1 Significant Accounting Policies - 2015-16 1.01 Basis of brparation of financial statements The financial statements are brpared under historical cost convention, on accrual basis and in accordance with the generally accepted accounting principle (GAAP) in India and 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. 1.02 Use of estimates The brparation of financial statements requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they materialize. 1.03 Fixed assets, Intangible assets and capital work-in-progress Fixed Assets are stated at cost except to the extent revalued. Borrowing costs attributable to the qualifying assets and all significant costs incidental to the acquisition of assets are capitalised. Freehold and Leasehold land at Rampur, inter alia, were revalued by an approved valuer as on 1st January, 1999. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed. Intangible Assets are stated at cost less accumulated amortization and impairment loss, if any. 1.04 Debrciation Tangible assets a) Cost of Leasehold land and leasehold improvements are amortised over the period of lease. b) Debrciation is provided as per Schedule II to the Companies Act, 2013, on straight line method with reference to the useful life of the assets specified therein. c) On additions costing less than Rs.5000, debrciation is provided at 100% on pro-rata basis. d) Debrciation on amount added on revaluation of assets is transferred from Revaluation Reserve to Surplus. Intangible assets e) Based on the anticipated future economic benefits, the life of Brands & Trade Mark and Goodwill are amortised over twenty year on straight line method. f) Softwares are amortised over a peiod of three years on straight line method. 1.05 Impairment: At each Balance Sheet date, the Company reviews the carrying amount of its fixed assets to determine whether there are any indication that those assets have suffered an impairment loss. If any such indication exists, recoverable amount of the assets is estimated in order to determine the extent of impairment loss. 1.06 Investments Long term investments are carried at cost. Provision for diminution in value of long term investment is considered, if in the opinion of management, such a decline in value is considered as other than temporary in nature. Current investments are valued at lower of cost or fair value 1.07 Inventories Finished goods and stock-in-process are valued at lower of cost or net realisable value. Cost includes cost of conversion and other expenses incurred in bringing the goods to their location and condition. Raw materials, packing materials, stores and spares are valued at lower of cost or net realisable value. Cost is ascertained on "moving average" basis for all inventories. 1.08 Revenue recognition Sales are recognised on delivery or on passage of title of the goods to the customers when the risk and reward stand transferred to customers. They are accounted net of sales tax/VAT, trade discounts and rebates but inclusive of excise duty. Export incentives are accounted for on the basis of export sales effected during the year. Interest income is accounted on time proportion basis. Dividend income is accounted for, when the right to receive is established. 1.09 Excise Duty In respect of stocks covered by central excise, excise duty is provided on closing stocks and also considered for valuation. In respect of country liquor and IMFL stocks, applicable State excise duty/ export duty is provided on the basis of state-wise despatches identified. In the case of Rectified Spirit/ ENA, it is not ascertainable as to how much would be converted finally into country liquor or IMFL or sold as such and also to which particular state or exported outside India. Duty payable in such cases is not determinable (as it varies depending on the places and the form in which these are despatched). Hence, the excise duty on such stocks lying in factory is accounted for on clearances of such goods. The method of accounting followed by the Company has no impact on the results of the year. 1.10 Transfer pricing of Bio-Gas / Power Since it is not possible to compute the actual cost, inter unit transfer of bio-gas & power have been valued on the basis of savings in direct fuel cost / brvailing purchase price of power. The same has been considered for valuation of inventories. 1.11 Treatment of Employee benefits The Company makes regular contributions to duly constituted funds set up for Provident Fund, Family Pension Fund, Employees State Insurance, Superannuation and Gratuity, which are charged to revenue. The employees are allowed the benefit of leave encashment as per the rules of the Company, for which provision for accruing liability is made on actuarial valuation carried out at the end of the year. Contribution to gratuity is also determined on actuarial basis. 1.12 Foreign Currency Transactions Transactions in foreign currencies are accounted for at the exchange rate brvailing on the day of the transaction. The outstanding liabilities/ receivables are translated at the year end rates. In the case long term foreign currency monetary items, relating to acquisition of debrciable capital assets, the resultant gain or loss is adjusted to cost of respective capital asset and in the case of other long term foreign currency monetary items, the resultant gain or loss is transferred to 'Foreign currency monetary item translation difference account' and transferred to revenue over the period of long term foreign currency monetary item. In the case of other monetary foreign currency items, the resultant gain or loss are adjusted to the statement of Profit & Loss. Non-monetary items denominated in foreign currency, (such as fixed assets) are valued at the exchange rate brvailing on the date of transaction. Any gain or losses arising due to exchange differences arising on translation or settlement are accounted for in the Statement of Profit and Loss. In case of forward exchange contracts, the brmium or discount arising at the inception of such contracts, is amortised as income or expense over the period of contract and exchange difference on such contracts, i.e. difference between the exchange rate at the reporting / settlement date and the exchange rate on the date of inception / the last reporting date, is recognized as income / expenses for the period. 