Accounting Policies of DIC India Ltd. Company

Dec 31, 2018

1. Significant accounting policies

1.1 Statement of compliance

The financial statements have been prepared in accordance with Indian Accounting Standards (IndAS’) as notified under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Upto the year ended December 31,2017, the Company prepared its financial statements in accordance with the requirements of the Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. These are the Company’s first IndAS financial statements. The date of transition to IndAS is January 1,2017. Refer to Note 4.2 for the details of first-time adoption exemptions availed by the Company.

1.2 Basis of preparation and presentation

The financial statements of the Company have been prepared in accordance with Ind AS as issued by the MCA under Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) specified under Section 133 ofthe Companies Act, 2013 and the relevant provisions ofthe Companies Act, 2013 (“the 2013 Act”) as applicable. These financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on above basis, except measurements that have some similarities to fair value but are not fair value, such as net realisable value in IndAS 2 Inventories or value in use in IndAS 36 Impairment of Assets.

In addition, for financial reporting purposes, fair value measurements are categorised 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 that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Company’s assumptions about pricing by market participants.

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation 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.

The principal accounting policies are set out below.

1.3 Revenue recognition

Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of estimated returns and allowances, trade discount and volume rebates.

Sales are recognised in accordance with the terms and conditions agreed with respective customers, which coincides with the following:

- the entity has transferred to the buyer the significant risks and rewards of ownership ofthe goods,

- the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

- the amount of revenue can be measured reliably;

- it is probable that the economic benefits associated with the transaction will flow to the entity; and

- the costs incurred or to be incurred in respect of the transaction can be measured reliably.

The sales include excise duty but are net of GST/sales tax/ VAT and returns. Excise duty is presented as expense in the statement of profit and loss.

1.4. Other income

Interest income from a financial asset is recognized 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, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Claims/counter-claims/penalties/awards are accounted for in the year of its settlement.

1.5. Leases

Leases are classified as finance leases whenever the terms ofthe lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Company as lessee

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. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Leasehold lands where the ownership of the land will not be transferred to Company at the end of lease period are classified as operating leases. Upfront operating lease payments are recognized as prepayments and amortised on a straight-line basis over the term ofthe lease.

1.6 Foreign currencies

The functional currency of the Company is Indian Rupees (INR) which represents the currency of the primary economic environment in which it operates.

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. 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. Exchange difference arising in respect of foreign currency monetary items is recognised in the statement of profit and loss.

1.7 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.

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

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

1.8 Employee benefits

(a) Short-term Employee Benefits

All employee benefits which are expected to be settled in twelve months at the end of the period in which the employees render the related services are classified as short-term employee benefits, which include benefits like salaries, wages, short term compensated absences, performance incentives, etc. and are recognised as expenses in the period in which the employee renders the related service and measured accordingly.

(b) Post-employment benefits:

Post employment benefit plans are classified into defined benefits plans and defined contribution plans asunder:

(i) Defined Contribution Plans

Contributions to defined contribution schemes such as superannuation scheme are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees. The Company contributes a certain percentage of the eligible salary for employees covered under the scheme towards superannuation fund administered by the Trustees. The Company has no further obligations for future superannuation benefits other than its contributions. Payments to defined contribution plans are recognised as an expense when employees have rendered service entitling them to the contributions.

(ii) Defined Benefit Plans

Defined benefit plans comprises of gratuity, provident fund, pension fund and retirement benefit plan and are explained as mentioned below:

1. Gratuity

In accordance with the Payment of Gratuity Act, 1972, applicable for Indian companies, the Company provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Company. The gratuity fund is managed by the Gratuity Fund Trustees fund managers. The Company’s obligation in respect of the gratuity plan, which is a defined benefit plan, is provided for based on actuarial valuation using the projected unit credit method.

2. Provident Fund

Certain employees ofthe Company receive provident fund benefits, which are administered by the Provident Fund Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees’ salary to such Provident Fund Trust.The Contribution is a defined benefit plan to the extent that the Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The Company’s obligation in this regard is determined by an independent actuary and provided for if the circumstances indicate that the Trust may not be able to generate adequate returns to cover the interest rates notified by the Government. Company’s contribution to the provident fund is charged to Statement of Profit and Loss.

3. Pension Fund

The Company has discontinued the Defined Pension Benefit scheme with effect from 1 May 2009 and all the employees who were members of the erstwhile Defined Pension Benefit scheme have been brought under the Defined Contribution superannuation scheme. The Company’s obligation in respect of pension plan till 30 April 2009 is actuarially determined at the end of each year by discounting the present value of crystallised pension as at 30 April 2009.

4. Retirement Benefits

Liability accrued during the year in respect of retirement benefit payable to certain employees governed by agreement with the unions representing them are treated as a defined benefit plan. As per the scheme, a lumpsum benefit is paid to the eligible employees on cessation of service with the Company.

For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) 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. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. 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 as follows:

- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

- net interest expense or income; and remeasurement

(c) Other Long-term Employee Benefits (unfunded)

As per the Company’s policy, eligible leaves can be accumulated by the employees and carried forward to future periods to either be utilised during the service, or encashed. Encashment can be made during service, on early retirement, on withdrawal of scheme, at resignation and upon death of the employee. Accumulated compensated absences are treated as other long-term employee benefits. The cost of providing other long-term employee benefits (Leave Encashment) is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other long-term employee benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(d) Termination Benefits

Termination benefits are recognised as an expense when, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur.

1.9 Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using tax rates that have been enacted or substantively enacted by the end ofthe reporting period.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as a Deferred tax asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.

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 base 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.

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 laws) that have been enacted or substantively enacted by the end ofthe 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 ofthe reporting period, to recover or settle the carrying amount ofits assets and liabilities.

Current and deferred tax for the vear

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

1.10 Property, plant and equipment

Property, plant and equipment is stated at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and, for assets that necessarily take a substantial period of time to get ready for their intended use, finance costs. Cost includes net of interest on capital advances and duty credits and is inclusive of freight, duties, taxes (not recoverable) and other incidental expenses. In respect of assets due for capitalization, where final bills/claims are to be received/passed, the capitalisation is based on the engineering estimates. Final adjustments, for costs and depreciation are made retrospectively in the year of ascertainment of actual cost and finalisation of claim. Items such as spare parts, stand-by equipment and servicing equipment are recognised in accordance with this Ind AS 16 when they meet the definition of property, plant and equipment.

Capital work in progress (CWIP) is stated at cost. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into the location and condition necessary. CWIP are not yet ready for their intended use and the cost of assets not put to use before the Balance Sheet date.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to Statement of Profit or Loss during the reporting period in which they are incurred.

1.10.1 Depreciation and amortisation

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

Depreciation on property, plant & equipment has been provided as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in the case of the certain categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.

The estimated useful life of various property, plant & equipment is as under:-

(a) Buildings- 3 to 60 years, written down value method

(b) Vehicles- 2 to 16 years, written down value method

(c) Furniture and fixtures- 2 to 30 years, written down value method

(d) Office equipment- 2 to 30 years, written down value method

(e) Computer- 3-10 years, straight-line method

(f) Plant and equipment used in manufacturing- 2 to 20 years, straight-line method

On Computer and Plant and equipment as mentioned above in (e) and (f) above, depreciation is provided on straight line method over the useful lives. On all other tangible assets, depreciation is provided on written down value method over the useful lives.

Freehold land is not depreciated.

The estimated useful life, residual life and depreciation 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. In respect of assets whose useful lives has been revised, the unamortised depreciable amount is charged over the revised remaining useful lives ofthe assets.

