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Accounting Policies of Abbott India Ltd. Company

Mar 31, 2015

A) Basis of Accounting and 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 Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on accrual basis under the historical cost convention.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except in case of depreciation (Refer (d) below).

b) 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 period. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

c) Revenue Recognition

Sales are recognised when the risk and reward of ownership is passed on to the customers. Net Sales are stated exclusive of excise duty, sales tax, VAT (Value Added Tax), and are net of sales returns, trade discounts, provision for anticipated returns on expiry, made on the basis of management expectation taking into account past experience.

Dividend income is recognised when the right to receive the dividend is established at the Balance Sheet date.

Interest income is recognised on a time proportion basis.

Service income is recognised as per the terms of the contracts / arrangements when related services are performed.

d) Fixed Assets and Depreciation / Amortisation

All Fixed Assets are stated at cost of acquisition less accumulated depreciation / amortisation and impairment in value, if any. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from derecognition of Fixed Assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

Till the period ended March 31, 2014, depreciation was provided on the basis of Schedule XIV to the Companies Act, 1956. During the current year, Schedule XIV has been replaced by Schedule II to the Companies Act, 2013. The applicability of Schedule II has resulted in changes related to depreciation of certain Fixed Assets. Based on Schedule II the Company has changed the life of Office Equipments from 10 years to 5 years and Computers from 4 years to 3 years.

During the year the Company had also changed the policy of fully depreciating the individual assets costing Rs. 5,000 or below. Now the Company is providing depreciation based on its useful life.

The management believes that useful lives currently used, which is as prescribed under Schedule II or higher, fairly reflect its estimate of the useful lives and residual values of Fixed Assets, though these rates in certain cases are different from lives prescribed under Schedule II.

e) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the Cash Generating Unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment amount is appropriately reversed.

f) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates that approximate the actual rate prevailing at the date of the transaction. Monetary items and forward contracts denominated in foreign currencies at the year end are translated at year end exchange rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Statement of Profit and Loss.

g) Inventories

Inventories consists of Raw Materials and Packing Materials, Work-in-Progress, Stock-in-Trade and Finished Goods. Inventories are valued at lower of cost and net realisable value. Cost is determined on First-In-First-Out basis. Cost of Work-in-Progress and Finished Goods includes labour and manufacturing overheads, wherever applicable. Cost of Finished Goods includes Excise Duty.

h) Research and Development

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalised. The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed Assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Fixed Assets.

i) Employee Benefits

i) Post employment Benefits

a) Defined Contribution Plans :

The Company has Defined Contribution Plans for post employment benefits, charged to Statement of Profit and Loss based on the contribution required to be made and when services are rendered by the employees in the form of :

i) Provident Fund / Employees'' Pension Fund administered by the Regional Provident Fund Commissioner, Mumbai;

ii) Superannuation Fund as per Company policy administered by Life Insurance Corporation of India, Mumbai;

iii) Employees'' Deposit Linked Insurance Scheme, 1976 under Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, administered by Life Insurance Corporation of India, Mumbai; and

iv) Group Life Insurance cover, as per Company policy.

b) Defined Benefit Plans :

i) Funded Plan : The Company has Defined Benefit Plan for post employment benefits in the form of Gratuity for all employees administered through a trust, funded with Life Insurance Corporation of India, Mumbai.

ii) Unfunded Plan : The Company has unfunded Defined Benefit Plans in the form of Compensated Absences (CA), Long Service Benefits (LSB) and Post Retirement Medical Benefits (PRMB) as per Company policy.

c) Other Long Term Defined Benefit Plans :

The Company has unfunded other long term benefit plans in the form of Compensated Absences (CA) and Long Service Benefits (LSB) as per Company Policy.

Liability for the above Defined Benefit Plans is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried out by an independent actuary using the Projected Unit Credit method.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

ii) The actuarial gains and losses arising during the period are recognised in the Statement of Profit and Loss for the period.

j) Leases

Lease rentals / Leave and Licence fees in respect of assets under operating lease are charged off to the Statement of Profit and Loss, as incurred.

k) Taxation

Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and / or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period. The provision for current tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income Tax Act, 1961.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.

