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Accounting Policies of Lyka Labs Ltd. Company

Jun 30, 2015

1. CORPORATE INFORMATION

Lyka Labs Limited ("the Company") is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (as amended by the Companies Act, 2013). Its shares are listed on two stock exchanges in India. The Company is engaged in the business of pharmaceutical and related activities, including research.

(a) Basis of Preparation of Financial Statements

These financial statements have been prepared under the historical cost convention except certain Fixed Assets, which have been revalued on the accrual basis of accounting in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") and are in conformity with mandatory accounting standards issued by Institute of Chartered Accountants of India, as prescribed under the Section 133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act")/ Companies Act 1956 ("the 1956 Act"), as applicable.

(b) Use of Estimates

The presentation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

(c) Fixed Assets

1. Tangible Fixed Assets

(i) Fixed Assets other than Land, Building and Plant & Machinery are recorded at cost of acquisition or construction.

(ii) Land, Building and Plant & Machinery:

(a) These Fixed Assets are recorded at net present replacement value as on 30th September, 2010.

(b) Additions to Land, Buildings and Plant & Machinery after 30th September, 2010 are recorded at cost.

Note: Cost comprises of all direct costs/ expenses (including borrowing costs referred to in 2(d)) incurred in order to bring such assets to their present condition and location including Indirect Taxes in the case of Land and Buildings but excluding applicable set-off in respect of Indirect Taxes relating to Plant & Machinery and Software.

(iii) Fixed Assets include assets purchased under Hire Purchase Agreement.

2. Intangible Fixed Assets

Intangible Fixed Assets include cost of acquired software, designs and contract acquisition costs. Intangible assets are initially measured at acquisition cost including any directly attributable costs of preparing the asset for its intended use.

Internally developed intangibles

Expenditure incurred in respect of "new product development and applied research" held under Capital Work-in-Progress shall be recognized as Intangibles upon successful development of respective products. Refer note note 2(d) for the policy on capitalization of borrowing costs.

(d) Borrowing Cost

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition or development of qualifying assets are capitalized up to the commencement of commercial production and are included in the cost of the assets to which they relate.

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Statement of Profit and Loss.

(e) Depreciation /Amortization

1. Tangible Fixed Assets

(i) Depreciation on tangible fixed assets is provided on straight-line method at the rates and manner in accordance with Schedule II to the Companies Act, 2013.

(ii) Leasehold land is amortized over the period of lease.

(iii) Depreciation in respect of re-valued assets is charged to Revaluation Reserve and/or to Statement of Profit & Loss after the Revaluation Reserve is exhausted.

2. Intangible Fixed Assets

Amortization of intangible fixed assets is provided on straight-line method basis over a period of 10 years from the date of implementation based on management's estimate of useful life over which economic benefit will be derived from its use.

(f) Investments

Investments are stated at cost of acquisition. Provision is made for diminution in value of long-term investments, if such diminution is other than temporary in nature.

(g) Inventories

(i) Raw Material, Packing Material, Work-in-Process and Finished Goods are valued at lower of cost or net realizable value. Cost is determined by using FIFO method. Cost comprises of all costs of purchases (net of CENVAT credit, rebates, trade discount etc.), costs of conversion and cost incurred to bring the inventories to the present location and condition.

(ii) Stores and Spares are charged to consumption as and when purchased.

(h) Employee Benefits

The Company's employee benefits primarily cover provident fund, superannuation, gratuity and compensated absences.

(i) Provident fund and Superannuation fund are defined contribution schemes and the Company has no further obligation beyond the contributions made to the fund. The contribution on account of Provident Fund is made to the Employees Provident Fund and that for Superannuation, is made to The Life Insurance Corporation of India. The said contributions are charged to Statement of Profit and Loss in the Year in which they accrue.

(ii) Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the year. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. The Company makes contributions to a fund administered and managed by the Life Insurance Corporation of India (LIC) to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although LIC administers the scheme.

