NOTE C: CORPORATE INFORMATION, BASIS OF brPARATION AND SIGNIFICANT ACCOUNTING POLICIES 1 Corporate Information Incorporated on 11-09-1939, The Ugar Sugar Works Ltd. (CIN-L15421PN193/PLC006738) is one of the leading sugar factories in Karnataka. Its shares are listed on BSE and NSE. The Company is engaged in manufacture and sale of sugar, industrial and potable alcohol, and generation and distribution of electricity. The Company's plants are located at Ugarkhurd in Belgaum District and at Malli-Nagarhalli Village in Kalburgi District in the state of Karnataka. 2 Basis of Preparation a. The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been brpared to comply in all material respects with The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013 b. The financial statements have been brpared under historical cost convention on an accrual basis. c. The accounting policies applied with the Company are consistent with those used in the brvious year. d. The financial statements have been brpared on a going concern basis. 3 Significant Accounting Policies i. Fixed Assets a. Tangible Assets are carried at cost of acquisition or construction (inclusive of freight, duties, taxes and expenses related to acquisition and installation and commissioning) less accumulated debrciation. b. Intangible Assets (Computer Software) are recorded at the consideration paid for acquisition. ii. Debrciation & Amortisation a. Debrciation on Tangible Assets is provided on "Written Down Value" Method: - As per the provisions of Schedule XIV to the Companies Act, 1956, till 31-03-2014 and - As per the provisions of Schedule II to the Companies Act, 2013, from 01-04-2014. Consequently, with effect from 01-04-2014; i. the carrying value of assets is now debrciated over their remaining useful lives, ii. where the remaining useful life of an asset is Nil as on 01-04-2014, carrying value has been adjusted against opening reserves amounting to Rs. 37.43 lakh (net of tax), in accordance with transitional provision of Schedule II. iii. on account of above change, debrciation expense for the year ended 31-03-2015 is lower by Rs. 888.74 lakh. b. Intangible Assets are amortised over a period of three years. iii. Impairment of Assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If an indication exists, the Company estimates the asset's recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. After impairment, debrciation is provided on the revised carrying amount of the asset over its remaining useful life. An assessment is made at each reporting date as to whether there is any indication that brviously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the company estimates the asset's recoverable amount. A brviously recognised impairment loss is changed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. iv. Investments Non-current Investments are carried at cost of acquisition. A provision for diminution is made to recognise decline other than temporary, in the value of investments. v. Valuation of Inventories a. Stores and Spares, Raw Material, Purchased Bagasse, Sugar in Process, Crops in progress, Petroleum Products and Finished Goods are valued at cost or net realisable value, whichever is less. Cost is arrived at on Weighted Average Method. Cost comprises costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their brsent location and condition. b. Molasses, Molasses in process, Own Bagasse and Scrap are valued at net realisable value. vi. Research and Development Revenue Expenditure on Research and Development is charged off as an expense in the year in which incurred and the Capital Expenditure is grouped with fixed assets under appropriate heads and debrciation is provided at the applicable rates. vii. Employee Benefits Short term compensated absence benefits (both vesting and non-vesting) are accounted for on the basis of the actual valuation of the leave entitlement as on the balance sheet date. The actuarial valuations in respect of post-employment defined plans and long term employee benefit as at the balance sheet date are measured using Project Unit Credit Method. a. Short term Employee Benefits All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits. Benefits such as salaries, wages, bonus and short term compensated absences, leave travel allowance, etc. are recognised in the period in which the employee renders the related service. b. Post Employment Benefits: i. Defined Contribution Plans The Company's superannuation scheme and pension scheme are defined contribution plans. The contribution paid / payable under the scheme is recognised during the period in which the employee renders related service. ii. Defined Benefit Plans The employees' gratuity fund scheme and provident fund scheme managed by a Trust are the Company's defined benefit plans. The brsent value of the obligation under such defined benefit plans is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the brsent value of the estimated future cash flows. The discount rates used for determining the brsent value of the obligation under defined plans, is based on the market yields on Government Securities as at the balance sheet date, having maturity periods approximating to the terms of related obligations. Actuarial gains and losses are recognised immediately in the Statement of Profit & Loss. in case of funded plans, the fair value of the plan's assets is reduced from the gross obligation under the defined benefit plans, to recognise the obligation on the net basis Gains or losses on curtailment or settlement of any defined benefit plan are recognised when the curtailment or settlement occurs. Past service cost is recognised as expenses on a straight line basis over the average period until the benefits become vested. The Company pays contribution to a recognised provident fund trust in respect of all locations. The guidance note on implementing AS-15, Employees Benefits (Revised 2006) as issued by the Institute of Chartered Accountants of India (ICAI) states that provident funds set up by employer, which requires interest shortfall to be met by the employer, needs to be treated as a defined benefit plan. In the absence of clear guidelines on the issue of actuarial valuation related to interest shortfall to be made good by the employer, the Company's actuary have exbrssed their inability to reliably measure the provident fund liability of the Company's recognised provident fund. Accordingly, the Company is unable to exhibit the related disclosures. iii. Long Term Employee Benefit The obligation for long term employee benefits such as long term compensated absences is recognised in the same manner as in the case of defined benefit plans as mentioned in note II(b) above. Accumulated leaves that are expected to be utilised within the next twelve months are treated as short term employee benefits. viii. Revenue Recognition a. Revenue in respect of insurance / other claims, interest, subsidy, incentive, etc. is recognised only when it is reasonably certain that the ultimate collection will be made. b. Sales Value is inclusive of Excise Duty and net of sales tax, where applicable. ix. Foreign Currency Transactions a. All foreign currency transactions are accounted for at the rates brvailing on the date of the transaction. The exchange differences on settlement / conversion are adjusted to Profit & Loss Account. b. In respect of amount payable in foreign currency covered by forward contracts, the brmium is recognised over the period of contract. x. Subsidies Received a. Subsidies received towards fixed assets are reduced from gross book value of the concerned fixed assets. b. Subsidies received relating to revenue expenditure are deducted from related expense. xi. Borrowing Costs a. Borrowing costs that are attributable to acquisition, construction or erection of qualifying assets incurred during the period of acquisition or construction, are capitalised as part of the cost of the asset. b. Other borrowing costs are recognised as expenditure in the period in which they are incurred. xii. Taxation Tax on income for the current period is made in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax is recognised on timing differences between the accounting income and the taxable income for the period. The tax effect is calculated on the accumulated timing differences at the end of the accounting period based on the brvailing enacted regulations or those that may be substantively enacted by the Balance Sheet date. xiii. Earnings per share a. Basic Earnings per share For the purpose of calculating basic earnings per share, the net profit or loss for the period attributable to equity shareholders after deducting any attributable tax thereto for the period is divided by weighted number of equity shares outstanding during the period. b. Diluted Earnings per share For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. 3 Figures of the brvious year have been regrouped / rearranged / recast where necessary. 4 Figures in the brackets pertain to brvious year. As per our report of even date For M/s P. G. Bhagwat Chartered Accountants Firm Regn. No. 101118W Nikhil M. Shevade Partner Membership No. 217379 Shishir S. Shirgaokar Exe. VC (DIN-00166189) Niraj S. Shirgaokar MD (DIN-00254525) Chandan S. Shirgaokar MD (DIN-00208200) R. V. Desurkar GM-Finance B. G. Kulkarni GM-Corp. Aff. & Co. Sec Place: Pune Date: 29-05-2015 |