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Accounting Policies of DFM Foods Ltd. Company

Mar 31, 2018

1.1. Basis of preparation and presentation of financial statements Statement of compliance

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

Upto the year ended 31st March, 2017, the Company prepared its financial statements in accordance with the requirements of previous GAAP, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is 1st April, 2016. Refer Note 44 for the details of first-time adoption exemptions availed by the Company.

Previous year''s figures have been regrouped / reclassified wherever necessary to conform with the current year''s classification / disclosures.

Basis of Preparation

The financial statements have been prepared on accrual and going concern basis under the historical cost convention except for certain class of financial assets/ liabilities, share based payments and net liability for defined benefit plans that are measured at fair value. The accounting policies have been consistently applied by the Company unless otherwise stated.

Functional and Presentation Currency

The financial statements have been prepared and presented in Indian Rupees (Rs.), which is also the Company''s functional currency. All amounts in the financial statement and accompanying notes are presented Rs. in lakhs and have been rounded-off unless stated otherwise.

1.2. Use of estimates

The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of asset and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the period presented.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Critical accounting judgments and key sources of uncertainty

The following are the key assumptions concerning the future, and other sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in future are:

(a) Useful lives and residual value of property, plant and equipment: Useful life and residual value are determined by the management based on a technical evaluation considering nature of asset, past experience, estimated usage of the asset, vendor''s advice etc and same is reviewed at each financial year end.

(b) Provision for product claims and trade scheme: Provision for the expected cost of product claims and trade schemes are recognized based upon the best estimate of the expenditure required to settle the Company''s obligation. These estimates are based upon past experience and market conditions.

(c) Litigations and related claims: The Company is the subject of lawsuits and claims arising in the ordinary course of business from time to time. The Company reviews any such legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. The Company establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company''s financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to Statement of Profit and Loss, the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss.

1.3. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use and for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Depreciation

Depreciation commences when the assets are ready for their intended use. Freehold land is not depreciated.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

The Company has assessed the useful lives of property, plant and equipment as per Schedule II to the Companies Act, 2013. Accordingly, depreciation has been computed on useful lives based on technical evaluation of relevant class of assets including components thereof. Useful lives and residual values are reviewed annually. Depreciation is provided as per the straight line method and computed on the basis of useful lives of property, plant and equipment as follows:

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

1.4. Intangible assets

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Amounts capitalised in Intangible assets under development include the total cost of any external products or services and labour costs directly attributable to development.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

1.5. Impairment of tangible and intangible assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

1.6. Inventories

Inventories are valued at the lower of cost and the net realizable value after providing for obsolescence and other losses, where considered necessary. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The basis of determining cost for various categories of inventories, are as follows:

Raw Material : At material cost on weighted average basis.

Finished goods : Cost of Raw Materials plus apportioned direct expenses.

Stores and Spares : At Weighted average cost.

1.7. Revenue recognition

Sale of goods: Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership and effective control to the buyer. Revenue is measured at the price charged to the customer and are recorded net of returns (if any), trade discounts, product claims and other pricing allowances to trade, when it is probable that the associated economic benefits will flow to the Company.

The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks.

Sales are presented net of Goods and Services Tax (GST), Value Added Tax (VAT)/ Sales Tax, wherever applicable.

Scrap sales: Revenue from sale of scrap is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer.

Other Income

Interest: Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, using Effective Interest Rate (EIR) method.

Dividends: Dividend income is recognized when the right to receive dividend is established.

1.8. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

1.9. Government grants

Government grant related to import cost of assets subject to an export obligation as prescribed in the Export Promotion Capital Goods (EPCG) scheme are presented as deferred income in the Balance Sheet and recognize in profit or loss on a systematic basis over the periods on fulfillment of associated export obligation.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.

1.10. Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund, compensated absences and share based payments.

1.10.1. Defined contribution plans

The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees. Provident fund contributions are made to a Trust administered by the promoter Company.