Deferred income taxes reflect the impact of current year''s timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax resulting from timing differences between book and tax profits is accounted for at the current rate of tax / substantively enacted tax rates, as applicable, to the extent that the timing differences are expected to crystalise.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which deferred tax asset can be realised. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities.

l) Provisions, Contingent Liabilities & Contingent Assets

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

Provisions are not discounted and are determined based on best estimate required to settle the obligation at each Balance Sheet date. Provisions are reviewed at each Balance Sheet date and are adjusted to effect the current best estimation.

A contingent liability is disclosed where the possibility of an outflow of resources embodying economic benefits is possible.

Contingent assets are not recognised in the financial statements.

m) Classification of Current / Non Current Assets and Liabilities

All assets and liabilities are presented as Current or Non current as per the Company''s normal operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation, the Company has ascertained its operating cycle as 12 months for the purpose of Current / Non current classification of assets and liabilities.

3. With effect from the previous financial year, the Company has changed its accounting year from year ended December 31 to year ended March 31. Accordingly, the financial statements for the previous accounting period were prepared for a period of 15 months from January 1, 2013 to March 31, 2014. Hence, the figures and Earnings per share for the current year are not comparable with those of the previous accounting period.

c) The Company has only one class of equity shares with voting rights having a par value of Rs. 10 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 at the ensuing Annual General Meeting.

In the event of liquidation of the Company, the shareholders 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.


Dec 31, 2012

A) Basis of Accounting

The financial statements are prepared under historical cost convention on an accrual basis and comply with the Accounting Standards as notified in the Companies (Accounting Standards) Rules, 2006.

b) Use of Estimates

The preparation and presentation of financial statements is in conformity with the generally accepted accounting principles which requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/ materialised.

c) Revenue Recognition

Sales are recognised when the risk and reward of ownership is passed on to the customers. Net Sales are stated exclusive of excise duty, sales tax, and are net of sales returns, trade discounts and anticipated returns on expiry thereof, made on the basis of management expectation taking into account past experience.

Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

Interest income is recognised on the time proportion basis.

Service income is recognised as per the terms of the contracts/ arrangements when related services are performed.

d) Fixed Assets and Depreciation/ Amortisation

All Fixed Assets are stated at Cost of Acquisition less Accumulated Depreciation / Amortisation and Impairment in Value, if any. Cost comprises the purchase price and any other attributable cost of bringing the asset to its working condition for its intended use.

With effect from January 1, 2012, Depreciation and amortisation is provided, pro-rata for the period of use, on the straight line method. Till December 31, 2011, depreciation was being provided, pro-rata for the period of use, on the written down value method (WDV Method). The write-back on account of the retrospective change in method has been disclosed as an exceptional item for the year ended December 31,2012. (Refer Notes 12 to 14)

Till December 31, 2011 the depreciation was provided under WDV method at the rates specified in Schedule XIV to the Companies Act, 1956, except in respect of computers, photocopiers, facsimile machines, modems and appliances where depreciation has been provided @ 80%. With effect from January 1, 2012, the rate of depreciation/ amortisation under straight line method is revised to higher of the rate determined based on the management''s estimate of useful life or the rate prescribed under Schedule XIV to the Companies Act, 1956; and are as follows:

e) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the Cash Generating Unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the Balance Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment amount is appropriately reversed.

f) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates that approximate the actual rate prevailing at the date of transaction. Monetary items and forward contracts denominated in foreign currencies at the year end are translated at year end exchange rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement /translation are recognised in the Statement of Profit and Loss.

g) Investments

Long term Investments are carried at cost less provision, if any, for other than temporary diminution in value of such investments. Current Investments are stated at lower of cost and fair value.