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 ofthe asset and is recognised in profit or loss.

1.11 IntangibleAssets

Expenditure on computer software, which is not an integral part of hardware, is capitalised as an intangible asset. The cost of software includes license fee and implementation cost and is capitalised in the year of its implementation. Computer Software are amortised on a straight-line basis over their estimated useful life of four years.

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.

1.12 Impairment of Non-financial assets

At the end of each reporting period, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount ofthe asset is estimated in order to determine the extent of the impairment loss (if any).

When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Component of cash-generating units for which areasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. Areversal of an impairment loss is recognised in the statement of profit and loss immediately.

1.13 Inventories

Inventories are valued at lower of cost and net realisable value.

Cost is determined on first-in-first-out formula for all categories of inventories except stores and spare parts for which it is determined under weighted average formula. Cost includes expenditure incurred in the normal course of business in bringing inventories to its present location, condition, direct labour and related production overheads, where applicable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletionandthe estimated costs necessary to make the sale.

Inventories are written down for obsolete / slow-moving/ non-moving items, wherever necessary.

1.14 Provisions, Contingent Liabilities & Contingent assets

a. Provision

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made ofthe amount ofthe obligation

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value ofmoney is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount ofthe receivable can be measured reliably.

b. Contingent Liabilities

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 ofthe 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 areliable estimate ofthe amount cannot be made.

1.15 Earnings per share (EPS)

Basic earnings per share (‘EPS’) is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the period except where the result would be anti-dilutive.

1.16 Cash and Cash equivalent

In the cash flow statement cash and cash equivalents include cash in hand, demand deposits with banks, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

1.17 Segment Reporting

The Companies’ segmental reporting is in accordance with IndAS 108 Operating Segments. Operating segments are reported in a manner consistent with the internal reporting provided to the board of directors, which is responsible for allocating resources and assessing performance ofthe operating segments, and has been identified as the chief operating decision maker.

1.18 Financial instruments

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

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.

1.19 Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets

1.19.1 Classification of financial assets

Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

- 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.

For the impairmentpolicy on financial assets measured at amortised cost, refer Note 3.19.4.

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (FVTOCI) (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):

- 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.

1.19.1 Classification of financial assets

Interest income is recognised in statement ofprofit or loss for FVTOCI debt instruments. For the purposes of recognising foreign exchange gains and losses, FVTOCI debt instruments are treated as financial assets measured at amortised cost. Thus, the exchange differences on the amortised cost are recognised in profit or loss and other changes in the fair value of FVTOCI financial assets are recognised in other comprehensive income and accumulated under the heading of’Reserve for debt instruments through other comprehensive income’. When the investment is disposed of, the cumulative gain or loss previously accumulated in this reserve is reclassified to statement ofprofit or loss.

For the impairment policy on debt instruments at FVTOCI, refer Note 3.19.4.

All other financial assets are subsequently measured at fair value.

1.19.2 Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments. Interest income is recognised in statement of profit or loss and is included in the “Other income” line item.

1.19.3 Financial assets at fair value through profit or loss (FVTPL)

Debt instruments that do not meet the amortised cost criteria or FVTOCI criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.

A financial asset that meets the amortised cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss.

1.19.4 Impairment of financial assets

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset.

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. The Company estimates cash flows by considering all contractual terms of the financial instrument through the expected life of that financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.

If the Company measured loss allowance for a financial instrument at lifetime expected credit loss model in the previous period, but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowance based on 12-month expected credit losses.

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead ofthe change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.

Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.

1.19.5 Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum ofthe consideration received is recognised in the statement of profit and loss.

1.19.6 Foreign exchange gains and losses

The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.

For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in profit or loss.

1.20 Financial liabilities and equity instruments

1.20.1 Classification as debt or equity

Debt and equity instruments issued by a Company entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

1.20.2 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company entity are recognised at the proceeds received, net of direct issue costs.

1.20.3 Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

1.20.3.1 Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘Other income’ line item.

However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition ofthe effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.

1.20.3.2 Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ‘Finance costs’ line item.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

1.20.3.3 Foreign exchange gains and losses

For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost ofthe instruments and are recognised in ‘Other income’.

The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.

1.20.3.4 Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

1.21 Derivative financial instruments

The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in statement ofprofit and loss.

1.22 Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

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Dec 31, 2016

26. (a) Commitments

Estimated amount of contracts remaining to be executed on Capital Account and not provided for (net of advances) Rs. 0.05 Million (2C5- Rs. 5.72 Million)

(b) Contingent Liabilities

Claims against the Company not acknowledged as debt :

i) Income Tax matters Rs. 84.38 Million (2C5 - Rs. 46.40Million) pending in appeals.

ii) Disputed Indirect Tax matters for which appeals before the relevant authorities are pending disposal are as follows :

a) Custom Duty matters Rs.2Q16 Million (2C5 - Rs.2C.16 Million)

b) Excise Duty matters Rs.44.49 Million (2C5 - Rs.45.22 Million)

c) Service Tax matter s Rs. 41C5 Million (2C5 - Rs.42.C9 Million)

d) S ales Tax / VAT / Entry Tax matter s Rs. 26.30 Million (2C5 - Rs. 8.66 Million)

iii) Rent under dispute Rs. Nil (2C5 - Rs.3.72 Million) pending in appeals.

In respect of above, it is not practicable for the Company to estimate the timings of cash outflows, if any, pending resolution of the respective proceedings. The Company does not expect any reimbursements in respect of the above contingent liabilities.

27. Derivative Instruments and Unheeded Foreign Currency Exposure

(a) Foreign currency exposures that have been hedged by a Derivative Instrument (Forward Contracts) as at year end are as under:

* Figures are below the rounding off norm adopted by the Company

(c) Mark-to-market losses provided for as at the yearend Rs.Q38 Million (2C5 - Rs. 0.31 Million)

28. Assets acquired under Operating Lease

(a) The Company’s significant leasing arrangements are in respect of operating leases for premises (like residential property, office premises, god owns, etc). These leasing arrangements, which are cancellable, range between 11 months to 4 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals in this regard amounting to Rs^^ Million (205 -Rs.29.65 Million) are charged as Rent under Note 25.

29. Provision for Taxation

Provision for taxation made in these accounts is based on the results for the current financial period including the results for the period from st January 206 to 3st March 206 forming part of the assessment year 20I6-207. Ultimate liability for taxation for the assessment year 207-208 will be determined on the basis of the results for the last nine months of the current financial period together with that of subsequent three months up to 31bt March 207 as one composite income.

Note :

The above particulars, as applicable, have been given in respect of Micro and Small Enterprises to the extent they could be identified on the basis of the information available with the Company.

Figures within brackets relate to previous year.

(1) Purchases of Goods from Fellow Subsidiaries include purchases from DIC Fine Chemicals Private Limited Rs.15.28 Million (205 - Rs.93.61 Million) and DIC Compounds (Malaysia) Sdn. Bhd. Rs.58.C4 Million (205 - Rs.29.71 Million).

(2) Sale of Products to Fellow Subsidiaries include sales to DIC Australia Pty Ltd. Rs. 14.96 Million (205- Rs.78.27 Million) and DIC Lanka (Private) Ltd. Rs. 4-.28 Million (205 - Rs.K48 Million).

(3) Commission Income from Fellow Subsidiaries include income from Sun Chemical N.V./S.A. Rs.Q09 Million (205 - Rs. Q33 Million).

(4) Reimbursement of Expenses from Fellow Subsidiaries include reimbursement from DIC Fine Chemicals Pvt. Limited Rs. 3.31 Million (205- Rs. Nil).