1.10.2. Defined benefit plans

The Company provides for gratuity fund under a defined benefit plan for all employees. The gratuity fund is covered through trusts'' group gratuity schemes managed by Life Insurance Corporation of India. The gratuity fund provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each Balance Sheet date.

Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding net interest), is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.

Defined benefit costs are categorised into three components - Service cost, net interest expense or income; and re-measurement. The Company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''.

The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the schemes.

1.10.3. Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

1.10.4. Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.

1.10.5. Share based payments

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 37.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the ''Share Options Outstanding Account'' in Other Equity.

1.11. Leases

Leases in which a substantial portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases, such increases are recognised in the year in which such benefits accrue.

1.12. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1.12.1. Current tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

1.12.2. Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

1.12.3. Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income, in which case, the current and deferred tax are also recognised in other comprehensive income.

1.13. Foreign currency transactions

1.13.1. Initial recognition:

Transactions in currencies other than the Company''s functional currency (foreign currencies) entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

1.13.2. Measurement at the Balance Sheet date

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

1.13.3. Treatment of exchange differences

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.

1.14. Provisions and contingent liabilities

Provisions are recognized when there is present obligation (legal or constructive) as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date and are not discounted to its present value. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

1.15. Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

1.15.1. Initial recognition

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

1.15.2. Subsequent measurement

(a) Financial assets carried at amortised cost: A financial asset is subsequently measured at amortised cost if the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(b) Financial assets carried at fair value through other comprehensive income (FVTOCI): A financial asset is subsequently measured at fair value through other comprehensive income if the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(c) Financial assets carried at fair value through profit or loss (FVTPL): All other financial assets are subsequently measured at fair value.

(d) Financial liabilities at amortised cost: Financial liabilities includes interest bearing loans and borrowings which are subsequently measured at amortized cost using the effective interest method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

(e) Derivative financial instruments: The Company holds derivative financial instruments such as foreign exchange forward to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial instruments at fair value through profit or loss.

1.15.3. Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the substantially all the risks and rewards of ownership of the asset to another party or the transfer qualified for derecognition under Ind AS 109.

1.15.4. Derecognition of financial liabilities

The Company derecognizes a financial liability when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit or Loss.

1.15.5. Impairment of financial assets

The Company recognizes loss allowances using the Expected Credit Loss (ECL) for the financial assets which are not measured at fair value through profit or loss. In relation to loss allowance for financial assets (excluding trade receivables), ECL''s are measured at an amount equal to 12 month ECL, unless there has been significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.

1.16. Fair Value Measurement

The Company measures financial instruments at fair value at each Balance Sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For financial reporting purposes, fair value measurements are categorized into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

1.17. Cash and Cash Equivalents

Cash and Cash Equivalents in Balance Sheet comprises of cash at bank and hand and short term deposits with original maturity of three months or less, which are subject to insignificant risk of change in value.

1.18. Cash Flow Statement

Cash Flows are reported using indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals and accruals of past or future operating cash receipts and payments and item of income and expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.

1.19. Earnings per share

Basic earnings per share are 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.

1.20. Current versus Non-Current

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification.

An asset is treated as current when it is:

1. Expected to be realised or intended to be sold or consumed in normal operating cycle;

2. Held primarily for the purpose of trading;

3. Expected to be realised within twelve months after the reporting period; or

4. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

1. It is expected to be settled in normal operating cycle;

2. It is held primarily for the purpose of trading;

3. It is due to be settled within twelve months after the reporting period; or

4. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.


Mar 31, 2017

1 Corporate Information

DFM FOODS LIMITED (''the Company'') is a public limited company incorporated under the provisions of the Companies Act, 1956 on 17th March, 1993. The shares of the Company are listed on BSE Ltd. (BSE) and National Stock Exchange of India Limited (NSE). The Company is engaged in manufacturing and sale of Snack Foods. The Company has manufacturing facilities in Greater Noida and Ghaziabad and sell its products under the brand name "CRAX” and "NATKHAT”.

2 Significant accounting policies

2.1. 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 specified under Section 133 of the Companies Act, 2013. 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.

