SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS 1. Significant accounting policies i. Accounting convention The financial statements are brpared under the historical cost convention. These statements have been brpared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 as applicable. ii. Fixed assets and debrciation Fixed assets are stated at cost less accumulated debrciation. Cost of acquisition or construction is inclusive of freight, duties, taxes and incidental expenses and interest on loans attributable to the acquisition of assets up to the date of commissioning of assets. Capital subsidy received against specific assets is reduced from the value of relevant fixed assets. The Company is following straight line method of debrciation in respect of buildings, plant and machinery and written down value method in respect of other assets. Debrciation on all tangible fixed assets except plant and equipments is provided on the basis of useful life brscribed in Schedule II to the Companies Act, 2013. For plant and equipments, debrciation is provided on the basis of useful life/residual value determined by the management based on a technical evaluation considering nature of asset, past experience, estimated usage of the asset, vendor's advise etc., as given below: (a) Useful life Asset Useful life Plant and Machinery used in generation, transmission and distribution of power 25-40 years Plant and Machinery (other than used in generation, transmission and distribution of power) 5-40 years (b) Residual value Asset -Residual value Certain electrical equipments 10% Debrciation is calculated on a pro-rata basis from the date of additions, except in case of assets costing upto Rs.5000 each, where each such asset is fully debrciated in the year of purchase. Debrciation/amortization on intangibles is provided on straight line method as follows: - Technical know-how 10 years - Brand 10 years - Software 5 years On assets sold, discarded etc. during the year, debrciation is provided upto the date of sale/discard. iii. Foreign currency transactions and derivatives Transactions in foreign currency are recorded on initial recognition at the exchange rate brvailing on the date of the transaction. Monetary items (i.e. receivables, payables, loans etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date. The exchange differences arising on the settlement of monetary items or on reporting these items at rates different from rates at which these were initially recorded/reported in brvious financial statements are recognized as income/expense in the period in which they arise except that the exchange differences arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets are adjusted to the cost of fixed assets. 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 life of the contract. Further, 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 of contract/the last reporting date, is recognized as income/ expense for the period except that the exchange differences, including brmium or discount on forward exchange contracts, arising till the commissioning of fixed assets, relating to borrowed funds and liabilities in foreign currency for acquisition of the fixed assets are adjusted to the cost of fixed assets. iv. Inventories Inventories are valued at lower of cost or net realisable value. The basis for determining cost (which also includes taxes and duties wherever applicable) for different categories of inventory are as under: Stores and spares, raw materials and stock-in-trade Weighted average rate Work-in-Progress and finished goods Direct cost plus appropriate share of overheads after giving credit for other income and certain expenses like ex-gratia and gratuity. By-products are valued at estimated net realisable value. v. Revenue recognition a) Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with dispatch to customers. Sales include excise duty but exclude sales tax and value added tax. b) Under the retention pricing scheme, the Government of India reimburses to the fertiliser industry, the difference between the retention price based on the cost of production and selling price (as realised from the farmers) as fixed by the Government from time to time, in the form of subsidy. The effect of variation in input costs/expenses on retention price yet to be notified is accounted for by the Company as income for the year based on its assessment of ultimate collection with reasonable degree of certainty at the time of accrual. vi. Investments Long term investments are stated at cost unless there is a permanent fall in value thereof. Current investments are stated at cost or net realisable value whichever is less. vii. Employee benefits Company's contributions paid/payable during the year to provident fund, superannuation fund and employees' state insurance corporation are recognised in the statement of profit and loss. For the Provident Fund Trust administered by the Company, it is liable to meet the shortfall, if any, in payment of interest at the rates declared by the Central Government, and such liability is recognised in the year of shortfall. Provisions for gratuity and compensated absences determined on an actuarial basis at the end of the year are charged to revenue each year. The Company makes contribution to the LIC for Employees Gratuity Scheme in respect of employees of one of the division. viii. Research and development The revenue expenditure on research and development is charged as an expense in the year in which it is incurred. Capital expenditure is included in fixed assets. ix. Income-tax The Income-tax liability is provided in accordance with the provisions of the Income-tax Act, 1961. Deferred tax is recognised, subject to the consideration of prudence, on timing differences, between taxable income and accounting income. Deferred tax assets on unabsorbed debrciation and carry forward losses are recognised on virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 2. In accordance with past practice, the Company has taken revenue credits aggregating Rs.8.58 Crores (201415 - Rs.123.83 Crores) for urea subsidy claims , which are pending notification/ final acceptance by 'Fertiliser Industry Coordination Committee' (FICC), Government of India, in pursuance of the Retention Price Scheme administered for nitrogenous fertiliseRs.Necessary adjustments to revenue credits so accrued will be made on issuance of notification by FICC, Government of India. 3. Based on the information available with the Company, the principal amount and interest due to Micro and Small Enterprise as defined under the “The Micro, Small and Medium Enterprises Development Act, 2006” is Rs.1.14 Crores (2014-15 - Rs.3.25 Crores) and Rs.Nil (2014-15 – Rs.0.01 crore) respectively. 4. Employee share based payments The Company has an Employees Stock Purchase Scheme (‘Scheme’) which is administered through DSCL Employees Benefits Trust based on acquisition of shares from the market to provide equity based incentives to employees. Under the Scheme, the Company has granted shares to employees with specified lock in period. The expenses on the Scheme is accounted for at intrinsic value i.e. excess of market price on the date of grant over the exercise price of the shares granted and is amortized on a straight line basis over the lock-in period,if any. 5. The Company has taken credit of Rs 85.54 Crores during the current year, pursuant to notification of cane subsidy of Rs.28.60/- per quintal for sugar season 2014-15, by Government of Uttar Pradesh. 6. Deposits received under Section 76 of the Companies Act, 2013 are repayable upto March 2018 based on the maturity dates. (due within 1 year Rs.0.07 Crores; 2014-15 Rs.0.57 Crores).18. During the financial year 2015-16, the Company has incurred Rs 5.03 Crores (2014-15 - Rs 3.19 Crores), being the gross amount required to be spent on corporate social responsibility activities under section 135 of the Companies Act 2013. 7. 'Excise duty' on sales has been deducted from gross sales on the face of statement of profit and loss. 'Increase/ (decrease) in excise duty on finished goods' has been shown under the head ''Other expenses" in note 2.25. 8. Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current year's classification / disclosure. SAMEET GAMBHIR Company Secretary J.K. JAIN Chief Financial Officer S.S. BAIJAL Director DIN: 00027961 AJAY S. SHRIRAM Chairman & Sr. Managing Director DIN: 00027137 New Delhi May 10, 2016 |
