2) Material Accounting Policies:
The material accounting policies applied by the Company in the preparation of its financial statements are listed below.
Such accounting policies have been applied consistently to all the periods presented in these financial statements unless
otherwise indicated.
i. Basis of preparation and presentation
a) Compliance with Ind AS
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section
133 of the Companies Act, 2013 (the Act) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 (as
amended) and relevant amendment rules thereafter and accounting principles generally accepted in India.
Accounting policies have been consistently applied except where a newly issued Indian Accounting Standard is initially
adopted or a revision to an existing Indian Accounting Standard requires a change in the accounting policy hitherto in use.
b) Basis of preparation
The financial statements have been prepared on the historical cost basis except for certain financial assets and liabilities
that are measured at fair values at the end of each reporting period, assets for defined benefit plans and Biological assets
that are measured at fair value, assets held for sale which is measured at lower of cost and fair value less cost to sell as
explained further in notes to standalone financial statements.
c) Functional and presentation currency
The financial statements are presented in Indian rupees (H) and all values are rounded to the nearest crores and two decimals
thereof, except if otherwise stated.
ii. Current versus non-current classification
The company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it satisfies any of the following criteria:
Ý Expected to be realised or intended to be sold or consumed in the normal operating cycle
Ý Held primarily for the purpose of trading
Ý Expected to be realised within twelve months after the reporting date, or
Ý Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
A liability is treated as current when it satisfies any of the following criteria:
Ý Expected to be settled in the company's normal operating cycle;
Ý Held primarily for the purpose of trading;
Ý Due to be settled within twelve months after the reporting date; or
Ý The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after
the reporting date.
Ý Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments
do not affect its classification.
Current liabilities include the current portion of non-current financial liabilities. All other liabilities are classified as
non-current.
The Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of
assets and liabilities.
iii. Property, plant and equipment & capital work-in-progress
Property, plant and equipment are tangible items that are held for use in the production or supply for goods and services,
rental to others or for administrative purposes and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is being recognised as an asset if and only if it is probable that future
economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits
associated with the item will flow to the entity and the cost of the item can be measured reliably.
Freehold lands are stated at cost. All other items of property, plant and equipment are stated at cost, net of recoverable taxes
less accumulated depreciation, and impairment loss, if any.
The cost of an asset includes the purchase cost of material, including import duties and non-refundable taxes, and any
directly attributable costs of bringing an asset to the location and condition of its intended use. For this purpose, cost
includes carrying value as Deemed cost on the date of transition. Interest on borrowings used to finance the construction of
qualifying assets are capitalised as part of the cost of the asset until such time that the asset is ready for its intended use.
Items of spare parts, stand-by equipment and servicing equipment which meet the definition of property, plant and
equipment are capitalized. Other spare parts are carried as inventory and recognized in the statement of profit and loss on
consumption. When parts of an item of PPE have different useful lives, they are accounted for as separate component.
The carrying amount of the replaced part is derecognised. All other repair and maintenance costs are recognised in the
Statement of Profit and Loss as incurred.
The present value of the expected cost for the decommissioning of an asset after its use, if any, is included in the cost of the
respective asset if the recognition criteria for a provision are met.
The cost and related accumulated depreciation are eliminated from the financial statement upon sale or retirement of the
asset and resultant gain or loss are recognized in the Statement of Profit and Loss.
Assets identified and technically evaluated as obsolete are retired from active use and held for disposal and are stated at the
lower of its carrying amount and fair value less cost to sell.
Capital work-in-progress, representing expenditure incurred in respect of assets under development and not ready for their
intended use, is carried at cost. Cost includes related acquisition expenses, construction costs, related borrowing costs and
other direct expenditures.
iv. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible
assets are carried at cost less accumulated amortisation and accumulated impairment losses. For this purpose, cost
includes carrying value as Deemed cost on the date of transition.
Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is
reflected in the statement of profit and loss in the year in which the expenditure is incurred.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, is recognised in the statement of profit and loss..
v. Depreciation and amortization
The classification of plant and machinery into continuous and non-continuous process is done as per their use and
depreciation thereon is provided accordingly. Depreciation commences when the assets are available for their intended
use. Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their
estimated useful lives.