(5) Trade Payables to Fellow Subsidiaries include payable to DIC Fine Chemicals Private Limited Rs. 32.39 Million (205 - Rs.7.89 Million), DIC Graphics Corporation Rs. 3.85 Million (205 - Rs. Nil) and DIC Compounds (Malaysia) Sdn. Bhd. Rs. R31 Million (205 - Rs. 5.25 Million).

(6) Trade Receivables from Fellow Subsidiaries include receivable from DIC Australia Pty Ltd. Rs. 2002 Million (205 - Rs.33.52 Million),

(7) Short-term Loans and Advances to Fellow Subsidiaries include receivable from Sun Chemical N.V./S.A. Rs. Q31 Million (205 -Rs.Q31Million) and Hartman Druckfarben GmbH Rs.Q08 Million (205- Rs. N il).

(8) Remuneration includes remuneration to Mr. Shailendra Hari Singh Rs. 12.59 Million (205 : Rs. 8.82 Million) and Mr. Yasuo Ikeda Rs. B46 Million (205: Rs. 128 Million).

(9) Employee Related Liabilities include payable to Mr. Shailendra Hari Singh Rs. 5.3 Million (205 : Rs. 3.28 Million) and Mr. Yasuo Ikeda Rs. 3.97 Million (205: Rs. 3.63 Million).

The estimate of future salary increases considered in the actuarial valuation takes into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.

The expected return on plan assets is determined after taking into consideration composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets, the Company''s policy for plan asset management and other relevant factors.

(b) In terms of Guidance on implementing Accounting Standard 5 (Revised 2006) on Employee Benefits issued

by the Accounting Standard Board of the Institute of Chartered Accountants of India (ICAI), a provident fund set up by the Company is treated as a defined benefit plan in view of the Company''s obligation to meet shortfall, if any, on account of interest.

The Actuary has carried out actuarial valuation of plan''s liabilities and interest rate guarantee obligations as at the Balance Sheet date using Projected Unit Credit Method and Deterministic Approach as outlined in the Guidance Note 29 issued by the Institute of Actuaries of India. Based on such valuation, there is no future anticipated shortfall with regard to interest rate obligation of the Company as at the Balance Sheet date. Further during the year, the Company''s contribution of Rs.16.45 Million (2055 - Rs.4-.84 Million) to the Provident Fund Trust has been expensed under the ''Contribution to Provident and Other Funds'' in Note 22 Disclosures given hereunder are restricted to the information available as per the Actuary''s Report -

(c) During the year the Company has recognised an amount of Rs. 20.42 Million (2055 - Rs.1P.34 Million) as expenditure towards defined contribution plans of the Company.

45 Effective fat January, 2055, the Company had revised the useful lives of certain tangible Fixed Assets in keeping with the provisions of Schedule II to the Companies Act, 203. As a result, net book value aggregating Rs.20.70 Million (Net of Deferred Tax Rs.D67 Million) relating to assets, where the revised useful lives had expired by 3st December, 204 had been adjusted against opening balance of Retained Earnings (Note 2) as on1st January, 2055.

46 Previous year''s figures have been re-grouped / re-arranged, wherever necessary to conform to current year''s classification.

NOTES TO THE FINANCIAL STATEMENTS Note 47 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of the Companies Act, 203 read with Rule 7 of the Companies (Accounts) Rules, 2C4-, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply, in all material aspects, with the accounting standards notified under Section 21(3C) of the Companies Act, 1956 [Companies (Accounting Standards) Rules, 2006, as amended] and other relevant provisions of the Companies Act, 203 (the ''Act'').

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Act.

FIXED ASSETS

Fixed Assets are stated at cost of acquisition less accumulated depreciation/a mort is at ion and accumulated impairment losses, if any.

Cost comprises cost of acquisition including non-refundable taxes/duties, freight and other incidental expenses related to acquisition and installation. Cost of software includes license fees and cost of implementation / system integration services, where applicable.

Subsequent expenditures related to an item of fixed asset (tangible or intangible) are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

DEPRECIATION AND AMORTISATION

Depreciation on tangible fixed assets is provided over the estimated useful lives of the assets in keeping with the requirements of Schedule II to the Act which is in line with the technical evaluation carried out by the Company''s expert as under:

(i) On Silos and Rollers included in Plant and Equipments on Straight Line Method @20%.

(ii) On Research Equipment included in Plant and Equipments on Straight Line Method @25%.

(iii) On Computers, on Straight Line Method @33.33%.

(iv) For assets set out in (i) to (iii) above, estimated useful lives are different from those specified in Schedule II to the Act. On Plant and Equipments other than (i) and (ii) above, depreciation is provided on Straight Line Method over the useful lives specified in Schedule II to the Act. On all other tangible assets, depreciation is provided on Written Down Value Method over the useful lives specified in Schedule II to the Act.

(v) All assets costing Rs 5,000 or less are fully depreciated in the year of additions.

(vi) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

Leasehold land is amortised on a straight-line basis over the lease period. Intangible assets (Computer Software) are amortised on a straight-line basis over a period of four years.

IMPAIRMENT

Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired.

An impairment loss, if any, is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount i.e. the higher of the assets'' net selling price and value in use.

Notes to the Financial Statements

After impairment, depreciation is provided on the revised carrying amount of the fixed asset over its remaining useful life.

INVESTMENTS

Investments that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost less write down for any diminution, other than temporary, in carrying value.

INVENTORIES

Inventories are valued at lower of cost and net realisable value. Cost is determined on first-in-first-out formula for all categories of inventories except stores and spare parts for which it is determined under weighted average formula.

Cost includes expenditure incurred in the normal course of business in bringing inventories to its present location, condition, direct labour and related production overheads, where applicable.

Inventories are written down for obsolete / slow-moving/ non-moving items, wherever necessary.

FOREIGN CURRENCY TRANSACTIONS AS APPLICABLE UNDER ACCOUNTING STANDARD 11 ON ''THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES’

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. At the year-end, monetary assets and liabilities denominated in foreign currencies are restated at the year-end exchange rates. The resultant exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in the Statement of Profit and Loss.

Premium or discount arising at the inception of a forward exchange contract entered into to hedge an existing asset / liability is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in the reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

DERIVATIVE CONTRACTS

In respect of derivative contracts (other than forward exchange contracts covered under Accounting Standard 1 on ''The Effects of Changes in Foreign Exchange Rates''), gains/losses on settlement and mark-to-market loss, if any, on outstanding contracts as at the Balance Sheet date are recognised in the Statement of Profit and Loss and mark-to-market gain, if any, on outstanding contracts as at the Balance Sheet date is ignored.

Refer Note on Foreign Currency Transactions above for forward exchange contracts covered under Accounting Standard Ion ''The Effects of Changes in Foreign Exchange Rates''.

REVENUE

Revenue from sale of goods are recognised when the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. It includes excise duty but excludes value added tax/sales tax, trade discounts, rebates, returns, as applicable.

BORROWING COSTS

Borrowing costs, if any, attributable to the acquisition and construction of qualifying assets (i.e., the assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost up to the date when such assets are substantially ready for their intended use. Other borrowing costs are recognised as expense in the period in which these are incurred.

RESEARCH & DEVELOPMENT EXPENDITURE

Revenue expenditure on Research is expensed in the period in which it is incurred. Expenditure on Development is expensed / capitalised in compliance with the provisions of the Accounting Standard 26 on ''Intangible Assets''.

