Accounting Policies of Hindustan Flurocarbons Ltd. Company

Mar 31, 2024

1. General Information

Hindustan Fluorocarbons Limited (HFL) was incorporated in 1983 as a subsidiary of Hindustan Organic Chemicals Limited (HOCL), a Government of India Enterprise under the Ministry of Chemicals & Fertilizers with a shareholding of 56.43%. HFL is engaged in manufacture of Polytetrafluoroethylene (PTFE) with annual capacity of 500 MT and intermediate product of Chlorodifluoromethane (CFM-22) with annual capacity of 1265 MT. The company also manufactures Modified Polytetrafluoroethylene (MPTFE). Shares of the company are listed in Bombay Stock Exchange.

2. Accounting Policies

a) Statement of Compliance

These financial statements have been prepared in accordance with the Indian Accounting Standards (referred to as “Ind AS”) as prescribed under section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules as amended from time to time.

The Cabinet Committee on Economic Affairs (CCEA) Govt.of India in its meeting held on 22.01.2020 had approved shutting down of operations of the plant/unit of HFL and closure of the Company. Ministry of Chemicals and Fertilizers, Department of Chemicals & Petrochemicals, under which the Company functions had given a detailed road map in this regard. The Board had initiated the said process of closure which got delayed due to Covid-19 pandemic. Hon’ble High Court of Telangana on 04-Nov-2020, in a legal case filed (Rockwell Industries Limited vs. HFL) had directed HFL (Appellant) not to dispose or transfer or to create a third party right with regard to its assets. Further, Hon’ble The High Court permitted to dispose of the plant, machinery and other equipment through MSTC with a condition to open a separate bank account by HFL to deposit the sale proceeds on 02.11.2022 in I.A. No.1/2022 in COM.C.A. No.16/2020. As approved by the Board on 30.01.2023, the plant, machinery and other assets were e-auctioned as a single lot through MSTC. The bid was opened on 15.03.2022, sold to the highest quoted bidder and full amount was received on 29.03.2023. Considering the above factors, management has concluded that the company will not continue as a going concern in the future.

Since the Company is in the process of closure and would not continue as a Going Concern, IndAS105 ‘Non-Current Assets held for Sale or Discontinuing Operations’ had been followed by the Company.

b) Basis of Accounting and Preparation

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013(‘Act’) (to the extent notified).The Ind AS are prescribed under Section 133 of the Act read with Rule3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as a net realizable value in Ind AS2 or value in use in Ind AS 36.

In addition, for financial reporting purposes, fair value measurements are categorized into Level1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

♦ Levell inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

♦ Level2 inputs are other than quoted prices included within Levell, that are observable for the asset or liability, either directly or indirectly; and

♦ Level3 in puts are unobservable inputs for the asset or liability.

c) Accounting Estimates

The preparation of the financial statements, in conformity with the recognition and measurement principles of Ind AS, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the results of operation during the reported period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates which are recognised in the period in which they are determined. Estimates and Assumptions:

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based on its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

Defined benefit plans

The cost and present value of the gratuity obligation and compensated absences are determined using actuarial valuations. Actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, attrition rate and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

d) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of income can be measured reliably. Revenue is net of returns and is reduced for rebates, trade discounts, refunds and other similar allowances. Revenue is net of GST. Effective April1,2018, the Company has applied Ind AS 115 which establishes a comprehensive frame work for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 Revenue and Ind AS11 Construction Contracts.

The Company has adopted Ind AS 115 using the cumulative effect method. The effect of initially applying this standard is recognised at the date of initial application (i.e. April1,2018). The standard is applied retrospectively only to contracts that are not completed as at the date of initial application and the comparative information in the statement of profit and loss is not restated-i.e., the comparative information continues to be reported under Ind AS 18and Ind AS 11. The impact of the adoption of the standard on the financial statements of the Company is insignificant.

i) Sale of goods

Revenue is recognized when it is probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is recognised, when the significant risks and rewards of the ownership have been transferred to the buyers and there is no continuing effective control over the goods or managerial involvement with the goods. Revenue from sale of chemical products is generally recognised at the time of dispatch.

ii) Other Income

Dividend income from investments is recognized when the right to receive payment is established. Interest income from a financial asset is recognised on time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate which exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. Insurance claims are recognised to the extent there is a reasonable certainty of the realizability of the claim amount.

e) Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of Property, plant and equipment comprises of purchase price, applicable duties and taxes, any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets, upto the date the asset is ready for its intended use. “The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is required to be included in the cost of the respective item of property plant and equipment” and “Cost of major inspections is recognized in the carrying amount of property, plant and equipment as a replacement, if recognition criteria are satisfied and any remaining carrying amount of the cost of previous inspection is derecognized.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in profit or loss. During the previous year, pursuant to the notification of Schedule II to the Companies Act,2013 with effect from April1,2014, the Company has reassessed the estimated useful life of its assets to align the useful life with those specified in Schedule II and there have been no change in the useful life of the asset. The useful lives, for the computation of deprecation rates are as follows:

Asset	Depreciation method	Useful life based on SLM
Building	SLM	30 years
Plant and equipment	SLM	20 years
Furniture and fixtures	SLM	10 years
Computers	SLM	3-5 years
Intangible Assets - Software	SLM	5 Years for Software and 20 years for MPTFE

*Pursuant CCEA decision to close the Company, as per IND AS 105, the Property, Plant and Equipment (PPE) has been reclassified to Assets Held for Sale and is valued at lower of Carrying value and Fair value less costs to sell. And no depreciation is charged after such reclassification. Further, entire carrying value of intangible assets has been written-off since the fair value of such intangible that could be realized from its sale is Nil.

f) Investment Property

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with the Ind AS1 6’s requirement for cost model.

