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Accounting Policies of Arvind Remedies Ltd. Company

Mar 31, 2014

Basis of preparation of financial statements

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles in India and comply with Accounting Standards notified by The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 (the Act). The financial statements have been prepared under the historical cost convention (except for revaluation of certain fixed assets) on accrual basis.

The accounting policies, in all material aspects, have been consistently applied by the company and are consistent with those used in the previous year.

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of financial statements and income and expenses for the reporting period. Estimates and assumptions are reviewed on an ongoing basis.

The significant accounting policies followed by the Company are stated below:a)Revenue Recognition Revenue from sale of goods is recognized upon passage of title to the customers, which generally coincides with delivery. Sales are stated net of Returns, Allowances and Discounts and are inclusive of excise duty but exclusive of sales tax / value added tax.

a) Revenue Recognition

Revenue from Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

b(I) Fixed Assets Fixed assets are stated at cost of acquisition inclusive of duties (net of CENVAT), taxes, incidental expenses, erection/commissioning expenses up to the date the asset is put to use or revalued amount, as the case may be. Fixed assets are classified as tangible and Intangible assets.

b(ii) Expenditure on New Projects Expenses directly related to construction activities are capitalized. Pre-operative and other indirect expenses incurred during construction period are also capitalized to the extent related to or incidental to construction. Trial run expenses for trial production prior to commissioning of the project are also capitalized. All such expenses are allocated to various assets proportionately on completion of the project. Sales and value of stock out of trial run and any other income attributable to the project are deducted from the total of project expenses.

c) Depreciation and Amortisation

(i)Depreciation is provided on tangible fixed assets on the straight-line method at the rates and in the manner prescribed in Schedule XIV of the Act, except on Plant and machinery, which is provided at 5.15% per annum based on management estimates.

Depreciation on additions / disposals during the year is provided on pro-rata basis with reference to the date of addition / disposal.

Leasehold improvements are amortised over the period of the lease.

(ii)Individual assets costing Rs.5, 000/- or less is depreciated in full in the year of purchase.

(iii)Depreciation on intangible assets is amortized over useful life of the asset, not exceeding five years.

d) Impairment of Asset

An asset is treated as impaired when the carrying cost exceeds the recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. The impairment loss recognized in the prior accounting periods is reversed if there has been any change in the estimate of the recoverable amount.

e) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the long term investments.

f) Inventories

Inventories are valued at lower of cost and net realisable value. The mode of valuation is as follows:

Raw Materials and Packing Materials : At or under cost on FIFO basis

Work-in-progress : At or under cost

Finished Goods & Traded Goods : At cost or net realisable value whichever is lower

Manufactured : At cost or net realisable value whichever is lower Cost of Finished Goods Manufactured, Work-in-progress is determined by considering Materials, Labour, Depreciation and related Overheads. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete the sale.

g) Employee benefits

Long Term Benefits

(i)The company has a defined benefit plan for Post-employment benefit in the form of Gratuity for all employees which is administered through Life Insurance Corporation of India (LIC). Liability for above defined benefit plan is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried out by LIC. The actuarial method used for measuring the liability is the Projected Unit Credit method. The company presents its gratuity liability as current and non-current based on actuarial valuation. The fair value of the plan asset is reduced from the gross obligation to disclose the obligation on net basis in the Balance Sheet. Actuarial gains / losses are also recognized in the Statement of Profit & Loss of the year.

(ii)Defined contribution plans are Provident fund scheme, Employees State Insurance Scheme and Government administered Pension Fund scheme for the employees. The company makes specific monthly contribution, which is recognized in the Statement of Profit and Loss in the financial year to which they relate. The Company has no further obligation beyond its monthly contributions.