h) Inventories

Inventories consists of Raw Materials and Packing Materials, Work-in-progress, Stock-in-Trade and Finished Goods. Inventories are valued at lower of cost and net realisable value. Cost is determined on First-In-First-Out basis. Cost of Work-in-Progress and Finished Goods includes labour and manufacturing overheads, wherever applicable. Cost of finished goods includes Excise Duty.

i) Research and Development

Capital expenditure on Research and Development is capitalised as Fixed Assets and depreciated in accordance with the depreciation policy of the Company. The Revenue expenditure on Research and Development is charged to Statement of Profit and Loss in the year in which it is incurred.

j) Employee benefits

(i) Post-employment Benefits

(a) Defined Contribution Plans :

The Company has Defined Contribution Plans for post employment benefits, charged to Statement of Profit and Loss, in the form of:

-Provident Fund/Employees'' Pension Fund administered by the Regional Provident Fund Commissioner, Mumbai;

- Superannuation Fund as per Company policy administered by Life Insurance Corporation of India, Mumbai;

- Employees'' Deposit Linked Insurance Scheme, 1976 under Employees'' Provident Fund and Miscellaneous Provisions Act, 1952, administered by Life Insurance Corporation of India, Mumbai; and

- Group Life Insurance cover, as per company policy.

(b) Defined Benefit Plans :

1. Funded Plan : The Company has Defined Benefit Plan for post employment benefits in the form of Gratuity for all employees administered through a trust, funded with Life Insurance Corporation of India, Mumbai.

2. Unfunded Plan : The Company has unfunded Defined Benefit Plans in the form of Compensated Absences (CA), Long Service Benefits (LSB) and Post Retirement Medical Benefits (PRMB) as per Company policy.

Liability for the above Defined Benefit Plans is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.

(ii) The Actuarial gains and losses arising during the year are recognised in the Statement of Profit and Loss for the year.

k) Leases

Lease rentals / Leave and Licence fees in respect of assets under Operating Lease are charged off to Statement of Profit and Loss, as incurred.

I) Taxation

The provision for Income Tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income-tax Act, 1961.

Deferred tax resulting from timing differences between book and tax profits is accounted for at the current rate of tax / substantively enacted tax rates, as applicable, to the extent that the timing differences are expected to crystalise.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

In respect of carried forward losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income would be available against which such deferred tax assets can be realised.

m) Provisions, Contingent Liabilities & Contingent Assets

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

Provisions are not discounted and are determined based on best estimate required to settle the obligation at each Balance Sheet date. Provisions are reviewed at each Balance Sheet date and are adjusted to effect the current best estimation.

A contingent liability is disclosed where the possibility of an outflow of resources embodying economic benefits is possible.

Contingent assets are not recognised in the Financial Statements as they may never be realised.


Dec 31, 2010

1 Basis of Accounting

The financial statements are prepared under historical cost convention on an accrual basis and comply with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006.

2 Use of Estimates

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

3 Revenue Recognition

Sales are recognised when the risk and reward of ownership is passed on to the customers, which is generally on despatch of goods. Sales are stated exclusive of Excise Duty, Sales Tax and are net of Sales Return and Trade Discount.

Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

Interest income is recognised on the time proportion basis.

4 Fixed Assets and Depreciation/ Amortisation

All Fixed Assets are stated at Cost of Acquisition less Accumulated Depreciation / Amortisation and Impairment in Value, if any.

Depreciation has been provided on the Written Down Value method at the rates specified in Schedule XIV of the Companies Act, 1956 except in respect of computers, photocopiers, facsimile machines, modems and appliances where depreciation has been provided @ 80%, included in Furniture, Fittings and Office Equipments. Depreciation on addition / deletion to Fixed Assets during the year is provided on a pro-rata basis.

Fixed Assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition.

Cost of Leasehold land / Improvement is amortised over the period of lease.

5 Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

6 Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the date of transaction. Monetary items denominated in foreign currencies at the year end are translated at year end rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement / translation are recognised in the Profit & Loss Account.