An investment property is de-recognised upon disposal or when the investment property is permanently withdrawn from use and no further economic benefits expected from disposal. Any gain or loss arising on de-recognition of the property is included in profit or loss in the period in which the property is de-recognised.

g) Intangible Assets

Identifiable intangible assets are recognised when the Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to the Company and the cost of the asset can be reliably measured. At initial recognition, the separately acquired intangible assets are recognised at cost. Following initial recognition, the intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. The estimated useful life and amortization method reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

h) Depreciation and Amortization

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost less its estimated residual value. Depreciation on Property, Plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 considering the nature of asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, maintenance, etc. Intangible Assets are amortised, on straight line method based on the useful life as assessed by the Management. The amortization period and the amortization method for an intangible asset is reviewed atleast at each financial year end.

i) Impairment of Assets

Intangible assets and property, plant and equipment: Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, there coverable amount is determined for the CGU to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.

j) Financial Instruments

Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.

The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not held for trading in other comprehensive income.

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss.

Financial liabilities

Financial liabilities are measured at amortised cost using the effective interest method.

Equity instruments

An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received net of direct issue cost.

k) Employee Benefits

The estimated liability for employee benefits for present and past services which are due as per terms of employment are determined in accordance with the requirements of Ind AS19 “Employee Benefits”. A brief description of the employee benefits are as follows:

Gratuity:

The Company has an obligation towards gratuity, a defined benefit plan covering all eligible employees. The plan provides for lumpsum payment in accordance with the Payment of Gratuity Act,1972 to vested employees on retirement, death while in employment or on separation. Vesting occurs on completion of five years of service. The liability, which is determined by means of an independent actuarial valuation, is partly funded under Group Gratuity Plan Scheme managed by the Life Insurance Corporation of India.

Provident Fund:

Provident Fund is a defined contribution plan of the Government of India under which both the employer and employee contribute on a monthly basis at a pre-determined rate (currently upto 10% of employee salary) and the Company has no further obligation.

Compensated Absences

a. In respect of the employees at Head Office, the Company measures the expected cost of compensated absence based on actuarial valuation made by an independent actuary as at the balance sheet date on projected unit credit method.

b. In respect of the employees at the locations, the undiscounted amount of short term employee benefits which include the compensated absences such as paid leave expected to be paid in exchange for the services rendered by employees is recognised during the year when the employee renders the service and is calculated on an actual basis.

l) Inventories

i) The closing stock of raw materials, packing material, stores and spares are valued at cost by adopting weighted average method. Stock in process (intermediate product) and finished goods are valued at cost or net realizable value whichever is lower.

Cost of stock-in-process includes costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

ii) By-products are valued at NIL value.

m) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker regularly monitors and reviews the operating result of the whole Company as one segment of “Manufacture of Chemicals”. Thus, as defined in Ind AS 108 “Operating Segments”, the Company’s entire business falls under this one operational segment and hence the necessary information has already been disclosed in the Balance Sheet and the Statement of Profit and Loss.

n) BorrowingCosts

Borrowing costs consist of interest and other costs that the Company incurs in connection with the borrowing of funds. Also, the EIR amortization is included in finance costs.

Borrowing costs relating to acquisition, construction or production of a qualifying asset which takes substantial period of time to get ready for its intended use are added to the cost of such asset to the extent they relate to the period till such assets are ready to be put to use. All other borrowing costs are expensed in the Statement of Profit and Loss in the period in which they occur.

o) Foreign Exchange Translation of Foreign Projects and Accounting of Foreign Exchange Transactions

The functional currency of the Company is the Indian rupee.

Foreign currency transactions are accounted at the exchange rates prevailing on the date of transactions. Gains and losses resulting from settlement of such transactions are recognized in the Statement of Profit and Loss. Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The difference in translation of monetary assets and liabilities and realised gains and losses on foreign exchange transactions are recognised in the Statement of Profit and Loss.

The exchange difference on restatement of long term receivables / payables from / to foreign operations that are considered as net investments in such operation are recognised in the statement of profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, as appropriate.

Foreign branches functional currency is other than reporting currency of its parent and foreign branch financial statements are translated into reporting currency of its parent using the following procedures.

Assets and Liabilities (both monetary and non-monetary) are translated at the closing rate at the year end. Income and expenses are translated at the monthly average rate at the end of the respective month. All resulting exchange differences are recognised in other comprehensive income till the disposal of the net investment.

p) IncomeTax

1) Current Tax

Current income tax is recognised based on the estimated tax liability computed after taking credit for allowances and exemptions in accordance with the Income Tax Act, 1961. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.