2.2. 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 year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

2.3. Fixed assets (Tangible / Intangible)

Fixed assets are carried at cost less accumulated depreciation/ amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets.

Subsequent expenditures related to an item of fixed asset are added to its book value only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. Losses arising from the retirement of and gains or losses arising from the disposal of fixed assets are recognized in the Statement of Profit and Loss.

Capital work-in-progress: Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

2.4. Depreciation and amortization

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on the estimated usage of the asset and past history of replacement etc.:

Assets Useful life

Vehicles 5 years

Leasehold land is amortized over the duration of the lease.

Intangible assets are amortized over their estimated useful life on straight - line method as follows:

Assets Useful life

Trade Mark 10 years

Computer software 3 years

The estimated useful life of the tangible fixed assets and intangible assets and the amortization period are reviewed at the end of each financial year.

2.5. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

2.6. Investments

Current investments are carried individually at lower of cost and fair value, computed category wise.

2.7. Cash and cash equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

2.8. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information

2.9. Inventories

Inventories are valued at the lower of cost and the net realizable value after providing for obsolescence and other losses, where considered necessary. The basis of determining cost for various categories of inventories, are as follows:

1. Raw Material : At material cost on weighted average basis

2. Finished goods : Cost of Raw Materials plus apportioned direct expenses

3. Stores and Spares : Weighted average cost

2.10. Revenue recognition

Sale of goods : Revenue from sales of goods is recognized when all the substantial risks and rewards of ownership of the goods have been passed to the buyer and are recognized net of claims. The Company collects value added taxes on behalf of the government and these taxes are not economic benefits flowing to the Company and as such these taxes are excluded from revenue.

Interest : Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income” in the Statement of Profit and Loss.

Dividends : Dividend income is recognized when the right to receive dividend is established.

2.11. Borrowing costs

Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

2.12. Employee benefits

Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences.

(i) Defined contribution plans : The Company''s contribution to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees. Provident fund contributions are made to a Trust administered by the promoter Company.

(ii) Defined benefit plans : The Company provides for gratuity fund under a defined benefit plan for all employees. The gratuity fund is covered through trusts'' group gratuity schemes managed by Life Insurance Corporation of India. The gratuity fund provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions in future contributions to the schemes.

(iii) Short-term employee benefits : The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

(iv) Long-term employee benefits : Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.

(v) Employee share based payments: The Company has constituted an DFM Foods Employee Stock Option Plan - 2014. Employee Stock Options granted are accounted under the ''Intrinsic Value Method'' stated in the Guidance Note on Employee Share Based Payments issued by the Institute of Chartered Accountants of India.

2.13. Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss.

2.14. Earning Per Share

Basic earnings per share is computed by dividing the net profit or loss after tax for the year as by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the net profit or loss after tax for the year as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares by the weighted average number of equity shares outstanding during the year is adjusted for giving dilutive effect of the outstanding stock options for the respective periods.

2.15. Provision for current and deferred tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternative Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e. the period for which the MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternative Tax under The Income Tax Act, 1961”, the said asset is created by way of credit to the Statement of Profit and Loss account and shown as "MAT Credit Entitlement”. The Company reviews the "MAT Credit Entitlement” asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal income tax during the specified period.

Deferred tax resulting from "timing differences” between taxable and accounting income is accounted for using the tax rates and laws that are enacted as on the Balance Sheet date. Deferred tax liabilities are recognised for all timing differences. Deferred tax asset 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 assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their reliability.

2.16. Foreign currency transactions Initial recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the balance sheet date

Foreign currency monetary items of the Company outstanding at the Balance Sheet date are restated at the year - end rates. Treatment of exchange differences

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.

Accounting for forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.

2.17. Provisions and contingent liabilities

Provisions are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date and are not discounted to its present value. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non - occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

2.18. Operating cycle

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.


Mar 31, 2014

1.1. 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 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, 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 amortization of leasehold land and trademark as indicated in Note 13.

1.2. 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 year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

1.3. Fixed assets (Tangible/ Intangible)

Fixed assets are stated at acquisition cost less accumulated depreciation/ amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.