7 Investments

Long term Investments are carried at cost less provision, if any, for other than temporary diminution in value of such investments. Current Investments are stated at lower of cost and fair value.

8 Inventories

Inventories are valued at lower of standard cost adjusted for variances and net realisable value. Cost is determined on First-in-Rrst-out basis. Cost of work-in-progress and finished goods includes labour and manufacturing overheads, where applicable.

9 Research and Development

Capital expenditure on Research and Developement is capitalised as Fixed Assets and depreciated in accordance with the depreciation policy of the Company. The Revenue expenditure on Research and Developement is charged to Profit & Loss Account in the year in which it is incurred.

10 Employee benefits

i) Post-employment Benefits

a) Defined Contribution Plans :

The Company has Defined Contribution Plans for post employment benefits, charged to Profit and Loss Account, in the form of

Provident Fund/ Employees Pension Fund administered by the Regional Provident Fund Commissioner, Mumbai;

Superannuation Fund as per Company policy administered by Life Insurance Corporation of India, Mumbai ;

Employees Deposit Linked Insurance Scheme, 1976 under Employees Provident Fund and Miscellaneous Provisions Act, 1952, administered by Life Insurance Corporation of India, Mumbai; and

Group Life Insurance cover, as per Company policy.

b) Defined Benefit Plans:

Funded Plan : The Company has Defined Benefit Plan for post employment benefits in the form of Gratuity for all employees administered through trust, funded with Life Insurance Corporation of India, Mumbai.

Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Compensated Absences(CA), Long Service Benefits (LSB) and Post Retirement Medical Benefits (PRMB) as per Company policy.

Liability for the above defined benefit plans is provided on the basis of actuarial valuation, for the period end carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method.

ii) The actuarial gains and losses arising during the year are recognised in the Profit and Loss Account for the period.

11 Excise Duty

Excise Duty paid on goods manufactured by the Company and remaining in inventory, is included as part of value of Finished Goods.

12 Leases

Lease rentals/Licence fees in respect of assets under Operating Lease are charged off to Profit & Loss Account, as incurred.

13 Taxation

The provision for Income Tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income Tax Act, 1961.

Deferred tax resulting from timing differences between book and tax profits is accounted for at the current rate of tax / substantively enacted tax rates, as applicable, to the extent that the timing differences are expected to crystalise.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Fringe Benefit Tax has been calculated in accordance with the provisions of the Income Tax Act, 1961 and Guidance Note on Fringe Benefit Tax issued by the Institute of Chartered Accountants of India. Pursuant to enactment of the Finance Act, 2009, Fringe Benefit Tax (FBT) stands abolished w.e.f. April 01, 2009.

14 Provisions, Contingent Liabilities & Contingent Assets

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

Provisions are not discounted and are determined based on best estimate required to settle the obligation at each Balance Sheet date. Provisions are reviewed at each Balance Sheet date and are adjusted to effect the current best estimation.

A contingent liability is disclosed where the possibility of an outflow of resources embodying the economic benefits is possible.

Contingent assets are not recognised in Financial Statements as they may never be realised.


Nov 30, 2009

1. Basis of Accounting

The financial statements are prepared under historical cost convention on an accrual basis and comply with the Accounting Standards as notified under the Companies (Accounting Standards) Rules, 2006.

2. Use of Estimates

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

3. Revenue Recognition

Sales are recognised when the risk and reward of ownership is passed on to the customers, which is generally on despatch of goods. Sales are stated exclusive of Excise Duty, Sales Tax and are net of Sales Return and Trade Discount.

Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

Interest income is recognised on the time proportion basis.

4. Fixed Assets and Depreciation/Amortisation

All Fixed Assets are stated at Cost of Acquisition less Accumulated Depreciation/Amortisation and Impairment in Value, if any.

Depreciation has been provided on the Written Down Value method at the rates specified in Schedule XIV of the Companies Act, 1956 except in respect of computers, photocopiers, facsimile machines, modems and appliances where depreciation has been provided @ 80%, included in Furniture, Fittings and Office Equipments. Depreciation on addition/deletion to Fixed Assets during the year is provided on a pro-rata basis.

