Accounting Policies of Prag Bosimi Synthetics Ltd. Company

Mar 31, 2024

1 COMPANY OVERVIEW

Prag Bosimi Synthetics Limited (“the company”) is a domestic public limited company with registered office situated at House No. 19, Milan Path, Ambikagiri Nagar, RGB Road, Guwahati - 781 024. It is engaged primarily in manufacturing of Polyester Yarn. The Company is listed on the Bombay Stock Exchange (BSE).

2 SIGNIFICANT ACCOUNTING POLICIES 2(a) Basis for Preparation of Accounts

i. Compliance with Ind AS: These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act. The Financial Statements are approved by the Board on May 28, 2024.

ii. Historical Cost Convention: The financial Statements have been prepared on an historical cost basis except for certain financial instruments which are measured at fair value.

iii. Current Non - Current Classification: All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Act.

2(b) Summary of Significant Accounting Policiesi. Financial Assets:Classification:

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• Those measured at amortized cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.

Measurement:

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Impairment of financial assets:

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

Derecognition of financial assets:

A financial asset is derecognized only when:

• the rights to receive cash flows from the asset have expired, or

• the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows to one or more recipient.

• retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where

the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

ii. Financial Liabilities:

Classification as debt or equity:

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Initial recognition and measurement:

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables.

Subsequent measurement:

The measurement of financial liabilities depends on their classification, as described below:

Borrowings:

Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the statement of profit and loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.

Trade and other Payable

These amounts represent obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These Payables are clasified as current liabilities if Payment is due within one year or less otherwise they are presented as non-current liabilities. Trade and Payables are subsequently measured at amortised cost using effective interest method.

De-recognition:

Borrowings are removed from the balance sheet when the obligation specified in the contract isdischarged, cancelled or expired. The difference between the carrying amount of a financial liability thathas been extinguished or transferred to another party and the consideration paid, including any non-cashassets transferred or liabilities assumed, is recognized in profit or loss as other gains/ (losses). When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss. Borrowings are classified as current liabilities unless the Company has an unconditional right to defersettlement of the liability for at least 12 months after the reporting period. Where there is a breach of amaterial provision of a long-term loan arrangement on or before the end of the reporting period with theeffect that the liability becomes payable on demand on the reporting date, the entity does not classify theliability as current, if the lender agreed, after the reporting period and before theapproval of the financialstatements for issue, not to demand payment as a consequence of the breach.

iii. Property, Plant and Equipment (PPE)

Property, plant and equipment are stated at acquisition or construction cost less accumulated depreciation and impairment loss. Cost comprises the purchase price and any attributable cost of bringing the asset to its location and working condition for its intended use, including relevant borrowing costs and any expected costs of decommissioning. If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE. The cost of an item of PPE is recognized as an asset if, and only if, it is probable that the economic benefits associated with the item will flow to the Company in future periods and the cost of the item can be measured reliably. Expenditure incurred after the PPE have been put into operations, such as repairs and maintenance expenses are charged to the Statement of Profit and Loss during the period in which they are incurred. Items such as spare parts, standby equipment and servicing equipment are recognized as PPE when it is held for use in the production or supply of goods or services, or for administrative purpose, and are expected to be used for more than one year. Otherwise such items are classified as inventory. An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.

iv. Depreciation on Property, Plant and Equipment

Depreciation on fixed assets other than lease-hold land is provided on straight-line method in the manner specified in Schedule II of Companies Act, 2013. Leasehold Land is amortized over the remaining period of lease. Depreciation on additions/deductions during the year has been provided on pro-rata basis with reference to the month of addition/deduction.

v. Treatment of Expenditure during Construction Period

As per the consistent accounting policy all expenditure related to the project construction/implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

vi. Investments

Temporary in nature Investments other than long term investments being current investments are Investments which are intended to be held for more than a year from the date of acquisition are classified as long term investments and are valued at cost subject to reduction made for diminution in value that is other than valued at cost or fair market value whichever is lower.

vii. Investments in Subsidiaries, Joint ventures and Associates:

Investment in equity instruments of subsidiary, joint ventures and associates is recognized at cost as per Ind AS 27.

viii. Inventories

Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any. Cost includes purchase price, duties, transport & handling costs and other costs directly attributable to the acquisition and bringing the inventories to their present location and condition.

• Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value.

• Work in process: At lower of cost or net realizable value.

