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Accounting Policies of Essel Propack Ltd. Company

Mar 31, 2015

I. Basis of preparation

The financial statements are prepared on going concern basis in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) and comply in all material respects with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI). The financial statements have been prepared on accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of these financial statements are consistent with those of previous year.

ii. Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amount of revenue and expenses for the year. Actual results could differ from these estimates. Any revision to such accounting estimate is recognised prospectively in current and future periods.

iii. Tangible and Intangible fixed assets

a) Tangible fixed assets (excluding freehold land which is carried at cost) are stated at original cost of acquisition/ installation (net of cenvat credit availed) and includes amounts added on revaluation less accumulated depreciation and impairment loss, if any. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of income) and borrowing costs incurred during pre-operational period.

b) Capital work-in-progress comprises cost of tangible fixed assets and related expenses that are not yet ready for their intended use at the reporting date.

c) Intangible assets acquired are measured on initial recognition at cost and stated at cost less accumulated amortization and impairment loss, if any.

iv. Borrowing costs

a) Borrowing costs attributable to the acquisition or construction of qualifying assets till the time such assets are ready for intended use, are capitalised as part of the cost of the assets. All other borrowing costs are expensed in the period they occur.

b) Ancillary costs incurred in connection with the arrangement of borrowings are amortised over the tenure of such borrowings.

v. Impairment of tangible and intangible assets

At each Balance Sheet date, the Company reviews the carrying amount of assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi. Depreciation/Amortisation on tangible and intangible assets

a) Depreciation on tangible fixed assets (including on assets acquired under finance lease) is provided on straight line method based on the useful lives specified in Schedule II of the Companies Act, 2013. Based on the management

b) Premium on Leasehold Land and Leasehold Improvements are amortised over the normal/extendable period of lease.

c) In case of revalued tangible fixed assets, the incremental depreciation attributable to the revaluation is recouped out of revaluation reserve.

d) Intangible assets are amortized on a straight-line basis over the economic useful life estimated by the management.

vii. Government grants/subsidies

Grants and subsidies from Government are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grant or subsidy will be received. Government grants in the nature of promoter''s contribution are credited to capital reserve and treated as part of the Shareholder''s fund.

viii. Investments

a) Investments, which are readily realisable and 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 including investment property are classified as long-term investments.

b) Current investments are stated at lower of cost and fair market value determined on an individual investment basis. Long-term investments are stated at cost less provision for diminution other than temporary in the value of such investments.

ix. Foreign currency transactions

a) Foreign currency transactions are recorded at the exchange rate prevailing on the date of such transaction. Foreign currency monetary assets and liabilities are translated using the exchange rate prevailing at the reporting date. Non- monetary foreign currency items are carried at cost.

b) Gains or losses arising on settlement /translation of foreign currency monetary assets and liabilities at the year-end rates are recognised in the Statement of Profit and Loss except treatment as per amendment to AS-11 effective till 31 March 2020 (Refer note 32).

c) In case of foreign currency monetary assets and liabilities covered by forward contracts, the difference between the year-end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contract is recognised over the life of the contract. Profit or loss on settlement / cancellation of forward contract is recognised as an income or expense for the year in which they arise except treatment as per amendment to AS-11 effective till 31 March 2020. (Refer note 32).

x. Revenue recognition

a) Revenue from sale of goods is recognised on transfer of significant risks and rewards of ownership to the customers. Gross sales include excise duty and is net of sales return, discount, value added tax / sales tax. Export sales are accounted for on the basis of date of bill of lading.

b) Income from royalty and service charges is recognised as per the agreed terms / completion of the service.

c) Export incentives / benefits are accounted on accrual basis.

d) Dividend income is recognised when the right to receive the dividend is established.

e) Interest income is recognised on a time proportion basis taking into consideration the amount outstanding and the applicable interest rate.

xi. Inventories

a) Inventories are valued at lower of cost or estimated net realisable value.

b) Cost of raw materials, packing materials and store and spares are determined on moving average cost method.

c) Cost of finished goods and goods-in-process includes cost of direct materials, labour and other manufacturing overheads.

d) Excise liability is included in the valuation of inventory of finished goods.

