(r) PROVISIONS
Provisions are recognized when the Company has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources will be required to settle the
obligation and the amount can be reliably estimated. Provisions are not recognized for future
operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the end of the reporting period. The discount rate used
to determine the present value is a pretax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. The increase in the provision due to the
passage of time is recognized as interest expense.
CONTINGENT LIABILITIES
Contingent Liabilities are disclosed in respect of possible obligations that arise from past events
but their existence will be confirmed by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or where any present
obligation cannot be measured in terms of future outflow of resources or where a reliable estimate
of the obligation cannot be made.
(s) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a
financial liability or equity instrument of another entity.
Financial assets and liabilities are recognised when the Company becomes a party to the
contractual provisions of the instruments and are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and liabilities
(other than financial assets and financial liabilities at fair value through profit or loss) are added to
or deducted from the fair value of the financial assets or liabilities on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised immediately in profit or loss.
Financial assets
Initial Recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not
recorded at fair value through profit or loss, transaction costs that are attributable to the
acquisition of the financial asset
However, trade receivables that do not contain a significant financing component are measured at
transaction price.
Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in four categories :
• Debt instruments at amortized cost
• Debt instruments at fair value through other comprehensive income (FVTOCI)
• Debt instruments, derivatives and equity instruments at fair value through profit or loss
(FVTPL)
• Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Debt instruments at amortized cost
A ‘debt instrument' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments ofprincipal and interest (’SPPI’) on the principal amount outstanding.
After initial measurement, such financial assets aresubsequently measured at amortised cost
using the effective interest rate (’EIR’) method. Amortised costis calculated by taking into account
any discount or premium on acquisition and fees or costs that are anintegral part of the EIR. The
EIR amortisation is included in other income in the statement of profit andloss. The losses arising
from impairment are recognised in the statement of profit and loss. This categoiygenerally applies
to trade and other receivables.
Debt instruments at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the
criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets
amortisedcost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so
reduces oreliminates a measurement or recognition inconsistency (referred to as 'accounting
mismatch').
Debt instruments included within the FVTPL category are measured at fair value with all changes
recognised in the P&L.
Equity investments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments
which are heldfor trading and contingent consideration recognised by an acquirer in a business
combination to whichlnd AS 103 Business Combinations applies are classified as at FVTPL. For all
other equity instruments, theCompany may make an irrevocable election to present in other
comprehensive income subsequentchanges in the fair value. The Company makes such election on
an instrument by- instrument basis. Theclassification is made on initial recognition and is
irrevocable.If the Company decides to classify an equity instrument as at FVTOCI, then all fair
value changes on theinstrument, excluding dividends, are recognized in the OCI. There is no
recycling of the amounts fromOCIto P&L, even on sale of investment. However, the Company may
transfer the cumulative gain or loss withinequity.
Equity instruments included within the FVTPL category are measured at fair value with all
changesrecognized in the P&L.
Investment in equity shares, compulsorily convertible debentures and compulsory convertible
preferenceshares of subsidiaries, associates and joint ventures have been measured at cost less
impairmentallowance, if any.
De- recognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar
financialassets) is primarily derecognized (i.e. removed fromthe Company's balance sheet) when:
• The rights to receive cash flows from the asset have expired, or
• The Company has transferred its rights to receive cash flows from the asset or has assumed
an obligation to pay the received cash flows in full without material delay to a third party
under a 'pass through ‘arrangement; and either:
a) The Company has transferred substantially all the risks and rewards of the asset, or
b) The Company has neither transferred nor retained substantially all the risks and rewards of
theasset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered
into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and
rewards of ownership. When it has neither transferred nor retained substantially all of the risks
and rewards of the asset, nor transferred control of the asset, the Company continues to recognise
the transferred asset to the extent of the Company's continuing involvement. In that case, the
Company also recognises an associated liability. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of
consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the following financial assets and credit risk
exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans,
debtsecurities, deposits, trade receivables and bank balance
b) Financial assets that are debt instruments and are measured as at FVTOCI
c) Trade receivables or any contractual right to receive cash or another financial asset that
result from transactions that are within the scope of Ind AS 115 Revenue from Contracts with
Customers.
