Accounting Policies of South India Paper Mills Ltd. Company

Mar 31, 2025

NOTE 1 : MATERIAL ACCOUNTING POLICIES

A.1 Basis of preparation

a) Statement of Compliance:

The standalone financial statements have been prepared in accordance with Indian Accounting Standards (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 and relevant provisions of the Companies Act, 2013 (“the
Act”).

The financial statements were authorised for issue in accordance with a resolution of the Company’s Board of
Directors on 29 May, 2025.

These financial statements have been prepared on the historical cost basis, except for certain items that are
measured at fair values at the end of each reporting period, as explained in the accounting policies below. The
financial statements are prepared on a ‘going concern’ basis under accrual method, except for the cash flow
information.

b) Classification of Assets and Liabilities as Current and Non-Current:

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An
asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when :

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve months as its operating cycle.

c) Functional and Presentation Currency:

The financial statements are presented in Indian Rupees O, which is also the Company’s functional currency
and all amounts are rounded to the nearest two decimal of lakhs (''00,000), except when otherwise indicated.

1.2 Property, plant and equipment (PPE)

PPE are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost
of PPE includes interest on borrowings attributable to acquisition of qualifying PPE up to the date the asset
is ready for its intended use and other incidental expenses incurred up to that date. Any trade discounts and
rebates are deducted in arriving at the purchase price. The cost is net of input tax credit availed. The Company
identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is
significant to the total cost of that item of PPE and has useful life that is materially different from that of the
remaining item. Subsequent expenditure relating to PPE is capitalised only if such expenditure results in an
increase in the future benefits from such asset beyond its previously assessed standard of performance. All
other costs are recognised in the statement of profit and loss as and when incurred as repairs and maintenance.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried
at cost, comprising direct cost, related incidental expenses and attributable interest (if any). Advances given
towards acquisition of PPE outstanding at each balance sheet date are disclosed as Other Non-Current Assets.

Depreciation is provided on straight line method based on the following useful lives / residual values as
prescribed in Part C of Schedule II of the Companies Act, 2013. Depreciation is charged on a proportionate
basis for all assets purchased and sold during the year. Extra Shift Depreciation has been charged, where
applicable.

An item of property, plant and equipment and any significant part initially recognised is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the income statement when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.

1.3 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

Computer Software which is not an integral part of the related hardware is classified as an intangible asset.
Intangible assets are amortised on a reducing balance method over the estimated useful economic life of 6
years, based on management’s estimate of useful life.

The amortization period and the amortization method are reviewed at least at each financial year end. If the
expected useful life of the asset is significantly different from previous estimates, the amortization period is
changed accordingly. If there has been a significant change in the expected pattern of economic benefits from
the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in
accordance with Ind AS.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds/net realizable value and the carrying amount of the asset and are recognised in the statement
of profit and loss when the asset is derecognised.

1.4 Impairment

(i) Financial assets -

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss
rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on Company’s past history, existing market conditions as well as forward looking estimates
at the end of each reporting period.

(ii) Non-financial assets -

Consideration is given at each balance sheet date to determine whether there is any indication of impairment
to a tangible / intangible asset. If any indication exists, an asset’s recoverable amount is estimated. An asset is
treated as impaired when the carrying amount of asset exceeds its recoverable value. The impairment loss is
charged to statement of profit and loss in the year in which an asset is identified as impaired. 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
amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

1.5 Revenue from contract with customer

The Company earns revenue from contract with customer primarily from sale of goods.

Revenue is recognised upon transfer of control of promised products to customers in an amount that reflects the
consideration which the Company expects to receive in exchange for those goods. The Company has generally
concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services
before transferring them to the customer, it is the primary obligor in all the revenue arrangements as it has
pricing latitude and is also exposed to inventory and credit risks.

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the
Company performs by transferring goods or services to a customer before the customer pays consideration or
before payment is due, a contract asset is recognised for the earned consideration that is conditional. Revenues
in excess of invoicing are classified as contract assets (Unbilled Revenue). The specific recognition criteria
described below must also be met before revenue is recognised.

Sale of goods

Revenue from sale of goods is recognised at the point in time when control of the asset is transferred to the
customer.

The revenue is collected immediately upon sale of goods or as per agreed credit terms which is within 30 to 50
days upon delivery. The Company considers whether there are other promises in the contract that are separate
performance obligations to which a portion of the transaction price needs to be allocated.

Variable Consideration

Rights of return, volume discounts, or any other form of variable consideration is estimated using either the sum
of probability weighted amounts in a range of possible consideration amounts (expected value), or the single
most likely amount in a range of possible consideration amounts (most likely amount), depending on which
method better predicts the amount of consideration realizable. Transaction price includes variable consideration
only to the extent it is probable that a significant reversal of revenues recognized will not occur when the
uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and
determination of whether to include estimated amounts in the transaction price may involve judgment and are
based largely on an assessment of our anticipated performance and all information that is reasonably available
to us.

Finance income

For all financial instruments measured at amortised cost, interest income is recorded using the effective interest
rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the
expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the
financial asset or to the amortised cost of a financial liability. When calculating EIR, the Company estimates the
expected cash flows by considering all the contractual terms of the financial instrument but does not consider
the expected credit losses. Interest income is included in “Other income” in the statement of profit and loss.

Dividend income

Revenue is recognised when the Company’s right to receive dividend is established, which is generally the
shareholders’ approval date.

Export Incentives

Revenue from export incentives are accounted for on export of goods if the entitlements can be estimated with
reasonable assurance and conditions precedent to claim are fulfilled.

Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent
that there is no uncertainty in receiving the claims.

1.6 Inventories

Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other
losses, where considered necessary. However, raw materials and other supplies held for use in the production
of inventories are not written down below cost if the finished products in which they will be incorporated are
expected to be sold at or above cost.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

- Raw materials, consumables & stores and fuel: Cost includes cost of purchase and other costs incurred in
bringing the inventories to their present location and condition. Cost is determined on moving weighted
average basis.

- Finished goods and Work-in-Progress: Cost includes cost of direct materials and labour and a proportion
of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost
is determined on moving weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of

completion and the estimated costs necessary to make the sale. The comparison of cost and net realisable value
is made on an item-by-item basis.

The provision for slow moving and obsolete inventory is assessed by the management and is provided as
considered necessary.