• Finished Goods: At lower of cost or net realizable value

ix. Retirement Benefits Defined Contribution Plan:

The Company’s liability towards Employee’s Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt. of India is considered as Defined Contribution Plan. The Company’s contributions paid towards these defined contribution plans is recognized as expense in the Profit and Loss Account during the year in which the employees rendered the related service.

Defined Benefit Plan:

Company’s liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the year-end. This is done on the same basis as in the last accounting year.

x. Cash and Cash Equivalents:

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, bank overdraft, deposits held at call with financial institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

xi. Government Grants

Grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase, construct or otherwise acquire long-term assets. Subsidiary conditions may also be attached restricting the type or location of the assets or the periods during which they are to be acquired or held. Grants from the government are recognized as per Ind AS 20. Government Grant are recognised at their fair value based on Capital Approach where there is reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income.

xii. Provisions, Contingent Liabilities and Contingent Assets:Provisions

Provisions are recognized when there is a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Contingent Liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company, or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

Contingent Assets

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. Contingent assets are not recognised but disclosed only when an inflow of economic benefits is probable.

xiii. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be reliably measured.

i. Revenue is recognized upon transfer of control of promised goods to the customers in an amount that reflects consideration which the company expects to receive in exchange of the goods. Revenue from Sale of goods is recognized at the point of time when the control is transferred to the customer which is usually dispatched / delivery of goods based on contracts with the customer. Revenue is measured based on the transaction price which is consideration. Revenue excludes taxes collected from customer on behalf of the Government.

ii. Income from services is recognized (net of GST as applicable) as they are rendered, based on agreement/arrangement with the concerned customers.

iii. Dividend income is accounted for when the right to receive the income is established.

iv. For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to the gross carrying amount of the financial asset.

v. Interest income for all financial instruments measured at fair value through other comprehensive income is recognized in the Statement of Profit and Loss.

xiv. Taxes on income

Current tax is determined on the basis of taxable income and tax credits computed in accordance with the provisions of applicable tax laws of the jurisdictions where the entity is located.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the entity will pay normal income tax. Accordingly, MAT is recognised as an asset in the balance sheet when it is highly probable that future economic benefit associated with it will flow to the entity.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences and on unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and unused losses can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

xv. Earnings Per Share

Basic Earnings per share

Basic earnings per share is calculated by dividing:

- the profit attributable to owners of the Company

- by the weighted average number of equity shares outstanding during the financial year.

Diluted Earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares

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Mar 31, 2016

1. SIGNIFICANT ACCOUNTING POLICIES

(i) Basis of Preparation:

The Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013.

The Company follows the accrual system of accounting and recognizes income and expenditure on accrual basis.

Accounting policies not referred to otherwise are consistent with the Generally Accepted Accounting Principles.

(ii) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/ reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 2013.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the year prior to the commencement of commercial production are capitalized proportionately as part of the asset cost in respect of machineries put to use.

(iii) Depreciation:

(a) Depreciation on fixed assets other than lease-hold land is provided on straight-line method at the rates and in the manner specified in Schedule II of Companies Act, 2013.

(b) Depreciation on additions/deductions during the year has been provided on prorata basis with reference to the month of addition/deduction.

(iv) Expenditure during construction year:

As per the consistent accounting policy all expenditure related to the project construction/ implementation and income arising out of

project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(v) Investments:

Long-term investments are valued at cost subject to reduction made for diminution in value that is other than temporary in nature.

(vi) Inventories:

In accordance with the revised Accounting Standard (AS-2), Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any.

(a) Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value.

(b) Materials in process: At lower of cost or net realizable value.

(c) Finished Goods: At lower of cost or net realizable value.

(vii) Retirement Benefits:

(a) Defined Contribution Plan

The Company’s liability towards Employee''s Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt. of India is considered as Defined Contribution Plan. The Company''s contributions paid towards these defined contribution plans is recognized as expense in the Profit and Loss Account during the year in which the employees rendered the related service.

(b) Defined Benefit Plan

Company''s liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the year-end. This is done on the same basis as in the last accounting year.

(viii) Transactions of foreign currency items:

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the capital work in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the year end and the resultant exchange difference is adjusted to the cost of assets.

(ix) Government Grants:

(a) Revenue grants are recognized in the Profit & Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(x) Taxes on Income:

No provision for taxation is made as the company has incurred losses during the year.

2. NOTES TO ACCOUNTS

i. Contingent liabilities not provided for:

Contingent liabilities are considered only when converted into demands.

No provision for deferred taxation is made in accounts as the company has been incurring losses year after year.

