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Accounting Policies of Essel Propack Ltd. Company

Mar 31, 2017

1 Corporate information

Essel Propack Limited (hereinafter referred to as ''EPL'' or ''the Company'' or ''the parent company'') is domiciled and incorporated in India and its shares are publicly traded on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The Company''s registered office is located at P.O. Vasind , Taluka : Shahpur District: Thane, Maharashtra -421604 , India. The Company is engaged in manufacture of plastic packaging material in the form of multilayer collapsible tubes and laminates used primarily for packaging of consumer products in the Beauty & Cosmetics, Health & Pharmaceuticals, Food and Home care categories.

The separate financial statements (hereinafter referred to as "Financial Statements") of the Company for the year ended 31 March 2017 were authorized for issue by the Board of Directors at their meeting held on 23 May 2017.

2 Basis of Preparation

a) The financial statements have been prepared to comply in all material respects with the Indian Accounting Standards (Ind AS) notified under Section 133 of Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards Rules, 2015 and other relevant provisions of the Act and rules framed there under and guidelines issued by Securities and Exchange Board of India (SEBI).

Till the year ended 31 March 2016, the financial statements of the Company were prepared to comply in all material respects with the Accounting standards (previous GAAP) specified as per section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014 and other provisions of the Act and guidelines issued by SEBI. These are the first financial statements of the Company prepared in accordance with Ind AS applicable to the Company from the year beginning 1 April 2016, consequent to the MCA notification dated 16 February 2015. In accordance with Ind AS 101, the transition date to Ind AS being 1 April 2015, the comparatives for the previous year ended 31 March 2016 and balances as on 1 April 2015 reported under previous GAAP have been restated as per Ind AS. Refer note 64 for understanding how the transition from previous GAAP to Ind AS affected the Company''s earlier reported Balance sheet, financial performance and cash flows.

The financial statements have been prepared under the historical cost convention and on accrual basis, except for certain financial assets and liabilities (including derivative instruments), defined benefit plan assets and liabilities and share based payments being measured at fair value.

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 a liability at the measurement date.

The financial statements are presented in Indian Rupees (''INR'') with values rounded off to the nearest lakhs (00,000), except otherwise indicated

b) Current and non-current classification

Assets and liabilities are classified as current if it is expected to realize or settle within twelve months after the balance sheet date. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Notes forming part of the financial statements

3(A) Significant accounting policies

a) Investment in subsidiaries

Investments in subsidiaries are accounted at cost in accordance with Ind AS 27 "Separate financial statements". Refer note 6 for the list of significant investments.

b) Property, plant and equipment

i) Free hold land is carried at cost. Other property, plant and equipment are stated at original cost of acquisition/ installation (net of cenvat credit availed) less accumulated depreciation and impairment loss, if any. Cost includes of cost of acquisition, construction and installation, taxes, duties, freight and other incidental expenses that are directly attributable to bringing the asset to its working condition for the intended use and estimated cost for decommissioning of an asset. Further, in respect of accounting periods commencing on or after 7 December, 2006, exchange differences arising on reporting of long-term foreign currency monetary items which are recognized in the financial statements till the period ending 31 March 2016 at rates different from those at which they were initially recorded during the period, or reported in the previous financial statements are added to or deducted from the cost of the assets and depreciated over the balance life of the asset, where these monetary items pertain to the acquisition of depreciable property, plant and equipment.

ii) Capital work-in-progress comprises cost of property, plant & equipment and related expenses that are not yet ready for their intended use at the reporting date.

iii) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.

Depreciation on property, plant and equipment

i) Depreciation on property, plant and equipment is provided to the extent of depreciable amount on straight-line method over the useful life of asset as specified in Part-C of Schedule II to the Act. Depreciation is charged on prorata basis for asset purchased / sold during the year. Depreciation on the following assets is provided considering a shorter useful life as compared to Schedule II useful life, based on management estimate in view of possible technology obsolescence and product life cycle implications.

Assets Useful life

Tooling, Moulds, Dyes 7 years

Hydraulic works, Pipelines and Slucies (HWPS) 10 years

Property, plant and equipment acquired under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.

ii) Premium on leasehold land and leasehold improvements are amortized over the normal period of lease.

c) Intangible assets

i) Intangible assets are stated at cost of acquisition less accumulated amortization. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized on a straight-line basis over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss.

