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Accounting Policies of IOL Chemicals and Pharmaceuticals Ltd. Company

Mar 31, 2015

A. Basis of preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention in accordance with the accounting standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule 2014.

b. Use of estimates

The preparation 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 as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results known materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

Revenue in respect of export incentives is recognised on post export basis.

iii) Dividend

Dividend income from investment is recognised when the right to receive the payment is established.

iv) Interest

Revenue from interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefits

a) Short Term employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the statement of profit and loss for the year in which the related service is rendered.

b) Post employment Benefits:

i) Defined contribution Plans:

Provident Fund:

The Employer's Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and is recognised as an expense in the statement of profit and loss.

ii) Defined Benefit Plans:

Gratuity:

The Group Gratuity Cash Accumulation Scheme, managed by Life Insurance Corporation of India is a defined benefit plan. The liability for gratuity is provided on basis of actuarial valuation carried out by an independent actuary as at the Balance Sheet date. The Present Value of the company's obligation is determined on the basis of actuarial valuation at the year end using the projected unit credit method and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

c) Leave encashment:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government Securities as at the Balance Sheet date.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss in the period in which they occur.

e. tangible fixed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

d) Expenditure incurred on renovation/modernisation of the existing fixed assets is added to the book value of these assets where such renovation/modernisation increases the future benefit from them beyond their previously assessed standard of performance.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fixed assets

i) Depreciation on tangible fixed assets is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to the Companies Act, 2013.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

v) The Intangible fixed assets acquired prior to 1st April 2014 are amortised over the revised useful life of the assets based on the indicative useful life of the assets mandated by Schedule II to the Companies Act, 2013.

h. Amortisation

Intangible assets are amortised on straight line method. These assets are amortised over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in the value of such investments, which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material

First in First out method plus direct expenses

b) Stores and Spares

Weighted Average method plus direct expenses

c) Work-in- progress

Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods

Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit

Actual cost plus direct expenses to the extent incurred.

k. Cenvat Credit

Cenvat credit on excise duty/service tax paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and when benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy related to specific fixed assets is deducted from the gross value of the assets concerned.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial

recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such fixed assets.

c. The premium or discount arising at the inception of a forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of profit and loss in the reported period in which the exchange rate changes profit or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

Provision for taxation for the year comprises of current tax and deferred tax. Current tax is amount of Income-tax determined to be payable in accordance with the provisions of Income tax Act 1961. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. cash flow statement

The cash flow statement has been in accordance with the Accounting Standard (AS) - 3 "Cash flow statements" issued by the Companies (Accounting Standard) Rules, 2006.

u. Provisions and contingent Liabilities

i. Provisions are recognised (for liabilities that can be measured by using substantial degree of estimate) when;

a) the company has a present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) (i) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.


Mar 31, 2014

A. Basis of preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of fi nancial 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 as on the date of fi nancial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results known/materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all signifi cant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) no signifi cant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

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

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no signifi cant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefi ts

a) Short Term Employee Benefi ts:

Short Term Employee Benefi ts are recognised as an expense on an undiscounted basis in the statement of profi t and loss for the year in which the related service is rendered.

b) Post Employment Benefi ts:

i) Defi ned Contribution Plans:

Provident Fund: Contributions to provident fund are made in accordance with the provisions of the Employee''s Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of profi t and loss in the period in which such contributions fall due.

ii) Defi ned Benefi t Plans:

Gratuity: The Group Gratuity Cash Accumulation Scheme, managed by Life Insurance Corporation of India is a defi ned benefi t plan. The liability for gratuity is provided on actuarial basis. The Present Value of the company''s obligation is determined on the basis of actuarial valuation at the year end using the projected unit credit method and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

c) Leave encashment:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defi ned benefi t obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under defi ned benefi t plan, are based on the market yields on Government Securities as at the Balance Sheet date.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profi t and loss in the period in which they occur.