(xi) Provisions:

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

(xii) There were no events occurring after the Balance Sheet date which require reporting.

(xiii) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.

ii. The Board is contemplating taking steps for recovering the calls-in-arrears from defaulting applicants, including forfeiture of the shares as a last resort after exhausting all other avenues for recovery in a spirit of maintaining shareholder friendly environment. The Board therefore considers it prudent not to provide for the interest on calls-in-arrears.

iii. Estimated amount of contracts remaining to be executed on capital account net of advances is Rs. Nil (Previous Year Rs. Nil).

iv. During the year, the Company invested Rs.4, 99,060 (49,906 Equity Shares of Rs. 10/each) which is reflected as Non-Current Investment in the Financial Statement.

v. Loans and Advances include Rs. 77,69,880/-(Previous Year Rs. 77,66,880 /- ) overdue from various parties on account of accommodation deposits, security deposits, advances given to suppliers, ex-employees, etc. Compensation for delayed payment, if any, will be accounted in the books of account, if and when realized.

vi. There is no amount overdue and remaining unpaid to small scale/or ancillary Industrial Suppliers on principal and/or interest as at the close of the year.

vii. Previous Year''s figures have been regrouped/ reclassified/ rearranged wherever necessary.

viii. In the opinion of the Board of Directors, in the ordinary course of business the value on realization of current assets, loans and advances, including security Deposits are at least equal to the amount at which they are stated in the Balance Sheet.

ix. Amounts appearing in Trade Receivables & Payables are realized and paid as on date of signing. Balances of Banks, Sundry Debtors, Sundry Creditors, Loans & Advance, and Deposits are subject to confirmation.

x. Profit and Loss Account of the current year includes following remuneration paid/credited/ accrued to managerial personnel.

xi. The AS-17 "Segment Reporting" is not applicable as the Company has operated only in one segment i.e. manufacturing of Yarn.

xii. AS-18 Related Party Information:

Pursuant to AS-18 information on remuneration paid to Key Management Personnel is given in the report on Corporate Governance under the heading "Remuneration to Directors" for Shri. Hemant B.Vyas - Managing Director.

Loans from Related Parties:

xiii. During the year, the company has entered into One Time Settlement (OTS) with Asset

Reconstruction Company (India) Ltd. (ARCIL), IDBI, IFCI, UTI and GIC in respect of their dues of holding 8% Optionally Cumulative Convertible Debentures (OCCDS). As pert the terms of OTS with the aforesaid Institutions; the details of settlement and payments made are as follows: being non payable to the above referred instituition are transferred to General Reserve. as per the past practice.

xiv. No provision has been made in the current for Salary, Wages and other dues in respect of workers at Guwahati. We are informed that the factory is closed and there have been no manufacturing activities.

xv. Prag Bosimi Synthetics Ltd (Holding Company) has two subsidiaries viz Prag Bosimi Texturising Pvt. Ltd. and Prag Bosimi Packaging Pvt. Ltd. Both these companies are non operating and non revenue generating. Therefore certain operating expenditure incurred by the company are absorbed by the holding Company. Accordingly such expenses incurred during the year are absorbed.

Therefore, the remaining balance in OCCD of Rs. 27.86 Crores and interest Accrued and Due of Rs. 13.93 Crores aggregating Rs. 41.79 crores

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Mar 31, 2015

(i) Basis of Preparation

The Financial Statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 2013.

The Company follows the accrual system of accounting and recognizes income and expenditure on accrual basis.

Accounting policies not referred to otherwise are consistent with the Generally Accepted Accounting Principles.

(ii) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/ reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 2013.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the period prior to the commencement of commercial production are capitalized proportionately as part of the asset cost in respect of machineries put to use.

(iii) Depreciation:

(a) Depreciation on fixed assets other than lease-hold land is provided on straight- line method at the rates and in the manner specified in Schedule II of Companies Act, 2013.

(b) Depreciation on additions/deductions during the year has been provided on pro- rata basis with reference to the month of addition/deduction.

(iv) Expenditure during construction period:

As per the consistent accounting policy all expenditure related to the project construction/ implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(v) Investments:

Long-term investments are valued at cost subject to reduction made for diminution in value that is other than temporary in nature.

(vi) Inventories:

In accordance with the revised Accounting Standard (AS-2), Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any.

(a) Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value

(b) Materials in process: At lower of cost or net realizable value.

(c) Finished Goods: At lower of cost or net realizable value.