The management has estimated the useful lives and residual values of all property, plant and equipment and adopted useful
lives as stated in Schedule II of the Companies Act, 2013.
The Company has used the following useful lives to provide depreciation on its tangible assets:
Intangible assets are amortized on a straight-line basis over the estimated useful economic life of the assets. The Company
uses a rebuttable presumption that the useful life of intangible assets is ten years from the date when the assets is available
for use.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each financial year and are
given effect to wherever appropriate.
vi. Foreign currency translations
Transactions and balances
Transactions in foreign currencies are initially recorded at the functional currency spot rate prevailing at the date the
transaction first qualifies for recognition.
Monetary assets and liabilities related to foreign currency transactions remaining outstanding at the balance sheet date
are translated at the functional currency spot rate of exchange prevailing at the balance sheet date. Any income or expense
arising on account of foreign exchange difference either on settlement or on translation is recognised in the Statement of
Profit and Loss.
Non-monetary items which are carried at historical cost denominated in a foreign currency are translated using the exchange
rate at the date of the initial transaction.
vii. Inventories
Raw materials, process chemicals, stores and packing materials are measured at weighted average cost.
Work in progress, traded and finished goods (other than by-products and scraps) are measured at lower of cost or net
realizable value.
By-products and scrap are carried at estimated Net Realizable Value.
The cost of finished goods and work in progress comprises raw material cost (net of realizable value of By-products), and
variable and fixed production overhead, which are allocated to work in progress and finished goods on a full absorption cost
basis. The cost of inventory also includes all other costs incurred in bringing the inventories to their respective present
location and condition. Borrowing costs are not included in the value of inventories.
Net realizable value (NRV) 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.
viii. Biological assets
Biological assets comprise standing crops and livestock. Biological assets are measured at fair value less cost to sell.
Changes in the fair value of biological assets are recognised in the statement of profit and loss account. The biological
process starts with the preparation of land for planting, and seedlings and ends with the harvesting of crops. For Standing
crop, where little biological transformation has taken place since the initial cost was incurred (for example seedlings planted
immediately before the balance sheet date), such biological assets are measured at cost i.e. the total expenses incurred on
such plantation up to the balance sheet date. When harvested, the crop is transferred to inventory at fair value less costs to
sell.
ix. Revenue recognition
The Company derives revenue primarily from the sale of sugar, power, ethanol, potable spirits, chemicals and other by¬
products produced from the processing of sugar cane.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the
consideration, the company expect to receive in exchange for those products or services. Revenue is inclusive of excise duty
and excludes estimated discounts, pricing incentives, rebates, and other similar allowances to the customers and excludes
goods and service tax and other taxes and amounts collected on behalf of third parties or government, if any.
Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which time all the
following conditions are satisfied:
Ý the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
Ý the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
Ý the amount of revenue can be measured reliably;
Ý it is probable that the economic benefits associated with the transaction will flow to the Company; and
Ý the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Contract Revenue
Contract revenue is recognised only to the extent of cost incurred till such time the outcome of the job cannot be ascertained
reliably subject to condition that it is probable that such cost will be recoverable. When the outcome of the contract is
ascertained reliably, contract revenue is recognised at cost of work performed on the contract plus proportionate margin,
using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date,
to the total estimated contract costs.
The estimated outcome of a contract is considered reliable when all the following conditions are satisfied:
i. the amount of revenue can be measured reliably;
ii. it is probable that the economic benefits associated with the contract will flow to the Company;
iii. the stage of completion of the contract at the end of the reporting period can be measured reliably; and
iv. the costs incurred or to be incurred in respect of the contract can be measured reliably.
Expected loss, if any, on a contract is recognised as expense in the period in which it is foreseen, irrespective of the stage of
completion of the contract.
Dividend income
Dividend income is recognised when the Company's right to receive the dividend is established, it is probable that the
economic benefits associated with the dividend will flow to the entity and the amount of the dividend can be measured
reliably i.e. in case of interim dividend, on the date of declaration by the Board of Directors; whereas in case of final dividend,
on the date of approval by the shareholders.
Interest income
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, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
Insurance claims
Insurance claims are accounted for on the basis of claims admitted/expected to be admitted and to the extent that the
amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Export incentives
Export incentives are accounted for in the year of exports based on eligibility and when there is no significant uncertainty in
receiving the same.