e. Tangible fi xed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fi xed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fi xed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fi xed assets

i) Depreciation on all fi xed assets is provided on the straight line method in accordance with and in the manner specifi ed in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fi xed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

h. Amortisation

Intangible assets are amortised on straight line method. These assets are amortised over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in the value of such investments, which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

k. Cenvat Credit

Cenvat credit on excise duty/service tax paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and when benefi ts in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to capital reserve. Government subsidy related to specifi c fi xed assets is deducted from the gross value of the assets concerned.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the fi nancial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous fi nancial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fi xed assets, these exchange differences are adjusted to the carrying cost of such fi xed assets.

c. The premium or discount arising at the inception of a forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of profi t and loss in the reported period in which the exchange rate changes profi t or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

Provision for taxation for the year comprises of current tax and deferred tax. Current tax is amount of Income-tax determined to be payable in accordance with the provisions of Income tax Act 1961. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning Per Share

Basic Earning per share is computed by dividing the net profi t or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Cash flow statement

The cash flow statement has been in accordance with the Accounting Standard (AS) – 3 "Cash fl ow statements" issued by the Companies (Accounting Standard) Rules, 2006.

u. Provisions and Contingent Liabilities

i. Provisions are recognised when;

a) the Company has a present obligation as a result of a past event:

b) a probable outfl ow of resources embodying economic benefi ts is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) Possible obligation that arises from past events and existence of which will be confi rmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b. Terms/rights attached to equity shares

The Company presently has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. 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 of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has not declared dividend during the period ended 31 March 2014.

Increase in equity share capital

The Company has issued 26,64,000 equity shares of face value of Rs. 10/- each at a premium of Rs. 68/- per share aggregating to Rs. 20,77,92,000 on 5 November 2013 to Promoter Group entities on conversion of unsecured loan, brought in by them.

Consequent upon the issue of the above 26,64,000 equity shares, the total paid-up capital of the Company stands increased to 2,88,15,164 fully paid equity shares of Rs. 10/- each.

c. Terms/rights attached to preference shares

7% Non-Cumulative Preference Shares 50,00,000 of Rs. 10/- each

The Company has extended the redemption of 50,00,000, 7% non-cumulative redeemable preference shares of Rs. 10/- each from 20 March 2014 to 30 June 2015 with an option to convert these preference shares into equity shares at the price calculated under SEBI formula. The earlier date of redemption is 30 June 2015 (Previous year 20 March 2014)

The preference shares shall carry a right to a non-cumulative preference dividend of 7% per annum, in case the dividend not declared for any year, it will cease to accrue and lapse and will not be cumulated and carry forward. The preference shareholder shall have preferential right of repayment of amount of capital.

1% Non-Cumulative Preference Shares 1,50,10,000 of Rs. 10/- each

The Company has allotted 1,50,10,000, 1% non cumulative redeemable preference shares of Rs. 10/- each to the promoter/promoter group companies. These preference shares shall be redeemable at par on expiry of 10 years from the date of allotment i.e. 5 November 2013.

The preference shares shall carry a right to a non-cumulative preference dividend of 1% per annum, in case the dividend not declared for any year, it will cease to accrue and lapse and will not be cumulated and carry forward. The preference shareholders shall have preferential right of repayment of amount of capital.

d. Details of shares held by holding company or the ultimate holding company or their subsidiaries and associates There is no holding company of the Company and therefore no subsidiary/ associate of holding /ultimate holding Company.

The Company has issued zero coupon unsecured foreign currency convertible bonds (FCCB) aggregating to US $ 7 Million.

The Company has option to convert all outstanding bonds into equity shares at the prevailing conversion price i.e. Rs. 78 per share at any time on or after 28 November 2014 but on or before 28 May 2015.

The bond holders have also option to convert into equity shares of the Company at price of Rs. 78 per share (subject to adjustment, if any) with a fi xed exchange rate of Rs. 47.57 per US $ at any time on or after 28 May 2010 but on or before 28 May 2015 subject to satisfaction of certain conditions.

a. Details of security for term loans

1 Term loans from banks and fi nancial institutions are secured by way of equitable mortgage of all present and future immovable properties of the Company ranking pari-passu charge by way of hypothecation of all the Company''s movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created / to be created in favour of the Company''s Bankers on specifi ed movable properties for securing borrowings for working capital requirements.