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Dec 31, 2015

BASIS OF PREPARATION

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notified under the Companies Act, 1956 shall continue to apply. Consequently, these financial statements have been prepared to comply, in all material aspects, with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] of the Companies Act, 1956 and other relevant provisions of the Companies Act, 2013 (the 'Act').

All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in the Schedule III to the Act.

FIXED ASSETS

Fixed Assets are stated at cost of acquisition less accumulated depreciation/amortization and accumulated impairment losses, if any.

Cost comprises cost of acquisition including non-refundable taxes/duties, freight and other incidental expenses related to acquisition and installation. Cost of software includes license fees and cost of implementation / system integration services, where applicable.

Subsequent expenditures related to an item of fixed asset (tangible or intangible) are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

DEPRECIATION AND AMORTISATION

Depreciation on tangible fixed assets is provided over the estimated useful lives of the assets in keeping with the requirements of Schedule II to the Act which is in line with the technical evaluation carried out during the year by the Company's expert as under:

(i) On Silos and Rollers included in Plant and Equipments on Straight Line Method @ 20%.

(ii) On Research Equipment included in Plant and Equipments on Straight Line Method @ 25%.

(iii) On Computers, on Straight Line Method @ 33.33%.

(iv) For assets set out in (i) to (iii) above, estimated useful lives are different from those specified in Schedule II to Act. On all other tangible assets, depreciation is provided on Written Down Value Method over the useful lives specified in Schedule II to the Act..

(v) All assets costing Rs 5,000 or less are fully depreciated in the year of additions.

(vi) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

(vii) Also refer Note 46.

Leasehold land is amortized on a straight-line basis over the lease period. Intangible assets (Computer Software) are amortized on a straight-line basis over a period of four years.

IMPAIRMENT

Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired.

An impairment loss, if any, is recognized wherever the carrying amount of the fixed assets exceeds the recoverable amount i.e. the higher of the assets' net selling price and value in use.

After impairment, depreciation is provided on the revised carrying amount of the fixed asset over its remaining useful life.

INVESTMENTS

Investments that are readily realizable and are intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost less write down for any diminution, other than temporary, in carrying value.

INVENTORIES

Inventories are valued at lower of cost and net realizable value.

Cost is determined on first-in-first-out formula for all categories of inventories except stores and spare parts for which it is determined under weighted average formula.

Cost includes expenditure incurred in the normal course of business in bringing inventories to its present location, condition, labor and overheads, where applicable.

Inventories are written down for obsolete / slow-moving/ non-moving items, wherever necessary.

FOREIGN CURRENCY TRANSACTIONS AS APPLICABLE UNDER ACCOUNTING STANDARD 11 ON 'THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES'

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. At the year- end, monetary assets and liabilities denominated in foreign currencies are restated at the year-end exchange rates. The resultant exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognized in the Statement of Profit and Loss.

Premium or discount arising at the inception of a forward exchange contract entered into hedge an existing asset / liability is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognized in the Statement of Profit and Loss in the reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognized as income or expense of the period.

DERIVATIVE CONTRACTS

In respect of derivative contracts (other than forward exchange contracts covered under Accounting Standard 11 on 'The Effects of Changes in Foreign Exchange Rates'), gains/losses on settlement and mark-to-market loss, if any, on outstanding contracts as at the Balance Sheet date are recognised in the Statement of Profit and Loss and mark-to-market gain, if any, on outstanding contracts as at the Balance Sheet date is ignored.

Refer Note on Foreign Currency Transactions above for forward exchange contracts covered under Accounting Standard 11 on 'The Effects of Changes in Foreign Exchange Rates'.

REVENUE

Revenue from sale of goods are recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. It includes excise duty but excludes value added tax/sales tax, trade discounts, returns, as applicable.

BORROWING COSTS

Borrowing costs, if any, attributable to the acquisition and construction of qualifying assets (i.e., the assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost up to the date when such assets are ready for their intended use. Other borrowing costs are recognized as expense in the period in which these are incurred.

RESEARCH & DEVELOPMENT EXPENDITURE

Revenue expenditure on Research is expensed in the period in which it is incurred. Expenditure on Development is expensed / capitalized in compliance with the provisions of the Accounting Standard 26 on 'Intangible Assets'.

Notes to the Financial Statements

EMPLOYEE BENEFITS

(a) Short-term Employee Benefits

Short-term Employee Benefits (i.e. benefits falling due within one year after the end of the period in which employees render the related service) are recognized as expense in the period in which employee services are rendered as per the Company's scheme based on expected obligations on undiscounted basis.

(b) Post-employment Benefit Plans

Post-employment benefits comprise Provident Fund, Superannuation Fund, Gratuity, Pension and Retirement Benefits which are accounted for as follows:

i. Provident Fund - Certain employees of the Company receive provident fund benefits, which are administered by the Provident Fund Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees' salary to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In view of the Company's obligation to meet the shortfall, this is a defined benefit plan. Actuarial valuation of the Company's liability under such scheme is carried out under the Projected Unit Credit (PUC) Method at the year end and the charge, if any, is recognized in the Statement of Profit and Loss. Actuarial gains/ losses are recognized immediately in the Statement of Profit and Loss as income/expense.

ii. Superannuation Fund - This is a defined contribution plan. The Company contributes a certain percentage of the eligible salary for employees covered under the scheme towards superannuation fund administered by the Trustees. The Company has no further obligations for future superannuation benefits other than its contributions and recognizes such contributions as expense in the period in which the related employee services are rendered.

iii. Gratuity - This is a defined benefit plan covering eligible employees. As per the scheme, the Gratuity Fund Trust administered by Trustees, makes 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. Vesting occurs upon completion of five years of service. The liability is determined based on year-end actuarial valuation using PUC Method. Actuarial gains/losses are recognized immediately in the Statement of Profit and Loss as income/expense.

iv. Pension - The Company has discontinued the Defined Pension Benefit scheme with effect from 1st May 2009 and all the employees who were members of the erstwhile Defined Pension Benefit scheme has been brought under the Defined Contribution scheme for benefit provisions under the Pension plan. The present value of benefit obligation is actuarially determined at the end of each year by discounting the present value of crystallised pension as at 30th April 2009. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.

v. Retirement Benefit - Liability accrued during the year in respect of retirement benefit payable to certain employees governed by agreement with the Union representing them are treated as a defined benefit plan. As per the scheme, a lump sum benefit is paid to the eligible employees on cessation of service with the Company. The Company's liability is actuarially determined using the PUC method at the end of each year. Actuarial gains/ losses are recognized immediately in the Statement of Profit and Loss as income/expense.

(c) Other Long-term Employee Benefits (unfunded)

The cost of providing other long-term employee benefits (Leave Encashment) is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains and losses and past service cost are recognized immediately in the Statement of Profit and Loss for the period in which they occur. Other long-term employee benefit obligation recognized in the Balance Sheet represents the present value of related obligation.

(d) Terminal benefits are recognized as expense as and when incurred.

Notes to the Financial Statements

PROVISIONS AND CONTINGENT LIABILITIES

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

A disclosure for contingent liabilities is made 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.

TAXATION

Current tax represents the amount that otherwise would have been payable under the Income-Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws. (Also refer Note 29).

Deferred tax is provided on timing differences between taxable income and accounting income measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized only if there is a virtual / reasonable certainty, as applicable, in keeping with Accounting Standard 22 on 'Accounting for Taxes on Income' that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are reviewed for the appropriateness of their respective carrying amount at each Balance Sheet date.