d) Loan commitments which are not measured as at FVTPL
e) Financial guarantee contracts which are not measured as at FVTPL
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade
receivables or contract revenue receivables. The application of simplified approach does not
require the Company to track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company
determines that whether there has been a significant increase in the credit risk since initial
recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for
impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a
subsequent period, credit quality of the instrument improves such that there is no longer a
significant increase in credit risk since initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the
expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which
results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in
accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash
shortfalls), discounted at the original EIR. When estimating the cash flows, an entity is required to
consider:
• All contractual terms of the financial instrument (including prepayment, extension, call and
similar options) over the expected life of the financial instrument. However, in rare cases
when the expected life of the financial instrument cannot be estimated reliably, then the
entity is required to use the remaining contractual term of the financial instrument.
• Trade receivables do not carry any interest and are stated at their nominal value as reduced
by appropriate allowances for estimated irrecoverable amounts. Estimated irrecoverable
amounts are based on the ageing of the receivables balance and historical experience.
Individual trade receivables are written off when management deems them not to be
collectable.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income
/expense in the statement of profit and loss. This amount is reflected under the head 'other
expenses' in the profit and loss. The balance sheet presentation for various financial instruments
is described below:
Financial assets measured as at amortised cost and contractual revenue receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in
thebalance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off
criteria, the Company does not reduce impairment allowance fromthe gross carrying amount.
• Loan commitments and financial guarantee contracts:ECL is presented as a provision in
thebalance sheet, i.e. as a liability.
• Debt instruments measured at FVTOCI: Since financial assets are already reflected at fair
value, impairment allowance is not further reduced from its value. Rather, ECL amount is
presented as accumulated impairment amount' in the OCI.
For assessing increase in credit risk and impairment loss, the Company combines financial
instruments on the basis of shared credit risk characteristics with the objective of facilitating an
analysis that is designed to enable significant increases in credit risk to be identified on a timely
basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments
in an effective hedge, as appropriate. 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, loans and borrowings
including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Loans and receivables are initially
recognized at fair value and subsequently measured at amortized cost using the effective interest
method, less provision for impairment.
De-recognition
A financial liability is de -recognised 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 de recognition 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 and loss.
Reclassification of financial assets and liabilities
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. The Company's senior management
determines change in the business model as a result of external or internal changes which are
significant to the Company's operations. Such changes are evident to external parties. A change in
the business model occurs when the Company either begins or ceases to perform an activity that
is significant to its operations. 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 no trestate any
previously recognised gains, losses (including impairment gains or losses) or interest.
(t) CASH AND CASH EQUIVALENTS
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes
cash on hand, bank overdraft, deposits held at call with financial institutions, other short-term
highly liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.
(u) EARNINGS / (LOSS) PER SHARE
Basic earnings / (loss) per share are calculated by dividing the net profit / (loss) for the year
attributable to equity shareholders by the weighted average number of equity shares outstanding
during the year. The weighted average number of equity shares outstanding during the year are
adjusted for any bonus shares, share splits or reverse splits issued during the year and also after
the balance sheet date but before the date the financial statements are approved by the board of
directors. For the purpose of calculating diluted earnings / (loss) per share, the net profit / (loss)
for the year attributable to equity shareholders and the weighted average number of shares
outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares,
share splits or reverse splits as appropriate. The dilutive potential equity shares are adjusted for
the proceeds receivable, had the shares been issued at fair value. Dilutive potential equity shares
are deemed converted as of the beginning of the year, unless issued at a later date.
(v) SEGMENT REPORTING
The Company’s Segment predominantly based on Sugarcane based produce and allied activities.
The Operational Segments constitute of Sugar, Industrial Alcohol, Potable Alcohol, Co -
Generation and Petroleum products Sale. As regards to Geographical Segments , the segments are
located at Ugarkhurd and Jewargi. Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Operating Decision Maker (CODM).