2 Further, the term loans from banks and fi nancial institutions are secured by second pari-passu charge on all current assets present and future and the personal guarantee of the Managing Director of the Company.

3 Term loan from others are secured by hypothecation of vehicles purchased against these loans.

c. Varinder Foundation a related party alongwith Company as co-applicant borrowed a sum of Rs. 10 Crore from Corporation Bank on behalf of the Company, to meet the additional working capital requirements of the Company. The said loan is shown under the head unsecured loan, from related party.

Security of such loan to bank is provided by the said party.

d. Foreign Currency Convertible Bonds at the beginning and at the end of the reporting period

e. Terms of repayment of Foreign Currency Convertible Bonds

Foreign Currency Convertible Bonds are redeemable on 5 June 2015 at a premium of 41.25% of their principal amount unless previously redeemed, repurchased and cancelled or converted.

Details of security

Loans repayable on demand from banks are secured by way of fi rst pari-passu charge on all present and future fi nished goods, work-in-progress, raw materials, stores and spares, book debts and second pari-passu charge on fi xed assets and further secured by personal guarantee of the Managing Director.

Security of unsecured loan from bank is provided by a third party.


Mar 31, 2013

A. Basis of preparation of fnancial statements:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of fnancial statements, in conformity with the generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of fnancial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

c. Revenue recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all signifcant risks and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and

b) no signifcant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

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

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no signifcant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee benefts

a) Short term employee benefts:

Short term employee benefts are recognised as an expense on an undiscounted basis in the statement of proft and loss for the year in which the related service is rendered.

b) Post employment benefts:

i) Defned contribution plans:

Provident fund: Contributions to provident fund are made in accordance with the provisions of the Employee''s Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of proft and loss in the period in which such contributions fall due.

ii) Defned beneft plans:

Gratuity: Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

c) Leave encashment:

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of proft and loss account.

e. Tangible fxed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fxed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fxed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fxed assets

i) Depreciation on all fxed assets is provided on the straight line method in accordance with and in the manner specifed in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fxed assets arising from exchange rate variation is depreciated over the residual life of the respective fxed assets.

h. Amortisation

Intangible assets are amortised on straight line method over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-progress Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

k. Cenvat credit

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government grants and subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefts in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to capital reserve. Government subsidy received for a specifc asset is reduced from the cost of the said asset.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the fnancial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a signifcant portion of the risks and rewards of ownership are retained by the lessor are classifed as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous fnancial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fxed assets, these exchange differences are adjusted to the carrying cost of such fxed assets.

c. The premium or discount arising at inception of forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of proft and loss in the reported period in which the exchange rate changes proft or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

The accounting treatment followed for taxes on income is to provide for current tax and deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning per share

Basic earning per share is computed by dividing the net proft or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fxed assets

At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Provisions and contingent liabilities

i. Provisions are recognised when;

a) the Company has a present obligation as a result of a past event:

b) a probable outfow of resources embodying economic benefts is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) Possible obligation that arises from past events and existence of which will be confrmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outfow of resources embodying economic benefts will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.


Mar 31, 2012

A. Basis of preparation of financial statements:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of Section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of financial statements, in conformity with the generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

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

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefits

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the statement of profit and loss for the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund: Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of profit and loss in the period in which such contributions fall due.

ii) Defined Benefit Plans:

Gratuity: Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

c) Leave encashment:

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss account.

e. Tangible fixed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange difference arising on reporting of long term foreign currency monetary items at rate different from those at which they were initially recorded during the period or reported in previous financial statements attributable to the acquisition of fixed assets are capitalised.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fixed assets

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

h. Amortisation

Intangible assets are amortised on straight line method over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-progress Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

k. Cenvat Credit

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy received for a specific asset is reduced from the cost of the said asset.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such assets.

q. Accounting for taxes on income

The accounting treatment followed for taxes on income is to provide for Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods. r. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Provisions and Contingent Liabilities

i. Provisions are recognised (for liabilities that can be measured by using a substantial degree of estimation) when;

a) the Company has a present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.