LEASES

Leases in which a significant portion of the risks and rewards of ownership are retained by the lesser are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight- line basis over the period of lease.

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Dec 31, 2014

Not Available.

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Dec 31, 2013

BASIS OF PREPARATION

These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. These financial statements have been prepared to comply, in all material aspects, with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as amended] and the other relevant provisions of the Companies Act, 1956 (the ''Act'').

All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule VI to the Act.

FIXED ASSETS

Fixed Assets are stated at cost of acquisition less accumulated depreciation/amortisation and accumulated impairment losses, if any.

Cost comprises cost of acquisition including non-refundable taxes/duties, freight and other incidental expenses related to acquisition and installation.

Subsequent expenditures related to an item of fixed asset (tangible or intangible) are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

DEPRECIATION AND AMORTISATION

Depreciation on tangible fixed assets is provided over the estimated useful lives of the assets in accordance with Schedule XIV to the Act as under:

(i) On Plant and Machinery and Computers added during the period 1st November 1977 to 31st October 1987 on Straight Line Method, on the basis of specified period [within the meaning of Section 205(2)(b) of the Act] determined in the year of acquisition, at rates prescribed under the Income Tax Act, 1961 and rules framed thereunder, as was in force during the relevant financial year.

(ii) On Plant and Machinery added from 1st November 1987, on Straight Line Method at rates specified in Schedule XIV to the Act as existing at the time of capitalisation.

(iii) On Silos and Rollers included in Plant and Machinery added from 1st January 2006, on Straight Line Method @ 20%.

(iv) On Research Equipment added from 1st January 2003, on Straight Line Method @ 25%.

(v) On Air conditioners, on Written Down Value Method @ 13.91%.

(vi) On Computers added from 1st November 1987, on Straight Line Method @ 25%.

(vii) On all other assets, on Written Down Value Method, at rates specified in Schedule XIV to the Act.

(viii) All assets costing Rs 5,000 or less are fully depreciated in the year of additions.

(ix) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

Leasehold land is amortised on straight-line basis over the lease period. Intangible assets (Computer Software) are amortised on a straight-line basis over a period of four years.

IMPAIRMENT

Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired.

An impairment loss, if any, is recognised wherever the carrying amount of the fixed assets exceeds the recoverable amount i.e. the higher of the assets'' net selling price and value in use.

After impairment, depreciation is provided on the revised carrying amount of the fixed asset over its remaining useful life.

INVESTMENTS

Investments that are readily realisable and are intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Long-term investments are carried at cost less write down for any diminution, other than temporary, in carrying value.

INVENTORIES

Inventories are valued at lower of cost and net realisable value.

Cost is determined on first-in-first-out formula for all categories of inventories except stores and spare parts for which it is determined under weighted average formula.

Cost includes expenditure incurred in normal course of business in bringing inventories to its present location, condition, labour and overheads, where applicable.

Inventories are written down for obsolete / slow-moving/ non-moving items, wherever necessary.

FOREIGN CURRENCY TRANSACTIONS AS APPLICABLE UNDER ACCOUNTING STANDARD 11 ON ''THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES''

Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. At the year- end, monetary assets and liabilities denominated in foreign currencies are restated at the year-end exchange rates. The resultant exchange differences arising from settlement of foreign currency transactions and from the year-end restatement are recognised in the Statement of Profit and Loss.

Premium or discount arising at the inception of a forward exchange contract entered into to hedge an existing asset / liability is amortised as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

DERIVATIVE CONTRACTS

In respect of derivative contracts (other than forward exchange contracts covered under Accounting Standard 11 on ''The Effects of Changes in Foreign Exchange Rates''), gains/losses on settlement and mark-to-market loss, if any, on outstanding contracts as at the Balance Sheet date are recognised in the Statement of Profit and Loss and mark-to- market gain, if any, on outstanding contracts as at the Balance Sheet date is ignored.

Refer Note on Foreign Currency Transactions above for forward exchange contracts covered under Accounting Standard 11 on ''The Effects of Changes in Foreign Exchange Rates''.

REVENUE

Revenue from sale of goods are recognised when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. It includes excise duty but excludes value added tax/sales tax, trade discounts, returns, as applicable.

BORROWING COSTS

Borrowing costs, if any, attributable to the acquisition and construction of qualifying assets (i.e., the assets that necessarily take a substantial period of time to get ready for their intended use) are added to the cost up to the date when such assets are ready for their intended use. Other borrowing costs are recognised as expense in the period in which these are incurred.

RESEARCH & DEVELOPMENT EXPENDITURE (R & D)

Revenue expenditure on R&D is expensed in the period in which it is incurred. Capital expenditure on Development is capitalised on compliance with the provisions of the Accounting Standard 26 on ''Intangible Assets''

EMPLOYEE BENEFITS

(a) Short-term Employee Benefits

Short term Employee Benefits (i.e. benefits falling due within one year after the end of the period in which employees render the related service) are recognised as expense in the period in which employee services are rendered as per the Company''s scheme based on expected obligations on undiscounted basis.

(b) Post-Employment Benefit Plans

Post-employment benefits comprise of Provident Fund, Superannuation Fund, Gratuity, Pension and Retirement Benefits which are accounted for as follows:

i. Provident Fund - Certain employees of the Company receive provident fund benefits, which are administered by the Provident Fund Trust set up by the Company. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employees and the Company make monthly contributions at specified percentage of the employees'' salary to such Provident Fund Trust. The Company has an obligation to fund any shortfall in return on plan assets over the interest rates prescribed by the authorities from time to time. In view of the Company''s obligation to meet the shortfall, this is a defined benefit plan. Actuarial valuation of the Company''s liability under such scheme is carried out under the Projected Unit Credit (PUC) Method at the year end and the charge/ gain, if any, is recognized in the Statement of Profit and Loss. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.

ii. Superannuation Fund - This is a defined contribution plan. The Company contributes a certain percentage of the eligible salary for employees covered under the scheme towards superannuation fund administered by the Trustees. The Company has no further obligations for future superannuation benefits other than its contributions and recognizes such contributions as expense in the period in which the related employee services are rendered.

iii. Gratuity - This is a defined benefit plan covering eligible employees. As per the scheme, the Gratuity Fund Trust administered by trustees, makes 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. Vesting occurs upon completion of five years of service. The liability is determined based on year-end actuarial valuation using PUC Method. Actuarial gains/losses are recognised immediately in the Statement of Profit and Loss as income/expense.

iv. Pension - The Company has discontinued the Defined Pension Benefit scheme with effect from 1st May 2009 and all the employees who were member of the erstwhile Defined Pension Benefit scheme has been brought under the Defined Contribution scheme for benefit provisions under the Pension plan. The present value of benefit obligation is actuarially determined using the PUC method at the end of each year by discounting the present value of crystallised pension as at 30th April 2009. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.

v. Retirement Benefit - Liability accrued during the year in respect of retirement benefit payable to certain employees governed by agreement with the Union representing them are treated as a defined benefit plan. As per the Scheme, a lump sum benefit is paid to the eligible employees on cessation of service with the Company. The Company''s liability is actuarially determined using the PUC method at the end of each year. Actuarial gains/ losses are recognised immediately in the Statement of Profit and Loss as income/expense.

(c) Other Long-term Employee Benefits (unfunded)

The cost of providing other Long-term Employee Benefits (Leave Encashment) is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each Balance Sheet date. Actuarial gains/losses and past service cost are recognised immediately in the Statement of Profit and Loss for the period in which they occur. Other Long-term Employee Benefit obligation recognised in the Balance Sheet represents the present value of related obligation.