The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

2) Deferred Tax

Deferred tax is determined by applying the Balance Sheet approach. Deferred tax assets and liabilities are recognised for all deductible temporary differences between the financial statements’ carrying amount of existing assets and liabilities and their respective tax base. Deferred tax assets and liabilities are measured using the enacted tax rates or tax rates that are substantively enacted at the Balance Sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period that includes the enactment date. Deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Such assets are reviewed at each Balance Sheet date to reassess realisation.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

3) MAT

Minimum Alternative Tax(“MAT”) credit is recognised as an asset only when and to the extent it is probable that the Company will pay normal income tax during the specified period.

q) Leases

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where the lease payments are structured to increase in line with expected general inflation. Assets acquired on finance lease are capitalised at fair value or present value of minimum lease payment at the inception of the lease, whichever is lower.

r) Earnings Per Share

Basic earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the company by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, which have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted earnings per share is computed by dividing the net profit or loss for the period attributable to the equity shareholders of the Company and weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares).

s) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which are liable estimate can be made of the amount of obligation.

Provisions (excluding gratuity and compensated absences) are determined based on management’s estimate required to settle the obligation at the Balance Sheet date. In case the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

t) Exceptional Items

When items of income and expense within profit or loss from ordinary activities are of such size, nature or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such material items are disclosed separately as exceptional items.

u) Operational Cycle

The Company adopts operating cycle based on the project period and accordingly all project related assets and liabilities are classified into current and non-current. Other than project related assets and liabilities, 12 months period is considered as normal operating cycle.

v) Cash Flow Statements

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. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

w) Non-Current Assets held for Sale and Discontinued Operations

The company classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. Assets that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell, and depreciation on such assets are ceased.

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and

(a) Represents a separate major line of business or geographical area of operations,

(b) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or

(c) Is a subsidiary acquired exclusively with a view to resale.

x) Ministry of Corporate Affairs (“MCA”), through Companies (Indian Accounting Standards) Amendment Rules,2019 and Companies (Indian Accounting Standards) Second Amendment Rules, has notified the following amendments to Ind AS.

Ind AS 109 - Prepayment Features with Negative Compensation

The amendments relate to the existing requirements in IndAS109 regarding termination rights in order to allow measurement at amortised cost (or, depending on the business model, at fair value through other comprehensive income) even in the case of negative compensation payments. The Company does not expect this amendment to have any impact on its financial statements.

Ind AS 23 - Borrowing Costs

The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings. The company does not expect any impact from this amendment.

Ind-AS 116 - Leases

The new Ind-AS116 ‘Lease’ had replaced Ind AS 17 ‘Leases’. Here, Ind AS 116 defines a lease as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. Under Ind AS116, leases have to recognize a lease liability reflecting future lease payments and a ‘right of use asset’ for almost all lease contracts.

The Company does not expect any impact from this amendment on its financial statements.

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Mar 31, 2015

BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The financial statements have been prepared under the historical cost convention on accrual basis to comply in all material aspects and in accordance with generally accepted accounting principles in India and the relevant provisions of the Companies Act, 2013. The accounting policies have been consistently applied by the Company unless otherwise stated.

(A) USE OF ESTIMATES:

The preparation of financial statements requires estimates and assumptions to be made that affect the reporting amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.

(B) RECOGNITION OF REVENUE AND EXPENDITURE :

(i) Revenues/Incomes and Costs/ Expenditures are generally accounted on accrual, as they are earned or incurred.

(ii) Sales are recognized when significant risks and rewards of ownership have been transferred to the buyer. In case of development projects / Research income is recognized on achieving the set milestones or targets.

(iii) Carbon credit revenue is recognized on achieving the set milestones or targets as prescribed by an agency and where reasonable assessment of certainty of future economic benefits.

(iv) Export incentives under various schemes are recognized as Income on certainty of realization.

(v) Sale of realizable scrap is accounted on receipt basis.

(vi) Insurance claims are accounted on accrual basis on admission of claims.

(vii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.

(C) FIXED ASSETS:

(i) Fixed Assets (including capital work-in- progress) are accounted at cost less accumulated depreciation net of modvat credit.

(ii) Constructed and fabricated capital assets are capitalized as and when the plant is put into commercial production.

(iii) Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

(iv) Significant items of separate identity capable of enhancing life and capacity of the machinery are capitalized at cost inclusive of installation cost.

(D) DEPRECIATION

(i) The depreciable amount of an asset is the cost of an asset or other amount substituted for cost less residual value. Depreciation is provided in accordance with Schedule II of the Companies Act, 2013, as amended treating plant and machinery as continuous process plant.

(ii) Depreciation on assets costing less than Rs.5000/- is provided at 100%.

(E) VOLUNTARY RETIREMENT SCHEME (VRS)

(i) The Company has introduced Voluntary Retirement Scheme in accordance with BIFR Modified Draft Rehabilitation Scheme. The Company followed the policy guidelines issued by BIFR by amortizing the VRS payment over a period of 3 years.