Notes forming part of the financial statements

ii) On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the intangible assets.

iii) Intangibles assets with finite lives are amortized as follows:

- Softwares : ERP software 10 years and others 3 years

- Patents : 10 years

d) Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An asset is treated as impaired when the carrying amount exceeds its recoverable value. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value using a pre-tax discount rate that reflects current market assessment of the time value of money and risks specific to the assets. An impairment loss is charged to the statement of profit and loss in the year in which an asset is identified as impaired. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life. The impairment loss recognized in prior accounting periods is reversed by crediting the statement of profit and loss if there has been a change in the estimate of recoverable amount.

e) Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. Ancillary costs incurred in connection with the arrangement of borrowings are amortized over the tenure of such borrowings. All other borrowing costs are charged to the statement of profit and loss as finance costs. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs under Ind AS 23.

f) Financial assets

i) Recognition and measurement

The Company at initial recognition measures a financial asset at its fair value plus transaction costs that are directly attributable to it''s acquisition. However, transaction costs relating to financial assets to be subsequently valued at fair value through profit or loss (FVTPL) are expensed in the statement of profit and loss for the year.

The Company subsequently recognizes its financial assets either at FVTPL, fair value through other comprehensive income (FVOCI) or at amortized cost, based on the Company''s business model for managing the financial assets and their contractual cash flows. This has been explained below separately for debt investments and equity investments.

Debt investments

Amortized cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on such instruments is recognized in the statement of profit and loss when the asset is derecognized or impaired. Interest income from these financial assets is included in interest income using the effective interest rate method.

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken

through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognized in the statement of profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to statement of profit and loss. Interest income from these financial assets is included in interest income using the effective interest rate method.

Fair value through profit or loss (FVTPL): Assets that do not meet the criteria for amortized cost or fair value through other comprehensive income (FVOCI) are measured at fair value through profit or loss. Gain and losses on fair value of such instruments are recognized in the statement of profit and loss. Interest income from these financial assets is included in other income.

Equity investments

The Company subsequently measures all equity investments at fair value. Where the Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the statement of profit and loss in the event of de-recognition. Dividends from such investments are recognized in the statement of profit and loss as other income when the Company''s right to receive payments is established. Changes in the fair value of financial assets at fair value through profit or loss are recognized in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

ii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 41A details how the Company determines whether there has been a significant increase in credit risk.

iii) De-recognition of financial assets

A financial asset is derecognized only when

- The Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.

Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.

g) Derivatives and embedded derivatives

i) The Company enters into certain derivative contracts (mainly foreign exchange forward contracts) to hedge risks, which are not designated as hedges. Such contracts are accounted for at fair value through profit or loss and are recognized in the statement of profit and loss.

ii) Derivatives embedded in a host contract that are assets within the scope of Ind AS 109 or are closely related to the host contract, are not separated. Derivatives embedded in all other host contracts are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host, and are measured at fair value through profit or loss.

h) Borrowings and other financial liabilities

i) Borrowings and other financial liabilities are initially recognized at fair value net of transaction costs incurred that are directly attributable to the acquisition of the financial liability .

ii) Subsequently recognition is done at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in the statement of profit and loss when the liabilities are derecognized as well as through the EIR amortization process. The EIR amortization is included in finance costs in the statement of profit and loss.

iii) Borrowings and other financial liabilities are derecognized when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in the statement of profit and loss.

i) Employee benefits

i) Short-term benefits

Short-term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which the related services are rendered.

ii) Defined benefit plans

a) Post-employment and other long-term employee benefits are recognized as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques.

b) Re-measurement of the net defined benefit liability, which comprises of actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognized in other comprehensive income in the period in which they occur.

iii) Defined contribution plans

Payments to defined contribution retirement benefit schemes are charged to the statement of profit and loss of the year when the contribution to the respective funds are due. There are no other obligations other than the contribution payable to the fund.

j) Share based payments

Share based compensation benefits are provided to employees under the Essel Employee Stock Option Scheme 2014. The fair value of options granted under the Essel Employee Stock Option Scheme 2014 is recognized as an employee benefits expense with a corresponding increase in equity. The total amount to be recognized is determined by reference to the fair value of the options granted:

- including any market performance conditions (e.g., the entity''s share price)

- excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period), and

- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a specific period of time).

The total expenses are amortized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the service and non-market performance vesting conditions. It recognizes the impact of the revision to original estimates, if any, in the statement of profit and loss, with a corresponding adjustment to equity.

In case of share based payments to employees of the parent company and its subsidiaries, in the separate financial statements, the parent company records a debit, recognizing an increase in the investment in the subsidiaries and a credit to equity.

k) Revenue recognition

i) Revenue is measured at the fair value of consideration received or receivable. Revenue is recognized only when it can be reliably measured and it is probable that future economic benefits will flow to the Company.

ii) Revenue from operations includes sale of goods, scrap, export incentives and income from royalty and service charges:

- Revenue from sale of goods is recognized when significant risk and rewards of ownership of the goods have passed to the customer. Amounts disclosed as revenue are inclusive of excise duty and net of returns, quality claims, discounts and value added tax/sales tax.

- Income from royalty and service charges is recognized as per the agreed terms.

