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Accounting Policies of Kwality Ltd. Company

Mar 31, 2016

1(i) General Information

Kwality Limited ("The Company") was incorporated on 21st August 1992. The Company is engaged in manufacture/ processing and sale of milk, milk products and dairy products. The Company is listed both on Bombay Stock Exchange and National Stock Exchange. The Company is having manufacturing facility at Uttar Pradesh, Haryana and Rajasthan. The Company operates both in domestic and international markets.

1(ii) Significant Accounting Policies (a) Basis of Preparation of Accounts

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and comply with mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Companies Act 2013 (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI) and as adopted consistently by the Company except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III as per Companies Act 2013. Based on the nature of products and the time between the acquisition of the same of processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of its assets and liabilities.

(b) Use of Estimates

The preparation of financial statements are in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the financial statements in the year which results are known/ materialized. If material, their effects are disclosed in the notes to the financial statements. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c) Revenue recognition Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, sales tax, rebates, trade discounts and price differences.

Income from Services

Revenue from milk processing and other services, if any, are recognized as and when services are rendered and are accounted on an accrual basis.

Interest Income

Interest income is recognized on time proportion basis taken into account the amount outstanding and the rate applicable.

Exports Benefits

Exports benefits are recognized on accrual basis in the statement of profit and loss when the reasonable right to receive the same is established.

(d) Fixed Assets Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes freight, duties, taxes, other expenses incidental to acquisition and installation and also includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets up to the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets.

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

Losses arising from the impairment and gains or losses arising from disposal of fixed assets are recognized in the Statement of Profit and Loss.

Intangible Assets

Acquired computer software are capitalized at cost of acquisition (Including License fees paid), net of accumulated amortization and accumulated impairment losses if any and are disclosed as intangible assets.

Other intangible assets are shown at cost of acquisition net of accumulated amortization and accumulated impairment loss if any.

(e) Depreciation:

Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Written down value (WDV). Pursuant to the requirement of the Companies Act 2013 (The Act), The company has revised the depreciation rates based on useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets where based on the internal technical assessment of the estimated economic useful lives of the fixed assets, the useful life is different than those prescribed in Schedule II are used:

Intangible asset are amortized on Written Down Value over the useful life of the asset up to a maximum of five years commencing from the month when the asset is first put to use.

The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.

(f) Employee Benefits

Short Term Employee Benefits:

Short term employee benefits such as salaries, wages, bonus etc. are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post-Employment Benefits Defined Contribution Plans:

Company''s contribution to Employees Provident Fund Scheme, Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due

Defined benefit plans:

The Company''s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. Actuarial gains and losses arising on such valuation are recognized immediately in the Statement of Profit and Loss.

Other Defined Plans:

Benefits under the Company''s leave encashment constitute other long-term employee benefits. The liability in respect of vacation pay is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Termination Benefits are recognized as an expense in the year in which they are incurred.

Employee Stock Option Plan (ESOP):

The Employee Stock Option Plan ("The Scheme") provides for grant of equity shares of the Company to the employees of the Company and its subsidiaries. The Scheme provides that employees are granted an option to acquire the equity shares of the Company that vests in a graded manner or as decided by Remuneration, Compensation and Nomination Committee. The options may be exercised within a specified period. The Company follows the intrinsic value method to account for its stock based employee compensation plans. Compensation cost is measured as the excess, if any, of the fair market price of the underlying stock over the exercise price on the grant date and is amortized over the vesting period of the option on a straight line basis.

The fair market price is the latest closing price on the date of the Board/ Committee meeting in which the options are granted, on the stock exchange on which the shares of the Company are listed. If the shares are listed on more than one stock exchange, than the stock exchange where there is highest trading volume on the said date is considered.

(g) Inventories

Raw Material, components, stores and spares are valued at lower of cost and net realizable value.

Working-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials, labor and related production overheads in the ordinary course of business. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) Investments

Investments if any which are readily realizable and intended to be held for not more than a year from the date on which the investment is made are classified as current investment. All other investments are classified as long term investment.

Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognize a decline, other than temporary value of the investment.

Investments in subsidiaries, joint ventures and associates if any are held for long term and valued at cost reduced by diminution of permanent nature therein, if any. No profit and losses of the subsidiaries are accounted for.

(i) Provision for Current and Deferred Tax

Income Tax expenses comprise current tax and deferred tax charge or credit. Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions under the Income tax Act, 1961. The deferred tax charge or credit resulting from the timing difference between taxable and accounting income and the corresponding deferred tax liability and assets are recognized using the tax rates that have been enacted or substantively enacted on the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Minimum Alternative tax credit is recognized 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 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.

