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Accounting Policies of Bafna Pharmaceuticals Ltd. Company

Mar 31, 2015

A. Basis of Accounting

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 specified under section 133 of the CompaniesAct,2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act.,2013 ("the 2013Act")/ Companies Act,1956 ("the 1956Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation.

All assets and liabilities have been classified as current or noncurrent as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Companies Act,2013. The Company's activities in its business segments have operating cycles which do not exceed 12 months. As a result, current assets comprise elements that are expected to be realized within 12 months after the reporting date and current liabilities comprise elements that are due for settlement within 12 months after the reporting date.

b. Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contigent liabilities, at the end of the reporting period. Although these estimates are based upon the management's best knowledge of current events and actions, actual results could differ from these estimates. Uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets.

accumulated impairment losses, If any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram units and straight line method is charges only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the PART C of the Schedule II to the Companies Act, 2013.

Depreciation for additions to / deletions from owned assets is calculated on pro rata from / to the day of addition /deletion.

e. Intangible assets

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, In process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of In process R&D, amortization will begin when product is approved and launched.

Intangible assets are reported at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected o be used and generally does not exceed 10years.

The estimated useful life of each major category of intangible assets is as follow

Assets Estimated useful life

Customers Relationships 5years

Developed Products 5years

Brand 10years

Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

f. Investments

Long term investments are valued at cost. The investment are made in subsidiary company ie., M/s Bafna Life Style Remedies Ltd and in M/s. Strides Health care Pvt Limited.

g. Inventories

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

h. Revenue Recognition

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

i. Foreign Currency Transactions

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchanges/gain loss is suitably dealt with in the Profit & Loss Account

j. Employee Benefits

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15(Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules,2006.

k. Gratuity

BPL has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

l. Income Taxes

Current Tax

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

m. Segment reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

n. Earning per share

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive. '

o. Impairment of Assets

In the Opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than book value of the fixed assets. Hence no provision has been made for Impairment.

p. Foreign currency transactions

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency on the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Difference

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

q. Custom & Excise Duty

Excise Duty on finished goods lying at the factory is accounted at point of sale or dispatch. Custom Duty on imported material lying in bonded warehouse is accounted for at the time of bonding materials.

r. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the final statement.

s. Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprises cash at bank and in hand and short-term investments with an original maturity of three months or less.

t. Research and Development Expenditure

Capital Expenditure is included in Fixed Assets & Capital Work in Progress and depreciation is provided at the respective applicable rates.

Revenue expenditure is charged off in the year in which they are incurred and are included with the respective nature of account heads in the profit and loss account statement.




Mar 31, 2014

A. Change in Presentation of financial statement:

During the year ended 31st March 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirement applicable in the current year.

b. Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets.

Fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram units and straight line method is charges only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956.

Depreciation for additions to / deletions from owned assets is calculated on pro rata from / to the day of addition /deletion.

e. Intangible assets

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, In process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of In process R&D, amortization will begin when product is approved and launched.

Intangible assets are reported at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected o be used and generally does not exceed 10 years.

The estimated useful life of each major category of intangible assets is as follow

Assets Estimated useful life

Customers Relationships 5 years

Developed Products 5 years

Brand & Trade Marks 10 years

f. Borrowing costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Investments

Long term investments are valued at cost. The investment are made only in subsidiary company i.e., M/s Bafna Life Style Remedies Ltd

h. Inventories

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis. Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

i. Revenue Recognition

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain. Interest income is recognized using time proportion method based on the rates implicit in the transaction.

j. Foreign Currency Transactions

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account. Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchanges/gain loss is suitably dealt with in the Profit & Loss Account.

k. Employee Benefits

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15 (Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules, 2006.

l. Gratuity

BPL has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15 days last drawn salary payable for each completed year of services. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

m. Income Taxes

Current Tax

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Taxes

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as of the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

n. Segment reporting

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

o. Earnings per share

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

p. Impairment of Assets

In the Opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than book value of the fixed assets. Hence no provision has been made for Impairment.