1.7 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents include other short-term
highly liquid investments with original maturities of three months or less. For the purpose of the Statement of
cash flows, cash and cash equivalents consists of cash and short term deposits as defined above.

1.8 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before exceptional 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.

1.9 Foreign currencies

The financial statements are presented in Indian Rupees (‘INR’), which is the functional currency of the
Company.

Transactions and balances -

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange
differences arising on foreign exchange transactions settled during the year are recognised in the statement of
profit and loss of the year.

Monetary items denominated in foreign currencies as at the balance sheet date are translated at the exchange
rates on that date; the resultant exchange differences are recognised in the statement of profit and loss as income
or expense.

Non-monetary items are recorded at the rate prevailing on the date of the transaction. Non-monetary items that
are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair
value is measured.

Premium / discount on forward exchange contracts if any are amortised over the period of the contracts if such
contracts relate to monetary items as at the balance sheet date.

1.10 Retirement and other employee benefits

(i) Short-term employee benefits -

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within
12 months after the end of the period in which the employees render the related services are recognised in
respect of employees’ service up to the end of the reporting period and are measured at the amounts expected to
be paid when the liabilities are settled. The liabilities are presented as current provisions in the balance sheet.

(ii) Compensated absences -

Compensated absences which are not expected to occur within twelve months after the end of the period in
which the employee renders the related service are recognised as a liability, based on actuarial valuation made
by an independent actuary, at the present value of the defined benefit obligation as at the balance sheet date less
the fair value of the plan assets out of which the obligations are expected to be settled.

(iii) Post-employment benefits -

The Company operates the following post-employment benefit schemes:

- defined contribution plans such as provident fund and employee state insurance scheme; and

- defined benefit plans such as gratuity.

Defined contribution plans :

The Company makes specified monthly contribution towards employee provident fund, superannuation fund
and employees state insurance schemes to Government administered schemes which are the defined contribution
schemes. The Company’s contribution is recognised as an expense in the statement of profit and loss during the
period in which the employee renders the related service.

Defined benefit plans :

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present
value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows by reference to market yields at the end of the reporting period on government bonds that have terms
approximating to the terms of the related obligation.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions
are recognised in the period in which they occur, directly in other comprehensive income. They are included in
retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments
are recognised immediately in the statement of profit or loss as past service cost

1.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of
the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist
of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also
includes exchange differences arising from foreign currency borrowings to the extent regarded as an adjustment
to the borrowing costs.

1.12 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the
internal organization and management structure. The operating segments are the segments for which separate
financial information is available.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
Segment revenue, segment expenses, segment assets and segment liabilities are identified to segments on the
basis of their relationship to the operating activities of the segment.

Inter-segment revenue, if any, is accounted on the basis of transactions which are primarily determined based
on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to
segments on reasonable basis are included under “unallocated revenue / expenses / assets / liabilities”.

1.13 Leases

Company as a Lessee -

The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in

exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether:

(i) the contract involves the use of an identified asset,

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of
the lease, and

(iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROU”) and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low
value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over
the term of the lease.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and
impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line
basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments
are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental
borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect
interest on the lease liability, reducing the carrying amount to reflect the lease payments made.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a
change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the
leased assets.

Wherever the lease period is less than 12 months, lease payments are recognised as an expense on a straight¬
line basis over the lease term.

Company as a Lessor -

Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership
of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis
over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Contingent rents are recognised as revenue in the period in which they are earned.

1.14 Taxes

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability
during the year. Current and deferred tax are recognised in the statement of profit and loss, except when they
relate to items that are recognized in other comprehensive income or directly in equity, in which case, the
current and deferredtax are also recognised in other comprehensive income or directly in equity, respectively.

(i) Current income tax -

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities based on the taxable income for that period. The tax
rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance
sheet date.

(ii) De ferred tax -

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using
the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are
recognised only to the extent there is reasonable certainty that the assets can be realised in future. Deferred tax
assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is
reasonably/ virtually certain (as the case may be) to be realised.

In the situations where the Company is entitled to a tax holiday, no deferred tax (asset or liability) is recognised
in respect of timing differences which reverse during the tax holiday period, to the extent the Company’s
gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing
differences which reverse after the tax holiday period is recognised in the year in which the timing differences
originate. However, the Company restricts recognition of deferred tax assets to the extent that it has become
reasonably certain, that sufficient future taxable income will be available against which such deferred tax assets
can be realised. For recognition of deferred taxes, the timing differences which originate first are considered to
reverse first.

(iii) Minimum alternate tax (MAT)-

In accordance with the provisions of Section 115JAA of the Income Tax Act, 1961, the Company is allowed
to avail credit equal to the excess of Minimum Alternative Tax (‘MAT’) over normal income tax for the
assessment year for which MAT is paid. MAT credit so determined can be carried forward for and set-off for
fifteen succeeding years for the year in which such credit becomes available. MAT credit can be set-off only in
the year in which the Company is liable to pay tax as per the normal provisions of the Income Tax Act, 1961 and
such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer
convincing evidence to the effect that the Company will pay normal income tax during the specified period.

1.15 Financial instruments

Financial instruments are recognised when the Company becomes a party to the contract that gives rise to
financial assets and financial liabilities.

Financial Assets

Initial recognition and measurement

All 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.

Subsequent measurement

Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost using the effective interest rate method 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 asset 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 and selling financial
assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding. Fair value movements are recognized
in Other Comprehensive Income (OCI).

Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is 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 at fair value through profit or loss are immediately recognised in statement of
profit and loss.

Trade Receivables

Loss allowance for trade receivables with no significant financing component is measured at an amount equal
to the lifetime Expected Credit Losses. Lifetime expected credit losses are the expected credit losses that result
from all possible default events over the expected life of a financial instrument. Company applies simplified
approach of Ind AS 109 “Financial Instruments” for determining lifetime Expected Credit Losses.

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A
financial liability (or a part of a financial liability) is derecognised when the obligation specified in the contract
is discharged or cancelled or expires.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised 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 and borrowings
Subsequent measurement

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of repurchasing in the near term.

Loans and Borrowings

Financial liabilities are subsequently measured at amortised cost using the effective interest method. For trade
and other payables maturing within one year from the balance sheet date, the carrying amounts approximate
fair value due to the short maturity of these instruments.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged orcancelled or expires.
When an existing financial liability is replaced by another from the samelender on substantially different terms,

or the termsof an existing liability are substantially modified,such an exchange or modification is treated as
the derecognition of the original liability and therecognition of a new liability. The difference in the respective
carrying amounts is recognised in the statement of profit or loss.