(j) Impairment of Assets

The carrying amounts of The Company''s assets are reviewed at each balance sheet date in accordance with Accounting Standard 28 ''Impairment of Assets'' to determine whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. 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 and the reduction is treated as an impairment loss and is recognized in the statement of profit and loss. Where there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.

(k) Foreign Exchange Transactions Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Subsequent Recognition

All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date. As at the reporting date, nonmonetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at date of the transaction.

Exchange Differences

The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.

All other exchange differences are recognized as income or expenses in the period in which they arise.

(l) Government Grants

Government grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received. Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge. Other government grants are recognized as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets till the time such assets are ready for the intended use, are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments

The Company is engaged mainly in processing, manufacturing and trading of milk, milk products & dairy products. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

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

Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

Contingent Assets: Contingent assets are neither recognized nor disclosed.

(p) Leases (1) Finance Lease

Assets acquired under finance lease are recognized at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment is apportioned between the finance charge and the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operating and leased assets are not recognized in the company Balance sheet. Payment under operating leases is recognized in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.

(r) Cash and Cash Equivalents

Cash and cash equivalents consist of cash, bank balances in current and short term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase.

(ii) Rights, preferences and restrictions attached to the equity shares :

- The Company has only one class of equity shares having a par value of ''1/-per share. Each shareholder is eligible for one vote per share held.

- The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting.

- The dividend distributable to the shareholders for the year ended on 31st March 2016, at the rate of ''0.10 per equity share (previous year '' 0.10) has been recognized on 23,42,74,516 nos. of equity shares existing on the date of board meeting (including 1,03,62,694 nos. of equity shares allotted on conversion of warrants on 09 April 2016)."

- In the event of liquidation of the company, the equity share holders will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

(iv) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, by way of bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:

(a) The Company has not issued any shares pursuant to contract(s) without payment being received in cash.

(b) The Bonus issue is made by capitalization of profit. However no bonus issues have been done in preceding 5 years

(c) The Company has not undertaken any buy back of shares.

(v) Shares reserved for issue under options and contracts/ commitments for sale/ disinvestment

There are no shares reserved for issue under contracts/ commitments for sale/ disinvestment. However the Company has reserved issuance of 1,00,00,000 (Previous Year Nil) Equity Shares of ''1 each for offering to the eligible employees of the Company and its subsidiaries under Employees Stock Option Plan 2014 (ESOP 2014). During the year the Company has granted 19,87,000 (Previous Year Nil) Options at a price of ''38 per option plus all applicable taxes. The options would vest over a period of 1 years. The other disclosure in respect of the ESOP Scheme are as under:"

Money received against Convertible Warrants represents amount received towards Convertible Warrants which entitles the warrant holder, the option to apply for and be allotted equivalent number of equity shares of the face value of ''1 each. The Company on preferential basis has allotted the following Convertible Warrants at issue price of Rs 48.25 in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI ICDR Regulations 2009) in 2014-15

The allotters at Sr. no. 1 to 2 above are entitled to apply for and be allotted one equity share for each Warrant held by them on payment of balance 75% of the issue price within 18 months from the date of allotment of Convertible Warrants. The allottee at Sr. no. 3 exercised its right to convert the Convertible Warrants into equity shares after paying the balance amount and accordingly 51,81,347 equity shares were issued to Mrs Sonika Gupta for an aggregate consideration of Rs, 2500.00 lacs.

Utilization of proceed of Convertible Warrants issued: The amount of Rs, 1,875 lacs received against Convertible Warrants has been utilized towards capital expenditure requirement.


Mar 31, 2014

(a) Basis of Preparation of Accounts

The financial statements are prepared under historical cost convention on an accrual basis of accounting and in accordance with the generally accepted accounting principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956, ("the Act”) as adopted consistently by the Company.

(b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c)Revenue recognition Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, rebates, trade discounts and price differences.

Income from Services

Revenue from Milk Processing services are recognized as and when services are rendered, and are accounted on an accrual basis.

Interest Income

Interest income is recognised on time proportion basis taken into account the amount outstanding and the rate applicable. Exports benefits are recognised in the statement of profit and loss when the reasonable right to receive and the same is established.

Other Income & Expenditure

Other Income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Fixed Assets Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets. In respect of new projects, all cost including borrowing cost incurred upto the date of commencement of commercial production or when related asset is put to use are capitalised.

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

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss.

