SIGNIFICANT ACCOUNTING POLICES AND NOTES ON ACCOUNT 1. Significant Accounting Policies 1.1. Basis of Preparation of financial statements The financial statements of the Company have been brpared under the historical cost convention and on accrual basis in accordance with Indian Generally Accepted Accounting Principles, applicable provisions of Companies Act,2013, and as per the Accounting standards specified under section 133 of the Compa nies Act,2013 read with rule 7 of Companies (Accounts) Rules 2014. The Financial statements have been brpared as per the schedule III of Companies Act,2013. 1.2 Changes in Accounting Policies 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 or for the purpose of better brsentation of financial statements. Management evaluates all recently issued or revised Accounting Standards on an ongoing basis and accordingly changes the Accounting policies as applicable. 1.3 Use of estimates The brparation of financial statements is in conformity with Indian GAAP which requires management to make judgments, estimates and assumptions that affect the reported balances of assets, liabilities, income and expenses the disclosures of contingent liabilities at the end of reporting period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements. 1.4 Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from operations includes revenue from sale of products, services and other operating revenue. Revenue from sales of products: Revenue from sale of products is recognized when all the significant risks and rewards of ownership of products have been passed to the buyer, usually on delivery of the products. The revenue from sale of products is inclusive of Excise duty and net of discounts, value added taxes and sales tax. With respect to Renewable Energy business, Revenue from Power supply and transmission charges are accounted for on the basis of billing to other divisions under inter-segment and includes unbilled revenues accrued up to the end of the accounting period. The intersegment revenue is based on arms length price under comparable uncontrolled price (CUP) method as per the Specified Domestic Transfer Pricing regulations. Revenue from sale of Renewable Energy Certificates is recognized at the time of sale. Interest Income: Interest is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Dividend Income: Dividend income is recognized when the Company's right to receive dividend is established by the reporting date. Incentives which are ascertainable are recognised as and when accrued. 1.5 Fixed Assets Tangible Assets: Tangible Assets are stated at cost net of accumulated debrciation and accumulated impairment losses, if any. The cost comprises purchase price(net of discounts and rebates), borrowing costs if capitalization criteria are met and any attributable cost of bringing the asset to its working condition and location for the intended use. Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future economic benefits from the existing assets beyond its brviously assessed standard of performance. Intangible Assets: Intangible assets that are acquired are recognized at cost initially and carried at cost less accumulated amortization and accumulated impairment loss, if any. Capital Work-in-Progress: Capital work-in-progress is recognized at cost. It comprises of fixed assets that are not yet ready for their intended use at the reporting date and capital stores issued Gain or loss arising from de-recognition of fixed assets (tangible and intangible) are measured as the difference between the net disposal proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss when the asset is de-recognized. 1.6 Debrciation and Amortization Debrciation on Tangible Assets: Debrciation on tangible assets is provided on the basis of straight line method at the rates and in the manner brscribed in Schedule II of the Companies Act, 2013 except in respect of the following assets where useful life is different from than those described in Schedule II Plant and Machinery: Debrciation on Plant and Machinery is provided on the basis of straight line method based on the useful life ranging from 1 to 20 years. Useful life of each asset is determined based on internal and external technical evaluation. Improvements to leasehold property: Debrciation on Improvements to leasehold property is provided over a period of lease. Debrciation on assets which are commissioned during the year is charged on pro -rata basis from the date of commissioning. Debrciation in respect of its Renewable Energy business is provided on straight line method and at rates / methodology brscribed under the relevant Central Electricity Regulatory Commission (CERC) regulations. Amortization on Intangible Assets: Intangible assets are amortized over their respective individual estimated useful lives not exceeding five years on a straight-line basis in the manner as brscribed in the Schedule II of the Companies Act,2013. 1.7 Borrowing Cost Borrowing cost directly attributable to the acquisition, construction or production of qualifying assets, till the time such assets are ready for intended use, are capitalized as part of the cost of such assets as defined in Accounting Standard (AS-16) on "Borrowing Costs". Other Borrowing costs are recognized as expenses in the year in which they are incurred. Borrowing cost includes interest, amortization of ancillary cost incurred in connection with arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. 1.8 Impairment of Fixed assets An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value and the resultant impairment loss is charged to profit and loss account in the year in which impairment is identified. Impairment loss of earlier years is reversed in the event of the estimated recoverable amount is higher. 