Reclassification of financial instruments

The Company determines classification of financial assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities.
For financial assets which are debt instruments, a reclassification is made only if there is a change in the
business model for managing those assets. Changes to the business model are expected to be infrequent. If the
Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date
which is the first day of the immediately next reporting period following the change in business model. The
Company does not restate any previously recognised gains, losses (including impairment gains or losses) or
interest.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is
a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net
basis, to realize the assets and settle the liabilities simultaneously.

1.16 Fair value of financial instruments

In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions
that are based on market conditions and risks existing at each reporting date.

Fair value hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.

---

Mar 31, 2024

NOTE 1 : SIGNIFICANT ACCOUNTING POLICIES

A.1 Basis of preparation

a) Statement of Compliance:

The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the CompaniesAct, 2013 read with Companies (Indian Accounting Standards) Rules as amended from tune to tune and relevant provisions of the CompaniesAct, 2013 (“the Act”).

The financial statements were authorised for issue in accordance with a resolution of the Company’s Board of Directors on 30th May, 2024.

These financial statements have been prepared on the historical cost basis, except for certain items that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. The financial statements are prepared on a ‘going concern’ basis under accrual method, except for the cash flow information.

b) Classification of Assets and Liabilities as Current and Non-Current:

The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle

• Held primarily for the purpose of trading

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when :

• It is expected to be settled in normal operating cycle

• It is held primarily for the purpose of trading

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.

c) Functional and Presentation Currency:

The financial statements are presented in Indian Rupees (?), which is also the Company’s functional currency and all amounts are rounded to the nearest two decimal of lakhs (?00,000), except when otherwise indicated.

1.2 Property, plant and equipment (PPE)

PPE are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost of PPE includes interest on borrowings attributable to acquisition of qualifying PPE up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Any trade discounts and rebates are deducted in arriving at the purchase price. The cost is net of input tax credit availed. The Company identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is significant to the total cost of that item of PPE and has useful life that is materially different from that of the remaining item. Subsequent expenditure relating to PPE is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. All other costs are recognised in the statement of profit and loss as and when incurred as repairs and maintenance.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any). Advances given towards acquisition of PPE outstanding at each balance sheet date are disclosed as Other Non-Current Assets.

Depreciation is provided on straight line method based on the following useful lives / residual values as prescribed in Part C of Schedule II of the Companies Act, 2013. Depreciation is charged on a proportionate basis for all assets purchased and sold during the year. Extra Shift Depreciation has been charged, where applicable.

An item of property, plant and equipment and any significant part initially recognised is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

1.3 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

Computer Software which is not an integral part of the related hardware is classified as an intangible asset. Intangible assets are amortised on a reducing balance method over the estimated useful economic life of 6 years, based on management''s estimate of useful life.

The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with Ind AS.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds/net realizable value and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.

1.4 Impairment

(i) Financial assets -

The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(ii) Non-financial assets -

Consideration is given at each balance sheet date to determine whether there is any indication of impairment to a tangible / intangible asset. If any indication exists, an asset’s recoverable amount is estimated. An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value. The impairment loss is charged to statement of profit and loss in the year in which an asset is identified as impaired. 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 amortisation or depreciation) had no impairment loss been recognised for the asset in prior years.

1.5 Revenue from contract with customer

The Company earns revenue from contract with customer primarily from sale of goods.

Revenue is recognised upon transfer of control of promised products to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer, it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Revenues in excess of invoicing are classified as contract assets (Unbilled Revenue). The specific recognition criteria described below must also be met before revenue is recognised.

Sale of goods

Revenue from sale of goods is recognised at the point in time when control of the asset is transferred to the customer.

The revenue is collected immediately upon sale of goods or as per agreed credit terms which is within 30 to 50 days upon delivery. The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated.

Variable Consideration

Rights of return, volume discounts, or any other form of variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration realizable. Transaction price includes variable consideration only to the extent it is probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and are based largely on an assessment of our anticipated performance and all information that is reasonably available to us.

Finance income

For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating EIR, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in “Other income” in the statement of profit and loss.

Dividend income

Revenue is recognised when the Company’s right to receive dividend is established, which is generally the shareholders’ approval date.

Export Incentives

Revenue from export incentives are accounted for on export of goods if the entitlements can be estimated with reasonable assurance and conditions precedent to claim are fulfilled.

Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

1.6 Inventories

Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. However, raw materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

- Raw materials, consumables & stores and fuel: Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on moving weighted average basis.

- Finished goods and Work-in-Progress: Cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs. Cost is determined on moving weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of

completion and the estimated costs necessary to make the sale. The comparison of cost and net realisable value is made on an item-by-item basis.

The provision for slow moving and obsolete inventory is assessed by die management and is provided as considered necessary.

1.7 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents include other short-term highly liquid investments with original maturities of three months or less. For the purpose of the Statement of cash flows, cash and cash equivalents consists of cash and short term deposits as defined above.

1.8 Cash Flow Statement

Cash flows are reported using die indirect mediod, 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.

1.9 Foreign currencies

The financial statements are presented hi Indian Rupees (‘INR’), which is the functional currency of die Company.

Transactions and balances -

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised hi die statement of profit and loss of the year.

Monetary items denominated in foreign currencies as at die balance sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the statement of profit and loss as income or expense.

Non-monetary items are recorded at the rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency, are translated ushig die exchange rates at the date when the fair value is measured.

Premium / discount on forward exchange contracts if any are amortised over the period of the contracts if such contracts relate to monetary items as at die balance sheet date.

1.10 Retirement and other employee benefits

(i) Short-term employee benefits -

Liabilities for wages and salaries, including non-monetary benefits that are expected to be sedled wholly within 12 months after the end of the period in which the employees render the related services are recognised in respect of employees’ service up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current provisions in the balance sheet.

(ii) Compensated absences -

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability, based on actuarial valuation made by an independent actuary, at the present value of the defined benefit obligation as at the balance sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

(iii) Post-employment benefits -

The Company operates the following post-employment benefit schemes:

- defined contribution plans such as provident fund and employee state insurance scheme ; and

- defined benefit plans such as gratuity.