Short Term Benefits

(i)Employee benefits, such as salaries, wages, performance incentives, etc are recognized as an expense at actual amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

(ii)Earned Leave Encashment: Earned leave accrued during the year is available for encashment as per the rules of the Company. The amount is paid and charged to the Statement of Profit and Loss every year.

h) Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing at the date of transactions. Monetary assets and liabilities denominated in foreign currency as at the end of the year are stated at the exchange rate prevailing at the year-end / forward contract rates. Realised gains / losses on transactions during the year and exchange difference on restatement at the year-end are charged to the Statement of Profit and Loss. Forward exchange premium or discount in respect of forward exchange contract is recognized over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

Investments in foreign companies are considered at the exchange rate prevailing on the date of their acquisition.

i)Taxation

Tax expense comprises of current tax and deferred tax charge or release. Current income- tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income tax reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. 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. Deferred tax asset arising on account of unabsorbed depreciation or carry forward tax losses are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company write downs the carrying amount of a deferred tax asset to the extent that it is no longer reasonably or virtually certain, as the case may be, that sufficient income will be available against which deferred tax asset can be realized.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal tax during the specified period. In the year in which MAT credit becomes eligible to be recognized as an asset, an asset is created by way of credit to the statement of profit and loss as MAT credit entitlement,. The company reviews the same at each balance sheet date and write downs the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to that effect that the company will pay normal Income tax during the specified period.

j) Provisions

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

Provisions made in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" are not discounted to its present value and are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

k) Borrowing Cost

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of such assets till such time as the assets are ready for their intended use or sale. Qualifying assets are assets that necessarily require a substantial period of time to get ready for their intended use or sale All the other borrowing costs are recognized as an expense in the period in which they are incurred.

l)Segmental Reporting

The Company operates only in one business segment namely Pharma formulations.

m)Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

n)Leases

Lease of assets where all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Operating lease rentals are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

o)Research and Development

Revenue expenditure on research and development is charged to the Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is shown as additions to fixed assets.


Mar 31, 2013

Basis of preparation of financial statements

The financial statements have been prepared in accordance with Generally Accepted Accounting Principles in India and comply with Accounting Standards notified by The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 {the Act). The financial statements have been prepared under the historical cost convention (except for revaluation of certain fixed assets) on accrual basis.

The accounting policies, in all material aspects, have been consistently applied by the company and are consistent with those used in the previous year.

The preparation of the financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of financial statements and income and expenses for the reporting period. Estimates and assumptions are reviewed on an ongoing basis.

The significant accounting policies followed by the Company are stated below:

a) Revenue Recognition

Revenue from sale of goods is recognized upon passage of title to the customers, which generally coincides with delivery. Sales are stated net of Returns, Allowances and Discounts and are inclusive of excise duty but exclusive of sales tax / value added tax.

Revenue from Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

b) (i) Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of duties (net of CENVAT), taxes, incidental expenses, erection/commissioning expenses up to the date the asset is put to use or revalued amount, as the case may be. Fixed assets are classified as tangible and intangible assets.

(ii) Expenditure on New Projects

Expenses directly related to construction activities are capitalized. Pre-operative and other indirect expenses incurred during construction period are also capitalized to the extent related to or incidental to construction. Trial run expenses for trial production prior to commissioning of the project are also capitalized. All such expenses are allocated to various assets proportionately on completion of the project. Sales and value of stock out of trial run and any other income attributable to the project are deducted from the total of project expenses.

c) Depreciation and Amortisation

(i) Depreciation is provided on tangible fixed assets on the straight-line method at the rates and in the manner prescribed in Schedule XIV of the Act, except on Plant and machinery, which is provided at 5.15% per annum based on management estimates.

Depreciation on additions / disposals during the year is provided on pro-rata basis with reference to the date of addition / disposal.

Leasehold improvements are amortised over the period of the lease.

(ii) Individual assets costing Rs.5,000/- or less is depreciated in full in the year of purchase.

(iii) Depreciation on intangible assets is amortized over useful life of the asset, not exceeding five years.

d) Impairment of Asset

An asset is treated as impaired when the carrying cost exceeds the recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. The impairment loss recognized in the prior accounting periods is reversed if there has been any change in the estimate of the recoverable amount.

e) Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current Investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline otherthan temporary in the value of the long term investments.

f) Inventories

Inventories are valued at lowerof cost and net realisable value. The mode of valuation is as follows: Raw Materials and Packing Materials : At or under cost on FIFO basis Work-in-progress : At or under cost