xii. Retirement and other employee benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the employee renders the service.

b) Post-employment and other long-term benefits are recognised as an expense in the Statement of Profit and Loss at the present value of the amounts payable determined using actuarial valuation techniques in the year the employee renders the service. Actuarial gains and losses are charged to the Statement of Profit and Loss.

c) Payments to defined contribution retirement benefit schemes are expensed as they fall due.

xiii. Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year as per the provisions of the Income Tax Act, 1961.

b) Deferred taxis recognised, subject to 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 and measured using relevant enacted tax rates.

c) Minimum Alternate Tax (MAT) paid in accordance with tax laws, which give rise to future economic benefits in the form of adjustment of future tax liability, is recognized as an asset only when, based on convincing evidence, it is probable that the future economic benefits associated with it will flow to the Company and the assets can be measured reliably.

xiv. Lease

a) Finance Lease

Assets acquired on long-term leases, which in economic terms constitute investments financed on a long-term basis i.e. finance lease, are capitalised and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs directly attributable to the lease are recognised with the asset under the lease.

b) Operating Lease

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

xv. Earnings per share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.

xvi. Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognised when there is present obligation as a result of past events and it is probable that there will be an outflow of resources. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the financial statements. Contingent assets are neither recognised nor disclosed in the financial statements.

f) Employees Stock Option Scheme (ESOPS):

During the year, the Company has instituted an Essel Employee Stock Option Scheme 2014 ("the Scheme") as approved by the Board of Directors for issuance of stock options to the eligible employees of the Company and of its subsidiaries, other than directors, promoters or person belonging to promoter group.

Pursuant to the said scheme, stocks options convertible into 29,53,000 equity shares of Rs. 2 each were granted to eligible employees at an exercise price ofRs. 121.65, being the market price as defined in the Securities and Exchange Board of India (Share Based Employee Benefits) Regulation, 2014 (SEBI Regulation). In view of there being no intrinsic value on the date of the grant (being the excess of market price of share under the Scheme over the exercise price of the option), the Company is not required to account for the value of options as per the SEBI Regulations.

Subject to terms and conditions of the Scheme, the said options will vest on each of 1 July 2016,1 July 2017 and 1 July 2018 to the extent mentioned in the letter of grant and can be exercised within a maximum period of four years from the date of vesting.

g) No bonus shares have been issued and no shares bought back during five years preceding 31 March 2015.

h) 5,00,155 equity shares ofRs. 2 each fully paid up were allotted on 14 September 2012 for consideration other than cash, purusant to the Scheme of merger of Ras Propack Lamipack Limited and Ras Extrusions Limited with the Company.

i) During the year, the Company issued demand cum forfeiture notice to 129 shareholders holding 71,650 partly paid equity shares {Refer 3(c) above}. Subsequently, the Company has received balance call amount due alongwith interest from 13 shareholders holding 35,925 partly paid equity shares; and shareholders holding the balance 35,725 partly paid equity shares have failed to pay the balance due call amount alongwith interest and the Board in its meeting held on 29 January 2015 approved forfeiture of the said 35,725 partly paid equity shares alongwith 21,395 bonus share entitlement, aggregating to 57,120 equity shares (Refer 3 {a} above). The amount of Rs. 78,515 (representing 35,725 partly paid-up equity shares and 21,395 fully paid-up bonus shares) will be transferred to reserves upon cancellation / re-issue of these shares.

a) Of the total secured short-term borrowings

Rs. 262,154,005 (Rs. 200,346,630) are secured by first pari-passu charge on current assets and second pari-passu charge on all fixed assets of the company (except all fixed assets situated at chakan). Out of this, loan Rs. 79,200,025 (Rs. Nil) is further secured by security provided and guarantee issued by other related party*.

Rs. 8,214,083 (Rs. Nil) is secured by first pari-passu charge on current assets of the company.

