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Fulford (India) Ltd. Accounting Policies | Accounting Policy of Fulford (India) Ltd.
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Accounting Policies of Fulford (India) Ltd. Company

Mar 31, 2015

(a) Basis of Preparation

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

All assets and liabilities are classified as current or non-current as per the company's normal operating cycle and other criteria set out in Schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.

(b) Fixed Assets

(i) Tangible Assets

Tangible assets are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use, less accumulated depreciation/amortisation and impairment losses, if any.

Depreciation is provided on Straight Line Method, pro-rata to the period of use, over the useful lives of the assets which are lower than the useful lives based on rates prescribed under Schedule II to the Act in order to reflect the actual usage of assets. The estimates of useful lives of the assets, based on the management evaluation, have not undergone a change on account of transition to the Act. The useful lives of the assets are as follows:

Fixed assets costing Rs. 5,000 or less are fully depreciated/amortised in the year/period of acquisition. A nominal value of Rs. 1 is assigned to fully depreciated/amortised assets.

Assessment is carried out at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

(c) Investments

Long-term Investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of Long-term Investments. Current Investments are stated at lower of cost and fair value.

(d) Inventories

Inventories are valued at lower of cost and net realisable value. Cost is determined on First In First Out basis. Cost of work- in-progress and finished goods includes manufacturing overheads, where applicable. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(e) Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at the exchange rates prevailing on that date. Exchange differences are recognised in the Statement of Profit and Loss.

(f) Revenue Recognition

Sales are recognised when the significant risks and rewards of ownership in the goods are transferred to the customers as per the terms of the contract and are recognised net of excise duty, sales tax, rebates and trade discounts.

Provision is made for the non-sellable returns of goods from the customers estimated on the basis of historical data of such returns. Such provision for non-sellable sales returns is reduced from sales for the year/period.

Service income is recognised on the basis of contractual arrangements and are net of service tax.

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

Interest Income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

(g) Employee Benefits

(i) Defined Contribution Plans

The company has Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation Fund, Employees' State Insurance Scheme and Employees' Deposits Linked Insurance Scheme which are administered through Government of India. Provident Fund, Superannuation Fund, Employees' State Insurance Scheme and Employees' Deposits Linked Insurance Scheme are classified as Defined Contribution Plans as the company has no further obligation beyond making the contributions. The company's contributions to Defined Contribution Plans are charged to the Statement of Profit and Loss as incurred.

(ii) Defined Benefit Plan

The company has Defined Benefit Plan for post employment benefits in the form of Gratuity. Gratuity schemes of the company are administered through Life Insurance Corporation of India (LIC). Liability for Defined Benefit Plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the company's expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations. Plan assets are measured at fair value as at the Balance Sheet date.

(iii) Other Employee Benefit

The employees are also entitled to Other Long-term Benefit in the form of Compensated Absences as per the company's policy. The liability for Compensated Absences is provided on the basis of valuation, as at Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method.

(iv) Termination benefits are recognised as an expense as and when incurred.

(v) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised in the Statement of Profit and Loss in the period in which they arise.

(h) Taxes on Income

Current tax is determined as the amount of tax payable in respect of estimated taxable income for the year/period.

Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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. In situations where the company has unabsorbed depreciation and/or carry forward of tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable income.

Minimum Alternative Tax (MAT) credit is recognised as an 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 entitlement 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.

(i) Leases

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight line basis over the period of lease.

(j) Provisions and Contingent Liabilities

The company recognises a provision when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure is made.

(k) Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the Balance Sheet date and the results of operations during the reporting period. The actual results could differ from these estimates. Any revision to such accounting estimates is recognised in the accounting period in which such revision takes place.

(b) The company has only one class of shares i.e. Equity Shares having a face value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

(c) Of the above, 2,923,237 (Previous period - 2,923,237) shares are held by Dashtag, UK, the holding company.

(d) List of shareholders holding more than 5% shares as at the Balance Sheet date.