(iii) Leave encashment / compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

(i) Translation of Foreign Currency Transactions

Transactions in foreign currency are recorded at the prevalent rates of exchange in force at the time the transactions are affected. Monetary items denominated in foreign currencies are translated at year- end rates. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in cases where they relate to:

(i) Acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets; and

(ii) Other long-term foreign currency monetary items that are amortized over the remaining life of the concerned monetary item.

(j) Revenue Recognition

Revenue is recognized when realization is reasonably certain in respect of:

(i) Sale of goods on transfer of significant risk and reward. Sales are inclusive of excise duty.

(ii) Processing charges are recognized on dispatch basis.

(iii) Transfer of Technology fees are recognized when the related services are performed as per the agreement.

(iv) Insurance / other claims, interest, commission and royalty.

(v) Export incentives on accrual basis.

(k) Taxes on Income

(i) Current tax is determined as the amount of Income Tax in respect of taxable income for the year in accordance with the applicable tax rates and the prevailing tax laws.

(ii) Deferred Ta x is recognized, subject to the consideration of prudence for deferred tax assets, on timing differences between taxable income and accounting income that originate in one period/s/ year/s and are capable of reversal in one or more subsequent years. Deferred Tax Assets and Liabilities are measured in accordance with the applicable tax rates and the prevailing tax laws.

(l) Contingent Liabilities

Contingent liabilities are not provided for and are disclosed by way of notes to accounts.


Jun 30, 2014

A. Basis of Preparation of Financial Statements

These Financial Statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the Generally Accepted Accounting Principles in India and the provisions of the Companies Act, 1956.

b. Use of Estimates

The presentation of Financial Statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

c. Fixed Assets

1) Tangible Assets

(i) Fixed Assets other than Land, Building and Plant & Machinery are recorded at cost of acquisition or construction.

(ii) Land, Building and Plant & Machinery are recorded at net present replacement value.

(iii) Gross Block of Fixed Assets includes assets purchased under Hire Purchase Agreement.

2 ) Intangible Assets

Expenditure incurred in respect of "new product development and applied research" held under Capital Work-in-Progress shall be recognized as Intangibles upon successful development of respective products.

d. Borrowing Cost

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition or development of qualifying assets are capitalized upto the commencement of commercial production and are included in the cost of the assets to which they relate.

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Statement of Profit and Loss.

e. Depreciation /Amortization

Depreciation has been provided on Straight Line Method as per Section 205(2)(b) of the Companies Act, 1956 as under:

(i) On assets installed at Mumbai before 30th June, 1986, in accordance with Circular 1/86 dated 21st May, 1986 issued by the Department of Company Affairs.

(ii) On assets installed at Mumbai from 1st July, 1986 to 15th December, 1993 at the rates specified in Schedule XIV to the Companies Act, 1956 prevailing before the alterations made by the Notification No. GSR 756 E dated 16th December, 1993 issued by the Department of Company Affairs came into force.

(iii) On all other assets at the rates specified in Schedule XIV to the Companies Act, 1956 as altered by the Notification referred to in e (ii) above.

(iv) Leasehold land is written off over the period of lease.

(v) Depreciation in respect of re-valued assets is charged to Revaluation Reserve and/or to Statement of Profit & Loss after the Revaluation Reserve is exhausted.

f. Investments

Investments (including investments in Joint Venture) are stated at cost of acquisition. Provision is made for diminution in value of Long-term investments, if such diminution is other than temporary in nature.

g. Inventories

(i) Raw Material, Packing Material, Work-in-Process and Finished Goods are valued at lower of cost or net realisable value. Cost is determined by using FIFO method. Cost comprises of all costs of purchases (net of Cenvat credit, rebates, trade discount etc.), costs of conversion and cost incurred to bring the inventories to the present location and condition.

(ii) Stores and Spares are charged to consumption as and when purchased.

h. Employee benefits

The Company''s employee benefits primarily cover provident fund, superannuation, gratuity and compensated absences.