Finished Goods Purchased : At cost or net realisable value whichever is lower

Finished Goods Manufactured : At cost or net realisable value whichever is lower

Cost of Finished Goods Manufactured, Work-in-progress is determined by considering Materials, Labour, Depreciation and related Overheads. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete the sale.

g) Employee benefits Long Term Benefits

(i) The company has a defined benefit plan for Post-employment benefit in the form of Gratuity for all employees which is administered through Life Insurance Corporation of India (LIC). Liability for above defined benefit plan is provided on the basis of actuarial valuation, as at the Balance Sheet date, carried out by LIC. The actuarial method used for measuring the liability is the Projected Unit Credit method. The company presents its gratuity liability as current and non-current based on actuarial valuation. The fair value of the plan asset is reduced from the gross obligation to disclose the obligation on net basis in the Balance Sheet. Actuarial gains / losses are also recognized in the Statement of Profit & Loss of the year.

(ii) Defined contribution plans are Provident fund scheme, Employees State Insurance Scheme and Government administered Pension Fund scheme for the employees. The company makes specific monthly contribution, which is recognized in the Statement of Profit and Loss in the financial year to which they relate. The Company has no further obligation beyond its monthly contributions.

Short Term Benefits

(i) Employee benefits, such as salaries, wages, performance incentives, etc are recognized as an expense at actual amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

(ii) Earned Leave Encashment: Earned leave accrued during the year is available for encashment as per the rules of the Company. The amount is paid and charged to the Statement of Profit and Loss every year.

h) Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing at the date of transactions. Monetary assets and liabilities denominated in foreign currency as at the end of the year are stated at the exchange rate prevailing at the year-end / forward contract rates. Realised gains / losses on transactions during the year and exchange difference on restatement at the year-end are charged to the Statement of Profit and Loss. Forward exchange premium or discount in respect of forward exchange contract is recognized over the life of the contract. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year.

I) Taxation

Tax expense comprises of current tax and deferred tax charge or release. Current income- tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income tax reflects 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 is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. 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. Deferred tax asset arising on account of unabsorbed depreciation or carry forward tax losses are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company write downs the carrying amount of a deferred tax asset to the extent that it is no longer reasonably or virtually certain, as the case may be, that sufficient income will be available against which deferred tax asset can be realized.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal tax during the specified period. In the year in which MAT credit becomes eligible to be recognized as an asset, an asset is created by way of credit to the statement of profit and loss as MAT credit entitlement,. The company reviews the same at each balance sheet date and write downs the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to that effect that the company will pay normal Income tax during the specified period.

j) Provisions

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

Provisions made in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" are not discounted to its present value and are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates,

k) Borrowing Cost

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of such assets till such time as the assets are ready for their intended use or sale. Qualifying assets are assets that necessarily require a substantial period of time to get ready for their intended use or sale All the other borrowing costs are recognized as an expense in the period in which they are incurred,

i) Segmental Reporting

The Company operates only in one business segment namely Pharma formulations.

m) Earnings PerShare

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

n)Leases

Lease of assets where all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Operating lease rentals are recognized as an expense in the Statement of Profit and Loss on a straight-line basis overthe lease term.

o) Research and Development

Revenue expenditure on research and development is charged to the Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is shown as additions to fixed assets.


Mar 31, 2012

A) Revenue Recognition

Revenue from sale of goods is recognized upon passage of title to the customers, which generally coincides with delivery. Sales are stated net of Returns, Allowances and Discounts and are inclusive of excise duty but exclusive of sales tax / value added tax.

Revenue from Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

b(i) Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of duties (net of CENVAT), taxes, incidental expenses, erection/commissioning expenses up to the date the asset is put to use. Fixed assets are classified as tangible and intangible assets.

b(ii) Expenditure on New Projects

Expenses directly related to construction activities are capitalized. Pre-operative and other indirect expenses incurred during construction period are also capitalized to the extent related to or incidental to construction. Trial run expenses for trial production prior to commissioning of the project are also capitalized. All such expenses are allocated to various assets proportionately on completion of the project. Sales and value of stock out of trial run and any other income attributable to the project are deducted from the total of project expenses.

c) Depreciation and Amortisation

(i) Depreciation is provided on tangible fixed assets on the straight-line method at the rates and in the manner prescribed in Schedule XIV of the Act, except on Plant and machinery, which is provided at 5.15% per annum based on management estimates. Leasehold improvements are amortised over the period of the lease.