Mar 31, 2014

(a) Basis of Preparation These financial statements are prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. Pursuant to General Circular 15/2013 dated 13th September, 2013 read with General Circular 08/2014 dated 4th April, 2014, till the Standards of Accounting or any addendum thereto are prescribed by Central Government in consultation and recommendation of the National Financial Reporting Authority, the existing Accounting Standards notifed under the Companies Act, 1956 (the ''Act'') shall continue to apply. Consequently, these financial statements are prepared to comply in all material aspects with the Accounting Standards notifed under sub-section (3C) of Section 211 of the Act and the other relevant provisions of the Act.

All assets and liabilities are classifed as current or non-current as per the company''s normal operating cycle and other criteria set out in Schedule VI to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current – non-current classifcation of assets and liabilities.

(b) Fixed Assets

Fixed assets are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss.

Depreciation is provided on Straight Line Method, pro-rata to the period of use, at the rates specified in Schedule XIV of the Act or the rates based on useful lives of the assets as estimated by the management, whichever are higher. The rates based on useful lives of the assets in the following categories are estimated to be higher than those specified in Schedule XIV of the Act:

Fixed assets costing Rs. 5,000 or less are fully depreciated/amortised in the period/year of acquisition. A nominal value of Rs.1 is assigned to fully depreciated/amortised assets.

Assessment is carried out at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.

(c) Investments Long-term Investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of Long-term Investments. Current Investments are stated at lower of cost and fair value.

(d) Inventories Inventories are valued at lower of cost and net realisable value. Cost is determined on First In First Out basis. Cost of work- in-progress and fnished goods includes manufacturing overheads, where applicable. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(e) Foreign Currency Transactions Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses arising out of subsequent fuctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at the exchange rates prevailing on that date. Exchange differences are recognised in the Statement of profit and Loss.

(f) Revenue Recognition Sales are recognised when the significant risks and rewards of ownership in the goods are transferred to the customers as per the terms of the contract and are recognised net of excise duty, sales tax, rebates and trade discounts.

Provision is made for the non-sellable returns of goods from the customers estimated on the basis of historical data of such returns. Such provision for non-sellable sales returns is reduced from sales for the period/year.

Service income is recognised on the basis of contractual arrangements and are net of service tax.

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

Interest Income is recognised on a time proportion basis taking into account the amounts invested and the rate of interest.

(g) Employee benefits (i) Defined Contribution Plans

The company has Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation Fund, Employees State Insurance Scheme and Employees'' Deposits Linked Insurance Scheme which are administered through Government of India. Provident Fund, Superannuation Fund, Employees State Insurance Scheme and Employees'' Deposits Linked Insurance Scheme are classifed as Defined Contribution Plans as the company has no further obligation beyond making the contributions. The company''s contributions to Defined Contribution Plans are charged to the Statement of profit and Loss as incurred.

(ii) Defined benefit Plan

The company has Defined benefit Plan for post employment benefits in the form of Gratuity. Gratuity schemes of the company are administered through Life Insurance Corporation of India (LIC). Liability for Defined benefit Plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates refecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered takes into account the infation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the company''s expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations. Plan assets are measured at fair value as at the Balance Sheet date.

(iii) Other Employee benefit

The employees are also entitled to Other Long-term benefit in the form of Compensated Absences as per the company''s policy. The liability for Compensated Absences is provided on the basis of valuation, as at Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method.

(iv) Termination benefits are recognised as an expense as and when incurred.

(v) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised in the Statement of profit and Loss in the period in which they arise.

(h) Taxes on Income

Current tax is determined as the amount of tax payable in respect of estimated taxable income for the period/year. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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.

Minimum Alternative Tax (MAT) credit is recognised as an 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 entitlement 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.

(i) Provisions and Contingent Liabilities

The company recognises a provision when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure is made.

(j) Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the Balance Sheet date and the results of operations during the reporting period. The actual results could differ from these estimates. Any revision to such accounting estimates is recognised in the accounting period in which such revision takes place.