(i) Provident fund and Superannuation fund are defined contribution schemes and the Company has no further obligation beyond the contributions made to the fund. The contribution on account of Provident Fund is made to the Employees Provident Fund and that for Superannuation, is made to The Life Insurance Corporation of India. The said contributions are charged to Statement of Profit and Loss in the year in which they accrue.

(ii) Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the period. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. The Company makes contributions to a fund administered and managed by the Life Insurance Corporation of India (LIC) to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although LIC administers the scheme.

(iii) Leave encashment / compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

i. Cenvat

Cenvat is accounted as per "exclusive method" of accounting.

j. Translation of Foreign Currency Transactions

Transactions in foreign currency are recorded at the prevalent rates of exchange in force at the time the transactions are effected. Monetary items denominated in foreign currencies are translated at year-end rates.

Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss except in cases where they relate to:

(i) acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets; and

(ii) other long-term foreign currency monetary items that are amortized over the remaining life of the concerned monetary item.

k. Revenue Recognition

Revenue is recognised when realisation is reasonably certain in respect of :

(i) Sale of goods on transfer of significant risk and reward. Sales are inclusive of excise duty and net of customer''s claims when admitted.

(ii) Processing charges are recognized on dispatch basis.

(iii) Transfer of Technology fees are recognized when the related services are performed as per the agreement.

(iv) Insurance / other claims, interest, commission and royalty.

(v) Export incentives / Benefits are accounted on accrual basis.

l. Taxes on Income

(i) Current tax is determined as the amount of Income Tax in respect of taxable income for the year.

(ii) Deferred Tax is recognized, subject to the consideration of prudence for deferred tax assets, on timing differences between taxable income and accounting income that originate in one period/s/year/s and are capable of reversal in one or more subsequent years. Deferred Tax assets and liabilities are measured using the tax rate and tax laws that have been enacted or substantially enacted by the balance sheet date.

m. Contingent Liabilities

Contingent liabilities are not provided for and are disclosed by way of notes to accounts.


Mar 31, 2012

A. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

c. Fixed Assets

(i) Fixed Assets other than Land, Building and Plant & Machinery are recorded at cost of acquisition or construction.

(ii) Land, Building and Plant & Machinery are recorded at "net present replacement value".

(iii) Gross Block of Fixed Assets includes assets purchased under Hire Purchase Agreement.

(iv) Certain expenditure incurred in respect of "new product development and applied research" held under Capital Work-in-Progress shall be recognized as Intangibles upon successful development of respective products.

d. Borrowing Cost

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition or development of qualifying assets are capitalized upto the commencement of commercial production and are included in the cost of the assets to which they relate.

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Profit and Loss Account.

e. Depreciation /Amortisation

Depreciation has been provided on Straight Line Method as per Section 205(2)(b) of the Companies Act, 1956 as under:

(i) On assets installed at Mumbai before 30th June, 1986, in accordance with Circular 1/86 dated 21st May, 1986 issued by the Department of Company Affairs.

(ii) On assets installed at Mumbai from 1st July, 1986 to 15th December, 1993 at the rates specified in Schedule XIV to the Companies Act, 1956 prevailing before the alterations made by the Notification No. GSR 756 E dated 16th December, 1993 issued by the Department of Company Affairs came into force.

(iii) On all other assets at the rates specified in Schedule XIV to the Companies Act, 1956 as altered by the Notification referred to in e (ii) above.

(iv) Leasehold land is written off over the period of lease.

(v) Depreciation in respect of revalued assets is charged to Revaluation Reserve and/or to Profit & Loss Account after the Revaluation Reserve is exhausted.

f. Investments

Investments (including investments in Joint Venture) are stated at cost of acquisition. Provision is made for diminution in value of long-term investments, if such diminution is other than temporary in nature.

g. Inventories

(i) Raw Material, Packing Material, Work-in-Process and Finished Goods are valued at lower of cost or net realisable value. Cost is determined by using FIFO method. Cost comprises of all costs of purchases (net of Cenvat credit, rebates, trade discount etc.), costs of conversion and cost incurred to bring the inventories to the present location and condition.