*Other related party i.e. Aqualand (India) Limited


Mar 31, 2013

I. Basis of preparation

The financial statements are prepared on going concern basis in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention except and comply in all material aspects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI). The Company follows the mercantile system of accounting and recognises income and expenditure on accrual basis.

ii. Use of estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amount of revenue and expenses for the year. Actual results could differ from these estimates. Any revision to such accounting estimate is recognised prospectively in current and future periods.

iii. Tangible and intangible assets

a) Tangible assets (excluding freehold land which is carried at cost) are stated at original cost of acquisition / installation (net of cenvat credit availed) and includes amounts added on revaluation less accumulated depreciation and impairment loss, if any. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of income) and borrowing costs incurred during pre-operational period.

b) Capital work-in-progress comprises cost of fixed assets and related expenses that are not yet ready for their intended use at the reporting date.

c) Intangible assets acquired are measured on initial recognition at cost and stated at cost less accumulated amortization and impairment loss, if any.

iv. Borrowing costs

a) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. All other borrowing costs are charged to revenue.

b) Ancillary costs incurred in connection with the arrangement of borrowings are amortised over the tenure of such borrowings.

v. Impairment of tangible and intangible assets

At each Balance Sheet date, the Company reviews the carrying amount of assets to determine whether there is an indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi. Depreciation/Amortisation on tangible and intangible assets

a) Depreciation on tangible assets (including on assets acquired under finance lease) is provided on straight line method at the rates specified in Schedule XIV of the Companies Act, 1956.

b) Premium on Leasehold Land and Leasehold Improvements are amortised over the normal / extendable period of lease.

c) In case of revalued tangible assets, the incremental depreciation attributable to the revaluation is recouped out of revaluation reserve.

d) Intangible assets are amortized on a straight-line basis over the economic useful life estimated by the management.

vii. Government grants/subsidies

Grants / subsidies from Government are recognised when all the conditions relating to the grants / subsidies are complied and there is a reasonable assurance that the grant/subsidy will be received. Grant / subsidy is credited to capital reserve.

viii. Investments

Investments intended to be held for more than one year, from the date of acquisition, are classified as long-term and are carried at cost. Provision for diminution in value of long-term investments is made to recognise a decline other than temporary. Current investments are carried at cost or fair value, whichever is lower.

ix. Foreign currency transaction

a) Foreign exchange transactions are recorded at the exchange rate prevailing on the date of such transaction. Foreign currency monetary assets and liabilities are translated using the exchange rate prevailing at the reporting date. Non-monetary foreign currency items are carried at cost.

b) Gains or losses arising on settlement / translation of foreign currency monetary assets and liabilities at the year-end rates are recognised in the Statement of Profit and Loss except treatment as per amendment to AS-11 effective till 31 March 2020.

c) In case of foreign currency monetary assets and liabilities covered by forward contracts, the difference between the year-end rate and rate on the date of the contract is recognised as exchange difference and the premium paid on forward contract is recognised over the life of the contract. Profit or loss on settlement / cancellation of forward contract is recognised as an income or expense for the year in which they arise except treatment as per amendment to AS-11 effective till 31 March 2020.

x. Revenue recognition

a) Revenue from sale of goods is recognised on transfer of significant risk and rewards of ownership on to the customers, which is generally on dispatch of goods. Gross sales include excise duty and is net of sales return, discount, value added tax / sales tax. Export sales are accounted for on the basis of date of bill of lading.

b) Income from royalty and service charges is recognised as per the agreed terms / completion of the service.

c) Export incentives/benefits are accounted on accrual basis.

d) Dividend income is recognised when the right to receive the dividend is established.

e) Interest income is recognised on a time proportion basis taking into consideration the amount outstanding and the applicable interest rate.

xi. Inventories

a) Inventories are valued at lower of cost or estimated net realisable value.

b) Inventory of raw materials, packing material and store and spares are valued on moving average price method.

c) Cost of finished goods and goods-in-process includes cost of direct materials, labour and other manufacturing overheads.

d) Excise liability is included in the valuation of closing inventory of finished goods.

xii. Retirement and other employee benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.

b) Post-employment and other long-term benefits are recognised as an expense in the Statement of Profit and Loss at the present value of the amounts payable determined using actuarial valuation techniques in the year in which the employee renders the service. Actuarial gains and losses are charged to the Statement of Profit and Loss.

c) Payments to defined contribution retirement benefit schemes are charged as expenses as they fall due.

xiii. Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year.

