NOTE "1 A" GENERAL INFORMATION Dwarikesh Sugar Industries Limited (DSIL) is a public limited company domiciled in India and was incorporated in the year 1993 under the provisions of the Companies Act, 1956. Currently equity shares of the company are listed at BSE and NSE. DSIL is integrated conglomerate, primarily engaged in manufacture of sugar and allied products. From a humble beginning in 1993, DSIL today is a multi-faceted, fast growing industrial group with the strong brsence in diversified fields such as sugar manufacturing, power and Ethanol/Industrial Alcohol production. The Company has three sugar manufacturing units, out of which 2 units namely Dwarikesh Nagar and Dwarikesh Puram are located in Bijnor District of Uttar Pradesh (U.P.) and one unit namely Dwarikesh Dham in Bareilly District (U.P.). Registration details Registration No. CIN No. L15421 UP1993 PLC 018642 State code 20 Generic name of principal product of the Company Item code No. (ITC Code) 170111.09 Product Description Cane Sugar SIGNIFICANT ACCOUNTING POLICIES 1. ACCOUNTING CONVENTION The Financial statements of the Company are brpared under the historical cost convention using accrual method of accounting and comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Company (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 unless stated otherwise hereinafter. Accounting Policies not specifically referred to, are consistent with Generally Accepted Accounting Principles in India. 2. USE OF ESTIMATES The brparation of financial statements requires the use of estimates and assumptions to be made that affect the reported amount of assets, liabilities and disclosure of contingent liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised. 3. FIXED ASSETS Fixed assets are capitalised at cost of acquisition including directly attributable costs such as freight, insurance and specific installation charges for bringing the assets to their working condition for intended use. Emergency machinery spares of irregular use and critical insurance machinery spares are capitalised as part of relevant plant & machinery. Pre-operative expenditure incurred up to the date of commencement of commercial production is capitalized as part of fixed assets. 4. INVESTMENTS Current investments are stated at lower of cost and fair value. Long-term investments are stated at cost after providing for diminution in value where in the opinion of the management such diminution is not temporary in nature. 5. DEbrCIATION/AMORTISATION A. Debrciation on Tangible Assets Debrciation on tangible assets is provided on straight line method over the useful life of assets estimated by the Management. Debrciation for assets purchased/ sold during the period is charged proportionately. The management estimates the useful life for fixed assets as follows 1) Based on technical evaluation, the management believes that useful life as given above rebrsents the period over which management expects to use these assets. Hence, the useful life for these assets is different from the useful life as brscribed under Part C of Schedule II of the Companies Act, 2013. Computers (including accessories and peripherals) and Temporary Structures are debrciated fully in the year of addition. All assets costing Rs. 5,000 or below are debrciated in one year period. Debrciation and amortization methods, useful life and residual values are reviewed periodically, including at the end of each financial year. B. Amortisation of Intangible Assets: Intangible assets are amortized over their estimated useful life on straight line basis, commencing from the date, the asset is available to the Company for its use. Computers software are debrciated fully in the year of addition. 7. 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. Insurance and other claims are accounted for as and when admitted by the appropriate authorities in view of uncertainty involved in ascertainment of final claim. Sale of goods Sales includes excise duty and is accounted for upon dispatch of goods from the factory when the risks and rewards of ownership are transferred to the buyer. Gross sales and net sales are disclosed separately in Statement of Profit & Loss. Power generated at co-gen plants is primarily consumed by the manufacturing units and excess power is sold to State Electricity Board (SEB) at rate stipulated by SEB's. Renewable Energy Certificates (REC's) Entitlement to Renewable Energy Certificates (REC) owing to generation of power are recognised to the extent sold and treated as capital receipt. Interest Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividends Revenue in respect of dividends is recognised when the Shareholders rights to receive payment is established by the balance sheet date. 8. CONTINGENCIES AND EVENTS OCCURING AFTER THE BALANCE SHEET DATE Events occurring after the date of the Balance sheet, which provide further evidence of conditions that existed at the Balance Sheet date or that arose subsequently, are considered upto the date of approval of accounts by the Board of Directors, where material. 9. GOVERNMENT GRANTS Grants relating to specific fixed assets are deducted from the original cost of specified assets. 10. EMPLOYEES BENEFITS a) Provident Fund Company's contribution to provident fund, being in the nature of defined contribution plan, are being charged to Statement of Profit & Loss in the period during which services are rendered by employees. b) Gratuity & Leave Encashment Provision for gratuity and leave encashment in the nature of defined benefit obligation is considered on the basis of Accounting Standard AS-15 on actuarial valuation using projected unit credit method. The discount rate and other financial assumptions are based on the parameters defined in the accounting standard. c) Other Short term benefits Expenses in respect of other short term benefits are recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee. 11. EXCISE DUTY Excise duty in respect of finished goods (including molasses) is accounted for at the end of period and is included in the value of closing stock as per 'Guidance Note on Accounting Treatment of Excise Duty' issued by the Institute of Chartered Accountants of India. 12. INTANGIBLE ASSETS Items of expenditure that meet the recognition criteria as mentioned in Accounting Standard are classified as intangible assets and are amortized over the period of economic benefits not exceeding ten years. 13. BORROWING COSTS Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale. All other borrowing costs are recognized as an expense in the period in which they are incurred. 