(F) REFURBISHMENT EXPENDITURE

The company has followed the policy of amortizing refurbishment expenditure met on Plant and Machinery over a period of five years from the year of expenditure in accordance with the BIFR Modified Draft Rehabilitation Scheme.

(G) INVENTORIES:

(i) The closing stock of raw materials, packing material, stores and spares are valued at cost by adopting weighted average method or net realizable value whichever is less. Stock-in process (intermediate products) and finished goods are valued at cost or net realizable value whichever is lower.

Cost of Stock-in-process includes costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(ii) Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

(iii) By-products are valued at NIL value.

(H) EMPLOYEE BENEFITS:

a. Short Term Employee Benefits:

Undiscounted value of short term employee benefits such as salaries, wages, short term compensated absences, bonus, ex-gratia and performance incentives are recognized as expense in the period in which the employees render the related service.

b. Post Employment Benefits

Defined Contribution plans:

Contribution to defined contribution plans being Employee Provident Fund, Employee State Insurance, Employee Insurance Scheme etc. are recognized in the Statement of profit and loss during the period in which the employees render the related services.

Defined Benefit Plans:

Liabilities in respect of defined benefit plans being Gratuity and Leave encashment are determined based on an actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized immediately in the Statement of Profit and Loss account.

(I) PROVISION FOR DOUBTFUL DEBTS:

Provision for doubtful debts/loans/advances:

Provision for doubtful debts is made in the books in respect of debtors outstanding for more than 3 years except Govt. Debts. In respect of cases under Civil suits/tribunals for recovery of dues which are yet to be decided, provisions are made to the extent considered necessary by the Management.

(J) FOREIGN CURRENCY TRANSACTIONS:

(i) Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

(ii) Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of profit and loss.

(iii) The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and difference in translation and realized gains/losses thereon adjusted in the Statement of profit and loss.

(K) BORROWING COST:

Borrowing costs relating to acquisition of fixed assets which takes substantial period of the time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use. All other borrowing costs are charged to revenue. Borrowing costs consist of interest and other costs that the company incurs in connection with borrowing of funds on acquisition of fixed assets are capitalized as part of the cost of asset.

(L) TAXES ON INCOME:

(i) The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the estimated total income for the year.

(ii) Deferred tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

(iii) Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

(M) SEGMENT REPORTING:

The company's operation mainly comprises manufacturing of PTFE (Suspension & Emulsion). These activities constitutes the primary segment i.e. manufacturing in chemicals.

(N) EARNING PER SHARE:

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

(O) IMPAIRMENT OF ASSETS:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

(P) PROVISIONS / CONTINGENT LIABILITIES:

Provisions are recognized, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow as contingent liability in the financial statements.

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Mar 31, 2014

1(A) USE OF ESTIMATES:

The preparation of financial statements requires estimates and assumptions to be made that affect the reporting amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized. 1(B) RECOGNITION OF REVENUE AND EXPENDITURE :

(i) Revenues/Incomes and Costs/ Expenditures are generally accounted on accrual, as they are earned or incurred.

(ii) Sales are recognized when significant risks and rewards of ownership have been transferred to the buyer. In case of development projects / Research income is recognized on achieving the set milestones or targets.

(iii) Carbon credit revenue is recognized on achieving the set milestones or targets as prescribed by an agency and where reasonable assessment of certainty of future economic benefits.

(iv) Export incentives under various schemes are recognized as Income on certainty of realization.

(v) Sale of realizable scrap is accounted on receipt basis.

(vi) Insurance claims are accounted on accrual basis on admission of claims.

(vii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.

1(C) FIXED ASSETS:

(i) Fixed Assets (including capital work-in- progress) are accounted at cost less accumulated depreciation net of modvat credit.

(ii) Constructed and fabricated capital assets are capitalised as and when the plant is put into commercial production.

(iii) Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

(iv) Significant items of separate identity capable of enhancing life and capacity of the machinery are capitalised at cost inclusive of installation cost.

1(D) DEPRECIATION

(i) Depreciation is provided on Straight-Line Method in accordance with Schedule XIV of the Companies Act, 1956, as amended treating plant and machinery as continuous process plant.

(ii) Depreciation on assets costing less than Rs.5000/- is provided at 100%.

1(E) VOLUNTARY RETIREMENT SCHEME (VRS)

(i) The Company has introduced Voluntary Retirement Scheme in accordance with BIFR Modified Draft Rehabilitation Scheme. The Company followed the policy guidelines issued by BIFR by amortizing the VRS payment over a period of 3 years.

1 (F) REFURBISHMENT EXPENDITURE

The company has followed the policy of amortizing refurbishment expenditure met on Plant and Machinery over a period of five years from the year of expenditure in accordance with the BIFR Modified Draft Rehabilitation Scheme.

1(G) INVENTORIES:

(i) The closing stock of raw materials, packing material, stores and spares are valued at cost by adopting weighted average method or net realizable value whichever is less. Stock-in process (intermediate products) and finished goods including CERs are valued at cost or net realizable value whichever is lower. Cost of Stock-in-process includes costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(ii) Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

(iii) By-products are valued at NIL value.