1.4. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. An impairment loss is charged to the Statement of Profit and Loss in the year in which the asset is identified as impaired. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.

1.5. Investments

Current investments are carried individually at lower of cost and fair value, computed category wise. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

1.6. Cash and cash equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand, demand deposits with banks and other short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.7. Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.8. Inventories

Inventories are valued at the lower of cost and the net realizable value after providing for obsolescence, if any. The basis of determining cost for various categories of inventories, are as follows:-

1. Raw Material : At material cost on weighted average basis

2. Finished goods : Cost of Raw Materials plus apportioned direct expenses

3. Stores and Spares : Weighted average cost

1.9. Revenue recognition

Sale of goods: Revenue from sales of goods is recognized when all the substantial risks and rewards of ownership of the goods have been passed to the buyer and are recognized net of claims. The Company collects value added taxes on behalf of the government and these taxes are not economic benefits flowing to the Company and as such these taxes are excluded from revenue.

Interest: Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the Statement of Profit and Loss.

Dividends: Dividend income is recognized when the right to receive dividend is established.

1. 10. Borrowing costs

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of the cost of assets. Other borrowing costs are recognized as an expense in the Statement of Profit and Loss.

1.11. Employee benefits

Employee benefits include Provident Fund, Employee State Insurance Scheme, Gratuity Fund and compensated absences.

(i) Defined contribution plans: The Company''s contribution to Provident Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees. Provident Fund contributions are made to a Trust administered by the promoter company. The Company makes good the deficiency, if any, in its Provident Fund Trust on a year to year basis.

(ii) Defined benefit plans: The Company provides for Gratuity Fund under a defined benefit plan for all employees. The gratuity fund is covered through trusts'' group gratuity schemes managed by Life Insurance Corporation of India. The gratuity fund provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee''s salary and the tenure of employment. The Company''s liability is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur.

(iii) Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of short-term compensated absences is accounted as under:

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

(iv) Long-term employee benefits: Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date less the fair value of the plan assets out of which the obligations are expected to be settled.

1.12 Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss.

1.13 Earnings Per Share

Basic earnings per share is computed by dividing the net profit or loss after tax for the year by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share is computed by dividing the net profit or loss after tax for the year as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares by the weighted average number of equity shares outstanding during the year is adjusted for the effects of all dilutive potential equity shares.

1.14. Provision for current and deferred tax

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the I ncome Tax Act, 1961.

Minimum Alternative Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period i.e. the period for which the MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on "Accounting for credit available in respect of Minimum Alternative Tax under The Income Tax Act, 1961", the said asset is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement". The company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal income tax during the specified period.

Deferred tax resulting from "timing differences" between taxable and accounting income is accounted for using the tax rates and laws that are enacted as on the Balance Sheet date. Deferred tax liabilities are recognized for all timing differences. Deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

1.15. Foreign currency transactions

Initial recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement at the Balance Sheet date

Foreign currency monetary items of the Company outstanding at the Balance Sheet date are restated at the year end rates.

Treatment of exchange differences

Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.

Accounting for forward contracts

Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the Balance Sheet date.

1.16. Provisions and contingent liabilities

Provisions are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date and are not discounted to its present value. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Com pany or a present obligation that arises from past events where it is either not probable that an outflow of resou rces will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

1.17. Operating Cycle

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

(ii) Rights, prefrences and restrictions attached to the equity shareholders:

The Company has one class of equity shares having a par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

Note:

a) Defined contribution plans

The Company makes contribution towards employees'' Provident Fund and Employees'' State Insurance Plan Scheme. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the schemes, to these defined contribution schemes. The Company recognized Rs. 78 lacs (March 31, 2013 Rs. 65 lacs) as provident fund and Rs. 16 lacs (March 31, 2013 Rs. 15 lacs) as employees'' state insurance plan during the year as expense towards contribution to these plans.

b) Defined benefit plans

Gratuity scheme

The amount of Gratuity has been computed based on respective employee''s salary and the years of employment with the Company. Gratuity has been accrued based on actuarial valuation as at the balance sheet date, carried out by an independent actuary. The amount is funded through trusts'' group gratuity schemes managed by Life Insurance Corporation of India. The Company is contributing to trusts towards the payment of premium of such group gratuity schemes.