b) 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 and measured using relevant enacted tax rates.

c) Minimum Alternate Tax (MAT) paid in accordance with tax laws, which give rise to future economic benefits in the form of adjustment of future tax liability, is recognized as an asset only when, based on convincing evidence, it is probable that the future economic benefits associated with it will flow to the Company and the assets can be measured reliably.

xiv. Leases

a) Finance Lease

Assets acquired under finance lease are capitalised and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs directly attributable to the lease are recognised with the asset under the lease.

b) Operating Lease

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

xv. Earnings per Share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.

xvi. Provisions, Contingent Liabilities and Contingent Assets

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


Mar 31, 2012

I. Basis of preparation

The financial statements are prepared on accrual basis in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention except certain freehold land and buildings acquired on merger {Refer note 11(2)} and comply in all material aspects with the accounting standards notified under section 211 (3C), Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India (SEBI).

ii. Use of estimates

The preparation of financial statements requires the management to make estimates and assumption that affect the reported amount of assets and liabilities, disclosure of contingent liabilities as at the date of financial statements and the reported amount of revenue and expenses of the year. Actual result could differ from these estimates. Any revision of such accounting estimate is recognised prospectively in current and future periods.

iii. Tangible and intangible assets

a) Tangible assets (excluding freehold land which is carried at cost) are stated at original cost of acquisition / installation (net of cenvat credit availed) net off accumulated depreciation and impairment losses except certain freehold land and buildings acquired on merger {Refer notes 11(2) and 30} are stated at revalued amount less accumulated depreciation. Cost includes cost of acquisition, construction and installation, taxes, duties, freight, other incidental expenses related to the acquisition, trial run expenses (net of income) and borrowing costs incurred during pre-operational period.

b) Capital work-in-progress comprises cost of fixed assets and related expenses that are not yet ready for their intended use at the reporting date.

c) Intangible assets acquired are measured on initial recognition at cost. Intangible assets are carried at cost less accumulated amortization and impairment loss, if any.

iv. Borrowing costs

a) Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such assets. All other borrowing costs are charged to revenue.

b) Ancillary costs incurred in connection with arrangement of borrowings are amortised over the tenure of such borrowings.

v. Impairment of tangible and intangible assets

At each Balance Sheet date, the Company reviews the carrying amount of tangible and intangible assets to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

vi. Depreciation/Amortisation on tangible and intangible assets

a) Depreciation on tangible assets (including on assets acquired under finance lease) is provided on straight line method at the rates specified in Schedule XIV of the companies Act, 1956.

b) Premium on Leasehold Land and Leasehold Improvements are amortised over the normal / extendable period of lease.

c) In case of revalued tangible assets, the incremental depreciation attributable to the revaluation is recouped out of revaluation reserve.

d) Intangible assets are amortized on a straight-line basis over the economic useful life estimated by the management.

vii. Government grants / subsidies

Grants / subsidies from government are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. Grants / subsidy received is credited to capital reserve and treated as a part of the shareholder's fund.

viii. Investments

Investments intended to be held for more than one year, from the date of acquisition, are classified as long- term and are carried at cost. Provision for diminution in value of long-term investments is made to recognise a decline other than temporary. Current investments are carried at cost or fair value, whichever is lower.

ix. Foreign currency transaction

a) Foreign exchange transactions are recorded at the exchange rate prevailing on the date of such transactions. Foreign currency monetary assets and liabilities are translated at the year-end exchange rates. Non-monetary items are carried at cost.

b) Gains or losses arising on account of difference in foreign exchange rates on settlement / translation of monetary assets and liabilities on the closing date are recognised in the Statement of Profit and Loss except treatment as per amendment to AS-11 effective till 31 March 2020 (Refer Note 32).

c) In respect of forward exchange contracts assigned to foreign currency monetary assets and liabilities, the difference due to change in exchange rate between the inception of forward contract and date of Balance Sheet and the proportionate premium / discount for the period upto the date of Balance Sheet is recognised in the Statement of Profit and Loss and profit or loss on settlement / cancellation of forward contract is recognised as an income or expense for the year in which they arise except treatment as per amendment to AS-11 effective till 31 March 2020 (Refer Note 32).