1 (H) EMPLOYEE BENEFITS:

a. Short Term Employee Benefits: Undiscounted value of short term employee benefits such as salaries, wages, short term compensated absences, bonus, ex-gratia and performance incentives are recognized as expense in the period in which the employees render the related service

b. Post Employment Benefits Defined Contribution plans:

Contribution to defined contribution plans being Employee Provident Fund, Employee State Insurance, Employee Insurance Scheme etc. are recognized in the Statement of profit and loss during the period in which the employees render the related services.

Defined Benefit Plans:

Liabilities in respect of defined benefit plans being Gratuity and Leave encashment are determined based on an actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized immediately in the Statement of Profit and Loss account.

1(I) PROVISION FOR DOUBTFUL DEBTS: Provision for doubtful debts/loans/advances:

Provision for doubtful debts is made in the books in respect of debtors outstanding for more than 3 years except Govt. Debts. In respect of cases under Civil suits/tribunals for recovery of dues which are yet to be decided, provisions are made to the extent considered necessary by the Management. 1(J) FOREIGN CURRENCY TRANSACTIONS:

(i) Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

(ii) Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of profit and loss.

(iii) The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and difference in translation and realized gains/losses thereon adjusted in the Statement of profit and loss.

1(K) BORROWING COST:

Borrowing costs relating to acquisition of fixed assets which takes substantial period of the time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use. All other borrowing costs are charged to revenue. Borrowing costs consist of interest and other costs that the company incurs in connection with borrowing of funds on acquisition of fixed assets are capitalised as part of the cost of asset.

1(L) TAXES ON INCOME:

(i) The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the estimated total income for the year.

(ii) Deferred tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

(iii) Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

1(M) SEGMENT REPORTING:

The company''s operation mainly comprises manufacturing of PTFE (Suspension & Emulsion). These activities constitutes the primary segment i.e. manufacturing in chemicals.

1(N) EARNING PER SHARE:

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1(O) IMPAIRMENT OF ASSETS:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1 (P) PROVISIONS / CONTINGENT LIABILITIES: Provisions are recognized, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow as contingent liability in the financial statements.

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Mar 31, 2013

1(A) USE OF ESTIMATES:

The preparation of financial statements requires estimates and assumptions to be made that affect the reporting amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.

1(B) RECOGNITION OF REVENUE AND EXPENDITURE :

(i) Revenues/Incomes and Costs/Expenditures are generally accounted on accrual, as they are earned or incurred.

(ii) Sales are recognized when significant risks and rewards of ownership have been transferred to the buyer. In case of development projects / Research income is recognized on achieving the set milestones or targets.

(iii) Carbon credit revenue is recognized on achieving the set milestones or targets as prescribed by an agency and where reasonable assessment of certainty of future economic benefits.

(iv) Export incentives under various schemes are recognized as Income on certainty of realization.

(v) Sale of realizable scrap is accounted on receipt basis.

(vi) Insurance claims are accounted on accrual basis on admission of claims.

(vii) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.

1(C) FIXED ASSETS:

(i) Fixed Assets (including capital work-in- progress) are accounted at cost less accumulated depreciation net of modvat credit.

(ii) Constructed and fabricated capital assets are capitalised as and when the plant is put into commercial production.

(iii) Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

(iv) Significant items of separate identity capable of enhancing life and capacity of the machinery are capitalised at cost inclusive of installation cost.

1(D) DEPRECIATION

(i) Depreciation is provided on Straight-Line Method in accordance with Schedule XIV of the Companies Act, 1956, as amended treating plant and machinery as continuous process plant.

(ii) Depreciation on assets costing less than Rs.5000/- is provided at 100%.

1(E) VOLUNTARY RETIREMENT SCHEME (VRS)

(i) The Company has introduced Voluntary Retirement Scheme in accordance with BIFR Modified Draft Rehabilitation Scheme. The Company followed the policy guidelines issued by BIFR by amortizing the VRS payment over a period of 3 years.

1(F) REFURBISHMENT EXPENDITURE

The company has followed the policy of amortizing refurbishment expenditure met on Plant and Machinery over a period of five years from the year of expenditure in accordance with the BIFR Modified Draft Rehabilitation Scheme.

1(G) INVENTORIES:

(i) The closing stock of raw materials, packing material stores and spares are valued at cost by adopting weighted average method or net realizable value whichever is less. Stock-in process (intermediate products) and finished goods including CERs are valued at cost or net realizable value whichever is lower.

Cost of Stock-in-process includes costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(ii) Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

(iii) By-products are valued at NIL value.

1(H) EMPLOYEE BENEFITS:

a. Short term employee benefits:

Undiscounted value of short term employee benefits such as salaries, wages, short term compensated absences, bonus, ex-gratia and performance incentives are recognized as expense in the period in which the employees render the related service

b. Post Employment Benefits

Defined Contribution plans: Contribution to defined contribution plans being Employee Provident Fund, Employee State Insurance, Employee Insurance Scheme etc. are recognized in the Statement of profit and loss during the period in which the employees render the related services.

Defined Benefit Plans: Liabilities in respect of defined benefit plans being Gratuity and Leave encashment are determined based on an actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognized immediately in the Statement of Profit and Loss account.