Defined contribution plans :

The Company makes specified monthly contribution towards employee provident fund, superannuation fund and employees state insurance schemes to Government administered schemes which are the defined contribution schemes. The Company’s contribution is recognised as an expense in the statement of profit and loss during the period in which the employee renders the related service.

Defined benefit plans :

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in the statement of profit or loss as past service cost.

1.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences arising from foreign currency borrowings to the extent regarded as an adjustment to the borrowing costs.

1.12 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities are identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue, if any, is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis are included under “unallocated revenue / expenses / assets / liabilities”.

1.13 Leases

Company as a Lessee -

The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, die Company assesses whether :

(i) the contract involves the use of an identified asset,

(ii) the Company has substantially all of die economic benefits from use of the asset through the period of the lease, and

(Hi) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For tiiese short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from die commencement date on a straight-line basis over die shorter of die lease tenn and useful life of the underlying asset.

The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using die interest rate implicit in the lease or, if not readily determinable, using die incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing die carrying amount to reflect the lease payments made.

A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts die leased assets.

Wherever the lease period is less than 12 montiis, lease payments are recognised as an expense on a straightline basis over the lease term.

Company as a Lessor -

Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in die period in which they are earned.

1.14 Taxes

Income tax expense comprises current tax expense and die net change in the deferred tax asset or liability during die year. Current and deferred tax are recognised in the statement of profit and loss, except when tiiey relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferredtax are also recognised in odier comprehensive income or directly in equity, respectively

(i) Current income tax -

Current income tax assets and liabilities for the current and prior periods are measured at die amount expected to be recovered from or paid to the taxation authorities based on the taxable income for that period. The tax rates and tax laws used to compute the amount are diose that are enacted or substantively enacted by the balance sheet date.

(ii) Deferred tax -

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.

In the situations where the Company is entitled to a tax holiday, no deferred tax (asset or liability) is recognised in respect of timing differences which reverse during the tax holiday period, to the extent the Company’s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognised in the year in which the timing differences originate. However, the Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain, that sufficient future taxable income will be available against which such deferred tax assets can be realised. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

(iii) Minimum alternate tax (MAT)-

In accordance with the provisions of Section 115JAA of the Income Tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternative Tax (‘MAT’) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for and set-off for fifteen succeeding years for the year in which such credit becomes available. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income Tax Act, 1961 and such tax is in excess of MAT for that year. The MAT credit asset is written down to the extent there is no longer convincing evidence to the effect that the Company will pay normal income tax during the specified period.

1.15 Financial instruments

Financial instruments are recognised when the Company becomes a party to the contract that gives rise to financial assets and financial liabilities.

Financial Assets

Initial recognition and measurement

All 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.

Subsequent measurement Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost using the effective interest rate method 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 asset 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 and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Fair value movements are recognized in Other Comprehensive Income (OCI).

Financial assets at fair vahie through profit or loss

Financial assets are measured at fair value through profit or loss unless it is 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 at fair value through profit or loss are immediately recognised in statement of profit and loss.

Trade Receivables

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to Hie lifetime Expected Credit Losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. Company applies simplified approach of Ind AS 109 “Financial Instruments” for determining lifetime Expected Credit Losses.

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognised when the obligation specified in the contract is discharged or cancelled or expires.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised 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 and borrowings.

Subsequent measurement

Financial liabilities at fair vahie through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.

Loans and Borrowings

Financial liabilities are subsequently measured at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. 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 derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Reclassification of financial instruments

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.

1.16 Fair value of financial instruments

In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.

Fair value hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

---

Mar 31, 2018

NOTE 1 : SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation

a) Statement of Compliance:

The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time). For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

The financial statements are prepared in accordance with the historical cost convention except for certain items that are measured at fair values at the end of each reporting period, as explained in the accounting policies. The financial statements are prepared on a ‘going concern’ basis under accrual method except for the cash flow information.

b) Classification of Assets and Liabilities as Current and Non-Current:

All Assets and Liabilities have been classified as Current or Non-Current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of product & activities of the Company and their realisation in cash and cash equivalent, the Company has determined its operating cycle as twelve months for the purpose of Current and Non-Current classification of assets and liabilities. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

c) Functional and Presentation Currency:

The financial statements are presented in Indian Rupees (?) and all values are rounded to the nearest two decimal of lakhs (''00,000), except when otherwise indicated.

1.2 First-time adoption of Ind AS

Company has prepared the financial statements under Ind AS for the first time for the year ending 31^st March 2018. The date of transition to Ind AS is 01.04.2016.

For periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with generally accepted accounting principle in India (Indian GAAP). Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for period ending on March 31, 2018, together with the comparative period data as at and for the year ended March 31, 2017. For the purpose, the Company prepared the opening balance sheet as of April 1, 2016 (the transition date), as per Ind AS. Company has applied the Standards only to items / transactions which are material.

1.3 Property, plant and equipment (PPE)

The Company has elected to continue with the carrying value for all of its PPE as recognised in its Indian GAAP financial statements as deemed cost at the transition date, viz., April 01, 2016.

PPE are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost of PPE includes interest on borrowings attributable to acquisition of qualifying PPE up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Any trade discounts and rebates are deducted in arriving at the purchase price. The cost is net of input tax credit availed. The Company identifies and determines the cost of each part of an item of PPE separately, if the part has a cost which is significant to the total cost of that item of PPE and has useful life that is materially different from that of the remaining item. Subsequent expenditure relating to PPE is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. All other costs are recognised in the statement of Profit and Loss as and when incurred as repairs and maintenance. Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any). Advances given towards acquisition of PPE outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets. An item of PPE is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any profit or loss arising on derecognition of the asset is included in the statement of profit and loss when the asset is derecognised.

1.4 Intangible Assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase or completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of asset.

1.5 Depreciation and amortization of property, plant and equipment and intangible assets

Depreciation is provided on straight line method based on the following useful lives / residual values as prescribed in Part C of Schedule II of the Companies Act, 2013. Depreciation is charged on a proportionate basis for all assets purchased and sold during the year. Extra Shift Depreciation has been charged, where applicable.

Consideration is given at each balance sheet date to determine whether there is any indication of an impairment to a tangible / intangible asset. If any indication exists, an asset’s recoverable amount is estimated. An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value. The impairment loss is charged to statement of profit and loss in the year in which an asset is identified as impaired.