The Management Committee monitors the operating results of its business units separately for the
purpose of making decisions about resource allocation and performance management. Segment
performance is evaluated based on profit or loss and is measured consistently with the profit and
loss of financial statements.
The accounting policies adopted for segment reporting are in line with the accounting policies
adopted by the Company, with the following additional policies for segment reporting:
(i) Inter segment revenue has been accounted for based on the transaction price agreed to
between segments which is primarily market led.
(ii) Segment Revenue, Segment Expenses, Segment Assets and Segment Liabilities have been
identified to segments on reasonable basis of their relationship to the operating activities of
the segment from the internal reporting system.
(iii) Gains/losses from transactions in commodity futures, which are ultimately settled net,
with/without taking delivery, are recorded as ‘Other revenues’under the Sugar segment.
(iv) Revenue, Expenses, Assets and Liabilities, which relate to the enterprise as a whole and are
not allocable to segments on a reasonable basis, has been included under “Unallocated”.
(w) RESEARCH AND DEVELOPMENT
Research Costs are expensed as incurred. Expenditure on Research is considered as cost for
valuation of inventory and expenditure related to capital asset is grouped with property plant and
equipment under appropriate head and depreciation is provided at the applicable rate. The
Company will recognize development expenditure as intangible assets when the company can
demonstrate:
• The technical feasibility of completing the intangible asset so that the asset will be available
for use or sale
• Its intention to complete and its ability and intention to use or sell the asset
• Howthe asset will generate future economic benefits
• The availability of resources to complete the asset
• The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at
cost lessany accumulated amortisation and accumulated impairment losses. Amortisation of the
asset begins when development is complete and the asset is available for use. It is amortised on a
straight line basis over the period of expected future benefit from the related project, i.e., the
estimated useful life. Amortisation is recognised in the statement of profit and loss. During the
period of development, the asset is tested for impairment annually.
x) SUBSIDIES RECEIVED
Subsidies received towards specific fixed assets are reduced from gross book value of the
concerned fixed assets. Subsidies received relating to revenue expenditure is deducted from
related expense.
(y) MERGER OF ACCOUNTS
Ugar The aters Private Limited a wholly owned subsidiary of the Ugar Sugar Works Ltd., is merged
as per the scheme approved by National Company Law Tribunal (NCLT) Mumbai vide its order
dated October,20 2023 and was filed with Registrar of Companies (“RoC”) in accordance with the
relevant sections of the Companies Act 2013 and rules there under.
Pursuant to this order consolidated financial need not be prepared. Previous year figures include
figures of the merged entity
The merger has been accounted under 'pooling of interest' method as prescribed in Appendix C of
Ind AS 103 "Business Combination". Outstanding balances between Ugar Theatres and Ugar
Sugar Works Limited were eliminated. All assets and liabilities have been recognised at carrying
amounts except for adjustments to bring uniformity of accounting policies as required under Ind
AS 103.
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Company’s accounting policies, which are described in Note No. C-2, the
Management of the Company are required to make judgements, estimates and assumptions about
the carrying amounts of assets and Labilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that
are considered to be relevant. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period or
in the period of the revision and future periods if the revision affects both current and future
periods.
Critical judgements in applying accounting policies :
The following are the critical judgements, apart from those involving estimations, that the
Management has made in the process of applying the Company’s accounting policies and that
have the most significant effect on the amounts recognized in the financial statements.
Key sources of estimation uncertainty:
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the end of the reporting period that may have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial
year.
Impairment of property, plant and equipment
Determining whether property, plant and equipment are impaired requires an estimation of the
value in use of the cash-generating unit. The value in use calculation requires the management to
estimate the future cash flows expected to arise from the cash-generating unit and a suitable
discount rate in order to calculate present value. When the actual future cash flows are less than
expected, a material impairment loss may arise.
Useful lives of property, plant and equipment
The Company reviews the estimated useful lives of property, plant and equipment at the end of
each reporting period. During the current year, the management has determined that no changes
are required to the useful lives of assets.
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