Intangible Assets

Acquired computer software are capitalised at cost of acquisition and disclosed as intangible assets

(e) Depreciation:

Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(f) EMPLOYEE BENEFITS

Short Term Employee Benefits :

Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits

Defined Contribution Plans:

Company''s contribution to state governed Provident Fund Scheme, Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans:

The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method . Actuarial gains and losses arising on such valuation are recognized immediately.

Other Defined Plans:

Other long term benefits (leave entitlement) are recognized in a manner similar to defined benefit plans:

Termination Benefits are recognized as an expense in the year in which they are incurred.

(g) Inventories :

Raw Material, components, stores and spares are valued at lower of cost and net realisable value.

Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) Investments

Investments which are readily realizable and intended to be held for not more than a year from the date on which the investment made are classified as current investment. All other investment are classified as long term investment.

Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognise a decline, other than temporary value of the investment.

(i) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in the future.

(j) 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 asset. 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 and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. Where there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carryingamount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods."

(k) Foreign Exchange Transactions

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Subsequent Recognition

All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date.

Exchange Differences

The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "longterm foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.

All other exchange differences are recognised as income or expenses in the period in which they arise.

(l) Government Grants

Government grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.

Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Other government grants are recognised as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments

The Company is engaged mainly in trading, processing, manufacturing of milk and dairy poducts. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

(O) Provisions, Contingent Liabilities and Contingent Assets

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

Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

Contingent Assets : Contingent assets are neither recognised nor disclosed.

(p) Leases

(1) Finance Lease

Assets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operating and leased assets are not recognised in the company Balance sheet. Payment under operating leases are recognised in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by theweighted average number of equity shares outstanding during the year

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity sharholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.


Mar 31, 2012

(a) Basis of Preparation of Accounts

The financial statements are prepared under historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles, AccountingStandards notified under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof. The accounting policies have been consistently applied by the Company and are consistent with those used inpreviousyear.

(b) Use of Estimates

The preparation of financials statements requires management to make judgements, estimates and assumptions, that affect the application of accounting policies and reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of these financial statements and the reported amount of revenues and expenses for the years presented . Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates is revised and future periods affected.

(c) Revenue Recognition

Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer.Sale comprise amounts invoiced for goods sold and does not include sales tax/vat or any other tax levied on sales, and are net of sales returns, trade discounts and rebates.

Income from Services

Revenue from Milk Processing services are recognized as and when services are rendered, and are accounted for an accrual basis.

Interest Income

Interest income is recognised on time proportion basis taken into accountthe amount outstandingand the rate applicable.

Other Income & Expenditure

Other income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Depreciation

Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(e) Employee Benefits

Short Term Employee Benefits:

Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits Defined Contribution Plans:

Company's contribution to state governed Provident Fund Scheme , Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans

The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognized immediately.

Other Defined Plans:

Other longterm benefits (leave entitlement) are recognized in a mannersimilarto defined benefit plans: Termination Benefits a re recognized as an expense in the year in which they are incurred.

(f) Inventories

Inventories are valued at the lower of cost and estimated net realizable value. Cost of work-in process and finished goods includes manufacturing overheads. Net realizable value is estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make thesale. ^^^^A

(g) Provision forCurrent and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timingdifference" between taxable andaccounting income is accounted for usingthe tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extentthat there is a virtual certainity that the asset will be realized in thefuture.

(h) Impairment of Assets

An asset is treated as impared when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed ifthere has been a change in estimate ofrecoverableamount.

As per assesment conducted by the Company at March 31, 2012 there were no indications that the fixed assets have suffered an impairment loss.

(i) Foreign Exchange Transactions

Foreign currency transactions duringtheyearare recorded at the rates of exchange prevailingon the date of the transaction. Foreign currency monetary assets and liabilities are translated into rupees at the rates of exchange prevailing on the date of the Balance Sheet. All exchange differences are dealt with in the statement of Profit and Loss account.

(j) Government Grants

Government grants are recognized when there reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.

Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carryingvalueof the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate on a systematic basis.

(k) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(I) Business segments

The Company is engaged mainly in trading, processing, manufacturing of milk and dairy poducts. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (AccountingStandards) Rules 2006, are considered to constitue one single primary segment. Hence Segment reporting is not required.

(m) Provisions, Contingent Liabilities and Contingent Assets

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

(n) Leases

(i) Finance Lease

Assets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods duringthe lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operatingand leased assets are not recognised on the companies Balance Sheet. Payment under operating leases are recognised in the Statement of Profitand Loss on a straight line over the lease term.

 
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