(ii) Individual assets costing Rs.5,000/- or less is depreciated in full in the year of purchase.

(iii) Depreciation on intangible assets is amortized over useful life of the asset, not exceeding five years.

Inventories

d) Inventories are valued at lower of cost and net realisable value. The mode of valuation is as follows: Raw Materials and Packing Materials At or under cost on FIFO basis

Cost of Finished Goods Manufactured, Work-in-progress is determined by considering Materials, Labour, Depreciation and related Overheads.

e) Employee benefits Long Term Benefits

(i) The Company has a defined plan for Post-Employment benefit in the form of Gratuity for all employees, which is administered through Life Insurance Corporation of India (LIC). Liability for above defined benefit plan is provided on the basis of actuarial valuation as at the Balance Sheet date, carried out by LIC. The actuarial method used for measuring the liability is the Projected Unit Credit method. The amount as above and the actuarial gain / loss are recognized in the Statement of Profit and Loss of the year.

(ii) Defined contribution plans are Provident fund scheme, Employees State Insurance Scheme and Government administered Pension Fund scheme for the employees. The company makes specific monthly contribution, which is recognized in the Statement of Profit and Loss in the financial year to which they relate. The Company has no further obligation beyond its monthly contributions.

Short Term Benefits

(i) Employee benefits, such as salaries, wages, performance incentives, etc are recognized as an expense at actual amounts in the Statement of Profit and Loss of the year in which the related service is rendered.

(ii) Earned Leave Encashment: Earned leave accrued during the year is available for encashment as per the rules of the Company. The amount is paid and charged to the Statement of Profit and Loss every year.

f) Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing at the date of transactions. Monetary assets and liabilities denominated in foreign currency as at the end of the year are stated at the exchange rate prevailing at the year-end / forward contract rates. Realised gains / losses on transactions during the year and exchange difference on restatement at the year-end are charged to the Statement of Profit and Loss. Forward exchange premium or discount in respect of forward exchange contract is recognized over the life of the contract.

g) Research and Development

Revenue expenditure on research and development is charged to the Statement of Profit and Loss in the year in which it is incurred. Capital expenditure on research and development is shown as additions to fixed assets

h) Provisions

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

Provisions made in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" are not discounted to its present value and are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

i) Taxation

Tax expense comprises both deferred and current taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized 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 realized.

j) Segmental Reporting

The Company operates only in one business segment namely Pharma formulations.

k) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

I) Leases

Lease of assets where all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreements.

m) Borrowing Cost

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of such assets till such time as the assets are ready for their intended use or sale. Qualifying assets are assets that necessarily require a substantial period of time to get ready for their intended use or sale All the other borrowing costs are recognized as an expense in the period in which they are incurred.

n) Impairment of Asset

An asset is treated as impaired when the carrying cost exceeds the recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. The impairment loss recognized in the prior accounting periods is reversed if there has been any change in the estimate of the recoverable amount.


Mar 31, 2011

The financial statements, statement of cash flows and the notes to the financial statements are the primary responsibility of the management of Arvind Remedies Limited (the Company).

1. Statement of Significant Accounting Policies Basis of preparation of financial statements

The financial statements of the Company are prepared under the historical cost convention in accordance with Generally Accepted Accounting Principles in India and comply with the Accounting Standards notified by The Companies (Accounting Standards) Rules, 2006 and the relevant provisions of The Companies Act, 1956 (the Act). The significant accounting policies followed by the Company are stated below:

a) Revenue Recognition

Revenue from sale of goods is recognized upon passage of title to the customers, which generally coincides with delivery. Sales are stated net of Returns, Allowances and Discounts and are inclusive of excise duty but exclusive of sales tax / value added tax.