Mar 31, 2012

A. Change in Presentation of financial statement:

During the year ended 31st March, 2012 the revised schedule VI notified under the Companies Act, 1956, has become applicable to the company, for preparation and presentation of its financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirement applicable in the current year.

b. Use of estimates:

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c. Tangible fixed assets:

Fixed assets, acquired are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalized criteria are met and directly attributable cost or bringing the assets to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed assets is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

The company adjusts exchange differences arising on transaction/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciation asset to the cost of the asset and depreciates the same over the remaining life of the asset.

d. Depreciation on tangible assets:

Depreciation on fixed assets is calculated on written down value (WDV) method on the plant & machinery situated at Madhavaram unit and straight line method is charged only to the Grantlyon unit using the rates arrived at based on the useful lives estimated by the management or those prescribed under the Schedule XIV to the Companies Act, 1956.

Depreciation for additions to / deletions from owned assets is calculated on prorata from / to the day of addition /deletion.

e. Intangible assets:

Intangible assets are tested for impairment on an annual basis. These generally include cost of Developed products, in process R&D and Customer relationships. Costs incurred for applying research results or other knowledge to develop new products is capitalized to the extent that these products are expected to generate future financial benefits. In case of in process R&D, amortization will begin when product is approved and launched.

Intangible assets are requested at acquisition value with deduction for accumulated amortization and any impairment losses. Amortization take place on a straight line basis over the assets anticipated useful life. The useful life is determined based on the period of the underlying contract and the period of time over which the intangible assets is expected to be used and generally does not exceeds 10 years.

f. Borrowing costs:

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange difference from foreign borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attribute to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Investments:

Long term investments are valued at cost. The investment is made only in subsidiary company i.e., M/s Bafna Life Style Remedies Ltd

h. Inventories:

Raw materials, components, store and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis.

Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the site.

i. Revenue Recognition:

Revenue from sale of products is recognized when practically all obligation connected with the transaction risks and rights to the buyer have been fulfilled and excluded sales tax and state value added taxes. This usually occurs upon dispatch and collection of the receivable is reasonably certain.

Interest income is recognized using time proportion method based on the rates implicit in the transaction.

j. Foreign Currency Transactions:

Transaction in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange difference arising on settlement thereof during the year are recognized as income or expenses in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currency are restated at the rates of exchange as on the Balance Sheet and the exchange/gain loss is suitably dealt with in the Profit & Loss Account.

k. Employee Benefits:

Liability for employee benefits, both short and long term, which are due as per the terms of employment, are recorded in accordance with Accounting Standard -15(Revised) "Employee Benefits" notified by the Companies (Accounting Standards) Rules, 2006.

l. Gratuity:

Bafna Pharmaceuticals Limited has an obligation towards gratuity, a defined benefit retirement plan (Gratuity Plan) covering eligible employees in accordance with Indian Law. The Gratuity Plan provides for a lump sum payment to vested employees on retirement, death while employment or on termination of employment in an amount equivalent to 15 days last drawn salary payable for each

completed year of service. The liability for the eligible employees is determined on the basis of actuarial valuation as on the balance sheet date, using projected unit credit method and is funded with Gratuity fund managed by Life Insurance Corporation of India Ltd.

m. Income Taxes:

Current Tax:

Current tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Taxes:

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date and is recognized on timing difference that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets, subject to consideration of prudence are recognized and carried forward only to the extent they can be realized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax to be utilized.

n. Segment reporting:

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. The company primarily operates in single business segment which is generic pharmaceutical, and accordingly there are no primary segments to be reported as per Accounting Standard 17 "Segment Reporting".

o. Earnings per share:

The basic earnings per equity share is computed by dividing the net profit or loss for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share and also the weighted average number of shares considered for deriving basic earnings per share which may be issued on the conversion of all dilutive potential shares, unless the results would be anti-dilutive.

p. Impairment of assets:

In the opinion of the Company, the recoverable amount of the fixed assets of the company will not be lower than the book value of the fixed assets. Hence no provision has been made for impairment.


Mar 31, 2011

1. BASIS OF ACCOUNTING

a) The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the Accounting Standards referred in section 211(3C) of the Companies Act, 1956.

b) The preparation of financial statements in conformity with GAAP requires that management of the company makes the estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of date of the financial statements. Example of such estimates include useful life of the fixed assets and intangible assets, provision for doubtful debts / advances, future obligations in respect of retirement plans etc. Actual results could differ from these estimates.

2. SHARE CAPITAL & SHARE WARRANTS

(i) The 15,00,000 Equity Shares have been allotted to Strategic Investors on 17th March, 2011 of the face value of Rs.10/- each at a premium of Rs.37.30/- per share aggregating to Rs.7,09,50,000/-. The said issue of shares resulted in decrease in Promoters holding from 49.40% in December, 2010 to 41.17% in March, 2011. Earning per share has been calculated considering the increase in Equity Share Capital due to the issue of above said shares during the year.