Other incomes
All other incomes are accounted for on an accrual basis.
x. Expenses
All expenses are accounted for on an accrual basis.
xi. Long-term borrowings
Long-term borrowings are initially recognised at a net of material transaction costs incurred and measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the
Statement of Profit and Loss over the period of the borrowings using the effective interest method.
Preference shares, which are mandatorily redeemable on a specific date are classified as liabilities. The dividend on
cumulative preference shares is recognised in the Statement of Profit and Loss as finance costs.
xii. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised
during the period that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets
that necessarily take a substantial time to get ready for their intended use or sale. Borrowing costs consist of interest and
other costs that the Company incurs in connection with the borrowing of funds. Borrowing costs also include exchange
differences to the extent regarded as an adjustment to the borrowing costs. Other borrowing costs are expensed in the
period in which they are incurred. Transaction costs incurred for long term borrowing until are not material are expensed in
the period in which they are incurred.
xiii. Leases
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. The determination of whether an arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset even if that
right is not explicitly specified in an arrangement.
The company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-lease components of
the contract and allocates the consideration in the contract to each lease component based on the relative stand-alone price
of the lease component and the aggregate stand-alone price of the non-lease components.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease
commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial
measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease
incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling
and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets
is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted
for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the
commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-
use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for
impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with
reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed
payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is
reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the
lessee exercising an option to terminate the lease.
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 and remeasuring the carrying amount to reflect any
reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The company recognises the
amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement
of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced
to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining
amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short-term leases of all assets that have a
lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with
these leases are recognized as an expense on a straight-line basis over the lease term.
The company as a lessor
At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The
Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term.
In the case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant
periodic rate of return on the lessor's net investment in the lease. When the Company is an intermediate lessor it accounts for
its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sublease with reference
to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short¬
term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating
lease.
If an arrangement contains lease and non-lease components, the Company applies Ind AS 115 Revenue from contracts with
customers to allocate the consideration in the contract.
xiv. Provision for current and deferred tax
(i) Current income tax :
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at
the reporting date.
Current tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in other
comprehensive income or equity, in which case it is recognized in OCI or equity.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and established provisions, where appropriate, on the basis of amounts expected
to be paid to the tax authorities.
The Company Offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the
recognised amounts and where it intends either to settle on a net basis or to realise the assets and settle the liabilities
simultaneously.
The Company will update the amount in the financial statement if facts and circumstances change as a result of examination
or action by tax authorities.
(ii) Deferred tax:
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the
reporting period and are expected to apply when the related deferred income tax assets is realised or the deferred income
tax liability is settled.
Deferred tax is recognized in the Statement of profit and loss except to the extent that it relates to items recognized directly
in OCI or equity, in which case it is recognized in OCI or equity.
Deferred tax liabilities are generally recognised for all taxable temporary differences. A deferred tax asset is recognized
to the extent that it is probable that future taxable profits will be available against which the temporary difference can be
utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realized.
Minimum Alternate Tax (MAT) credits is recognised as deferred tax assets in the Balance Sheet only when the asset can be
measured reliably and to the extent there is convincing evidence that sufficient taxable profit will be available against which
the MAT credits can be utilised by the company in future.
xv. Impairment of non-financial assets
Goodwill and Intangible assets that have an indefinite useful life are not subject to amortisation but are tested annually for
impairment.
Other intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases,
the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The Carrying amount of assets is reviewed at each balance sheet date, if there is any indication of impairment based on
internal/external factor. An asset is impaired when the carrying amount of the assets exceeds the recoverable amount.
Impairment is charged to the profit and loss account 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 amortization or
depreciation) had no impairment loss been recognized for the asset in prior years.
xvi. Government grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and
all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a
systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
Government grants related to assets, including non-monetary grants recorded at fair value, are treated as deferred income
and are recognized and credited in the Statement of Profit and Loss on a systematic and rational basis over the estimated
useful life of the related asset.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current
applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is
initially recognised and measured at fair value and the government grant is measured as the difference between the initial
carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy
applicable to financial liabilities.
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