1.6 Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on a weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Work-in-progress and finished goods include an appropriate proportion of freight, overheads, direct costs and excise duty (where applicable).

1.7 Cash and cash equivalents

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.

1.8 Financial Instruments

Financial assets and liabilities are recognised when the Company becomes a party to the contract that gives rise to financial assets and financial liabilities. 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.

a) 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 in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) 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 and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets at fair value through profit or loss

Financial assets are measured at fair value through profit or loss unless it is 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 at fair value through profit or loss are immediately recognised in statement of profit and loss.

De-recognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.

Financial liabilities

Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

Reclassification of Financial Instruments

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.

Offsetting of Financial Instruments

Financial Assets and Financial Liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

1.9 Fair value of financial instruments

In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.

Fair value measurements are categorised into Level 1, 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, as described hereunder:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 - Other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 - Unobservable inputs for the asset or liability.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

1.10 Provisions and Contingencies

a) Provisions:

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

b) Contingencies:

Claims against the Company not acknowledged as debts are treated as Contingent Liabilities. Provision in respect of contingent liabilities if any, is made when it is probable that a liability may be incurred and the amount can be reasonably estimated. Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the Company’s views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the Company. Contingent liabilities are disclosed by way of a note. Contingent assets are not recognised but are disclosed in notes.

1.11 Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable for supply of goods or services net of returns, discounts, rebates and allowances.

a) Sale of Goods:

Sales of goods are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the despatch of goods to customers. Sales include excise duty (where applicable), but exclude GST and Value Added Tax. Income from sale of electricity is recognized as and when electricity is generated and supplied to the grid.

b) Dividend Income and Interest Income:

Dividend income is accounted for when the right to receive it is established. Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis.

c) Insurance claims:

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

1.12 Foreign Currency Transactions and Translations

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss of the year.

Monetary items denominated in foreign currencies as at the Balance Sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss as income or expense.

Non-monetary items are recorded at the rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured.

Premium / discount on forward exchange contracts if any are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.13 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

a) Defined contribution plans:

The Company’s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made and when services are rendered by the employees.

b) Defined benefit plans:

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

c) Others:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Re-measurements of the net defined benefit liability / (asset) comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income in the period in which they occur. Re-measurements are not reclassified to profit or loss in subsequent periods.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability, based on actuarial valuation made by an independent actuary, at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.14 Borrowing cost

Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily takes a substantial period of time to get ready for their intended use are capitalised. Borrowing costs on general borrowings are determined using a capitalisation rate which is computed as the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Other borrowing costs are accounted as an expense in the period in which they are incurred.

1.15 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalised at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line basis in net profit in the Statement of Profit & Loss over lease term.

1.16 Taxes on income

a) Current Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 and at the rates enacted by the statute on the Balance Sheet date. Assets and liabilities representing current tax are disclosed on a net basis where there is a legally enforceable right to set off and where the Management intends to settle the asset and liability on a net basis.

b) Deferred Tax:

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.

Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognised as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.

Current and deferred tax are recognised in the Statement of Profit and 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.

1.17 Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

1.18 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.19 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities”.

1.20 Cash dividend to equity shareholders of the Company

The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors.

1.21 Standards issued but not yet effective

The standards issued, but not yet effective up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards as and when they become effective.

a) Ind AS 115 - Revenue from Contracts with Customers:

Ind AS 115 introduces a five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard is notified on 28.03.2018 and it is applicable for the accounting periods commencing on or after 01.04.2018. Accordingly, this Standard is not applicable for preparation of the financial statements for the year ended 31.03.2018. However, application of this standard from 01.04.2018 does not have any impact in the revenue recognition and measurement for the Company.

b) Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration:

The Appendix clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The Appendix is effective for accounting periods beginning on or after 1 April 2018. The Company does not anticipate that the application of the new standard in future will have significant impact on the financial statement.

---

Mar 31, 2016

CORPORATE INFORMATION

The South India Paper Mills Ltd is a public limited Company, incorporated under the provisions of the Companies Act,1956. The Company is engaged in the manufacture of Paper, Paperboards, Cartons and Power Generation. Corporate Identity No. (CIN) of the Company is L85110KA1959PLC001352. Equity Shares of the Company are listed on the BSE (Bombay Stock Exchange) in India.

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenditure during the year. Examples include provisions for doubtful debts, provision for employee benefits, provision for taxation, useful lives of depreciable assets, provisions for impairment, provision for contingencies, provision for warranties / discounts etc. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

Future results could differ from those estimates. The effects of changes in accounting estimates are reflected in the financial statements in the period in which results are known and, if material, their effects are disclosed in the financial statements.

1.3 Inventories

Inventories are valued at the lower of cost and the net realizable value after providing for obsolescence and other losses, where considered necessary. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on a weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Work-in-progress and finished goods include an appropriate proportion of freight, overheads, direct costs and excise duty (where applicable).

1.4 Cash and cash equivalents

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.

1.5 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.6 Depreciation & amortization

Depreciation on fixed assets is provided on straight line method based on the following useful lives / residual values as prescribed in Part C of Schedule II of the Companies Act, 2013. Depreciation is charged on a

Note 1: Intangible Asset - Software is amortized over 6 years, based on management’s estimate of useful life

1.7 Revenue Recognition

Sales of goods are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the dispatch of goods to customers. Sales include excise duty (where applicable), but exclude sales tax and Value Added Tax.

Income from sale of electricity is recognized as and when electricity is generated and supplied to the grid. Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.8 Fixed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. The cost is net of VAT and CENVAT credit availed.

Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Land acquired on lease for 99 years or less is treated as leasehold land.

Intangible assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase or completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of asset. Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any).

1.9 Foreign Currency Transactions and Translations

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognized in the Statement of Profit and Loss as income or expense.

Premium / discount on forward exchange contracts if any are amortized over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.10 Investments

Investments are either classified as current or long-term based on Management’s intent at the time of making the investment. Current investments are carried individually, at the lower of cost and fair value. Long-term investments (excluding investment properties) are carried individually at cost less provision made to recognize any diminution, other than temporary, in the value of such investment. Cost of investments include acquisition charges such as brokerage, fees and duties. Provision is made to recognize any reduction in the carrying value of long-term investments and any reversal of such reduction is credited to the Statement of Profit and Loss.