(d) Terminal benefits are recognised as expense as and when incurred.

PROVISIONS AND CONTINGENT LIABILITIES

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

A disclosure for contingent liabilities is made 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.

TAXATION

Current tax represents the amount that otherwise would have been payable under the Income Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws (also refer Note 29).

Deferred tax is provided on timing differences between taxable income and accounting income measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised only if there is a virtual / reasonable certainty, as applicable, in keeping with Accounting Standard 22 on ''Accounting for Taxes on Income'' that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are reviewed for the appropriateness of their respective carrying amount at each Balance Sheet date.

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 on a straight-line basis over the period of lease.

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Dec 31, 2012

ACCOUNTING CONVENTION

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

Basis of Accounting

Financial statements are prepared in accordance with the historical cost convention.

All assets and liabilities have been classified as current and non-current as per Company''s normal operating cycle and other criteria set in revised Schedule VI to the Companies Act, 1956 based on the nature of products and the time between the acquisition of assets for processing and the realization in cash and cash equivalents.

TANGIBLE ASSETS

- Fixed assets are stated at their original cost (including cost incidental to acquisition) less depreciation.

- Loss on scrapping of Fixed Assets and profit or losses on sale of Fixed Assets are included in the Statement of Profit and Loss and calculated as the difference between the value realized and the book value.

Depreciation is provided in accordance with Section 205 read with Schedule XIV to the Companies Act, 1956(Act), in the following manner:

(i) On Plant and Machinery and Computers added during the period 1st November 1977 to 31st October 1987 on Straight Line Method, on the basis of specified period (within the meaning of Section 205(2)(b) of the Act) determined in the year of acquisition, at rates prescribed under the Income Tax Act, 1961 and rules framed thereunder, as was in force during the relevant financial year.

(ii) On Plant and Machinery added from 1st November 1987, on Straight Line Method at rates specified in Schedule XIV to the Act as existing at the time of capitalisation.

(iii) On Silos and Rollers included in Plant and Machinery added from 1st January 2006, on Straight Line Method @ 20%.

(iv) On Research Equipment added from 1 st January 2003, on Straight Line Method @ 25%.

(v) On Air conditioners, on WrittenDown Value Method@ 13.91%.

(vi) On Computers added from 1 st November 1987, on Straight Line Method @ 25%.

(vii) On all other assets, on Written Down Value Method, at rates specified in Schedule XIV to the Act.

(viii) All assets costing Rs 5,000 or less are fully depreciated in the year of additions.

(ix) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

(x) Leasehold land is amortized over the period of the lease and freehold land is not depreciated.

Cash generating units/assets are assessed for possible impairment at Balance Sheet dates based on external and internal sources of information. Impairment loses, if any, is recognised as an expense in the Statement of Profit and

INTANGIBLE ASSETS

Intangible assets (not internally generated) are recognised only when future economic benefits attributable to the assets will flow to the enterprises and cost can be measured reliably and are being amortized in equal instalments over its useful life of four years.

ASSETS ACQUIRED UNDER LEASE

For assets acquired under operating lease, rentals payable are charged to the Statement Profit and Loss.

INVENTORIES

Inventories are valued at the lower of cost and net realizable value.

Cost comprise of all cost of purchase and other cost incurred in bringing the inventories to their present location and condition. In determining the cost, the FIFO method is used for all categories of inventories except Stores and Spare parts.

In respect of finished goods / intermediates, cost includes relevant overheads calculated on bases appropriate to the business carried on by the Company.

Stores and Spare parts are valued at weighted average cost.

INVESTMENTS

Long term investments are stated at cost, and where applicable, provision is made against diminution in value. Profit or Loss on sale of investment are included in the Statement of Profit and Loss and calculated as the difference between the net proceeds realised and the book value. Dividends are accounted for in the year in which it is received.

EMPLOYEE BENEFITS

a) Contribution to Superannuation Fund are recognized in the Statement of Profit and Loss on accrual basis.

Contribution to Superannuation scheme are made to a separate fund administered by an Insurance Company.

b) Defined Benefit Plan-

i. Gratuity - The Company provides for Gratuity, a Defined Benefit plan covering the eligible employees in accordance with the Payment of Gratuity Act, 1972 .The Company''s liability is actuarially determined using the Projected Unit Credit (PUC) method at the end of each year.

ii. Pension - The Company has discontinued the Defined Pension Benefit scheme with effect from 1 st May 2009 and all the employees who were erstwhile member of the Defined Pension benefit scheme has been brought under the Defined Contribution scheme for benefit provisions under the Pension plan. The present value of benefit obligation is actuarially determined using the PUC method at the end of each year by discounting the present value of crystallized pension as at 30th April 2009.

iii. Retirement Benefit - Liability accrued during the year in respect of retirement/ terminal benefit payable to certain employees governed by agreement with the Union representing them are treated as a defined benefit plan . The Company''s liability is actuarially determined using the PUC method at the end of each year.

iv. Leave Encashment - Liability accrued upto the close of the year for encashment of leave not availed by certain categories of employees as stipulated in their respective terms of employment are treated as a defined benefit plan. The Company''s liability is actuarially determined using the PUC method at the end of each year.

v. Trust Administered Provident Fund — Provident fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust are not lower than the statutory rate of interest declared by the Central Government. Any interest shortfall are actuarially determined using the . deterministic method at the end of the year and provided for in the accounts, however contribution for the shortfall are made good by the Company on a year to year basis.

Acturial gains and losses are recognized in the Statement of Profit & Loss in the year in which they arise.

c) As per service rules, part of the leave accrued during the year, which cannot be accumulated are accounted for on accrual basis and charged to Statement of Profit and Loss as short term benefit.

d) Terminal benefits are recognized as expense as and when incurred.

SALES

Sales are recognized when goods are supplied in accordance with the terms of the sale and are inclusive of Excise Duty and net of turnover discount.

TRANSACTIONS IN FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for in the following manner:

(a) In case of forward exchange contract the premium or discount arising at the inception of such contract is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the Statement of Profit and Loss in reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

(b) Foreign currency transactions not covered by forward exchange contracts are accounted for at exchange rates prevailing at the date of the transaction. Gains / losses arising from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss.

BORROWING COST

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised till substantial completion of all the activities that are necessary for this purpose. Other borrowing costs are charged to revenue.

ACCOUNTING FOR TAXES ON INCOME

Current Tax represents the amount that otherwise would have been payable under the Income Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws.

Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

RESEARCH AND DEVELOPMENT

Revenue expenditure incurred on Research and Development is charged to revenue. Capital expenditure incurred for Research and Development is included under Fixed Assets

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Dec 31, 2011

FIXED ASSETS

- Fixed assets are stated at their original cost (including cost incidental to acquisition) less depreciation.

- Loss on scrapping of Fixed Assets and profit or loss on sale of Fixed Assets are included in the Profit & Loss Account and calculated as the difference between the value realized and the book value.

Depreciation is provided in accordance with Section 205 read with Schedule XIV to the Companies Act, 1956 (Act), in the following manner:

(i) On Plant and Machinery and Computers added during the period 1st November 1977 to 31st October 1987 on Straight Line Method, on the basis of specified period (within the meaning of Section 205(2)(b) of the Act) determined in the year of acquisition, at rates prescribed under the Income Tax Act, 1961 and Rules framed thereunder, as was in force during the relevant financial year.

(ii) On Plant and Machinery added from 1st November 1987, on Straight Line Method at rates specified in Schedule XIV to the Act as existing at the time of capitalisation.