(ii) Stores and Spares are charged to consumption as and when purchased.

h. Employee benefits

(i) The Company's employee benefits primarily cover provident fund, superannuation, gratuity and compensated absences.

(ii) Provident fund and Superannuation fund are defined contribution schemes and the Company has no further obligation beyond the contributions made to the fund. The contribution on account of Provident Fund is made to the Employees Provident Fund and that for Superannuation, is made to The Life Insurance Corporation of India. The said contributions are charged to profit and loss account in the year in which they accrue.

(iii) Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the year. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. The Company makes contributions to a fund administered and managed by the Life Insurance Corporation of India (LIC) to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although LIC administers the scheme.

(iv) Leave encashment/compensated absences are provided for based on actuarial valuation, which is done as per projected unit credit method.

i. Cenvat

Cenvat is accounted as per "exclusive method" of accounting.

j. Translation of Foreign Currency Transactions

Transactions in foreign currency are recorded at the prevalent rates of exchange in force at the time the transactions are effected. Monetary items denominated in foreign currencies are translated at year-end rates. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to:

(i) acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets and

(ii) other long-term foreign currency monetary items that are amortized over the remaining life of the concerned monetary item.

k. Revenue Recognition

Revenue is recognised in respect of

(i) Sale of goods on transfer of significant risk and reward;

(ii) Processing charges are recognized only when it is reasonably certain that the ultimate realisation will be effected;

(iii) Insurance / other claims, interest, commission, royalty, etc. are recognised only when it is reasonably certain that the ultimate realisation will be effected.

(iv) Transfer of Technology fees are recognized when the related services are performed.

l. Sales

Sales are inclusive of excise duty and net of customer's claims when admitted. The value of Bulk Drugs transferred from one Division to another is not included in Sales.

m. Taxes on Income

Current tax is determined as the amount of Income Tax in respect of taxable income for the year. Deferred Tax is recognized, subject to the consideration of prudence for deferred tax assets, on timing differences between taxable income and accounting income that originate in one period/s/year/s and are capable of reversal in one or more subsequent years. Deferred Tax assets and liabilities are measured using the tax rate and tax laws that have been enacted or substantially enacted by the balance sheet date.

n. Contingent Liabilities

Contingent liabilities are not provided for and are disclosed by way of notes to accounts.


Sep 30, 2010

A. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known / materialized.

c. Fixed Assets

(i) Fixed Assets other than Land, Building and Plant & Machinery are recorded at cost of acquisition or construction.

(ii) Land, Building and Plant & Machinery are recorded at "net present replacement value".

(iii) Gross Block of Fixed Assets includes assets purchased under Hire Purchase Agreement.

(iv) Certain expenditure incurred in respect of "new product development and applied research" held under Capital Work-in-Progress shall be recognized as Intangibles upon completion of development of respective products.

d. Borrowing Cost

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition of qualifying assets are capitalized upto the commencement of commercial production and are included in the cost of the assets to which they relate.

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to Profit and Loss Account.

e. Depreciation/Amortisation

Depreciation has been provided on Straight Line Method as per Section 205(2)(b) of the Companies Act, 1956 as under:

(i) On assets installed at Mumbai before 30th June, 1986, in accordance with Circular 1/86 dated 21st May, 1986 issued by the Department of Company Affairs.

(ii) On assets installed at Mumbai from 1st July, 1986 to 15th December, 1993 at the rates specified in Schedule XIV to the Companies Act, 1956 prevailing before the alterations made by the Notification No. GSR 756 E dated 16th December, 1993 issued by the Department of Company Affairs came into force.

(iii) On all other assets at the rates specified in Schedule XIV to the Companies Act, 1956 as altered by the Notification referred to in e (ii) above.

(iv) Leasehold land is written off over the period of lease.