1.11 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences. Defined contribution _plans

The Company’s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plans

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Others

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability, based on actuarial valuation made by an independent actuary, at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing cost

Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily takes a substantial period of time to get ready for their intended use are capitalized. Borrowing costs on general borrowings are determined using a capitalization rate which is computed as the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Other borrowing costs are accounted as an expense in the period in which they are incurred.

1.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities”.

1.14 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis. The Company has not entered into any finance lease arrangements.

1.15 Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

1.16 Taxes on income

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 and at the rates enacted by the statute on the Balance Sheet date. Assets and liabilities representing current tax are disclosed on a net basis where there is a legally enforceable right to set off and where the Management intends to settle the asset and liability on a net basis.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future; however where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.

1.17 Impairment

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the company’s fixed asset. If any indication exists, an asset’s recoverable amount is estimated. An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value. The impairment loss is charged to Statement of profit and loss in the year in which an asset is identified as impaired.

1.18 Provisions and contingencies

A provision is recognized when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the Company’s views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the Company.

Contingent liabilities are disclosed by way of a note. Contingent assets are neither recognized nor disclosed in the financial statements.

1.19 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

As per the records of the Company, including its register of members/shareholders, the above shareholding represents both legal and beneficial ownership of the shares.

---

Mar 31, 2015

1.1 Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenditure during the year. Examples include provisions for doubtful debts, provision for employee benefits, provision for taxation, useful lives of depreciable assets, provisions for impairment, provision for contingencies, provision for warranties / discounts etc. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable.

Future results could differ from those estimates. The effects of changes in accounting estimates are reflected in the financial statements in the period in which results are known and, if material, their effects are disclosed in the financial statements.

1.3 Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on a weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Work-in-progress and finished goods include an appropriate proportion of freight, overheads, direct costs and excise duty (where applicable).

1.4 Cash and cash equivalents

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.

1.5 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.6 Depreciation & amortisation

Depreciation on fixed assets is provided on straight line method based on the following useful lives / residual values as prescribed in Part C of Schedule II of the Companies Act, 2013. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year. Extra Shift Depreciation has been charged, where applicable.

1.7 Revenue Recognition

Sales of goods are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the despatch of goods to customers. Sales include excise duty (where applicable), but exclude sales tax and Value Added Tax.

Income from sale of electricity is recognized as and when electricity is generated and supplied to the grid.

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.8 Fixed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. The cost is net of VAT and CENVAT credit availed.

Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price and any directly attributable expenditure on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase or completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of asset.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any).

1.9 Foreign Currency Transactions and Translations

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss as income or expense.

Premium / discount on forward exchange contracts are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.10 Investments

Investments are either classified as current or long-term based on Management's intent at the time of making the investment. Current investments are carried individually, at the lower of cost and fair value. Long-term investments (excluding investment properties) are carried individually at cost less provision made to recognise any diminution, other than temporary, in the value of such investment. Cost of investments include acquisition charges such as brokerage, fees and duties. Provision is made to recognise any reduction in the carrying value of long-term investments and any reversal of such reduction is credited to the Statement of Profit and Loss.

1.11 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences. Defined contribution _plans

The Company's contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made and when services are rendered by the employees.

Defined benefit plans

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Others

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability, based on actuarial valuation made by an independent actuary, at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing cost

Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily takes a substantial period of time to get ready for their intended use are capitalised. Borrowing costs on general borrowings are determined using a capitalisation rate which is computed as the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Other borrowing costs are accounted as an expense in the period in which they are incurred.

1.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.

Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

1.14 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis. The Company has not entered into any finance lease arrangements.

1.15 Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

1.16 Taxes on income

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 and at the rates enacted by the statute on the Balance Sheet date. Assets and liabilities representing current tax are disclosed on a net basis where there is a legally enforceable right to set off and where the Management intends to settle the asset and liability on a net basis.

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.

1.17 Impairment

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the company's fixed asset. If any indication exists, an asset's recoverable amount is estimated. An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value. The impairment loss is charged to Statement of profit and loss in the year in which an asset is identified as impaired.

1.18 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the Company's views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the Company.

Contingent liabilities are disclosed by way of a note. Contingent assets are neither recognised nor disclosed in the financial statements.

1.19 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

---

Mar 31, 2014

1.1 Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on a weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Work-in-progress and finished goods include an appropriate proportion of freight, overheads, direct costs and excise duty (where applicable).

1.4 Cash and cash equivalents

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.

1.5 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.6 Depreciation

Depreciation is provided on straight line method over the estimated useful lives of fixed assets. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If

Management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the Management''s estimate of the useful life or remaining useful life.

Pursuant to this policy, depreciation on fixed assets has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 as the Management expects these rates to reflect the useful lives of these fixed assets. As required by Schedule XIV of the Companies Act, 1956, Extra Shift Depreciation has been charged, where applicable.

Assets individually costing Rs.5,000 or less are fully depreciated in the year of purchase. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year.

1.7 Revenue Recognition

Sales of goods are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the despatch of goods to customers. Sales include excise duty (where applicable), but exclude sales tax and Value Added Tax.

Income from sale of electricity is recognized as and when electricity is generated and supplied to the grid.

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established. Income from sale of shares is recognized when the title to the shares is legally transferred to the buyer.

1.8 Fixed assets and depreciation

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. The cost is net of VAT and CENVAT credit availed.

Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any).

1.9 Foreign Currency Transactions and Translations

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss as income or expense.

Premium / discount on forward exchange contracts, are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.10 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. The cost of investments includes acquisition charges such as brokerage, fees and duties.

1.11 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences. Defined contribution plans

The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Others

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing cost

Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily takes a substantial period of time to get ready for their intended use are capitalised. Borrowing costs on general borrowings are determined using a capitalisation rate which is computed as the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Other borrowing costs are accounted as an expense in the period in which they are incurred.

1.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market/ fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities.

1.14 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

The Company has not entered into any finance lease arrangements.

1.15 Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

1.16 Taxes on income

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.

Assets and liabilities representing current tax are disclosed on a net basis where there is a legally enforceable right to set off and where the Management intends to settle the asset and liability on a net basis.

1.17 Impairment

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.18 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the Company''s views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the Company. Contingent liabilities are disclosed by way of a note.

1.19 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

As per the records of the Company, including its register of members/shareholders, the above shareholding represents both legal and beneficial ownership of the shares.