Dec 31, 2012

(a) Basis of Preparation

The financial statements are prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis. The financial statements are prepared to comply in all material aspects with the accounting standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 (the ''Act'') and the other relevant provisions of the Act.

All assets and liabilities are classified as current or non-current as per the company''s normal operating cycle and other criteria set out in Schedule VI to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current - non-current classification of assets and liabilities.

(b) Fixed Assets

Fixed assets are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss.

Depreciation is provided on Straight Line Method, pro-rata to the period of use, at the rates specified in Schedule XIV of the Act or the rates based on useful lives of the assets as estimated by the management, whichever are higher. The rates based on useful lives of the assets in the following categories are estimated to be higher than those specified in Schedule XIV of the Act:

Fixed assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition. A nominal value of Re. 1 is assigned to fully depreciated assets.

Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and form its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.

(c) Investments

Long-term Investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of Long-term Investments. Current Investments are stated at lower of cost and fair value.

(d) Inventories

Inventories are valued at lower of cost and net realisable value. Cost is determined on First In First Out basis. Cost of work-in-progress and finished goods includes manufacturing overheads, where applicable.

(e) Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at the exchange rates prevailing on that date. Exchange differences are recognised in the Statement of Profit and Loss.

(f) Revenue Recognition

Sales are recognised when goods are supplied to customers and are recorded net of excise duty, sales tax, rebates and trade discounts.

Provision is made for the non-sellable returns of goods from the customers estimated on the basis of historical data of such returns. Such provision for non-sellable sales returns is reduced from sales for the year.

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

(g) Employee Benefits

(i) Long-term Employee Benefits

(a) Defined Contribution Plans

The company has Defined Contribution Plans for post employment benefits in the form of Provident Fund, Superannuation Fund, Employees'' State Insurance Scheme and Employees'' Deposits Linked Insurance Scheme which are administered through Government of India. Provident Fund, Superannuation Fund, Employees'' State Insurance Scheme and Employees'' Deposits Linked Insurance Scheme are classified as Defined Contribution Plans as the company has no further obligation beyond making the contributions. The company''s contributions to Defined Contribution Plans are charged to the Statement of Profit and Loss as incurred. ''

(b) Defined Benefit Plan ''

The company has Defined Benefit Plan for post employment benefits in the form of Gratuity. Gratuity schemes of the company are administered through Life Insurance Corporation of India (LIC). Liability for Defined Benefit Plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the company''s expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. Plan assets are measured at fair value as at the Balance Sheet date.

(c) Other Long-term Employee Benefit

The employees are also entitled to Other Long-term Benefit in the form of Leave Encashment as per the company''s policy. The liability for Leave Encashment is provided on the basis of valuation, as at Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method.

(ii) Termination benefits are recognised as an expense as and when incurred. .

(iii) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised in the Statement of Profit and Loss in the year in which they arise.

(h) Taxes on Income

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

Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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.

(i) Provisions and Contingent Liabilities -

The company recognises a provision when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and in respect of which reliable estimate can be made. A ~ disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure is made.

(j) Use of Estimates

The preparation of financial statements in accordance with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities as at the Balance Sheet date and the results of operations during the reporting period. The actual results could differ from these estimates. Any revision to such accounting estimates is recognised in the accounting period in which such revision takes place.


Dec 31, 2011

(a) Basis of Accounting

The financial statements are prepared in accordance with the historical cost convention.

(b) Fixed Assets

Fixed assets are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss.

Depreciation is provided on Straight Line Method, pro-rata to the period of use, at the rates specified in Schedule XIV of the Act or the rates based on useful lives of the assets as estimated by the management, whichever are higher. The rates based on useful lives of the assets in the following categories are estimated to be higher than those specified in Schedule XIV of the Act:

Fixed assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition. A nominal value of Rs. 1 is assigned to fully depreciated assets.

Intangible assets consisting of computer software are recorded at their cost of acquisition and are mortised over the useful life of three years, as estimated by the management.

Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing parties, less the costs of disposal.