14. FOREIGN CURRENCY TRANSACTIONS Transactions denominated in foreign currency are accounted for at the exchange rate brvailing on the date of transaction. Exchange differences arising on account of forward contracts are dealt with in the Statement of Profit & Loss over the period of the contracts. Monetary assets and liabilities relating to foreign currency transactions are converted at the year-end rate or at forward contract rate, as applicable. Gains or losses arising on cross currency forex swap transactions are accounted for over the period of contract. 15. TAXES ON INCOME Tax on income for the current period is determined on the basis of taxable income & tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on expected outcome of assessments/ appeals. Deferred Tax is recognized on timing differences between the accounting income and the taxable income for the year and reversal/adjustment of earlier year deferred tax assets / liabilities which are quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets on account of unabsorbed losses and debrciation are recognized and carried forward to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed at each Balance Sheet date. MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period. 16. IMPAIRMENT OF ASSETS Where the recoverable amount of the fixed asset is lower than its carrying amount, a provision is made for the impairment loss. Post impairment, debrciation is provided for on the revised carrying value of the asset over its remaining useful life. The impairment loss recognized in prior accounting period is reversed if there is a favorable change in the estimate of recoverable amount. 17. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS Contingent liabilities, if material, are disclosed by way of notes, contingent assets are not recognized or disclosed in the financial statements. A provision is recognized when an enterprise has a brsent obligation as a result of past event(s) and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation(s), in respect of which a reliable estimate can be made for the amount of obligation. 18. EARNING PER SHARE (EPS) Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting year. 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. 19. LEASES Where the Company is the lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. Where the Company is the lessor Assets subject to operating leases are included in fixed assets. Lease income is recognised in the Statement of Profit and Loss on a straight-line basis over the lease term. Costs, including debrciation are recognised as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognised immediately in the Statement of Profit and Loss. 20. SEGMENT ACCOUNTING & REPORTING Identification of segments The company's operating business are organized and managed separately according to the nature of products manufactured and services provided, with each segment rebrsenting a strategic business unit that offers different products. Allocation of common costs Common allocable costs are allocated to each segment on reasonable basis. Unallocated Items Unallocable assets & liabilities rebrsent the assets & liabilities not allocable to any segment as identified as per the Accounting Standard. Segment Policies 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. 21. CASH & CASH EQUIVALENTS Cash & Cash Equivalents includes cash in hand, demand deposit with banks, other short-term highly liquid investment with original maturities of three months or less. 7. During the year the State Government of Uttar Pradesh has granted part remission of the commission payable to Cane Societies on cane purchased during the crushing season 2012-13. The remission was granted to improve the viability of sugar industry in Uttar Pradesh. Hence an amount of T 4,91,83,132 (net of taxes) is shown as an exceptional in the Statement of Profit and Loss. 8. During the year, the company has sold Renewal Energy Certificates (RECs) for a consideration of T 7,94,73,000 and incurred T 1,78,61,217 as expenditure on such sale. The Company has not incurred any cost to earn the RECs. These RECs have been generated due to environmental concerns and allotted to the company as per Regulation on Renewal Energy Certificate, notified by Central Electricity Regulatory Commission. Recent judgements of the various hon'ble courts have held that such credits are not an off shoot of business but an off shoot of environmental concerns and hence, the net gain from such sale has been held as capital receipt and not an income forming part of the operations of the company. The same is also supported by legal opinion obtained by the Company. Accordingly net earnings on such sale amounting to Rs. 6,16,1 1,783 is treated as capital receipt for computation of the income tax (including MAT computation) and the Company has accordingly revised its income tax returns of the earlier years. 9. Trade Receivable/Payables and Loans and Advances balances are subject to confirmation and reconciliation. 10. As per the Accounting Standard AS-28 'Impairment of Assets', the company has tested impairment to identify the impairment loss, if any. Based on the assessment of the existing assets, the realizable amount for all the units is higher than the carrying values of such units. Accordingly, no impairment is required to be recognized during the current period. 11. The company has not taken/given any assets on finance/ operating lease. Accordingly, Accounting Standard AS-19 on leases is not applicable. The company has taken various office/ residential brmises and office equipment's on cancellable leases which are renewable on expiry of the respective lease period. 12. Derivative instruments and foreign currency exposures: (a) During the year Rupee term loans of Rs. 4,100 lacs (brvious period Rs. 15,000 lacs) were converted into foreign currency loan of USD 64,85,289.46 (brvious period USD 2,44,40,305.80) out of which Rs. 4,100 lacs equivalent to USD 64,85,289.46 (brvious period Rs. 10,000 lacs equivalent to USD 1,65,70,008.30) was reinstated as Rupees term loan during the year/period itself. The above loans are hedged by forward contracts and there is no foreign currency exposure outstanding as at the Balance Sheet date. (b) Particulars of un-hedged foreign currency exposures as at the Balance Sheet date are Rs. Nil (Previous period Rs. Nil). 13. There are no brsent obligations requiring provision in accordance with the guiding principles as enunciated in Accounting Standard AS-29 as it is not probable that an outflow of resources embodying economic benefit will be required. 14. Previous period figures have been regrouped and recasted wherever considered necessary. However, the same are not strictly comparable as the brvious period figures are for the period from 01.10.2013 to 31.03.2015(18 months) whereas the current period figures are for the period from 01.04.2015 to 31.03.2016 (12 months). |