1(I) PROVISION FOR DOUBTFUL DEBTS:

Provision for doubtful debts/loans/advances:

Provision for the doubtful debts is made in the books in respect of debtors outstanding for more than 3 years except Govt. Debts. In respect of cases under Civil suits/tribunals for recovery of dues which are yet to be decided, provisions are made to the extent considered necessary by the Management.

1(J) FOREIGN CURRENCY TRANSACTIONS:

(i) Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

(ii) Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of profit and loss.

(iii) The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and difference in translation and realized gains/losses thereon adjusted in the Statement of profit and loss.

1(K) BORROWING COST:

Borrowing costs relating to acquisition of fixed assets which takes substantial period of the time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use, All other borrowing costs are charged to revenue. Borrowing costs consists of interest and other costs that the company incurs in connection with borrowing of funds on acquisition of fixed assets are capitalised as part of the cost of asset.

1(L) TAXES ON INCOME:

(i) The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the company on the estimated total income for the year.

(ii) Deferred tax assets and liabilities are recognized on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

(iii) Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

1(M) SEGMENT REPORTING:

The company''s operation mainly comprises manufacturing of PTFE (Suspension & Emulsion). These activities constitutes the primary segment i.e. manufacturing in chemicals.

1(N)EARNING PER SHARE:

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1(O) IMPAIRMENT OF ASSETS:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1(P) PROVISIONS / CONTINGENT LIABILITIES:

Provisions are recognized, when the company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow as contingent liability in the financial statements.

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Mar 31, 2012

1(A). USE OF ESTIMATES:

The preparation of financial statements requires estimates and assumptions to be made that affect the reporting amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recongnised in the period in which the results are known/ materialised.

1(B). RECOGNITION OF REVENUE AND EXPENDITURE:

(i) Revenues/Incomes and Costs/Expenditures are generally accounted on accrual, as they are earned or incurred.

(ii) Sales are recognized when significant risks and rewards of ownership have been transferred to the buyer. In case of development projects/Research income, revenue is recognized on achieving the set milestones or targets.

(iii) Export incentives under various schemes are recognized as Income on certainty of realization

(iv) Sale of realizable scrap is accounted on receipt basis.

(v) Insurance claims are accounted on accrual basis on admission of claims.

(vi) Interest income is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate of interest.

(vii) Revenue (income) is recognised when no significant uncertainties as to its determinations or realisations exists. Turnover includes carbon credits (Carbon Emission Reductions) which are recognised as delivery thereof or sale of right therein as the case may be, in terms of contracts with respective buyers.

1(C). FIXED ASSETS:

(i) Fixed assets (including capital work-in-progress) are accounted at cost less accumulated depreciation net of modvat credit.

(ii) Constructed and fabricated capital assets are capitalized as and when the plant is put into commercial production.

(iii) Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

(iv) Significant items of separate identity capable of enhancing life and capacity of the machinery are capitalized at cost inclusive of installation cost.

1(D). DEPRECIATION

(i) Depreciation is provided on Straight-Line Method in accordance with Schedule XIV of the Companies Act, 1956, as amended, treating plant and machinery as continuous process plant.

(ii) Depreciation on assets costing less than Rs.5000/- is provided at 100%.

1(E). VOLUNTARY RETIREMENT SCHEME (VRS)

(i) The Company has introduced Voluntary Retirement Scheme in accordance with BIFR Modified Draft Rehabilitation Scheme. The Company followed the policy guidelines issued by BIFR by amortizing the VRS payment over a period of 3 years.

1(F). REFURBISHMENT EXPENDITURE

The company has followed the policy of amortizing refurbishment expenditure met on Plant and Machinery over a period of five years from the year of expenditure in accordance with the BIFR Modified Draft Rehabilitation Scheme.

1(G). INVENTORIES:

(i) The closing stock of raw materials, packing material stores and spares are valued at cost by adopting weighted average method or net realizable value whichever is less. Stock-in-process (intermediate products) and finished goods are valued at cost or net realizable value whichever is lower.

Cost of Stock-in-process includes costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

(ii) Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

(iii) By-products are valued at NIL value.

(iv) Closing stock of CERs are treated as finished goods and are valued at market price as reported in International Stock exchange market, New York at the yearend date (after deducting marginal expenses) upto 31.03.2011.

1(H). EMPLOYEE BENEFITS:

a. Short term employee benefits:

Undiscounted value of short term employee benefits such as salaries, wages, short term compensated absences, bonus, exgratia and performance incentives are recognised as expense in the period in which the employees render the related service.

b. Post Employment Benefits Defined Contribution plans:

Contribution to defined contribution plans being Employee Provident Fund, Employee State Insurance, Employee Insurance Scheme etc. are recognised in the Statement of profit and loss during the period in which the employees render the related services.

Defined Benefit Plans:

Liabilities in respect of defined benefit plans being Gratuity and Leave encashment are determined based on an actuarial valuation using the projected unit credit method. Actuarial gains or losses are recognised immediately in the Statement of Profit and Loss account.

1(I). PROVISION FOR DOUBTFUL DEBTS:

Provision for doubtful debts/loans/advances:

Provision for the doubtful debts is made in the books in respect of debtors outstanding for more than 3 years except Govt. Debts. In respect of cases under Civil suits/tribunals for recovery of dues which are yet to be decided, provisions are made to the extent considered necessary by the Management.