(vii) Retirement Benefits:

(a) Defined Contribution Plan

The Company's liability towards Employee's Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt. of India is considered as Defined Contribution Plan. The Company's contributions paid towards these defined contribution plans is recognized as expense in the Profit and Loss Account during the period in which the employees rendered the related service.

(b) Defined Benefit Plan

Company's liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the year-end. This is done on the same basis as in the last accounting period.

(viii) Transactions of foreign currency items:

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the capital work in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the year end and the resultant exchange difference is adjusted to the cost of assets.

(ix) Government Grants:

(a) Revenue grants are recognized in the Profit & Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(x) Taxes on Income:

No provision for taxation is made as the company has incurred losses during the period.

No provision for deferred taxation is made in accounts as the company has been incurring losses year after year.

(xi) Provisions:

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

(xii) There were no events occurring after the Balance Sheet date which require reporting.

(xiii) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.

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Sep 30, 2013

(i) Fixed Assets :

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 1956.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the period prior to the commencement of commercial production are capitalized proportionately as part of the asset cost in respect of machineries put to use.

(ii) Depreciation :

(a) Depreciation on fixed assets other than lease-hold land is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

(b) Depreciation on additions/ deductions during the period has been provided on pro-rata basis with reference to the month of addition/deduction.

(c) Effective from 15'' October, 2003 , the Leasehold land is amortized over the balance period of unexpired lease period in equal installments. The leasehold land was acquired on 1st August, 1989 for 30 years period at a premium of Rs.. 599,678/-. Accordingly, the premium paid for acquiring the lease hold rights on the said leasehold land are being written off over the balance unexpired life of the lease.

(d) The Company has not provided any depreciation on major part of its Plant & Machineries which are not put to use during the accounting period under review as per the accounting policy followed by the company.

(iii) Expenditure during construction period :

As per the consistent accounting policy all expenditure related to the project construction/implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(iv) Investments :

Long-term investments are valued at cost subject to reduction made for diminution in value that is other than temporary in nature.

(v) Inventories :

In accordance with the revised Accounting Standard (AS-2), Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any.

(a) Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value.

(b) Materials in process : At lower of cost or net realizable value.

(c) Finished Goods : At lower of cost or net realizable value.

(vi) Retirement Benefits :

(a) Defined Contribution Plan

The Company''s liability towards Employee''s Provident Fund scheme administered by the Employees Provident Fund Scheme, Government of India is considered as Defined Contribution Plan. The Company''s contributions paid towards these defined contribution plan amounting to Rs. 20,45,389 /- is recognized as expense in the statement of Profit and Loss during the period in which the employees rendered the related service.

(b) Defined Benefit Plan

Company''s liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the period end. Provision of Rs. 36,61,913/- is accordingly made for leave encashment during the current period. This is done on the same basis as in the last accounting period.

(vil) Transactions of foreign currency items :

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the period end and resultant gains/losses are recognized in the capital work in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the period end and the resultant exchange difference is adjusted to the cost of assets.

(viii) Government Grants :

(a) Revenue grants are recognized in the Profit & Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(ix) Taxes on Income :

No provision for taxation is made as the profits and gains of units set up in North Eastern State are tax free under the Income Tax Act, 1961 and the company has also incurred losses during the period.

No provision for deferred taxation is made in accounts as the company has been incurring losses period after period and Company''s business income is also exempt u/s 80IC of Income Tax Act, 1961.

(x) Provisions:

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

(xi) There were no events occurring after the Balance Sheet date which are reportable.

(xii) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.

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Mar 31, 2012

(1) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/ reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 1956.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the period prior to the commencement of commercial production are capitalized proportionately as part of the asset cost in respect of machineries put to use.

(2) Depreciation:

(a) Depreciation on fixed assets other than lease-hold land is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

(b) Depreciation on additions/deductions during the year has been provided on pro-rata basis with reference to the month of addition/ deduction.

(c) Effective from 01.10.2003, the Leasehold land is amortized over the balance period of unexpired lease period in equal installments. The leasehold land was acquired on 1.8.1989 for 30 years period at a premium of Rs. 599,678/-. Accordingly, the premium paid for acquiring the lease hold rights on the said leasehold land are being written off over the balance unexpired life of the lease.