(ii) 23,18,000 Share Warrants have been allotted to Promoters & Strategic Investors on 17th March, 2011 convertible into equal number of Equity Shares of face value of Rs.10/- each including the premium of RS.37.30/-. For the aforesaid Share Warrants, the allottee has already paid 25% of the Share Warrant Price of 11.83/- per Warrant aggregating to Rs.27410350/-. For the aforesaid Warrants right to exercise conversion option is available within 18 months from the date of allotment of Warrants.

(iii) According to the information and explanations given to us and on the basis of the records examined by us, price for the aforesaid allotment of shares & warrants is not prejudicial to the interest of the Company.

3. REVENUE RECOGNITION:

a) Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery.

b) Revenue from sale of good s is recognized when the substantial risks and rewards of ownership is transferred to buyer under the terms of contract.

c) The Interest income is recognized on accrual basis.

d) Duty draw back claimed by the Company on account of Export Sales is shown as Export Incentive.

e) Sales either Domestic or Export are shown net of Excise duty.

4. EMPLOYEE RETIREMENT BENEFIT:

a) The company is contributing to provident fund as per law and rules applicable, which is charged to revenue.

b) Payment of gratuity is applicable to the company. However no provision has been made in the books of account. Gratuity shall be accounted on cash basis whenever it is paid.

c) Provision for leave encashment is made on the basis of company's rules and regulation.

5. DEPRECIATION

a) Depreciation on all assets is provided on written down value (WDV) method as provided in Schedule XIV of the Companies Act, 1956 less accumulated depreciation.

b) Depreciation for additions to / deductions from owned assets is calculated prorate from / to the day of addition / deduction.

c) Pre-operative expenses amounting to Rs.106,329,572/- up to 30th June 2008 have been capitalized to the total value of assets in respect of Grantlyon unit and depreciation for this unit has been calculated on Straight Line Method as provided in Schedule XIV of the Companies Act,1956.

d) Depreciation for additions to / deletions from owned assets is calculated pro- rata from/to the day of addition /deletion.

e) Work on Research & Development unit though inaugurated is under progress and amount is spend till 31.03.2011 Rs.13,66,32,331/- on Research and Development including Machinery and Building Expenses there on.

6. INTANGIBLE ASSETS AND AMORTISATION:

a) Product Registration charges: The Company has not written off the Product Registration Charges incurred during the year since, the business did not commenced business in the product registered Area It was explained to us that the product registration charges will be written off in the ensuing year..

b) Share Issue Expenses: The company has spent Rs.25,135,460/- and amortized over a period of five years. As Such Rs.5,027,092/- was written off during the year.

c) The company is spend Rs.64,62,823/- on Brand Building in International Market and showing on work-in-progress.

d) A Sum of Rs.12,386,196/- of Interest of Term Loan and Salary was Capitalized and included in Work In Progress of R& D Facility.

BORROWING COST

a) The Company has got Term Loan for Setting Up of R& D facility and Paid Rs.71,24,831/- as Interest till 31st March 2011.

7. VALUATION OF INVENTORIES:

Raw Material At Cost (FIFO Method)

Work in Process At Cost

Finished goods At Cost or Market Price whichever is lower

Packing Material At cost (FIFO Method)

8. INCOME TAX AND DEFERRED TAX:

a) The Company has calculated its tax liability after considering Minimum Alternative Tax (MAT).The MAT liability can be carried forward and set off against the future tax liability. The tax provision (MAT) for the year ended 31st march 2011 is made for Rs.NIL (Previous Year Rs. 43,43,155/-).

b) Provision for Current tax is made for Rs.78,00,000/- after consideration of benefits admissible under Section 115JAA of the Income Tax Act,1961.

c) Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax Asset and Liability is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future. Deferred Tax liability provided during the year is Rs.60,96,573/- (Previous Year Rs.97,98,234/-).

9. FOREIGN CURRENCY TRANSACTION:

a) Income of foreign currency transaction is recorded at the rate of exchange prevailing on the date when the relevant transaction has taken place. Realised gains or losses on the exchange transactions Rs.20,04,382/- are recognized in the Profit & Loss account.