x. Revenue recongnition

a) Revenue from sale of goods is recognised on transfer of significant risk and rewards of ownership on to the customers, which is generally on dispatch of goods. Gross sales include excise duty and is net of discount, value added tax / sales tax. Export sales are accounted for on the basis of date of bill of lading.

b) Export incentives/benefits including custom duty benefits (advance licenses) are accounted on accrual basis.

c) Income from royalty and service charges is recognised as per the agreed terms / completion of the service.

d) Dividend income is recognised when the right to receive the dividend is established.

e) Interest income is recognised on a time proportion basis taking into consideration the amount outstanding and the applicable interest rate.

xi. Inventories

a) Inventories are valued at lower of cost or estimated net realisable value.

b) Inventory of raw materials, packing material and store and spares are valued on moving average price method.

c) Cost of finished goods and goods-in-process includes cost of direct materials, labour and other manufacturing overheads.

d) Excise liability is included in the valuation of closing inventory of finished goods.

xii. Employee benefits

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the Statement of Profit and loss of the year in which the related service is rendered.

b) Post-employment and other long-term benefits are recognised as an expense in the Statement of profit and loss at the present value of the amounts payable determined using actuarial valuation techniques in the year in which the employee renders services. Actuarial gains and losses are charged to the Statement of Profit and Loss.

c) Payments to defined contribution retirement benefit schemes are charged as expenses as they fall due.

xiii. Accounting for taxes on income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year.

b) 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 and measured using relevant enacted tax rates.

c) Minimum Alternate Tax (MAT) paid in accordance with tax laws, which give rise to future economic benefits in the form of adjustment of future tax liability, is recognized as an asset only when, based on convincing evidence, it is probable that the future economic benefits associated with it will flow to the Company and the assets can be measured reliably.

xiv. Leases

a) Finance Lease

Assets acquired under finance lease are capitalised and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs directly attributable to the lease are recognised with the asset under the lease.

b) Operating Lease

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

xv. Earnings per Share

Basic earnings per share is computed and disclosed using the weighted average number of equity shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except when the results would be anti-dilutive.

xvi. Provisions, Contingent Liabilities and Contingent Assets

a) Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events. A provision is made when it is probable that an outflow of resources embodying economic benefits will be required to settle an obligation and in respect of which a reliable estimate can be made. Provision is not discounted and is determined based on best estimate required to settle the obligation at the year-end date.

b) Contingent assets are not recognized or disclosed in the financial statements.


Mar 31, 2011

(i) Basis of Accounting

These financial statements have been prepared under the historical cost convention, on accrual basis and in accordance! with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

(ii) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect thel reported amounts of assets and liabilities, as of the date of financial statements and the reported amount of revenuel and expenses of the year. Actual results could differ from these estimates. The difference between the actual results andl estimates are recognized in the period in which the results are known / materialised.

(iii) Fixed Assets

a) Fixed assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net of accumulated! depreciation, amortization and impairment losses except land which is carried at cost including lease premium. The cost I of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of I the respective assets.

b) Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet including advances fori capital expenditure.

c) The capitalized cost of software includes license fees, cost of implementation and system integration services. These I costs are capitalized as intangible assets in the year in which related software is implemented.

(iv) Borrowing Costs

Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalised as part of cost of such I assets upto the date such assets are ready for intended use. Other borrowing costs are charged to revenue when incurred. I

(v) Impairment of Assets

At each Balance Sheet date, the Company reviews the carrying amount of fixed assets to determine whether there is any { ndication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use, determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

(vi) Depreciation / Amortisation

a) Depreciation on tangible fixed assets (including on fixed assets acquired under finance lease) is provided on Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956.

b) Software (intangible asset) other than (c) below, is amortised on a straight-line basis over a period of three years from the date of its implementation based on the management's estimate of useful life over which economic benefits will be derived from its use.

c) Cost of Enterprise Resource Planning (ERP) software (intangible asset) including expenditure on implementation is amortised over a period of ten years based on the management's estimate of useful life over which economic benefits will be derived from its use.

d) Premium on Leasehold Land and Leasehold Improvements are amortised over the normal / extendable period of lease

(vii) Investments

Investments intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. Provision for diminution in value of long term investments is made to recognise a decline other than temporary, in the value of such investments. Current investments are carried at lower of cost or fair value.