(d) The Company has not provided any depreciation on major part of its Plant & Machinery which is not used during the accounting period under review for practical difficulties. Such depreciation not provided is computed to be Rs. 21,86,52,089/- Similarly, on the same reasoning, the Company has written bs ck and credited to profit & Loss Account an amount of Rs.11,62,80,208/-by way of depreciation provided in the accounting period 01.10.2009 to 30.09.2010 and Rs.2,49,000/-provided in the accounting period 01.04.2008 to 30.09.2009.

(3) Expenditure during construct on period:

As per the consistent accounting policy all expenditure related to the p oject construction/ implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(4) Investments:

Long-term investments are valued at cost subject to reduction made for diminution in value that is other than temporary in natuife.

(5) Inventories:

In accordance with the revised Accounting Standard (AS-2), Inventories are valued at lower of cost or net realizable value; after providing for obsolescence, if any.

(a) Raw materials, stores, sriares, consumables and construction materials: At lower of cost or net realizable value

(b) Materials in process: At lower of cost or net realizable value

(c) Finished Goods: At lovjver of cost or net realizable value. j

(6) Retirement Benefits:

Defined Contribution Plan

The Company's liability towards Employee's Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt, of India is considered as Defined Contribution Plan. The Company's contributions paid towards these defined contribution plan amounting to Rs.1,394,468/-is recognized as expense in the Profit and Loss Account during the period in which the employees rendered the related service.

Defined Benefit Plan

Company's liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the year-end. Provision of Rs.28,05,932/- is accordingly made for leave encashment during the current year. This is done on the same basis as in the last accounting period.

(7) Transactions of foreign currency items:

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the capital work in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the year end and the resultant exchange difference is adjusted to the cost of assets.

(8) Government Grants:

(a) Revenue grants are recognized in the Profit

& Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(9) Taxes on Income:

No provision for taxation is made as the profits and gains of units set up in North Eastern State are tax free under the Income Tax Act 1961 and the company has also incurred losses during the year.

No provision for deferred taxation is made in accounts as the company has been incurring losses year after year and Company's business income is also exempt u/s 80IC of Income Tax Act of 1961.

(10) Provisions:

A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made.

(11) There were no such events occurring after the Balance Sheet date which are reportable.

(12) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.

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Sep 30, 2010

(1) Basis of preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956.

The Company follows the accrual system of accounting and recognises Income and expenditure on accrual basis.

Accounting policies not referred to otherwise are consistent with the Generally Accepted Accounting Principles.

(2) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/ reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 1956.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the period prior to the commencement of commercial production are capitalised proportionately as part of the asset cost in respect of machineries put to use.

(3) Depreciation:

(a) Depreciation on fixed assets other than lease-hold land is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

(b) Depreciation on additions/deductions during the year has been provided on pro-rata basis with reference to the month of addition/ deduction.

(c) Effective from 01.10.2003, the Leasehold land is amortized over the balance period of unexpired lease period in equal installments.

The leasehold land was acquired on 1.8.1989 for 30 years period at a premium of Rs. 599,678/-. Accordingly, the premium paid for acquiring the lease hold rights on the said leasehold land are being written off over the balance unexpired life of the lease.

(4) Expenditure during construction period:

As per the consistent accounting policy all expenditure related to the project construction/ implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(5) Investments:

Long-term investments are valued at cost subject to reduction made for diminution in value-that is other than temporary in nature.

(6) Inventories:

In accordance with the revised Accounting Standard (AS-2), Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any.

(a) Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value

(b) Materials in process: At lower of cost or net realizable value

(c) Finished Goods: At lower of cost or net realizable value.

(7) Retirement Benefits:

Defined Contribution Plan

The Companys liability towards Employees Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt, of India is considered as Defined Contribution Plan. The Companys contributions paid/payable towards these defined contribution plan is recognized as expense in the Profit and Loss Account during the period in which the employees rendered the related service.

Defined Benefit Plan

Companys liabilities towards gratuity and leave encashment if any are considered as Defined

Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the Leave encashment, it is calculated on the actual balance leave of each employee on the year-end. Provision of Rs. 6,34,424 is accordingly made for leave encashment during the current year. This is done on the same basis as in the last accounting period.

(8) Transactions of foreign currency items:

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the capital work in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the year end and the resultant exchange difference is adjusted to the cost of assets.

(9) Government Grants:

(a) Revenue grants are recognized in the Profit & Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(10) Provision for taxation:

No provision for taxation is made as the profits and gains of units set up in North Eastern State are tax free under the Income Tax Act 1961 and the company has also incurred losses during the year.