(v) Depreciation in respect of revalued assets is charged to Revaluation Reserve and/or Profit & Loss Account.

f. Investments

Investments (including investments in Joint Venture) are stated at cost of acquisition. Provision is made for diminution in value of long-term investments, if such diminution is other than temporary in nature.

g. Inventories

(i) Raw Material, Packing Material and Work-in-Process are valued at cost. Finished Goods are valued at lower of cost or net realisable value. Cost is determined by using FIFO method. Cost comprises of all costs of purchases (net of Cenvat credit, rebates, trade discount etc.), costs of conversion and cost incurred to bring the inventories to the present location and condition.

(ii) Stores and Spares are charged to consumption as and when purchased.

h. Employee benefits

(i) The Companys employee benefits primarily cover provident fund, superannuation, gratuity and compensated absences.

(ii) Provident fund and Superannuation fund are defined contribution schemes and the Company has no further obligation beyond the contributions made to the fund. The contribution on account of Provident Fund is made to the Employees Provident Fund and that for Superannuation, is made to The Life Insurance Corporation of India. The said contributions are charged to profit and loss account in the year in which they accrue.

(iii) Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the year. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. The Company makes contributions to a fund administered and managed by the Life Insurance Corporation of India (LIC) to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although LIC administers the scheme.

(iv) Long term compensated absences are provided for based on actuarial valuation, which is done as per projected unit credit method.

(v) Annual premiums as determined by the LIC in respect of Gratuity & Leave are charged to the Profit & Loss Account.

i. Cenvat

Cenvat is accounted as per "exclusive method" of accounting.

j. Translation of Foreign Currency Transactions

Transactions in foreign currency are recorded at the prevalent rates of exchange in force at the time the transactions are effected. Monetary items denominated in foreign currencies are translated at year-end rates. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

k. Revenue Recognition

Revenue is recognised in respect of

(i) Sale of goods on transfer of significant risk and reward;

(ii) Processing charges are recognized only when it is reasonably certain that the ultimate realisation will be effected;

(iii) Insurance / other claims, interest, commission, royalty, etc. are recognised only when it is reasonably certain that the ultimate realisation will be effected.

l. Sales

Sales are inclusive of excise duty and net of customers claims when admitted. The value of Bulk Drugs transferred from one Division to another is not included in Sales.

m. Taxes on Income

Current tax is determined as the amount of Income Tax in respect of taxable income for the year. Deferred Tax is recognized, subject to the consideration of prudence for deferred tax assets, on timing differences between taxable income and accounting income that originate in one period/s/year/s and are capable of reversal in one or more subsequent years. Deferred Tax assets and liabilities are measured using the tax rate and tax laws that have been enacted or substantially enacted by the balance sheet date.

n. Contingent Liabilities

Contingent liabilities are not provided for and are disclosed by way of notes to accounts.

o. Comparatives

Comparative financial information is presented in accordance with the Corresponding Figure financial reporting framework set out in Auditing and Assurance Standard 25 on Comparatives. Accordingly, amounts and other disclosures for the preceding period are included as an integral part of the Current Years financial statements.




Sep 30, 2009

A. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the historical cost convention on the accrual basis of accounting, in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

b. Use of Estimates

The presentation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known/materialized.

c. Fixed Assets

(i) Fixed Assets other than Land, Building and Plant & Machinery are recorded at cost of acquisition or construction.

(ii) Land, Building and Plant & Machinery are recorded at net present replacement value.

(iii) Gross Block of Fixed Assets includes assets purchased under Hire purchase agreement

d. Borrowing Cost

Financing costs relating to deferred credits or to borrowed funds attributable to construction or acquisition of qualifying assets are capitalized upto the commencement of commercial production and are included in the cost of the assets to which they relate.

A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use.

All other borrowing costs are charged to Profit and Loss Account.

e. Depreciation /Amortisation

Depreciation has been provided on Straight Line Method as per Section 205(2)(b) of the Companies Act, 1956 as under:

(i) On assets installed at Mumbai before 30th June, 1986, in accordance with Circular 1/86 dated 21st May, 1986 issued by the Department of Company Affairs.