(viii) Foreign Currency Transactions

a) Foreign exchange transactions are recorded at exchange rates prevailing on the date of such transactions. Current monetary assets and liabilities are reported using the closing exchange rate prevailing on the last day of the year. Non monetary items are carried at cost.

b) Gains or losses arising on account of difference in foreign exchange rates on settlement / translation of monetary assets and liabilities on the closing date are recognised in the Profit and Loss account except to the extent provided under amendment to AS-11 (Refer Note 7(a)).

c) In respect of forward exchange contracts assigned to the current monetary foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of Balance Sheet and the proportionate premium / discount for the period upto the date of Balance Sheet is recognised in the Profit and Loss account. Any profit or loss on settlement / cancellation of forward contract is recognised as an income or expenses for the year in which they arise.

(ix) Revenue Recognition

a) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods. Gross Sales include excise duty but exclude value added tax / sales tax and is net of discount Export sales are accounted for on the basis of date of bill of lading

b) Export incentives / benefits including custom duty benefits (Advance License) are accounted on accrual basis.

c) Income from Royalty and Service charges is recognised when due

d) Dividend income is recognized when the right to receive the dividend is unconditional

(x) Inventories

a) Inventories are valued at lower of cost or estimated net realisable value

b) The basis of determining cost for various categories of inventories is as follows:

i) Raw Materials, Packing Materials and Stores and Spares Moving Weighted average price method

i) Finished Goods and Goods-In-Process Cost of Direct Materials, Labour, Other

Manufacturing Overheads and excise duty wherever applicable.

(xi) Employee Benefits

a) Short term employee benefits are recognised as an expense at the undiscounted amount in the Profit and Loss account of the year in which the related service is rendered.

b) Post employment and other long term benefits are recognised as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long-term benefits are charged to the Profit and Loss account.

c) Payments to defined contribution retirement benefit schemes are charged as expenses as they fall due

(xii) Accounting for Taxes on Income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year

b) 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 and measured using relevant enacted tax rates.

(xiii) Leases

a) Finance Lease

Assets acquired under finance lease are capitalised and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognised as an asset under the lease.

b) Operating Lease

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on accrual basis in accordance with the respective lease agreements.

(xiv) Earnings per Share

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding! during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive. Dilutive earnings per share include the dilutive effect of potential equity shares under Stock options.

(xv) Miscellaneous Expenditure

Ancillary Term Loan costs incurred in connection with the arrangement of borrowings are deferred and amortised over thel tenure of loan.

(xvi) Provisions, Contingent Liabilities and Contingent Assets

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


Mar 31, 2010

The significant accounting policies adopted in presentation of these accounts are:

(i) Basis of Accounting

These financial statements have been prepared under the historical cost convention and accrual basis in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

(ii) Use of Estimates

The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of financial statements and the reported amount of revenue and expenses of the year. Actual results could differ from these estimates. The difference between the actual results and estimates are recognized in the period in which the results are known / materialised.

(iii) Fixed Assets

a) Fixed assets are stated at original cost of acquisition / installation (net of cenvat credit availed) net off accumulated depreciation, amortization and impairment losses except land which is carried at cost including lease premium. The cost of fixed assets includes taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets.

b) Capital work-in-progress is stated at the amount expended upto the date of Balance Sheet including advances for capital expenditure.

c) The capitalized cost of software includes license fees, cost of implementation and system integration services. These costs are capitalized as intangible assets in the year in which related software is implemented.

(iv) Borrowing Costs

Borrowing Costs attributable to the acquisition or construction of assets are capitalised as part of such assets upto the date when such assets are ready for intended use. Other borrowing costs are charged to revenue when incurred.

(v) Impairment of Assets

At each Balance Sheet date,the Company reviews the carrying amount of fixed assets to determine whether there is any indication that those assets suffered impairment loss. If any such indication exist, the recoverable amount of the assets is estimated in order to determine the extent of impairment loss. The recoverable amount is higher of the net selling price and value in use,determined by discounting the estimated future cash flows expected from the continuing use of the asset to their present value.