E. Terms / Rights attached to Equity Shares

1. The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2. During the year ended 31st March 2014, the amount of per share dividend recommended by the Directors for distribution to equity shareholders is Rs.1.50 (Previous Yr.: Rs.2.20).

3. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

---

Mar 31, 2013

1.1 Basis of preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Inventories

Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary. However, materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on a weighted average basis. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.

Work-in-progress and finished goods include an appropriate proportion of freight, overheads, direct costs and excise duty (where applicable).

1.4 Cash and cash equivalents

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.

1.5 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information

1.6 Depreciation

Depreciation is provided on straight line method over the estimated useful lives of fixed assets. The rates of depreciation prescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates. If Management''s estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the Management''s estimate of the useful life or remaining useful life.

Pursuant to this policy, depreciation on fixed assets has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 as the Management expects these rates to reflect the useful lives of these fixed assets. As required by Schedule XIV of the Companies Act, 1956, Extra Shift Depreciation has been charged, where applicable.

Assets individually costing Rs 5,000 or less are fully depreciated in the year of purchase. Depreciation is charged on a proportionate basis for all fixed assets purchased and sold during the year.

1.7 Revenue Recognition

Sales of goods are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the despatch of goods to customers. Sales include excise duty (where applicable), but exclude sales tax and Value Added Tax.

Income from sale of electricity is recognized as and when electricity is generated and supplied to the grid.

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established. Income from sale of shares is recognized when the title to the shares is legally transferred to the buyer.

1.8 Fixed assets and depreciation

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. The cost is net of VAT and CENVAT credit availed.

Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest (if any).

1.9 Foreign Currency Transactions and Translations

Foreign exchange transactions are recorded at the rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognised in the Statement of Profit and Loss of the year.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the Statement of Profit and Loss as income or expense.

Premium / discount on forward exchange contracts, are amortised over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.10 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. The cost of investments includes acquisition charges such as brokerage, fees and duties.

1.11 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund and compensated absences.

Defined contribution plans

The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Others

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Borrowing cost

Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily takes a substantial period of time to get ready for their intended use are capitalised. Borrowing costs on general borrowings are determined using a capitalisation rate which is computed as the weighted average of the borrowing costs applicable to the borrowings of the enterprise that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Other borrowing costs are accounted as an expense in the period in which they are incurred.

1.13 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

1.14 Leases

Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

The Company has not entered into any finance lease arrangements.

1.15 Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year.

1.16 Taxes on income

The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.

Assets and liabilities representing current tax are disclosed on a net basis where there is a legally enforceable right to set off and where the Management intends to settle the asset and liability on a net basis.

1.17 Impairment

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.18 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed by way of a note.

1.19 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

---

Mar 31, 2011

1. AS - 1 : Disclosure of Accounting Policies -

The Financial statements are prepared under historical cost convention on accrual basis and on the basis of going concern and comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

2. AS - 2 : Valuation of Inventories -

Inventories are valued in accordance with the method of valuation prescribed under the Accounting Standard and are as under:

i) Raw Materials & Consumables - At Cost comprising of purchase price, freight, duty, taxes and other direct costs in accordance with AS-2.

ii) Work in Process & Finished Goods - At Cost or Net Realisable Value whichever is less.

Material Cost is determined on a weighted average basis. Net realizable value is the expected price that it would fetch at the time of sale.

3. AS - 3: Cash Flow Statement-

Cash Flow Statement is prepared under the "Indirect Method" and is annexed

4. AS - 4 : Contingencies & events occurring after Balance Sheet Date -

All material events occurring after the Balance Sheet date but which has a bearing on the conditions that existed on the balance sheet date are taken into cognizance.

5. AS - 5 : Prior period items -

Significant items of Extra - ordinary items, prior period incomes & expenses are accounted as per AS- 5

6. AS - 6 : Depreciation Accounting -

Depreciation has been charged in the following manner:

A. In respect of assets acquired i) WDV method at the rates prescr upto the year ending 31.3.89 -ibed under the Income tax Rules

ii) WDV method under Schedule XIV to the Companies Act, 1956

B. On assets acquired during the WDV method under Schedule XIV to period from 1.4.89 to 31.3.91 the Companies Act, 1956

C. On assets acquired during 91- SLM method under Schedule XIV to -92 & onwards the Companies Act, 1956



A. In respect of assets acquired Upto the year ended 31.3.93 upto the year ending 31.3.89 From the year 1993-94

B. On assets acquired during the From the year 1989-90 period from 1.4.89 to 31.3.91

C. On assets acquired during 91- From the year 91-92 & -92 & onwards onwards

In respect of assets added / assets sold during the year pro-rata depreciation has been provided at the rates prescribed under Schedule XIV.

7. AS - 9 : Revenue Recognition -

i) Sales are recognised when products are dispatched, and are recorded at invoice value including Excise Duty & net of VAT/ Sales Tax. Excise Duty collected is separately deducted from Gross Sales to arrive at Net Sales as per ASI - 14.

ii) Interest in recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

8. AS - 10 : Fixed Assets -

i) Fixed assets are recorded at cost net of VAT / Cenvat availed, including expenditure incurred in bringing them to usable condition less depreciation. Attributable costs are capitalized until fixed assets are ready for use. Interest on borrowed money allocated to and utilized for fixed assets, pertaining to the period up to the date of use is capitalized.

ii) Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use as at the Balance Sheet date.

9. AS -11 : Accounting for effects of changes in foreign exchange rates -

The transactions in foreign exchange are accounted at the Average mean rate. Assets and Liabilities denominated in foreign currency are restated at the year end adopting the contracted/year end rates as applicable. Any exchange gains or losses arising out of subsequent fluctuations are accounted in the Profit & Loss Account. Exchange differences, arising on forward contracts are recognised over the life of the contract. Translation of foreign exchange transaction : Company follows AS - 11 ( revised) in respect of foreign currency transaction applying the principle of most likely realisable / disbursable amount.

10. AS - 13 : Accounting for Investments -

Investments are stated at Cost.

11. AS - 15 : Accounting for employee benefits -

i) Company's contributions paid / payable during the year to Provident Fund & Super Annuation Fund, being Defined Contribution Plans, are charged to Profit and Loss Account.

ii) Liability towards gratuity is provided on the basis of an actuarial valuation in accordance with Accounting Standard - 15 ( Revised) issued by the Institute of Chartered Accountants of India.

iii) Liability towards Earned Leave Encashment i.e. paid annual leave is charged to Profit & Loss A/c on an undiscounted basis.