Compensated absences

Compensated absences include earned leaves and sick leaves. Long term compensated absences have been provided on accrual basis based on year end actuarial valuation and short term compensated absences on actual basis.


Mar 31, 2013

1.1. Basis of Preparation of Financial Statements

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 211(3C) of the Companies Act,1956 and the Companies (Accounting Standards) Rules, 2006 (as amended).

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule VI to the Companies Act,1956. The Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.

1.2. Use of Estimates

The preparation of financial statements 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 recognized in the period in which the results are known / materialized.

1.3. Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. Losses arising from the retirement of and gains or losses arising from the disposal of fixed assets are recognized in the statement of Profit and Loss.

1.5. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its 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 prior accounting period is reversed, if there has been a change in the estimate of recoverable amount.

1.6. Investments

Current investments are carried at lower of cost or quoted / fair value, computed category wise. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

1.7. Cash and Cash Equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprise cash in hand, demand deposits with banks and other short term highly liquid investments.

1.8. Inventories

Basis of valuation is as under:

1. Raw Material : Valuation is at material cost on Weighted Average basis

2. Stock in Trade : Finished Goods are valued at cost of Raw Material and apportioned direct expenses

3. Stores and Spares : Valuation is at cost or market value, whichever is lower

1.9. Revenue Recognition

Sale of Goods : Revenue from sales of goods is recognized when all the substantial risks and rewards of ownership of the goods have been passed to the buyer and are recognized net of claims. The Company collects value added taxes on behalf of the government and these taxes are not economic benefits flowing to the Company and as such these taxes are excluded from revenue.

Interest : Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income " in the Statement of Profit and Loss.

Dividends : Dividend income is recognized when the right to receive dividend is established.

1.10. Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of the cost of assets. Other borrowing costs are recognized as an expense in the Statement of Profit and Loss.

1.11. Employees Benefits

Provident Fund : Contributions to Provident Fund and Employee State Insurance are being paid and accounted as per the respective Rules and debited to the Statement of Profit and Loss. Provident Fund contributions are made to a Trust administered by the promoter company. The Company makes good the deficiency, if any, in its Provident Fund Trust on a year to year basis.

Gratuity : The Company provides for gratuity under a defined benefit plan for all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee''s salary and the tenure of employment. The Company liability is actuarially determined at the end of each year and is recognized in the Statement of Profit and Loss in the year in which it arises.

Leave Encashment : Provision for encashment of leave is being made on the basis of actuarial valuation made at the end of each financial year by an independent actuary and is charged to the Statement of Profit and Loss.

1.12. Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss.

1.13. Earning Per Share

Basic earning per share is calculated by dividing the net profit or loss for the period 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 is adjusted for the effects of all dilutive potential equity shares.

1.14. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration 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 tax rates and laws that are enacted as on the balance sheet date. Deferred Tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

Minimum Alternative Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period i.e. the period for which the MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on"Accounting for credit available in respect of Minimum Alternative Tax under The Income Tax Act, 1961", the said asset is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement". The company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will pay normal income tax during the specified period.

1.15. Foreign Currency Transactions

1. All transaction in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

2. Loans in foreign currencies are reported using the closing exchange rate on balance sheet date.

3. In case of forward exchange contracts entered into to hedge foreign currency risks, the exchange rate difference arising between the contracted rate and the rate on settlement date or reporting date is recognized as income / expenses for the period.

1.16. Provisions and Contingent Liabilities

Provisions are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount can not be made, is termed as a contingent liability.


Mar 31, 2012

1.1. Basis of Preparation of Financial Statements

The financial statements have been prepared under historical cost convention in accordance with the generally accepted accounting principles and the applicable accounting standards notified under Section 211(3C) of the Companies Act,1956 and the Companies (Accounting Standards) Rules, 2006 (as amended).