(vi) Depreciation/Amortisation

a) Depreciation on tangible fixed assets (including on fixed assets acquired under finance lease) is provided on Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956.

b) Software (Intangible Asset) other than (c) below, is amortised on a straight-line basis over a period of three years from the date of its implementation based on the management estimate of useful life.

c) Cost of Enterprise Resource Planning (ERP) software including expenditure on implementation is amortised over a period of ten years based on the management estimate of useful life.

d) Premium on Leasehold Land is amortised over the period of lease and Leasehold improvements are amortised over the normal / extendable period of lease.

(vii) Investments

Long Term Investments intended to be held for more than a year, from the date of acquisition, are classified as long-term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline other than temporary, in the value of investments. Current investments are carried at lower of cost or fair value.

(viii) Foreign Currency Transactions

a) Foreign exchange transactions are recorded at exchange rates prevailing on the date of such transactions. Current monetary assets and liabilities are reported using the closing exchange rate prevailing on the last day of the year. Non monetary items are carried at cost.

b) Gains or losses arising on account of difference in foreign exchange rates on settlement / translation of monetary assets and liabilities on the closing date are recognised in the Profit and Loss account except to the extent provided under amendment to AS-11 (Refer Note 7(a)).

c) In respect of forward exchange contracts assigned to the current monetary foreign currency assets/liabilities, the difference due to change in exchange rate between the inception of forward contract and date of Balance Sheet and the proportionate premium / discount for the period upto the date of Balance Sheet is recognised in the Profit and Loss account. Any profit or loss on settlement / cancellation of forward contract is recognised as an income or expenses for the year in which they arise.

(ix) Revenue Recognition

a) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods. Gross Sales include excise duty but exclude value added tax / sales tax and is net of volume discount. Export sales are accounted for on the basis of date of bill of lading.

b) Export incentives / benefits are accounted on accrual basis. Custom duty benefit (Advance license) is recognized on entitlement and is set off from material costs.

c) Income from Royalty and Service charges is accounted as per the agreed terms.

d) Dividend income is recognized when the right to receive the dividend is unconditional.

(x) Inventories

a) Inventories are valued at lower of cost or estimated net realisable value.

b) The basis of determining cost for various categories of inventories is as follows:

i) Raw Materials, Packing Materials and Stores and Moving Weighted average price Spares method (Refer Note 10)

ii) Finished Goods and Goods-In-Process Cost of Direct Materials, Labour, Other Manufacturing Overheads and excise duty wherever applicable

(xi) Employee Benefits

a) Short term employee benefits are recognised as an expense at the undiscounted amount in the Profit and Loss account of the year in which the related service is rendered.

b) Post employment and other long term benefits are recognised as an expense in the profit and loss account for the year in which the employee has rendered services. The expense is recognised at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post employment and other long- term benefits are charged to the Profit and Loss account.

c) Payments to defined contribution retirement benefit schemes are charged as expenses as they fall due.

(xii) Accounting for Taxes on Income

a) Current tax is determined as the amount of tax payable in respect of taxable income for the year.

b) 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 and measured using relevant enacted tax rates.

(xiii) Leases

a) Finance Lease

Assets acquired under finance lease are capitalised and the corresponding lease liability is recorded at an amount equal to the fair value of the leased asset at the inception of the lease. Initial costs incurred in connection with the specific leasing activities directly attributable to activities performed by the Company are included as part of the amount recognised as an asset under the lease.

b) Operating Lease

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on accrual basis in accordance with the respective lease agreements.

(xiv) Earnings per Share

Basic earnings per share is computed and disclosed using the weighted average number of common shares outstanding during the year. Dilutive earnings per share is computed and disclosed using the weighted average number of common and dilutive common equivalent shares outstanding during the year, except when the results would be anti-dilutive. Dilutive earnings per share include the dilutive effect of potential equity shares under Stock options.

(xv) Provisions, Contingent Liabilities and Contingent Assets

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

(xvi) Miscellaneous Expenditure

Ancillary Loan costs incurred in connection with the arrangement of borrowings are deferred and amortised over the period for which the benefits accrue (Refer Note 9).

 
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