(iii) On Silos and Rollers included in Plant and Machinery added from 1st January 2006, on Straight Line Method @20%.

(iv) On Research Equipment added from 1st January 2003, on Straight Line Method @25%.

(v) On Air conditioners, on Written Down Value Method @ 13.91%.

(vi) On computers added from 1st November 1987, on Straight Line Method @25%.

(vii) On all other assets, on Written Down Value Method, at rates specified in Schedule XIV to the Act.

(viii) All assets costing Rs 5,000 or less are fully depreciated in the year of additions.

(ix) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

(x) Leasehold land is amortized over the period of the lease and freehold land is not depreciated.

Cash generating units/assets are assessed for possible impairment at balance sheet dates based on external and internal sources of information. Impairment loses, if any, recognised as an expense in the Profit & Loss Account.

INTANGIBLE ASSETS

Intangible Assets (not internally generated) are recognised only when future economic benefits attributable to the assets will flow to the enterprises and cost can be measured reliably and are being amortized in equal installments over its useful life of four years.

ASSETS ACQUIRED UNDER LEASE

For assets acquired under operating lease, rentals payable are charged to Profit & Loss Account.

INVENTORIES

Inventories are valued using weighted average cost formula and are valued at the lower of cost and net realizable value.

In respect of finished goods, cost, which comprises of expenditure incurred in the normal course of business in bringing inventories to their location and condition including relevant overheads, is calculated on basis appropriate to the business carried on by the Company. Excise duty payable on finished goods lying in the factory of manufacture are included in the value of closing stock after creating suitable provision for the liability. In respect of Intermediates, cost includes attributable production overheads.

Cost for raw material includes expenditure incurred in the normal course of business in bringing inventories to their present location. Customs Duty payable for materials cleared from port but kept in bonded warehouse are included in the value of closing stock after creating suitable provision for liability.

INVESTMENT

Long term investments are stated at cost, and where applicable, provision is made against diminution in value. Profit or loss on sale of investment are included in the Profit & Loss Account and calculated as the difference between the net proceeds realised and the book value. Dividends are accounted for in the year in which they are received.

RETIREMENT/TERMINAL BENEFITS

a) Contribution to Superannuation and Provident Fund Schemes are recognized in the Profit & Loss Account on accrual basis. Provident Fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the Trust is not lower than the statutory rate of interest declared by the Central Government. Contribution for the shortfall is made good by the Company on a year to year basis. Contribution to Superannuation Scheme is made to a separate fund administered by Insurance Company.

b) The following Defined Benefit Plans are provided for based on valuations as at the Balance Sheet date, made by independent actuaries:

i. Liability for Gratuity.

ii. Expected annual cost of providing pension to management staff as per respective conditions of their employment.

iii. Liability accrued during the year in respect of retirement/terminal benefit payable to certain employees governed by agreement with the Union representing them.

iv. Liability accrued up to the close of the year for encashment of leave not availed by the management staff as stipulated in their respective terms of employment.

c) Actuarial gains or losses are charged to Profit & Loss Account.

d) As per service rules, part of the leave accrued during the year, which cannot be accumulated are accounted for on accrual basis and charged to Profit & Loss Account as short term benefit.

e) Terminal benefits are recognized as expense as and when incurred.

SALES

Sales are recognized when goods are supplied in accordance with the terms of the sale and are inclusive of excise duty and net of turnover discount. *"

TRANSACTIONS IN FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for in the following manner:

(a) In case of forward exchange contract, the premium or discount arising at the inception of a such contract is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the statement of Profit & Loss in reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

(b) Foreign currency transactions not covered by forward exchange contracts are accounted for at exchange rates prevailing at the date of the transaction. Gains/losses arising from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit & Loss Account

BORROWING COST

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised till substantial completion of all the activities that are necessary for this purpose. Other borrowing costs are charged to revenue.

ACCOUNTING FOR INCOME TAX

Current Tax represents the amount that otherwise would have been payable under the Income Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws.

Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets are not recognised unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

RESEARCH AND DEVELOPMENT

Revenue expenditure incurred on Research and Development is charged to revenue. Capital expenditure incurred for Research and Development is included under Fixed Assets.

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Dec 31, 2010

ACCOUNTING CONVENTION

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notified under Section 21K3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

FIXED ASSETS

- Fixed Assets are stated at their original cost (including cost incidental to acquisition) less depreciation.

- Loss on scrapping of Fixed Assets and profit or losses on sale of Fixed Assets are included in the Profit & Loss Account and calculated as the difference between the value realized and the book value.

Depreciation is provided in accordance with Section 205 read with Schedule XIV to the Companies Act, 1956(Act), in the following manner:

(i) On Plant and Machinery and Computers added during the period 1st November, 1977 to 31st October, 1987 on Straight Line Method, on the basis of specified period (within the meaning of Section 205(2)(b) of the Act) determined in the year of acquisition, at rates prescribed under the Income Tax Act, 1961 and Rules framed thereunder, as was in force during the relevant financial year.

(ii) On Plant and Machinery added from 1st November, 1987, on Straight Line Method at rates specified in Schedule XIV to the Act as existing at the time of capitalisation.

(iii) On Silos and Rollers included in Plant and Machinery added from 1st January, 2006, on Straight Line Method @ 20%.

(iv) On Research Equipment added from 1st January, 2003, on Straight Line Method @ 25%.

(v) On Air conditioners, on Written Down Value Method @ 13.91%).

(vi) On computers added from 1st November, 1987, on Straight Line Method @ 25%).

(vii) On all other assets, on Written Down Value Method, at rates specified in Schedule XIV to the Act.

(viii) All assets costing Rs.5,000 or less are fully depreciated in the year of additions.

(ix) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

(x) Leasehold land is amortized over the period of the lease and freehold land is not depreciated. Cash generating units/assets are assessed for possible impairment at balance sheet dates based on external and internal sources of information. Impairment loses, if any, recognised as an expense in the Profit and Loss Account.

INTANGIBLE ASSETS

Intangible Assets (not internally generated) are recognised only when future economic benefits attributable to the assets will flow to the enterprises and cost can be measured reliably and are being amortized in equal instalments over its useful life of four years.

ASSETS ACQUIRED UNDER LEASE

For Assets acquired under operating lease, rentals payable are charged to Profit & Loss Account.

INVENTORIES

Inventories are valued using weighted average cost formula and are valued at the lower of cost and net realizable value.

In respect of finished goods, cost, which comprises of expenditure incurred in the normal course of business in bringing inventories to their location and condition including relevant overheads, is calculated on bases appropriate to the business carried on by the Company. Excise Duty payable on finished goods lying in the factory of manufacture are included in the value of closing stock after creating suitable provision for the liability.

In respect of Intermediates cost includes attributable production overheads.

Cost for raw material includes expenditure incurred in the normal course of business in bringing inventories to their present location. Customs Duty payable for materials cleared from port but kept in bonded warehouse are included in the value of closing stock after creating suitable provision for liability.

INVESTMENTS

Long term investments are stated at cost, and where applicable, provision is made against diminution in value. Profit or Loss on sale of investment are included in the Profit & Loss Account and calculated as the difference between the net proceeds realised and the book value. Dividends are accounted for in the year in which it is received.

RETIREMENT/TERMINAL BENEFITS

(i) Contribution to defined contribution plans like Superannuation and Provident Fund Schemes are recognized in the Profit & Loss account on accrual basis. Provident fund contributions are made to a Trust administered by the Company. The interest rate payable to the members of the trust are not lower than the statutory rate of interest declared by the Central Government and shortfall, if any, is made good by the Company. Contribution to Superannuation Scheme is made to a separate fund administered by an Insurance Company.