All assets and liabilities have been classified as current or non-current as per the criteria set out in the Schedule VI to the Companies Act, 1956.The Company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.

1.2. Use of Estimates

The preparation of financial statements 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 recognized in the period in which the results are known / materialized.

1.3. Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance. Losses arising from the retirement of and gains or losses arising from the disposal of fixed assets are recognized in the statement of Profit and Loss.

1.5. Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. An asset is treated as impaired when the carrying cost of assets exceeds its 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 prior accounting period is reversed, if there has been a change in the estimate of recoverable amount.

1.6. Investments

Current investments are carried at lower of cost or quoted / fair value, computed category wise. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary.

1.7. Cash and Cash Equivalents

Cash and cash equivalents for the purposes of Cash Flow Statement comprise cash in hand, demand deposits with banks and other short term highly liquid investments.

1.8. Revenue Recognition

Sale of Goods: Revenue from sales of goods is recognized when all the substantial risks and rewards of ownership of the goods have been passed to the buyer and are recognized net of claims. The Company collects value added taxes on behalf of the government and these taxes are not economic benefits flowing to the Company and as such these taxes are excluded from revenue.

Interest: Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the Statement of Profit and Loss. Dividends: Dividend income is recognized when the right to receive dividend is established.

1.9. Borrowing Costs

Borrowing costs, which are directly attributable to the acquisition /construction of fixed assets, till the time such assets are ready for intended use, are capitalized as a part of the cost of assets. Other borrowing costs are recognized as an expense in the Statement of Profit and Loss.

1.10. Employees Benefits

Provident Fund: Contributions to Provident Fund and Employee State Insurance are being paid and accounted as per the respective Rules and debited to the Statement of Profit and Loss. Provident Fund contributions are made to a Trust administered by the promoter company. The Company makes good the deficiency, if any, in its Provident Fund Trust on a year to year basis.

Gratuity: The Company provides for gratuity under a defined benefit plan for all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment of an amount based on the respective employee's salary and the tenure of employment. The Company liability is actuarially determined at the end of each year and is recognized in the Statement of Profit and Loss in the year in which it arises.

Leave Encashment: Provision for encashment of leave is being made on the basis of actuarial valuation made at the end of each financial year by an independent actuary and is charged to the Statement of Profit and Loss.

1.11. Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the Lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss.

1.12. Earnings Per Share

Basic earning per share is calculated by dividing the net profit or loss for the period 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 is adjusted for the effects of all dilutive potential equity shares.

1.13. Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration 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 tax rates and laws that are enacted as on the balance sheet date. Deferred Tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.

1.14. Foreign Currency Transactions

1. All transaction in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

2. Loans in foreign currencies are reported using the closing exchange rate on balance sheet date.

3. In case of forward exchange contracts entered into to hedge foreign currency risks, the exchange rate difference arising between the contracted rate and the rate on settlement date or reporting date is recognized as income / expenses for the period.

1.15. Provisions and Contingent Liabilities

Provisions are recognized when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount can not be made, is termed as a contingent liability.


Mar 31, 2011

A. ACCOUNTING CONVENTION

The financial statement has been prepared under historical cost convention, on an accrual basis in accordance with the generally accepted accounting principles and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and relevant provisions referred of the Companies Act,1956and Companies (Accounting Standards) Rules, 2006.

B. FIXED ASSETS & DEPRECIATION

1) Fixed assets are stated at cost less accumulated depreciation.

2) Depreciation is provided on Straight Line Method (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act,1956, except in the case of Office Equipment, Cars, Computers and Mobile Phones where depreciation on a Straight Line Method is provided at the rates of 19%, 19%, 23.75% and 31.67% respectively.

3) No depreciation is charged on Trade Marks.

C. INVESTMENTS

Investments are classified either as current or long-term investment. Current investments are carried at lower of cost or fair market value. Long-term investments are stated at cost of acquisition, net of diminution in value, if any, which is other than temporary.