- Export incentives / benefits are accounted on accrual basis.

iii) Dividend income is recognized when the right to receive the payment is established by the balance sheet date.

iv) Interest income for all debt instruments, measured at amortized cost or fair value through other comprehensive income, is recognized using the effective interest rate method and shown under interest income in the statement of profit and loss.

l) Government grants

i) Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

ii) Government grants relating to income are deferred and recognized in the statement of profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

iii) Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the statement of profit and loss on a straight-line basis over the expected lives of the related assets and presented within other income.

m) Inventories

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

ii) Cost of raw materials, packing material and stores and spares are determined on moving average cost method.

iii) Cost of finished goods and goods-in-process includes cost of direct materials, labour and other manufacturing overheads. Excise liability is included in the valuation of inventory of finished goods.

n) Foreign currency transactions

i) The functional currency of the Company is Indian national rupee (?) which is also the presentation currency. All other currencies are accounted for as foreign currency.

ii) Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rate prevailing at the date of transaction.

iii) Monetary items denominated in foreign currencies at the year-end are restated at the closing rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.

iv) Exchange differences, in respect of accounting periods commencing on or after 7 December 2006, arising on reporting of long-term foreign currency monetary items which are recognized in the financial statements till the period ending 31 March 2016 at rates different from those at which they were initially recorded or reported in previous Financial Statements, in so far as they relate to the acquisition of a depreciable capital asset, are added to or deducted from the cost of the asset and are depreciated over the balance life of the asset. Any other income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.

o) Income taxes

i) The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

ii) The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.

iii) Deferred tax is provided in full, using the balance sheet approach, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

iv) Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

v) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

vi) Current and deferred tax is recognized in the statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

vii) Minimum Alternate Tax (MAT) credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

p) Leases

Leases where the Company is a lessee and has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of profit and loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.

q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a right issue, shares split and reserve share splits (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

r) Provisions, contingent liabilities and contingent assets

i) Provisions are recognized when there is a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.

Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognized as interest expense.

ii) A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

iii) A contingent asset is a possible asset that arises from past events and whose existence 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. Contingent assets are not recognized, but its existence is disclosed in the financial statements.

s) Business combinations

Business combinations are accounted for using the acquisition method as per Ind AS 103, Business Combinations. The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred to the Company. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition. Business combinations between entities under common control is accounted for at carrying value. Transaction costs that the Company incurs in connection with a business combination such as finder''s fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.

t) Dividend

Provision is made for the amount of any dividend declared on or before the end of the reporting period but remaining undistributed at the end of the reporting period, where the same has been appropriately authorized and is no longer at the discretion of the Company.

u) Contributed equity

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

v) Cash and cash equivalents

i) Cash and cash equivalents in the balance sheet comprise cash at bank and on hand and short-term deposit with original maturity up to three months, which are subject to insignificant risk of changes in value.

ii) For the purpose of presentation in the statement of cash flows, cash and cash equivalents consists of cash and short-term deposit, as defined above, net of outstanding bank overdraft but including 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. "

w) Exceptional items

Certain occasions , the size, type , or incidences of the item of income or expenses pertaining to the ordinary activities of the Company is such that its disclosure improves the understanding of the performance of the Company, such income or expenses is classified as an exceptional item and accordingly, disclosed in the financial statements.

3(B) Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards)(Amendments) Rules, 2017, notifying amendment to Ind AS 7, ''Statement of Cash Flows''. This amendment is in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of Cash Flows''. The amendment is applicable to the Company from 1 April 2017.

Amendments to Ind AS 7

The amendments to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement. The Company is currently assessing the potential impact of this amendment.

3(C) Significant estimates, judgments and assumptions

The preparation of financial statements in conformity with Ind AS requires the management to make estimates, assumptions and exercise judgment in applying the accounting policies that affect the reported amount of assets, liabilities and disclosure of contingent liabilities at the date of financial statements and the reported amounts of income and expenses during the year.

The Management believes that these estimates are prudent and reasonable and are based on the Management''s best knowledge of current events and actions. Actual results could differ from these estimates and differences between actual results and estimates are recognized in the periods in which the results are known or materialized.

This note provides an overview of the areas that involves a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.

i) Defined benefit obligation

The cost of post-employment and other long term benefits is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include determination of the discount rates, expected rate of return on assets, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The assumptions used are disclosed in note 44.

ii) Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. In applying the valuation techniques, management makes maximum use of market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm''s length transaction at the reporting date. For details of the key assumptions used and the impact of changes to these assumptions refer note 40.

iii) Share-based payments

Estimating fair value for share-based payment requires determination of the most appropriate valuation model. The estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 43.

iv) Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (CGU) exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the future years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate.

v) Impairment of financial assets

The impairment provisions for financial assets disclosed are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company''s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

vi) Taxes

The Company periodically assesses its liabilities and contingencies related to income taxes for all years open to scrutiny based on latest information available. The Company records its best estimates of the tax liability in the current tax provision. The management believes that they have adequately provided for the probable outcome of these matters.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits.


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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