1(J). FOREIGN CURRENCY TRANSACTIONS:

(i) Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

(ii) Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to Statement of profit and loss.

(iii) The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and difference in translation and realized gains/losses thereon adjusted in the Statement of profit and loss.

1(K). BORROWING COST:

Borrowing costs relating to acquisition of fixed assets which takes substantial period of the time to get ready for its intended use are included to the extent they relate to the period till such assets are ready to be put to use, Ail other borrowing costs are charged to revenue. Borrowing costs consist of interest and other costs that the company incurs in connection with borrowing of funds.

1(L).TAXES ON INCOME:

(i) The Current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company on the estimated total income for the year.

(ii) Deferred tax assets and liabilities are recognised on timing differences between taxable income and accounting income, originating in one period and expected to reverse in subsequent periods.

Deferred tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in future.

(iii) Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date.

1(M). SEGMENT REPORTING:

The company's operation mainly comprises manufacturing of PTFE (Suspension & Emulsion). These activities constitutes the primary segment i.e. manufacturing in chemicals.

1(N). EARNING PER SHARE:

Basic Earnings Per Share is calculated by dividing the net profit or loss for the period attributable to equity share holders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating the diluted earnings per share, the net profit or loss for the period attributable to equity share holders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1(O). IMPAIRMENT OF ASSETS:

The carrying amounts of assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such an indication exists, then the carrying value is reduced to the higher of the net selling price or the value in use. The value in use is the present value of estimated future net income expected from use of the asset.

1(P). PROVISIONS/CONTINGENT LIABILITIES:

Provisions are recognised, when the Company has a present legal or constructive obligation, as a result of past events, for which it is probable that an out flow of economic benefits will be required to settle the obligation and a reliable estimate can be made for the amount of the obligation. The disclosure is made for all present or possible obligations that may but probably will not require outflow as contingent liability in the financial statements.

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Mar 31, 2011

1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:

The Accounts have been prepared on accrual basis unless stated otherwise under historical cost convention and in accordance with the accounting standards issued by ICAI and provisions of Companies Act. The deviations from the above are stated in the notes.

2. FIXED ASSETS:

2.1. Fixed assets (including capital work-in-progress) are accounted at cost, net of modvat credit.

2.2. Machinery spares procured for maintenance of machinery are taken as Stock of spares and are valued as closing stock at cost.

2.3 In respect of Plant and machinery, the routine expenditure for repairs of the plant and machinery are charged to P & L Account. Only significant items of separate identity capable of enhancing Life and capacity of the machinery are capitalized at cost inclusive of installation cost.

2.4. Constructed and fabricated capital assets are capitalized as and when the plant is put into commercial production.

2.5. Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

2.6. Machinery, Spares relating to a particular Machinery are capitalized to fixed assets and those of general in nature are taken to closing stock.

3. DEPRECIATION

3.1. Depreciation is provided on Straight-Line Method in accordance with Schedule XIV of the Companies Act, 1956, as amended, treating plant and machinery as continuous process plant.

3.2. Depreciation on assets costing less than Rs.5000/- is provided at 100%.

4. VOLUNTARY RETIREMENT SCHEME (VRS)

4.1. The Company has introduced Voluntary Retirement Scheme in accordance with BIFR Modified Draft Rehabilitation Scheme. The Company followed the policy guidelines issued by BIFR by amortizing the VRS payment over a period of 3 years.

5. REFURBISHMENT EXPENDITURE

The company has followed the policy of amortizing refurbishment expenditure met on Plant and Machinery over a period of five years from the year of expenditure. This is in accordance with the BIFR Modified Draft Rehabilitation Scheme.

6. REVENUE RECOGNITION

6.1. Sales are recognized when all significant risks and rewards of ownership have been transferred to the buyer. Gross value of sale is recognized and the Excise Duty is later on shown as deduction. In case of development projects / research income, revenue is recognised on achieving the set of milestone or targets.

6.2. Export incentives under various schemes are recognized as Income on certainty of realization.

6.3. Sale of realizable scrap is accounted on receipt basis.

6.4. Insurance claims are accounted on accrual basis on admission of claims.

7. INVENTORIES

7.1 The closing stock of raw materials, stores and spares are valued at cost by adopting weighted average method after giving due credit for VAT or net realizable value which ever is less. Stock- in-process (intermediate products) and finished goods are valued at cost or net realizable value whichever is lower after giving due credit for VAT. However, the CERs confirmed by UNFCCC are valued as finished goods at market price of CERs in the international Stock Exchange of CERs at the year end date after considering some margin.

7.2. Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

7.3. By-products are valued at NIL value.

8. RETIREMENT BENEFITS

8.1. In respect of gratuity the company has taken an Insurance Policy with Life Insurance Corporation of India to cover the gratuity that may be payable to employees on retirement. The premium on the policy is being charged to Profit and Loss account.

8.2. Leave encashment, gratuity and other retirement benefits are accounted on accrual basis and provided in books of accounts on the basis of acturial valuation.