Fixed Assets costing Rs 5,000 or less are fully depreciated in the year of acquisition.

Cost of Leasehold land/Improvement is amortised over the period of lease.

5. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

6. Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the date of transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates. In respect of monetary items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognised as exchange difference and the premium on such forward contracts is recognised over the life of the forward contract. The exchange differences arising on settlement/translation are recognised in the Profit & Loss Account.

7. Investments

Long term Investments are carried at cost less provision, if any, for other than temporary diminution in value of such investments. Current Investments are stated at lower of cost and fair value.

8. Inventories

Inventories are valued at lower of standard cost adjusted for variances and net realisable value. Cost is determined on First-in- First-out basis. Cost of work-in-progress and finished goods includes labour and manufacturing overheads, where applicable.

9. Research and Development

Capital expenditure on Research and Development is capitalised as Fixed Assets and depreciated in accordance with the depreciation policy of the Company. The Revenue expenditure on Research and Development is charged to Profit & Loss Account in the year in which it is incurred.

10. Employee benefits

(i) Post-employment Benefits :

(a) Defined Contribution Plans :

The Company has Defined Contribution Plans for post employment benefits, charged to Profit and Loss Account, in the form of

Provident Fund/Employees Pension Fund administered by the Regional Provident Fund Commissioner, Mumbai;

Superannuation Fund as per Company policy administered by Life Insurance Corporation of India, Mumbai;

Employees Deposit Linked Insurance Scheme, 1976 under Employees Provident Fund and Miscellaneous Provisions Act, 1952, administered by Life Insurance Corporation of India, Mumbai; and Group Life Insurance cover, as per Company policy.

(b) Defined Benefit Plans :

Funded Plan: The Company has Defined Benefit Plan for post employment benefits in the form of Gratuity for all employees administered through trust, funded with Life Insurance Corporation of India, Mumbai. Unfunded Plan: The Company has unfunded Defined Benefit Plans in the form of Compensated Absences (CA), Long Service Benefits (LSB) and Post Retirement Medical Benefits (PRMB) as per Company policy. Liability for the above defined benefit plans is provided on the basis of actuarial valuation, for the year end carried out by independent actuary. The actuarial method used for measuring the liability is the Projected Unit Credit method. (ii) The actuarial gains and losses arising during the year are recognized in the Profit and Loss Account for the year.

11. Excise Duty

Excise Duty paid on goods manufactured by the Company and remaining in inventory, is included as part of value of Finished Goods.

12. Leases

Lease rentals/Licence fees in respect of assets under Operating Lease are charged off to Profit & Loss Account, as incurred.

13. Taxation

The provision for Income Tax is made at the rate of tax as applicable for the income of the previous year as defined under the Income Tax Act, 1961.

Deferred tax resulting from timing differences between book and tax profits is accounted for at the current rate of tax/ substantively enacted tax rates, as applicable, to the extent that the timing differences are expected to crystalise.

Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

In respect of carry forward losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

Fringe Benefit Tax has been calculated in accordance with the provisions of the Income Tax Act, 1961 and Guidance Note on Fringe Benefit Tax issued by the Institute of Chartered Accountants of India. Pursuant to enactment of Finance Act, 2009, Fringe Benefit Tax (FBT) stands abolished w.e.f. April 01, 2009.

14. Provisions, Contingent Liabilities & Contingent Assets

A provision is recognised when the Company has a present obligation as a result of a past event and it is probable that an outflow of resources would be required to settle the obligation, and in respect of which a reliable estimate can be made. Provisions are not discounted and are determined based on best estimate required to settle the obligation at each Balance Sheet date. Provisions are reviewed at each Balance Sheet date and are adjusted to effect the current best estimation. A contingent liability is disclosed where the possibility of an outflow of resources embodying the economic benefits is remote. Contingent assets are not recognised in Financial Statements as they may never be realised.



 
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