognition of Revenue and Expenses a) All revenue and expenses are accounted for on accrual basis except as otherwise stated. b) Gross Sales are inclusive of excise duty and net of returns, claims and discount etc. c) Export benefit entitlements to the Company under the EXIM/Foreign Trade Policy is recognized in the year of exports on accrual basis. d) Sale of Certified Emission Reductions (CERs) is recognized as income on the delivery of the CERs to the buyer's account as evidenced by the receipt of confirmation of execution of delivery instructions. 1.11 Taxation Provision for Current Income Tax is made in accordance with the Income Tax Act, 1961. The deferred tax charge or credit is recognized using substantively enacted tax rates subject to consideration of prudence on timing differences between book and tax profits. Deferred tax assets are recognized 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. Tax credit for Minimum Alternate Tax (MAT) is recognized when there is convincing evidence of payment of normal income tax during the specified period. 1.12 Government Grants Grants received from Government agencies against specific fixed assets are adjusted to the cost of the assets and capital grants for Project Capital Subsidy are credited to Capital Reserve. Revenue Grants are recognized as Other Operative Revenue or reduced from respective expenses. 1.13 Impairment An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net brsent value of cash flow expected over the balance useful lives of the assets. An impairment loss is recognized as an expense in the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognized in earlier accounting period is reversed if there has been an improvement in recoverable amount. 1.14 BorrowingCosts General and specific borrowing costs attributable to the acquisition, construction or installation of qualifying capital assets till the date of commencement of commercial use of the assets are capitalised. Other borrowing costs are recognized as an expense in the period in which they are incurred. 1.15 Provisions Provisions are recognised where reliable estimate can be made for probable outflow of resources to settle the brsent obligation as a result of past event and the same is reviewed at each Balance Sheet date. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date. 1.16 Contingent Liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future events beyond the control of the company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. 2.1 Commitments Capital Commitments Estimated amount of contracts remaining to be executed on Capital Account (Net of advances) and not provided for Rs.3227.39 (Previous Year Rs. 4666.91). 2.2 Derivative Instruments and Unhedged Foreign Currency Instruments (a) Outstanding Forward/Future Contracts booked for the purpose of hedging receivables/firm commitments are USD/INR 2.36 (Previous Year USD/INR 12.98) and payables/firm commitments are USD/INR 312.00 (Previous Year USD/INR 190.00). (b) Unhedged foreign currency receivables are USD 5.47 (Previous Year USD 3.72) and EURO 0.57 (Previous Year EURO NIL) and payables are USD 935.64 (Previous Year USD 1131.23), EURO 0.71 (PreviousYear EURO 12.77) and JPY 1.55 (Previous Year JPY NIL). 2.3 In accordance with the Guidance Note on Accounting for Expenditure on Corporate Social 2.4 During the year, the Company has signed a share purchase agreement with Reliance Infrastructure Limited for acquisition of its entire cement business for an enterprise value of Rs. 480000. The said acquisition is subject to the approval of regulatory authorities, as may be applicable. 2.5 The Board of Directors of the Company at its meeting held on 25th July, 2013 had approved the Scheme of Amalgamation to amalgamate Talavadi Cements Limited, a 98% subsidiary with Birla Corporation Limited with an appointed date of 1st April, 2013. The Scheme is brsently pending for the approval of the Hon'ble High Court, Kolkata. 2.6 In view of decision of Hon'ble Subrme Court dated 24th September 2014, the allocation of Bikram Coal Block to the company was cancelled. Subsequently, the Government promulgated The Coal mines (Special Provisions) Act, 2015, which inter alia provides for compensation to prior allottees against expenditure incurred on the cancelled coal block. The company has submitted its claim for compensation of amount incurred on Coal Block amounting to Rs. 1609.54 (included Rs. 1211.40 under "Other Current Assets" in note no. 2.13 and Rs. 398.14 under Fixed Assets in note no. 2.10). Consequential adjustment shall be made on settlement of the claim. 2.7 There being uncertainties in realisation from Insurance Claims, the same are accounted for on settlement/realisation. 2.8 Certain Trade Receivables, Loans & Advances and Creditors are subject to confirmation. In the opinion of the management, the value of trade receivables and Loans & Advances on realisation in the ordinary course of business, will not be less than the value at which these are stated in the Balance Sheet. 2.9 a) The Company's Unit Soorah Jute Mills is under Suspension of Operations since 29th March, 2004. b) The Company's Units Birla Vinoleum and Auto Trim Division at Birlapur, are under Suspension of Operations since 18th February, 2014. c) In respect of mining matter of Chanderia before the Hon'ble Subrme Court, a combrhensive report has been submitted by Central Building Research Institution (CBRI) on full scale mining. The next date of hearing is fixed on 29th June ,2016. 2.10 Liability in respect of compensation/penalty, if any, for non-compliance of Jute Packaging Materials (Compulsory use of Packaging Commodities) Act, 1987 up to 30th June, 1997 being unascertainable shall be accounted for as and when settled. 2.11 Figures for the brvious year have been regrouped wherever necessary. As per our Report annexed. For H. P. KHANDELWAL & CO. Chartered Accountants Firm Registration No. 302050E RAJIV SINGHI Partner Membership No. 053518 ADITYA SARAOGI Chief Financial Officer GIRISH SHARMA Joint President (Indirect Taxes) & Company Secretary HARSH V. LODHA Chairman (DIN: 00394094) B. R. NAHAR Managing Director (DIN: 00049895) 1B, Old Post Office Street, Kolkata-700 001. The 6th day of May, 2016 |