Mar 31, 2010

1. Basis of Accounting:

a. The Company maintains its accounts on accrual basis following the historical cost convention in accordance with Generally Accepted Accounting Principles (GAAP) and in compliance with the Accounting Standards referred in section 211(3C) of the Companies Act, 1956.

b. The preparation of financial statements in conformity with GAAP requires that management of the company makes the estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balances of assets and liabilities and the disclosures relating to contingent liabilities as of date of the financial statements. Example of such estimates include useful life of the fixed assets and intangible assets, provision for doubtful debts / advances, future obligations in respect of retirement plans etc. Actual results could differ from these estimates*

2- Revenue Recognition:

a. Revenue is recognized based on the nature of activity, where consideration can be reasonably measured and there exists reasonable certainty of its recovery.

b. Revenue from sale of goods is recognized when the substantial risks and rewards of ownership is transferred to buyer under the terms of contract. & The Interest income is recognized on accrual basis.

d. Duty draw back claimed by the Company on account of Export Sales is shown as Export Incentive. Sales either Domestic or Export are shown net of Excise duty.

3. Employment Retirement Benefit:

a. The company is contributing to provident fund as per law and rules applicable, which is charged to revenue.

b. Payment of gratuity is applicable to the company. However, no provision has been made in the books of account. Gratuity shall be accounted on cash basis whenever it is paid.

c Provision for leave encashment is made on the basis of companys rules and regulation.

4. Depreciation

a. Depreciation on all assets situated at Madhavaram Factory is provided on Written Down Value (WDV} method as provided in Schedule XIV of the Companies Act, 1956 less accumulated depreciation.

b. Depreciation for additions to / deductions from owned assets is calculated prorata from / to the day of addition / deduction.

c. Depreciation for Grantlyon unit has been calculated on Straight Line Method (SLM) as provided in Schedule XIV of the Companies Act, 1956.

d. Depreciation for additions to / deletions from owned assets is calculated pro-rata from / to the day of addition /deletion.

e. Work on Research & Development unit is under progress and amount spent till 31,03.2010 is Rs.63,912,376/- on building and machinery.

5* Intangible Assets And Amortisation:

a. Product Registration charges: The Company registers its products in other countries. Expenses are amortized over a period of 5 years. Hence the 1/5th of Registration charges are written off during the year. b- Share Issue Expenses: The Company has spent Rs.25,135,460/- and amortized over a period of five years.

As such Rs.5,027,092 /- was written off during the year c. The company has spent Rs. 6,462,823/- on brand building in international market and has shown the amounts under Loans and Advances d. A sum of Rs, 2,184,222/- of interest on term loan was capitalised and included in work in progress of R& D facility

Borrowing Cost

a. Company has got term loan for setting up of R & D facility and paid Rs.2,184,222/- as interest till 31sl March 2010, The amount of interest has capitalised and shown as work in progress of R & D facility,

6. Valuation of Inventories:

Raw Material: At Cost (FIFO Method)

Work in Process; At Cost

Finished goods: At Cost or Market Price whichever is lower

Packing Material: At cost (FIFO Method)

7- Income Tax and Deferred Tax:

a. The Company has calculated its tax liability after considering Minimum Alternative Tax (MAT). The MAT liability can be carried forward and set off against the future tax liability- The tax provision (MAT) for the year ended 31st March 2010 is made for Rs.5,040,000/- (Previous Year Rs.2,830,495/-)

b. Provision for Current tax is made after consideration of benefits admissible under the provision of the Income Tax Act, 1961, Deferred tax resulting from timing differences between taxable and accounting income is accounted for using the rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The Deferred Tax Asset and Liability is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future. Deferred Tax liability provided during the year is Rs,9,798,234/-,

8, Foreign Currency Transaction:

a. Income of foreign currency transaction is recorded at the rate of exchange prevailing on the date when the relevant transaction has taken place. Realised gains on the exchange transactions Rs.1,109,051/- are recognized in the Profit & Loss account,

9. Contingent Liabilities Not Provided For:

a. In respect of Letter of Credit and Bank Guarantee Rs.31,577,447/- {previous year Rs.21,237,544/-)

b. Bonds have been executed in favour of customs authorities for Rs.42,000,000/- for the purchase of materials and capital goods without payment of duty- (Previous year Rs.42,000,000/-).

12. Miscellaneous Expenses:

a. Preliminary expenses Rs.5,187,192/- writtenoff during the year (Previous year Rs.5,187,192/-}

 
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