12. AS - 16 : Borrowing Costs -

Borrowing Costs, which are directly attributable to acquisition of qualifying assets, are capitalized as a part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

13. AS - 17 : Segment Reporting -

The Company manufactures "Paper & Paper Products" as well as generates "Power" and has accordingly identified "Paper and Paper Products" as a reportable business segment & "Power" as another reportable business segment, accordingly disclosures are made.

14. AS - 22 : Accounting for Taxes on Income -

i) Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 and at the rates enacted by the statute on the Balance Sheet date.

ii) Deferred tax resulting from timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date.

iii) Deferred tax labilities are reviewed at each balance sheet date.

15. AS - 28 : Impairment of Assets -

i) Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the company's asset.

ii) If any indication exists, an asset's recoverable amount is estimated.

iii) An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value.

iv) The impairment loss is charged to Profit and Loss Account in the year which an asset is identified as impaired.

16. AS- 29 : Provisions, Contingent Labilities and Contingent Assets -

i) Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

ii) Contingent liabilities are not recognised but are disclosed in the notes.

iii) Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the company's views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the company.

iv) Contingent assets are neither recognised nor disclosed in the financial statements.

---

Mar 31, 2010

1. AS -1 : Disclosure of Accounting Policies -

The Financial statements are prepared under historical cost convention on accrual basis and on the basis oi going concern and comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

2. AS - 2 : Valuation of Inventories -

Inventories are valued in accordance with the method of valuation prescribed under the Accounting Standard and are as under:

i) Raw Materials & Consumables - At Cost comprising of purchase price, freight, duty, taxes and other direct costs in accordance with AS-2.

ii) Work in Process & Finished Goods - At Cost or Net Realisable Value whichever is less.

Material Cost is determined on a weighted average basis. Net realizable value is the expected price that ii would fetch at the time of sale.

3. AS - 3: Cash Flow Statement-

Cash Flow Statement is prepared under the "Indirect Method" and is annexed

4. AS - 4 : Contingencies & events occurring after Balance Sheet Date - All material events occurring after the Balance Sheet date but which has a bearing on the conditions tha existed on the balance sheet date are taken into cognizance.

5. AS - 5 : Prior period items -

Significant items of Extra - ordinary items, prior period incomes & expenses are accounted as per AS- 5

6. AS - 6 : Depreciation Accounting -

Depreciation has been charged in the following manner:

A. In respect of assets acquired upto the year ending 31.3.89

i) WDV method at the rates prescribed under the Income tax Rules

ii) WDV method under Schedule XIV to the Companies Act, 1956

Upto the year ended 31.3.93

From the year 1993-94

B. On assets acquired during the period from 1.4.89 to 31.3.91

WDV method under Schedule XIV to the Companies Act, 1956

From the year 1989-90

C. On assets acquired during 91 - 92 & onwards

SLM method under Schedule XIV to the Companies Act, 1956

From the year 91-92 & onwards

7. AS - 9 : Revenue Recognition -

i) Sales are recognised when products are dispatched, and are recorded at invoice value including Excise Duty & net of VAT/ Sales Tax. Excise Duty collected is separately deducted from Gross Sales to arrive at Net Sales as per ASI - 14.

ii) Interest in recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

8. AS -10 : Fixed Assets -

i) Fixed assets are recorded at cost net of VAT / Cenvat availed, including expenditure incurred in bringing them to usable condition less depreciation. Attributable costs are capitalized until fixed assets are ready for use. Interest on borrowed money allocated to and utilized for fixed assets, pertaining to the period up to the date of use is capitalized.

ii) Capital work-in-progress comprises of the cost of fixed assets that are not yet ready for their intended use as at the Balance Sheet date.

9. AS -11 : Accounting for effects of changes in foreign exchange rates -

The transactions in foreign exchange are accounted at the Average mean rate. Assets and Liabilities denominated in foreign currency are restated at the year end adopting the contracted/year end rates as applicable. Any exchange gains or losses arising out of subsequent fluctuations are accounted in the Profit & Loss Account. Exchange differences, arising on forward contracts are recognised over the life of the contract. Translation of foreign exchange transaction : Company follows AS - 11 (revised) in respect of foreign currency transaction applying the principle of most likely realisable / disbursable amount.

10. AS - 13 : Accounting for Investments -

Investments are stated at Cost.

11. AS - 15 : Accounting for employee benefits -

i) Companys contributions paid / payable during the year to Provident Fund & Super Annuation Fund, being Defined Contribution Plans, are charged to Profit and Loss Account.

ii) Liability towards gratuity is provided on the basis of an actuarial valuation in accordance with Accounting Standard - 15 (Revised) issued by the Institute of Chartered Accountants of India.

iii) Liability towards Earned Leave Encashment i.e. paid annual leave is charged to Profit & Loss A/c on an undiscounted basis.

12. AS - 16 : Borrowing Costs -

Borrowing Costs, which are directly attributable to acquisition of qualifying assets, are capitalized as a part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

13. AS - 17 ; Segment Reporting -

The Company manufactures "Paper & Paper Products" as well as generates "Power" and has accordingly identified "Paper and Paper Products" as a reportable business segment & "Power" as another reportable business segment, accordingly disclosures are made.

14. AS - 22 : Accounting for Taxes on Income -

i) Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961 and at the rates enacted by the statute on the Balance Sheet date.

ii) Deferred tax resulting from timing difference between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date.

iii) Deferred tax labilities are reviewed at each balance sheet date.

15. AS - 28 : Impairment of Assets -

i) Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the companys asset.

ii) If any indication exists, an assets recoverable amount is estimated.

iii) An asset is treated as impaired when the carrying amount of asset exceeds its recoverable value. iv) The impairment loss is charged to Profit and Loss Account in the year which an asset is identified as impaired.

16. AS- 29 : Provisions, Contingent Labilities and Contingent Assets -

i) Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

ii) Contingent liabilities are not recognised but are disclosed in the notes.

iii) Show cause notices issued by various Government authorities are not considered as contingent liabilities. However, when the demands are raised against such show cause notices after considering the companys views, these demands are either paid or treated as liabilities, if accepted by the company, and are treated as contingent liability, if disputed by the company.

iv) Contingent assets are neither recognised nor disclosed in the financial statements.