NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2016 1. Corporate Information The United Nilgiri Tea Estates Company Limited is a public company incorporated under the provisions of the Companies Act; its shares are listed on National Stock Exchange Ltd. in India. The Company is primarily engaged in growing and manufacture of Tea besides Letting-out of property. The Company’s teas are sold both in domestic and international markets. 2. Significant Accounting Policies 2.1 Basis of accounting and brparation of financial statements The financial statements of the Company have been brpared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) 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 (“the 2013 Act”) / Companies Act, 1956 (“the 1956 Act”), as applicable besides additional disclosures required by SEBI under listing agreement. 2.1 Basis of accounting and brparation of financial statements The financial statements of the Company have been brpared under the historical cost convention on accrual basis in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) 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 (“the 2013 Act”) besides additional disclosures required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. 2.2 Use of estimates The brparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and reported income and expenditure during the year. The management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Actual results could differ due to these estimates and differences between the actual results and the estimates are recognised in the periods in which the results are known/materialized. 2.3 Fixed Assets and Debrciation (a) Expenditure on Development and New Tea Planting is capitalised. (b) Fixed assets both intangible and tangible are carried at cost less accumulated debrciation / amortisation and impairment losses, if any. (c) Assets acquired under Finance Lease Agreement are capitalised (d) Debrciation on Tangible assets is provided on Straight Line basis at the rates specified in Schedule II to the Companies Act, 2013. Cost of software is amortised over a period of three years, on a straight line basis. 2.4 Borrowing Costs Borrowing costs attributable to acquisition or construction of qualifying assets are capitalised as part of the cost of assets up to the date such assets are ready for their intended use. Other borrowing costs are recognised as expense in the period in which they are incurred. 2.5 Impairment The carrying values of assets / cash generating units at each Balance Sheet date are annually reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased such reversal of impairment loss is recognised in the Statement of Profit and Loss. 2.6 Investments Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are stated at lower of cost and Fair value Cost of investments includes acquisition charges such as brokerage, fees and duties. 2.7 Inventories (a) Stock of Tea is valued at lower of Cost and net realizable value. Cost is determined based on absorption costing method. (b) Stores and Spare parts are valued at cost ascertained on moving weighted average basis. (c) Nursery stocks are valued at cost incurred in raising and maintaining such stocks till transplanted. 2.8 Cash and cash equivalents Cash and cash equivalents consist of all cash balances including demand deposits with banks with original maturities of three months or less. 2.9 Cash Flow Statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. 2.10 Provisions and Contingencies Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the financial statements. 2.11 Revenue recognition (a) Revenue from sale of tea at auction is recognised on receipt of sale notes from the brokers. Exports and Private tea sales are recognised when the property in finished goods (tea) is transferred. (b) Export benefits are accounted for based on eligibility and when there is no uncertainty in receiving them. (c) The Company recognises the Minimum Guaranteed Fixed License fee (MGFLF) in respect of its let-out property as revenue. As per the Leave and License agreement, the Company is entitled for MGFLF or Variable License Fee (VLF) whichever is higher and shall be determined on half yearly basis. The difference, if any, between MGFLF and VLF will be recognised upon its determination as per the said agreement. (d) Other income Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established. 2.12 Subsidies Replanting subsidy and Subsidy on manufacture of Orthodox tea are accounted based on acceptance of claim by the Tea Board. 2.13 Employee benefits (a) Short Term Short term employee benefits are charged off at the undiscounted amount in the year in which the related service is rendered. (b) Post Retirement Post Retirement Benefits comprise of Provident Fund, Superannuation Fund and Gratuity which are accounted for as follows: (i) Provident Fund This is a defined contribution plan, and contributions made to the Fund as per the rules of the Company are charged to Revenue. The Company has no further obligations for future provident fund benefits other than monthly contributions. (ii) Superannuation Fund This is a defined contribution plan. The Company contributes a sum equivalent to 15% of eligible employees’ salary towards superannuation fund administered by the Trustees and managed by Life Insurance Corporation of India (LIC). The Company has no further obligations for future superannuation benefits other than its annual contributions and recognises such contributions as expense in the year incurred. (iii) Gratuity This is a defined benefit plan. The Company makes annual contribution to a Gratuity Fund administered by LIC. The liability is determined based on the actuarial valuation using projected unit credit method. Actuarial gains and losses are recognised in full in the Statement of Profit and Loss for the period in which they occur. (c) Long Term Long term employee benefits rebrsent compensated absence which is provided for based on actuarial valuation using projected unit credit method. 2.14 Income Taxes Current tax is the amount of tax payable on the portion of taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.Provision for Deferred Tax is made for all timing differences arising between the taxable income and accounting income at the tax rates enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised only if there is a virtual/reasonable certainty that they will be realised and are reviewed for the appropriateness of their respective carrying values with reference to Balance Sheet date. 2.15 Leases Assets taken on lease by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the brsent value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis. 2.16 Foreign currency transactions Foreign currency transactions are recorded at the exchange rates brvailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are restated at the exchange rates brvailing on the Balance Sheet date except for transactions which are convered by forex contracts. Exchange differences arising on settlement of transactions and from the year end restatement are dealt with in the Statement of Profit and Loss. Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, is amortised over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or expense in the period in which such cancellation or renewal is made. 2.17 Earnings per share Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Earnings considered in ascertaining the Company’s earnings per share is the net profit for the year is attributable to the equity shareholders. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares. 2.18 Segment reporting The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis, have been included under “Unallocated corporate expenses/ income”. 3. The Company was permitted in an earlier year to retain excess holding of 333.67 acres of vacant land contiguous the planted area in the Tea garden but due to rocky terrain, land could not be cultivated as stipulated by Government and eviction proceeding relating to the aforesaid piece of land had been stayed by the Subrme Court of India. In its final order dated 7th August, 2013, the subrme court has directed the Land Board to review the case afresh. 4. The Previous year figures have been reclassified to make them comparable with those of current year classification |