(ii) On assets installed at Mumbai from 1st July, 1986 to 15th December, 1993 at the rates specified in Schedule XIV to the Companies Act, 1956 prevailing before the alterations made by the Notification No. GSR 756 E dated 16th December, 1993 issued by the Department of Company Affairs came into force.

(iii) On all other assets at the rates specified in Schedule XIV to the Companies Act, 1956 as altered by the Notification referred to in e (ii) above.

(iv) Leasehold land is written off over the period of lease.

(v) Depreciation in respect of revalued assets is charged to Revaluation Reserve / Profit & Loss Account.

f. Investments

Investments (including investments in Joint Venture) are stated at cost of acquisition. Provision is made for diminution in value of Long-term investments if such diminution is other than temporary in nature.

g. Inventories

(i) Raw Material, Packing Material and Work-in-Process are valued at cost. Finished Goods are valued at lower of cost or net realisable value. Cost is determined by using FIFO method. Cost comprises of all costs of purchases (net of Cenvat credit, rebates, trade discount etc.), costs of conversion and cost incurred to bring the inventories to the present location and condition.

(ii) Stores and Spares are charged to consumption as and when purchased.

h. Employee benefits

The Companys employee benefits primarily cover provident fund, superannuation, gratuity and compensated absences.

(a) Provident fund and Superannuation fund are defined contribution schemes and the Company has no further obligation beyond the contributions made to the fund. The contribution on account of Provident Fund is made to the Employees Provident Fund and that for Superannuation, is made to The Life Insurance Corporation of India. The said contributions are charged to profit and loss account in the year in which they accrue.

(b) Gratuity liability is a defined benefit obligation and is recorded based on actuarial valuation on projected unit credit method made at the end of the year. The gratuity liability and net periodic gratuity cost is actuarially determined after considering discount rates, expected long term return on plan assets and increase in compensation levels. The Company makes contributions to a fund administered and managed by the Life Insurance Corporation of India (LIC) to fund the gratuity liability. Under this scheme, the obligation to pay gratuity remains with the Company, although LIC administers the scheme.

(c) Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.

(d) Annual premiums as determined by the LIC in respect of Gratuity & Leave are charged to the Profit & Loss Account.

i. Cenvat

Cenvat is accounted as per exclusive method of accounting.

j. Translation of Foreign Currency Transactions

Transactions in foreign currency are recorded at the prevalent rates of exchange in force at the time the transactions are effected. Monetary items denominated in foreign currencies are translated at year-end rates. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Profit and Loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets, except as stated in note no 12 in schedule 15.

k. Revenue Recognition

Revenue is recognised in respect of

(i) Sale of goods on transfer of significant risk and reward;

(ii) Processing charges are recognized only when it is reasonably certain that the ultimate realisation will be effected.

(iii) Insurance / other claims, interest, commission, royalty, etc. are recognised only when it is reasonably certain that the ultimate realisation will be effected.

l. Sales

Sales are inclusive of excise duty and net of customers claims when admitted. The value of Bulk Drugs transferred from one Division to another is not included in Sales.

m. Taxes on Income

Current tax is determined as the amount of Income Tax in respect of taxable income for the year and that for Fringe Benefit Tax.

Deferred Tax is recognized, subject to the consideration of prudence for deferred tax assets, on timing differences between taxable income and accounting income that originate in one period/s/year/s and are capable of reversal in one or more subsequent years. Deferred Tax assets and liabilities are measured using the tax rate and tax laws that have been enacted or substantially enacted by the balance sheet date.

n. Contingent Liabilities

Contingent liabilities are not provided for and are disclosed by way of notes to accounts.

o. Comparatives

Comparative financial information is presented in accordance with the Corresponding Figure financial reporting framework set out in Auditing and Assurance Standard 25 on Comparatives. Accordingly, amounts and other disclosures for the preceding period are included as an integral part of the Current Years financial statements, and are to be read in relation to the amounts and other disclosures relating to the Current period. Figures of the previous year are regrouped and reclassified wherever necessary to correspond to the figures of the current financial period.

 
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