1.13 Derivative Transactions These transactions are undertaken to hedge the cost of borrowing and comprise of principal / interest rate swaps.The income / expenses are recognised as & when earned / incurred. In case of outstanding derivative contracts at the year end date, loss is determined on marked to market (MTM) basis and provision made. 1.14 Leases Since significant portion of risks and rewards are retained by lessor in respect of assets acquired on lease, they are classified as operating lease and the lease rentals are charged off to revenue account. 1.15 Research and Development Fixed assets used for Research and Development are debrciated in the same manner as in the case of similar assets; the revenue expenses are charged off in the year of incurrance. 1.16 Taxation Provision is made for deferred tax for all timing differences arising between taxable income and accounting income at currently enacted or substantially enacted tax rates. Deferred tax assets are recognized, only if there is reasonable / virtual certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each Balance Sheet date. 1.17 Provisions, Contingent Liabilities and Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized 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 recognized but are disclosed in the notes to accounts. Contingent assets are neither recognized nor disclosed in the financial statements. 2 i) In the opinion of the Management, trade receivables exceeding three years (Rs.3243.01 lakhs - Previous year: Rs.2954.58 lakhs) are considered good and recoverable in view of the legal steps being taken for recovery. ii) The Company entered into an agreement dated 11th November 2011 for purchase of land & building for a lumpsum consideration of Rs 80.00 crores. The purchase consideration was paid subject to vacation of mortage with payment of interest by the party on the consideration till the transfer of the property in the name of the Company. Since the party had not fulfilled the obligation, the matter was referred to an arbitrator in December 2015. Subsequently, the party has agreed to repay the advance with accrued interest over a period of five years. Consent terms have been filed with the Arbitrator and the matter was reserved for award. The party has agreed for the continuing use of the asset by the company till the entire amount is returned. In the opinion of the management, the advance is considered good and recoverable. iii) In the opinion of the Management and to the best of their knowledge and belief, the value on realisation of current assets, loans and advances in the ordinary course of business would not be less than the amount at which they are stated in the Balance Sheet. 3. Pursuant to the amendment by way of addition of paras 46 and 46A to AS-11 on effect of changes in foreign exchange rates, the Company had excercised the option of deferring the foreign exchange fluctuation gain / loss in respect of the accounting periods commencing from 01.04.2007. Further, such foreign exchange differences relating to acquisition of debrciable capital assets have been adjusted to the cost of such assets and debrciated over the balance life of the assets. As a result, foreign exchange loss (including arising on account of loan repayment) of Rs 565.70 lacs (brvious year Rs 479.45 lacs) long term foreign currency items pertaining to capital assets has been adjusted to fixed assets. Out of the foreign currency monetary items translation difference account of Rs.2806.35 lacs (debit) (brvious year Rs.4229.45 lacs), as on 31.03.2016, a sum of Rs 706.85 lacs (brvious year Rs. 1033.09 lacs) has been debited to loss on foreign exchange fluctuation account during the year. 4 Operating Lease The Company has taken brmises on operating lease i) Lease rental recognised during the year 546.04 489.57 ii) The minimum non-cancellable lease outstanding at the balance sheet date in respect of assets Particulars Within one year of the balance sheet date 516.07 366.61 Due in a period between one year and five years 1,409.87 462.90 Due after five years 55.67 109.26 iii) General description of lease terms: Lease rentals are charged on the basis of terms and conditions. Assets are given on lease for a period of one to ten years. 5. Income Tax - The Company can avail the benefit of unutilized MAT credit of Rs 153.00 lacs within the period provided in law. Previous year figures have been re-grouped, wherever necessary, to correspond to current year figures. As per our report of even date For V. Sankar Aiyar & Co. Chartered Accountants ICAI Firm Regn. No. 109208 W M. S. Balachandran Partner Membership No. 024282 For and on behalf of Board Dilip K. Banthiya Chief Financial Officer Dr. Lalit Khaitan Chairman & Managing Director Amit Manchanda Group Head - Legal & Company Secretary Abhishek Khaitan Managing Director Ajay K. Agarwal President (Finance & Accounts) Directors Place : New Delhi Dated : 10th May, 2016 |