(if) The following defined benefit plans are provided for based on valuations, as at the Balance Sheet date, made by independent actuaries:

(a) Liability for Gratuity;

(b) expected annual cost of providing pension to management staff as per respective conditions of their employment;

(c) liability accrued during the year in respect of retirement/terminal benefit payable to certain employees governed by agreement with the Union representing them;

Cd) liability accrued upto the close of the year for encashment of leave not availed by the management staff as stipulated in their respective terms of employment.

(iii) Actuarial gains or losses are charged to Profit & Loss Account.

(iv) As per service rules, part of the leave accrued during the year, which cannot be accumulated are accounted for on accrual basis and charged to Profit & Loss Account as short term benefit.

(v) Terminal Benefits are recognized as expenses as and when incurred.

SALES

Sales are recognized when goods are supplied in accordance with the terms of the sale and are inclusive of Excise Duty and net of turnover discount.

TRANSACTIONS IN FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for in the following manner:

(i) In case of forward exchange contract the premium or discount arising at the inception of a such contract is amortized as expense or income over the life of the contract. Exchange differences on such a contract are recognised in the statement of Profit & Loss Account in reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

(ii) Foreign currency transactions not covered by forward exchange contracts are accounted for at exchange rates prevailing at the date of the transaction. Gains/Losses arising from the settlement of such transactions and from the translation of monetary Assets and Liabilities denominated in foreign currencies are recognised in the Profit & Loss Account.

BORROWING COSTS

Borrowing Costs that are directly attributable to the acquisition or construction of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised till substantial completion of all the activities that are necessary for this purpose. Other borrowing costs are charged to revenue.

ACCOUNTING FOR INCOME TAX

Current Tax represents the amount that otherwise would have been payable under the Income Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws.

Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax assets are not recognised unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

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Dec 31, 2009

ACCOUNTING CONVENTION

The financial statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.

FIXED ASSETS

- Fixed assets are stated at their original cost (including cost incidental to acquisition) less depreciation.

- Loss on scrapping of Fixed Assets and profit or losses on sale of Fixed Assets are included in the Profit & Loss Account and calculated as the difference between the value realized and the book value.

Depreciation is provided in accordance with Section 205 read with Schedule XIV of the Companies Act, 1956 (Act), in the following manner:

(i) On Plant and Machinery and Computers added during the period 01.11.1977 to 31-10.1987 on Straight Line Method, on the basis of specified period (within the meaning of Section 205(2)(b) of the Act) determined in the year of acquisition, at rates prescribed under the Income Tax Act, 1961 and rules framed thereunder, as was in force during the relevant financial year.

(ii) On Plant and Machinery added from 01.11.1987, on Straight Line Method at rates specified in Schedule XIV of the Act as existing at the time of capitalisation.

(iii) On Silos included in Plant and Machinery added from 01.01.2006, on Straight Line Method @ 20%.

(iv) On Research Equipment added from 01.01.2003, on Straight Line Method @ 25%.

(v) On Airconditioners, on Written Down Value Method @ 13-91%.

(vi) On Computers added from 01.11.1987, on Straight Line Method @ 25%).

(vii) On all other assets, on Written Down Value Method, at rates specified in Schedule XIV to the Act.

(viii) All Assets costing Rs.5,000 or less are fully depreciated in the year of additions.

(ix) In respect of assets acquired, sold or discarded during the period, prorated depreciation, for the period during which each such asset was in use, after rounding off part of the month to the whole month.

(x) Leasehold Land is amortized over the period of Lease and Freehold Land is not depreciated.

Cash generating units/assets are assessed for possible impairment at balance sheet dates based on external and internal sources of information. Impairment loses, if any, recognised as an expense in the Profit & Loss Account.

EVTANGIBLE ASSETS

Intangible Assets are recognised only when future economic benefits attributable to the assets will flow to the enterprises and cost can be measured reliably and are being amortized in equal instalments over its useful life of four years.

ASSETS ACQUIRED UNDER LEASE

For assets acquired under operating lease, rentals payable are charged to Profit & Loss Account.

INVENTORIES

Inventories are valued using weighted average cost formula and are valued at the lower of cost and net realizable value.

In respect of finished goods, cost, which comprises of expenditure incurred in the normal course of business in bringing inventories to their location and condition including relevant overheads, is calculated on bases appropriate to the business carried on by the Company. Excise Duty payable on finished goods lying in the factory of manufacture are included in the value of Closing Stock after creating suitable provision for the liability.

In respect of Intermediates Cost includes attributable production overheads.

Cost for raw materials include expenditure incurred in the normal course of business in bringing inventories to their present location. Customs Duty payable for materials cleared from port but kept in bonded warehouse are included in the value of Closing Stock after creating suitable provision for liability.

INVESTMENTS

Long term investments are stated at cost, and where applicable, provision is made against diminution in value. Profit or Loss on sale of investment are included in the Profit & Loss Account and calculated as the difference between the net proceeds realised and the book value. Dividend is accounted for in the year in which it is received.

RETIREMENT/TERMINAL BENEFITS

(i) Contribution to Defined Contribution Superannuation Scheme and Provident Fund are recognized in the Profit & Loss Account on accrual basis. Provident Fund Contributions are made to a Trust administered by the Company. The interest rate payable to the members of the trust are not lower than the statutory rate of interest declared by the Central Government and shortfall, if any, shall be made good by the Company. Contribution to Superannuation Scheme are made to a separate fund administered by an Insurance Company.

(ii) The following are the defined benefit obligation and are provided for based on valuations, as at the Balance Sheet date, made by independent actuaries:

a) liability for Gratuity

b) expected annual cost of providing pension to management staff as per respective conditions of their employment.

c) liability accrued during the year in respect of retirement/terminal benefit payable to certain employees governed by agreement with the Union/representing them.

d) liability accrued upto the close of the year for encashment of leave not availed by the management staff as stipulated in their respective terms of employment.

iii) Actuarial gains or losses are charged to Profit & Loss Account.

iv) As per service rules, part of the leave accrued during the year are accounted for on accrual basis and charged to Profit & Loss Account as a short term benefit.

v) Terminal Benefits are recognized as expenses as and when incurred.

SALES

Sales are recognized when goods are supplied in accordance with the terms of the sale and are inclusive of excise duty and net of turnover discount.

TRANSACTIONS IN FOREIGN CURRENCIES

Transactions in foreign currencies are accounted for in the following manner:

(i) In case of forward exchange contract the premium or discount arising at the inception of a such contract is amortized as expense or income over the life of. the contract. Exchange differences on such a contract are recognised in the statement of Profit & Loss in reporting period in which the exchange rates changed. Profit or loss arising on cancellation or renewal of forward contract is recognised as income or expense of the period.

(ii) Foreign currency transactions not covered by forward exchange contracts are accounted for at exchange rates prevailing at the date of the transaction. Gains/losses arising from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Profit & Loss Account.

BORROWING COSTS

Borrowing Costs that are directly attributable to the acquisition or construction of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised till substantial completion of all the activities that are necessary for this purpose. Other borrowing costs are charged to revenue.

ACCOUNTING FOR INCOME TAX

Current Tax represents the amount that otherwise would have been payable under the Income Tax Act, 1961 had this financial year been reckoned as the basis for computation of tax payable under the prevailing taxation laws.

Deferred Tax is recognised, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets are not recognised unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.