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Accounting Policies of DFM Foods Ltd. Company

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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