Mar 31, 2011

A. Basis for preparation of Financial Statements

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statement conforming to generally accepted accounting principals require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

C. Revenue Recognition

i. Sales

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of goods transferred to a degree usually associated with ownership and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii. Export Incentives

The revenue in respect of export incentives is recognised on post export basis.

iii. Dividend

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

iv. Interest:

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v. Insurance and other claims

Revenue in respect of the claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D. Employee Benefits

i. Short Term Employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

ii. Post Employment Benefits: a) Defined Contribution Plans: Provident Fund:

Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to profit and loss account in the period in which such contributions fall due.

b) Defined Benefit Plans:

Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

Leave encashment

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

c) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss account.

E. Fixed Assets

i) Fixed assets are stated at historical cost less accumulated depreciation.

ii) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

iii) The exchange difference arising on reporting of long term foreign currency monetary items at rate different from those at which they were initially recorded during the period or reported in previous financial statements attributable to the acquisition of fixed assets are capitalised.

F. Depreciation

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

G. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current Investments are carried at lower of cost and fair value.

H. Inventories:

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-process Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

I. Cenvat Credit:

Cenvat credit on excise duty paid on inputs, capital assets and input services is taken in accordance with the Cenvat Credit Rules, 2004.

J. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

K. Subsidy:

Government grants available to the company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy received for a specific asset is reduced from the cost of the said asset.

L. Foreign Exchange Transactions

i. Foreign currency transactions are recorded on initial recognition in reporting currency by applying foreign currency amount, the exchange rate, between the reporting currency and the foreign currency, at the date of transaction.

ii. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such assets.

M. Accounting for Taxes on Income

Tax expense comprises of Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

N. Impairment of Assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

O. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

P. Operating Lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

Q. Provisions and Contingent Liabilities

i. Provisions are recognised for liabilities that can be measured by using a substantial degree of estimation, if:

a) the company has present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in the case of:

a) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.


Mar 31, 2010

A. Accounting Convention

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable Accounting Standards referred to in sub section (3C) of Section 211 and other relevant provisions of the Companies Act, 1956.

B. Use of estimates

The preparation of financial statement conforming to generally accepted accounting principals require estimates and assumptions to be made that effect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

C. Revenue Recognition

i. Sales Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) When all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of goods transferred to a degree usually associated with ownership and;

b) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

c) The revenue in respect of export incentives is recognised a post export basis.

ii. Interest

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii. Insurance and other claims

Revenue in respect of the claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D. Employee Benefits

i. Short Term Employee Benefits

Short term employee benefits are recognised as an expense on an undiscounted basis in the Profit and Loss Account of the year in which the related service is rendered.

ii. Post Employment Benefits

a) Defined Contribution Plans Provident Fund

Contributions to provident fund are made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to Profit and Loss Account in the period in which such contributions fall due.

b) Defined Benefit Plans Gratuity

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

Leave encashment

Provision for leave with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year. c) The actuarial gain/loss

The actuarial gain/loss is recognised in statement of Profit and Loss Account.

E. Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation.

F. Expenditure incurred during construction period

In respect of new/major expansion cost incurred which are directly attributable to bringing the assets to their working condition are capitalized on various categories of fixed assets on proportionate basis.

G. Depreciation

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period.

H. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

I. Cenvat Credit

Cenvat credit on excise duty paid on inputs, capital assets and input services is taken in accordance with the Cenvat Credit Rules, 2004. J. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition,, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

L. Accounting for Taxes on Income

Tax expense comprises of Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

M. Impairment of Assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

N. Earning Per Share

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

O. Operating Lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

P. Provisions and Contingent Liabilities

i. Provisions are recognised for liabilities that can be measured by using a substantial degree of estimation, if:

a) the Company has present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in the case of:

a) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot made.

 
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