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Accounting Policies of Marksans Pharma Ltd. Company

Mar 31, 2015

1 BACKGROUND

Marksans Pharma Limited (The Company) together with it's subsidiaries, operates as an international pharmaceutical organisation with business encompassing the research, manufacturing, marketing and distribution of pharmaceutical products.

The company's equity shares are listed for trading on the National Stock Exchange and the Bombay Stock Exchange in India.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Accounting

The Financial Statements are prepared to comply with the Generally Accepted Accounting Principles in India (Indian GAAP), Including the Accounting Standards notified under the relevant provision of the Companies Act,2013.

2.2 Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortisation.The Company capitalises all costs relating to the acquisition and installation of fixed assets.

2.3 Depreciation

Depreciation on fixed assets other than leasehold land is provided on Straight Line Method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act,2013.

2.4 Impairment of Assets

The company identifies impairable assets at the year end in terms of cash generating unit concept based on para - 5 to 13 of AS-28 issued by ICAI for the purpose of arriving at impairment loss thereon being the difference between the book value and recoverable value of relevant assets. Impairment loss, if any, when crystallizes is charged against revenue of the year.

2.5 Expenditure during construction period

In case of new projects and substantial expansion of existing factories, expenditure incurred including financing costs prior to commencement of commercial production is capitalized. All pre-operative and trial run expenditure accumulated as Capital work-in-progress is allocated on pro- rata basis depending on the prime cost of the assets.

2.6 Inventories

Inventories are valued at the lower of cost (net of CENVAT Credit and Input VAT) or Net Realisable Value as under :

Raw Materials, Packing Materials and Stores – At Weighted Average Cost on FIFO basis.

work-in-process - At Cost (Direct Cost plus Conversion Cost) upto estimated stage of completion.

Finished Goods - At Cost (Direct cost plus Conversion Cost and Excise Duty) or Net Realisable Value, whichever is lower.

2.7 Customs / Excise duty

Excise Duty on finished goods and Custom Duty on imported materials are accounted on production of packed finished goods / receipt of material in custom bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence provision for excise duty is not made.

2.8 Foreign Currency Transaction

a) Foreign currency transactions are recorded at the exchange rates prevailling on the date of such transactions.

Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailling at the date of the Balance Sheet. Gain/Loss arising on account of differences in foreign exchange rates on settlement/ translation of monetary assets and liabilities are recognised in the statement of Profit and Loss, unless they are considered as an adjustment to borrowing costs.

b) Gain/Loss on account of foreign exchange fluctuation in respect of long term liabilities in foreign currencies specific to acquisition of fixed assets are recognised in the Statement of Profit and Loss.

c) Forward contracts entered into by the Company to hedge the risk of existing assets or liabilities are accounted for as per Guidance Note contained in AS 11 'The Effects Of Changes in Exchange Rates (revised 2003)'.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange difference on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. Forward exchange contracts outstanding as at the year-end on account of firm commitment transaction are marked to market and the losses, If any are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of the Institute of Chartered Accountants of India on 'Accounting for Derivatives' issued in March 2008.

2.9 Research and Development

Capital expenditure on research and development is capitalized as fixed assets. Development cost relating to the new and improved product and/or process development is expensed as incurred.

2.10 Investments

Long term investments are stated at cost less any provision for permanent diminution in the value. The current investments are valued at lower of cost or market value.

2.11 Employee Benefits

Liability for Gratuity is accounted on accrual basis.

Annual contributions to Provident Fund & ESIC are accounted on accrual basis and charged to the Statement of Profit and Loss.

2.12 Revenue Recognition

The company recognises sale of goods on the invoice date. Sales comprise of amounts invoiced for goods sold, including excise duty wherever applicable but net of returns and trade discounts. Dividend Income is accounted on receipt of the same. CRAMS milestone revenues are recognised on signing of Agreement with respective parties.

Interest Income and Guarantee Commission

Interest income is recognised on the basis determined by the amount outstanding and the rate applicable and where no significant uncertanity as to measurability or collectability exists. Guarantee commission is recognised in the Statement of Profit and Loss based on contractual terms.

2.13 Income Tax

Current Year:

Provision for current tax has been made in accordance with the Income Tax Laws prevailing for the relevant assessment year.

Deferred Tax:

Deferred tax is recognised, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realised.

Deferred tax assets/liabilities recognised as above is after excluding the amounts, which are getting reversed during the tax holiday period.

2.14 Provisions, Contingent Liabilities & Contingent Assets

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable and an estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the likelihood of outflow of resouces is remote, no provision or disclosure is made.


Mar 31, 2014

1.1 Basis of Accounting

The Financial Statements are prepared to comply in all material aspects with the accounting principles generally accepted in india, including the applicable Accounting Standards notified u/s 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act,1956.

2.2 Fixed Assets

Fixed assets are stated at cost less accumulated depreciation and amortisation.The Company capitalises all costs relating to the acquisition and installation of fixed assets.

2.3 Depreciation

Depreciation on fixed assets other than leasehold land is provided on Straight Line Method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Ministry of Corporate Affairs from time to time. Leasehold land is not amortised.