8.3. Contributions to Provident Fund are charged to P& L A/c on accrual basis.

8.4. Bonus is provided as per Payment of Bonus Act 1965.

9. FOREIGN CURRENCY TRANSACTIONS:

9.1. Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

9.2. Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, up to the period of settlement is taken to profit and loss account.

9.3. The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains/losses there on adjusted in the profit and loss account

10. SUNDRY DEBTORS:

10.1.Provision for doubtful debts/loans/advances : Full provision for the doubtful debts is made in the books in respect of debtors outstanding for more than 3 years except Govt. Debts. In respect of cases under Civil suits/tribunals for recovery of dues which are yet to be decided, Provisions are made to the extent considered necessary by the Management.

11. CONTINGENT LIABILITIES

11.1. Claims against the company not acknowledged as debts relating to normal business transactions and show cause notices/demands raised by authorities disputed by the company are treated as Contingent Liabilities and necessary disclosures are made as per AS-4. Wage revision amount due to employees quantified on estimated basis is treated on contingent liability.

12. PRIOR PERIOD/PRE-PAID EXPENSES

12.1 Prior period and prepaid expenses are recognized taking the cut off date as 31st March of the financial year.

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Mar 31, 2010

1. GENERAL

1.1 The Accounts have been prepared on historical cost basis.

1.2 All revenues and expenses are accounted on accrual basis except to the extent stated otherwise.

2. FIXED ASSETS:

2.1 Fixed assets (including capital work-in-progress) are accounted at cost, net of modvat credit.

2.2 Expenditure during construction period including interest on loans borrowed is included in the Capital cost.

3. DEPRECIATION

3.1 Depreciation is provided on Straight-Line Method in accordance with Schedule XIV of the Companies Act, 1956, as amended, treating plant and machinery as continuous process plant.

3.2 Depreciation on assets costing less than Rs.5000/- is provided at 100%.

3.3 Expenditure not represented by assets is written off over a period of 5 years.

4. VOLUNTARY RETIREMENT SCHEME

4.1 Last year an amount of Rs.223.57 lacs had incurred towards VRS payments for 31 employees in accordance with BIFRs Modified Draft Rehabilitation Scheme(MDRS). Out of this, an amount Rs.74.52 lacs was charged to P&L Account in the current year. The balance will be written off in the next two years (Rs.74.52 Lacs in 2010-11 and Rs.37.27 Lacs in 2011 -12) in accordance with BIFRs Modified Draft Rehabilitation Scheme (MDRS). As per AS-15 issued by ICAI , VRS expenditure is to be written off over the pay back period, but the deferred VRS Expenditure cannot be carried forward beyond 31.03.2010. The Company is following the guide lines contained in the BIFRs MDRS in this matter deviating from AS issued by ICAI.

5. REFURBISHMENT EXPENDITURE

5.1 This year an amount of Rs. 17.84 lacs was incurred whereas last year an amount of Rs.285.14 lacs has been incurred towards Refurbishment Expenditure on Plant and Machinery. Out of which Rs.61.49 lacs was charged to Profit & Loss account during the Current year. The balance will be written off in 3 equal installments of Rs.61.49 Lacs in the next three years in accordance with BIFRs Modified Draft Rehabilitation Scheme (MDRS). As per AS-6 issued by ICAI, any expenditure incurred for improvement in performance of the Plant & Machinery, should be capitalized and depreciated accordingly as per Schedule -XIV applicable to the Company. However the Company is following the guide lines contained in the BIFRs MDRS in this matter deviating from AS issued by ICAI.

6. REVENUE RECOGNITION.

Sales are recognized when all significant risks and rewards of ownership have been transferred to the buyer.

6.1) Export incentives under various schemes are recognized as Income on certainty of realization.

7. INVENTORIES

7.1) The closing stock of raw materials, stores and spares etc., are valued at cost by adopting weighted average method after giving due credit for VAT. Stock-in-process and finished goods are valued at cost or net realizable value whichever is lower after giving due credit for VAT. HFC- 23 Gas is converted into eligible CERs and are valued at the lowest quoted price during the year in the international market.

7.2) Excise duty payable on finished goods manufactured but not removed is included in the Valuation of such stocks.

7.3) Sales of realizable scrap are accounted on receipt basis.

7.4) Insurance claims are accounted on accrual basis on admission of claims.

8. RETIREMENT BENEFITS

8.1. In respect of gratuity the company has taken an Insurance Policy with Life Insurance Corporation of India to cover the gratuity that may be payable to employees on retirement. The premium on the policy is being charged to Profit and Loss account.

8.2. Leave encashment and other retirement benefits are accounted on accrual basis and charged to P&L Account.

8.3. Contributions to Provident Fund are charged to P& L A/c.

9. FOREIGN CURRENCY TRANSACTIONS:

Foreign currency transactions are accounted for at the exchange rates prevailing on the date of transaction.

9.1 Fixed assets are translated at the exchange rates on the date of transaction. The exchange difference in each financial year, upto the period of settlement is taken to profit and loss account.

9.2 The monetary items in foreign currencies are translated at the closing exchange rate on the date of balance sheet and gains/losses there on adjusted in the profit and loss account.