(c) Investments

Long-term Investments are stated at cost. Provision is made to recognize a decline, other than temporary, in the value of Long-term Investments. Current Investments are stated at lower of cost and fair value.

(d) Inventories

Inventories are valued at lower of cost and net realisable value. Cost is determined on First In First Out basis. Cost of work-in-progress and finished goods includes manufacturing overheads, where applicable.

(e) Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at the exchange rates prevailing on that date. Exchange differences are recognised in the Profit and Loss Account.

(f) Revenue Recognition

Sales are recognised when goods are supplied to customers and are recorded net of excise duty, sales tax, rebates and trade discounts.

Provision is made for the non-sellable returns of goods from the customers estimated on the basis of historical data of such returns. Such provision for non sellable sales returns is reduced from sales for the year.

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

(g) Employee Benefits

(i) Long-term Employee Benefits

In case of Defend Contribution plans, the company's contributions to these plans are charged to the Profit and Loss Account as incurred. Liability for Defend Benefit plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the company's expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Plan assets are measured at fair value as at the Balance Sheet date. The liability for leave encashment is provided on the basis of valuation, as at Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method.

(ii) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense.

(h) Taxes on Income

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

Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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.


Dec 31, 2010

The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the accounting standards notified under sub-section (3C) of Section 211 of the Companies Act, 1956 (the Act) and the other relevant provisions of the Act. The significant accounting policies are as follows-

(a) Basis of Accounting

The financial statements are prepared in accordance with the historical cost convention.

(b) Fixed Assets

Fixed assets are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use, less accumulated depreciation and impairment loss.

Fixed assets costing Rs. 5,000 or less are fully depreciated in the year of acquisition. A nominal value of Rs. 1 is assigned to fully depreciated assets.

Intangible assets consisting of computer software are recorded at their cost of acquisition and are amortised over the useful life of three years, as estimated by the management.

Impairment loss is provided to the extent the carrying amount of assets exceed their recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of an asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal.

(c) Investments

Long-term Investments are stated at cost. Provision is made to recognise a decline, other than temporary, in the value of Long-term Investments. Current Investments are stated at lower of cost and fair value.

(d) Inventories

Inventories are valued at lower of cost and net realisable value. Cost is determined on First In First Out basis. Cost of work-in-progress and finished goods includes manufacturing overheads, where applicable.

(e) Foreign Currency Transactions

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transaction. Gains and losses arising out of subsequent fluctuations are accounted for on actual payment or realisation. Monetary items denominated in foreign currency as at the Balance Sheet date are converted at the exchange rates prevailing on that date. Exchange differences are recognised in the Profit and Loss Account.

(f) Revenue Recognition

Sales are recognised when goods are supplied to customers and are recorded net of excise duty, sales tax, rebates and trade discounts.

Provision is made for the non-sellable returns of goods from the customers estimated on the basis of historical data of such returns. Such provision for non-sellable sales returns is reduced from sales for the year.

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

(g) Employee Benefits

(i) Long-term Employee Benefits

In case of Defined Contribution plans, the companys contributions to these plans are charged to the Profit and Loss Account as incurred. Liability for Defined Benefit plan is provided on the basis of valuation, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. The expected rate of return of plan assets is the companys expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Plan assets are measured at fair value as at the Balance Sheet date. The liability for leave encashment is provided on the basis of valuation, as at Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method.

(ii) Actuarial gains and losses comprise experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Profit and Loss Account as income or expense.

(h) Taxes on Income

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

Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, 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.


Dec 31, 2009

1. Basis of accounting

The financial statements are prepared under the historical cost convention, on an accrual basis, in accordance with the Generally Accepted Accounting Principles and applicable Accounting Standards as notified under the Companies (Accounting Standards) Rules 2006.

2. Use of estimates

The presentation of financial statements in conformity with the generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities on the date of the financial statement and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

3. Revenue recognition

Sales of product are recognized when the risk and rewards of ownership of the products are passed on to the customers, which is generally on dispatch of goods .Sales are stated inclusive of sales tax and excise.