D. INVENTORIES

Basis of Valuation is as under

1) Raw Material : Valuation is at material cost on FIFO basis.

2) Stock in Trade : Finished goods are valued at cost of Raw material and apportioned direct expenses.

3) Stores and Spares : Valuation is at Cost or Market Value, which ever is Lower.

E. EMPLOYEE RETIREMENT BENEFITS

1) Contribution to Provident Fund is charged to Profit & Loss Account.

2) Gratuity is provided in accordance with the group gratuity scheme with MetLife India Insurance Company Pvt. Ltd.

3) Provision for earned leave encashment is made on the basis of actuarial valuation conducted at year end by an independent actuary.

F. TAXATION

i) Provision for current tax is made and retained in the accounts on the basis of estimated tax liability as per the applicable provisions of the Income Tax Act,1961.

ii) Deferred tax for timing differences between tax profits and book profits is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the Balance Sheet date. Deferred tax assets are recognised to the extent there is reasonable certainty that these assets can be realised in future.

G. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

H. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

I. FOREIGN EXCHANGE TRANSACTION

1. All transaction in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

2. Loans in foreign currencies are reported using the closing exchange rate on balance sheet date.

3. In case of forward exchange contracts entered into to hedge foreign currency risks, the exchange rate difference arising between the contracted rate and the rate on settlement date or reporting date is recognised as income / expenses for the period.

J. BORROWING COST

Interest and other borrowing costs directly incurred in relation to capital assets acquired are capitalised till the date of commissioning of such asset.


Mar 31, 2010

A. ACCOUNTING CONVENTION

The financial statement has been prepared under historical cost convention, on an accrual basis in accordance with the generally accepted accounting principles and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India and relevant provisions referred of the Companies Act, 1956 and Companies (Accounting Standards) Rules, 2006.

B. FIXED ASSETS & DEPRECIATION

1) Fixed assets are stated at cost less accumulated depreciation.

2) Depreciation is provided on Straight line basis (SLM), at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956, except in the case of Office Equipment, Cars, Computers and Mobile Phones where depreciation on a Straight Line basis is provided at the rates of 19%, 19%,23.75% and 31.67% respectively.

3) No depreciation is charged on Trade Marks.

C. INVESTMENTS

Investments are classified either as current or long-term investment. Current investments are carried at lower of cost or fair market value. Long-term investments are stated at cost of acquisition, net of diminution in value, if any, which is other than temporary.

D. INVENTORIES

Basis of Valuation is as under

1) Raw Material : Valuation is at material cost on FIFO basis.

2) Stock in Trade : Finished goods are valued at cost of Raw material and apportioned direct expenses.

3) Stores and Spares : Valuation is at Cost or Market Value , which ever is Lower.

E. EMPLOYEE RETIREMENT BENEFITS

1) Contribution to Provident Fund is charged to Profit & Loss Account.

2) Gratuity is provided in accordance with the group gratuity scheme with Met Life India Insurance Company Pvt. Ltd.

3) Provision for earned leave encashment is made on the basis of actuarial valuation conducted at year end by an independent actuary.

F. TAXATION

i) Provision for current tax is made and retained in the accounts on the basis of estimated tax liability as per the applicable provisions of the Income Tax Act, 1961.

ii) Deferred tax for timing differences between tax profits and book profits is accounted for using the tax rates and laws that have been enacted or substantially enacted as on the Balance Sheet date. Deferred tax assets are recognised to the extent there is reasonable certainty that these assets can be realised in future.

G. IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged for when an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

H. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

I. FOREIGN EXCHANGE TRANSACTION

1. All transaction in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

2. Loans in foreign currencies are reported using the closing exchange rate on balance sheet date.

3. In case of forward exchange contracts entered into to hedge foreign currency risks, the exchange rate difference arising between the contracted rate and the rate on settlement date or reporting date is recognised as income/ expenses for the period.

J. BORROWING COST

Interest and other borrowing costs directly incurred in relation to capital assets acquired are capitalised till the date of commissioning of such asset.

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