Revenue from Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

b(i)Fixed Assets

Fixed assets are stated at cost of acquisition inclusive of duties (net of CENVAT), taxes, incidental expenses, erection/commissioning expenses up to the date the asset is put to use. Fixed assets are classified as tangible and intangible assets.

b(ii)Expenditure on New Projects

Expenses directly related to construction activities are capitalized. Pre-operative and other indirect expenses incurred during construction period are also capitalized to the extent related to or incidental to construction. Trial run expenses for trial production prior to commissioning of the project are also capitalized. All such expenses are allocated to various assets proportionately on completion of the project. Sales and value of stock out of trial run and any other income attributable to the project are deducted from the total of project expenses.

c) Depreciation and Amortisation

(i) Depreciation is provided on tangible fixed assets on straight-line method at the rates and in the manner prescribed in Schedule XIV of the Act, except on Plant and machinery, which is provided at 5.15% per annum based on management estimates. Leasehold improvements are amortised over the period of the lease.

(ii) Individual assets costing Rs.5,000/- or less is depreciated in full in the year of purchase.

(iii) Depreciation on intangible assets is amortized over useful life of the asset, not exceeding five years.

d) Inventories

Inventories are valued at lower of cost and net realisable value. The mode of valuation is as follows: Raw Materials and Packing Materials : At or under cost on FIFO basis

Work-in-progress : At or under cost

Finished Goods

Purchased : At cost or net realisable value whichever is lower

Manufactured : At cost or net realisable value whichever is lower

Cost of Finished Goods Manufactured, Work-in-progress is determined by considering Materials, Labour, Depreciation and related Overheads.

e) Employee benefits Long Term Benefits

(i) The Company has a defined benefit plan for Post-Employment benefit in the form of Gratuity for all employees, which is administered through Life Insurance Corporation of India (LIC). Liability for above defined benefit plan is provided on the basis of actuarial valuation as at the Balance Sheet date, carried out by LIC. The actuarial method used for measuring the liability is the Projected Unit Credit method. The amount as above and the actuarial gain / loss are recognized in the Profit and Loss Account of the year.

(ii) Defined contribution plans are Provident fund scheme, Employees State Insurance Scheme and Government administered Pension Fund scheme for the employees. The company makes specific monthly contribution, which is recognized in the Profit and Loss Account in the financial year to which they relate. The Company has no further obligation beyond its monthly contributions. Short Term Benefits

(i) Employee benefits, such as salaries, wages, performance incentives, etc are recognized as an expense at actual amounts in the Profit and Loss Account of the year in which the related service is rendered.

(ii) Earned Leave Encashment: Earned leave accrued during the year is available for encashment as per the rules of the Company. The amount is paid and charged to the Profit and Loss Account every year.

f) Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing at the date of transactions. Monetary assets and liabilities denominated in foreign currency as at the end of the year are stated at the exchange rate prevailing at the year-end / forward contract rates. Realised gains / losses on transactions during the year and exchange difference on restatement at the year-end are charged to the Profit and Loss Account. Forward exchange premium or discount in respect of forward exchange contract is recognized over the life of the contract.

g) Research and Development

Revenue expenditure on research and development is charged to the Profit and Loss Account in the year in which it is incurred. Capital expenditure on research and development is shown as additions to fixed assets.

h) Provisions

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

Provisions made in terms of Accounting Standard 29 "Provisions, Contingent Liabilities and Contingent Assets" are not discounted to its present value and are determined based on management estimates required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

i) Taxation

Tax expense comprises both deferred and current taxes. Current income tax is measured at the amount expected to the paid to the tax authorities in accordance with the Income Tax Act, 1961. Deferred income tax reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized 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 realized.

j) Segmental Reporting

The Company operates only in one business segment namely formulations.

k) Earnings Per Share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

l) Leases

Lease of assets where all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreements.

m) Borrowing Cost

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of such assets till such time as the assets are ready for their intended use or sale. Qualifying assets are assets that necessarily require a substantial period of time to get ready for their intended use or sale All other borrowing costs are recognized as an expense in the period in which they are incurred.

n) Impairment of Asset

An asset is treated as impaired when the carrying cost exceeds the recoverable value. An impairment loss is charged to the profit and loss account in the year in which the asset is identified as impaired. The impairment loss recognized in the prior accounting periods is reversed if there has been any change in the estimate of the recoverable amount.

 
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