Revenue from service rendered is recognized on rendering of service.

Dividend income is recognized when right to receive dividend is unconditional at the Balance Sheet date.

Interest income is recognized on time proportion basis.

4. Fixed assets, Depreciation and Amortization

Fixed assets are carried at cost of acquisition less accumulated depreciation and impairment in value, if any. Depreciation on fixed assets acquired/sold/ discarded/demolished during the year is provided from/upto the date on which the asset is acquired/sold/discarded/demolished. Fixed assets are depreciated on Straight Line Method over their estimated useful lives. (Depreciation (%) used: Building 5/10; Leasehold improvements 20, Furniture and fixtures 10; Machinery and equipments, Utilities 15,Office equipments 15/20; Vehicles 20; Computers 20/33.33). Assets costing less than Rs. 5,000/- per item are depreciated at 100% in the year of purchase. A nominal value of Re. 1/- is assigned to fully depreciated assets.

Cost of assets acquired under finance lease after April 1, 2001 is amortized over the period of lease.

Intangible assets consisting of software are recorded at their acquisition cost and amortized on Straight Line Method from the date they are available for use, over their estimated economic life not exceeding three years.

5. Investments

Investments are classified as long term and current investments. Long term investments are carried at cost less provision, if any, for other than temporary diminution in their value. Current investments are valued at lower of cost and fair value.

6. Inventories

Inventories are valued at lower of cost and net realizable value. Cost is arrived at on First In First Out basis. Cost of finished goods and work-in-process includes appropriate allocation of production overheads.

7. Borrowing cost

Borrowing costs other than those that are directly attributable to the acquisition, construction or production of a qualifying asset are recognized as an expense in the period in which they are incurred.

8. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing at the time of occurrence of the transaction. Monetary items denominated in foreign currency at the year end are translated at year end rates. In respect of monetary items which are covered by forward exchange contracts, premium/ discount arising on inception of the contract is amortized over the life of the contract. Any exchange differences arising on settlement/translation are dealt with in the Profit and Loss Account.

9. Treatment of Retirement Benefits

The Company has various Schemes of Retirement Benefits such as Provident fund, Superannuation fund and Gratuity duly recognized by the Income tax authorities. Companys contribution in respect of Provident fund, Superannuation fund and Gratuity is charged to revenue. Contribution in respect of Gratuity is paid to Life Insurance Corporation of India based on the actuarial valuation. The Company also accounts for future gratuity liability based on an independent external actuarial valuation carried out at every statutory year end.

Compensated absences and sick leaves that are accumulated are considered as Long Term and provided for based on an independent actuarial valuation.

10. Taxation

Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Deferred tax is recognized for all timing differences between accounting income and taxable income and is quantified using substantively enacted tax rates as at the balance sheet date. Deferred tax assets are recognized where realization is reasonably certain whereas in case of existence of carried forward losses or unabsorbed depreciation, deferred tax assets are recognized only if there is a virtual certainty of realization backed by convincing evidence. Deferred tax assets are reviewed for the appropriateness of their respective comparative values at each Balance Sheet date.

Fringe Benefit Tax is determined as per the provisions of Income Tax Act, 1961.Pursuant to the enactment of Finance Act 2009, Fringe Benefits Tax (FBT) stands abolished with effect from April 1, 2009

11. Lease

Assets taken on finance lease after April 1, 2001, have been capitalized in accordance with Accounting Standard (AS) 19 on "Leases" as notified by the Companies (Accounting Standards) Rules 2006.

Rentals paid under operating leases are charged to Profit and Loss Account in accordance with Accounting Standard (AS) 19 on "Leases" notified by the Companies (Accounting Standards) Rules 2006.

12. Provisions, Contingent liabilities and Contingent assets

Provisions are recognized only when there is a present obligation as a result of past events and when a reliable estimate of the amount of obligation can be made. Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation can not be made. Contingent assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized.

13. Impairment of assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such indication exists ,the Company estimates the recoverable amount of the assets. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

 
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