(11) Events occurring after the Balance Sheet Date:

In term of Corporate Debt Restructuring Scheme, the Company has issued 8% Optionally Cumulative Convertible Debentures amounting to Rs. 57.52 Crore to the Financial Institution, Banks and Insurance Companies on 23rd March, 2011.

(12) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.

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Sep 30, 2009

(1) Basis of preparation of Financial Statements:

The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956.

The Company follows the accrual system of accounting and recognises income and expenditure on accrual basis.

Accounting policies not referred to otherwise are consistent with the Generally Accepted Accounting Principles.

(2) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction and includes amounts added/reduced on revaluation less accumulated depreciation. Impairment losses have been accounted as per the mandatory Accounting Standards issued by The Institute of Chartered Accountants of India as applicable and the relevant provisions of The Companies Act, 1956.

Borrowing costs for acquisition or construction of a qualifying asset and revenue expenses incurred (including expenses on test runs and experimental production) for the period prior to the commencement of commercial production are capitalised proportionately as part of the asset cost in respect of machineries put to use.

(3) Depreciation:

(a) Depreciation on fixed assets other than leasehold land is provided on straight-line method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.

(b) Depreciation on additions/deductions during the year has been provided on pro-rata basis with reference to the month of addition/deduction.

(c) Effective from 01.10.2003, the leasehold land is amortized over the balance period of unexpired lease period in equal installments. The leasehold land was acquired on 1.8.1989 for 30 years period at a premium of Rs. 599,678/-. Accordingly, the premium paid for acquiring the lease hold rights on the said leasehold land are being written off over the balance unexpired life of the lease of 15 years @ Rs. 40,000 per annum. This does not result in any change during the current period and hence there is no effect on Loss for the period.

(4) Expenditure during construction period:

As per the consistent accounting policy all expenditure related to the project construction/implementation and income arising out of project activities and funds related to the project are capitalized and allocated to the respective fixed assets.

(5) Investments:

Long-term investments are valued at cost subject to reduction made for diminution in value that is other than temporary in nature.

(6) Inventories:

In accordance with the revised Accounting Standard (AS- 2), Inventories are valued at lower of cost or net realizable value after providing for obsolescence, if any.

(a) Raw materials, stores, spares, consumables and construction materials: At lower of cost or net realizable value

(b) Materials in process: At lower of cost or net realizable value

(c) Finished Goods: At lower of cost or net realizable value.

(7) Retirement Benefits:

Defined Contribution Plan

The Companys liability towards Employees Provident Fund scheme administered by the Employees Provident Fund Scheme, Govt, of India is considered as Defined Contribution Plan. The Companys contributions paid/ payable towards these defined contribution plan is recognized as expense in the Profit and Loss Account during the period in which the employees rendered the related service.

Defined Benefit Plan

Companys liabilities towards gratuity and leave encashment if any are considered as Defined Benefit Plans. The present value of the obligations towards gratuity is determined based on actuarial valuation using the projected unit credit method. As regards the leave encashment, it is calculated on the actual balance leave of each employee on the year-end. Provision of Rs.7,23,670 is accordingly made for leave encashment during the current period. This is done on the same basis as in the last accounting period.

(8) Transactions of foreign currency items:

Transactions in foreign currency are recorded at the rate of exchange in force at the date of transaction. Foreign currency assets and other liabilities other than for financing fixed assets are stated at the rate of exchange prevailing at the year-end and resultant gains/losses are recognized in the capital wo* in progress. Foreign currency loans for financing fixed assets (other than those where the company is protected against exchange fluctuations) are accounted for at the rate of exchange prevailing at the year end and the resultant exchange difference is adjusted to the cost of assets.

(9) Government Grants:

(a) Revenue grants are recognized in the Profit & Loss account.

(b) Capital Grants relating to specific fixed assets are shown under capital reserve.

(10) Provision for taxation:

No provision for taxation is made as the profits and gains of units set up in North Eastern State are tax free under the Income Tax Act 1961 and the company has also incurred losses during the period.

(11) Events occurring after the Balance Sheet Date:

In accordance with the Accounting Standard 4, the company has given effects in accounts to the Corporate Debt Restructuring (CDR) Package approved on 17/03/2009 by the CDR Empowered Group. The same has been accepted by the Company and the Consortium of Financial Institutions and Banks who have provided the finance to the company.

(12) Revenue Recognition:

(a) Sales are recognized on dispatch to customers and are net of returns, discounts and sales tax.

(b) Other Income and Expenditure are recognized and accounted on accrual basis.