1.9 Investments Investments, which are readily realizable and intended to be held for not more than one year from the date of such investments are classified as current investments. Current investments are carried at the lower of cost and fair value of each investment individually. All other investments are classified as long-term investments which are carried at cost less provisions for decline (if any), other than temporary, in the carrying value of each investment. 1.10 Government Grants The investment subsidies (Non-refundable) received from Government in lieu of promoters contribution are treated as capital reserve. Subsidies received towards acquisition of assets are treated as deferred Government grants and the amount in proportion to the debrciation is transferred to statement of profit and loss. 1.11 Employee Retirement Benefits Provident Fund: Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund administered by the Central Government under the Provident Fund Act, 1952, are charged to the statement of profit and loss for the year in which the contributions are due. The company has no obligation, other than the contribution payable to the provident fund. Gratuity: Accrued liability is determined on actuarial valuation basis using Projected Unit Credit (PUC) Method at the end of the year and provided in accounts as per AS-15 Leave Encashment: Accrued liability for leave encashment including sick leave is determined on actuarial valuation basis using Projected Unit Credit (PUC) Method at the end of the year and provided in accounts as per AS-15. 1.12 Foreign Exchange transactions : Transactions made during the year in foreign currency are recorded at the exchange rate brvailing at the time of transaction. Foreign currency monetary items remaining unsettled at the year end are translated a t the contract rates, when covered by firm commitment forward cover contracts and at the year end rates in other cases. Gains and losses on foreign currency transactions are recognized in the profit and loss account as per AS-11. 1.13 Leases Operating leases (Lessee): The Company has taken properties on operating lease, Civil works and other improvements of enduring nature are capitalized. Operating lease payments for properties and other assets are recognized as an expense in the statement of profit and loss on a straight line basis over the term of the lease. Finance leases (Lessee): A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. The lower of the fair value of the assets and brsent value of the minimum lease rentals is capitalized as fixed assets with corresponding amount shown as lease liability. The principle component in the lease rental is adjusted against the lease liability and the interest component is charged to profit and loss account. 1.15 Taxes on Income Income Taxes are accounted for in accordance with Accounting Standard (AS-22) on " Accounting for Taxes on Income". Income tax expenses comprises current tax (i.e., amount of tax for the period determined in accordance with the Income Tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the period). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax liability/ assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realized. Taxes on distributed profits payable in accordance with the Guidance note on "Accounting for Corporate Dividend Tax" regarded as a tax on distribution of profits and is not considered in determination of profits for the year. MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal tax during the specific period. 1.16 Cash flow statement The cash flow statement is brpared as per the "Indirect Method" set out in Accounting Standard (AS-3) "Cash Flow Statements" and brsents the cash flows by operating, financing and investing activities of the Company. Operating cash flows are arrived by adjusting profit or loss before tax for the effects of transactions of a non- cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of income or expense associated with investing or financing cash flows. 1.17 Cash and Cash Equivalents Cash and cash equivalents comprises cash on hand, cash at bank, cash on deposits with banks. 1.18 Earnings Per Share Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting brference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for theperiod attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. 1.19 Segment Reporting The Company is engaged in Dairy, Retail, Agri, Bakery and Renewable Energy businesses which are identified as reportable segments as per the Accounting Standard (AS-17) -"Segment Reporting ". The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. The Company accounts for inter-segment sales and transfers at cost plus appropriate margins. Allocation of common allocable costs allocated to each segment according to the relative contribution of each segment to the total common costs. 1.20 Provisions Provision is recognized when the company has a brsent obligation as a result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to the ir brsent value and are determined based on the best estimate required to settle the obligation at the year end. These estimates are reviewed at each year end and adjusted to reflect the current best estimates. 1.21 Contingent Liabilities Contingent liabilities are identified and disclosed as per the requirements of "Accounting Standard AS-29" Note: 2 Previous year figures are regrouped / reclassified, wherever necessary. The amounts in the financial statements are brsented in Indian Rupees in lakhs. As per our report attached For and on behalf of the Board For Raju & Prasad Chartered Accountants FRN: 003475S N Bhuvaneswari Vice Chairperson & Managing Director DIN : 00003741 N Brahmani Executive Director DIN: 02338940 I Dileep Kumar Partner Membership No.223943 A Prabhakara Naidu Chief Financial Officer M.No.FCA 200974 Umakanta Barik Company Secretary M.No.FCS 6317 Date : May 23, 2016 Place : Hyderabad |