2.4 Impairment of Assets

The company identifies impairable assets at the year end in terms of cash generating unit concept based on para - 5 to 13 of AS-28 issued by ICAI for the purpose of arriving at impairment loss thereon being the difference between the book value and recoverable value of relevant assets. Impairment loss, if any, when crystallizes is charged against revenue of the year.

2.5 Expenditure during construction period

In case of new projects and substantial expansion of existing factories, expenditure incurred including financing costs prior to commencement of commercial production is capitalized. All pre-operative and trial run expenditure accumulated as Capital Work in Progress is allocated on pro- rata basis depending on the prime cost of the assets.

2.6 Inventories

Inventories are valued at the lower of cost (net of CENVAT Credit and Input VAT) or Net Realisable Value as under :

Raw Materials, Packing Materials and Stores - At Weighted Average Cost on FIFO basis.

Work in Process - At Cost (Direct Cost plus Conversion Cost) upto estimated stage of completion.

Finished Goods - At Cost (Direct cost plus Conversion Cost and Excise Duty) or Net Realisable Value, whichever is ower.

2.7 Customs / Excise duty

Excise Duty on finished goods and Custom Duty on imported materials are accounted on production of packed finished goods / receipt of material in custom bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence provision for excise duty is not made.

2.8 Foreign Currency Transaction

a) Foreign currency transaction are recorded at the exchange rates prevailing on the date of such transactions.

Monetary assets and liabilities as at the Balance Sheet date are translated at the rates of exchange prevailing at the date of the Balance Sheet. Gain/Loss arising on account of differences in foreign exchange rates on

settlement/translation of monetary assets and liabilities are recognised in the Statement of Profit and Loss,unless they are considered as an adjustment to borrowing costs.

b) Gain/Loss on account of foreign exchange fluctuation in respect of long term liabilities in foreign currencies specific to acquisition of fixed assets are recognised in the Statement of Profit and Loss.

c) Forward contracts entered into by the Company to hedge the risk of existing assets or liabilities are accounted for as per Guidence Note contained in AS 11 ''The Effects Of Changes in Exchange Rates (revised 2003)''.

The premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange difference on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year. Forward exchange contracts outstanding as at the year-end on account of firm commitment transaction are marked to market and the losses,If any are recognised in the Statement of Profit and Loss and gains are ignored in accordance with the Announcement of the Institute of Chartered Accountants of India on ''Accounting for Derivatives'' issued in March 2008.

2.9 Miscellaneous Expenditure

Expenditure on launch of new products and their sales promotion for domestic markets are being amortised over a period of 60 months.

2.10 Research and Development

Capital expenditure on research and development is capitalized as fixed assets. Development cost relating to the new and improved product and/or process development are expensed as incurred.

2.11 Investments

Long term investments are stated at cost less any provision for permanent diminution in the value. The current investments are valued at lower of cost or market value.

2.12 Employee Benefits

Liability for Gratuity is accounted on accrual basis.

Annual contributions to Provident Fund & ESIC are accounted on accrual basis and charged to the Statement of Profit & Loss.

2.13 Revenue Recognition

The company recognises sale of goods on the invoice date. Sales comprise of amounts invoiced for goods sold, including excise duty wherever applicable but net of returns and trade discounts.Dividend Income is accounted on receipt of the same. CRAMS milestone revenues are recognised on signing of Agreement with respective parties.

Interest Income and Guarantee Commission

Interest income is recognised on the basis determined by the amount outstanding and the rate applicable and where no significant uncertanity as to measurability or collectability exists. Guarantee commission is recognised in the Statement of Profit and Loss based on contractual terms.

2.14 Income Tax

Current Year:

Provision for current tax has been made in accordance with the Income Tax Laws prevailing for the relevant assessment years.

Deferred Tax:

Deferred tax is recognised, subject to the consideration of prudence, on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent period. Deferred tax assets are not recognised on unabsorbed depreciation and carry forward of losses unless there is virtual certainty that sufficient future taxable income will be available against which deferred tax assets can be realised.

Deferred tax assets/liabilities recognised as above is after excluding the amounts,which are getting reversed during the tax holiday period.

2.15 PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable and an estimate can be made of the amount of the obligation.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation that the liklihood of outflow of resouces is remote, no provision or disclosure is made.


Mar 31, 2013

1.1 Accounting Standards

The Accounts have been prepared in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

1.2 Basis of Accounting

The financials are prepared under the historical cost convention on an accrual basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India referred to in Section 211 (3C) of the Companies Act, 1956.

1.3 Fixed Assets

a Fixed assets are stated at cost along with costs directly attributable to bring the assets to their working condition as reduced by CENVAT credit and Input VAT.

b Intangibles:

- Internally Generated Intangible Assets - ANDA / Market Authorisations / Site Variation Licenses for CRAMS:

ANDA / Market Authorisation / Site Variation Licenses for CRAMS costs represent expenses incurred on development of process / product and compliance with regulatory procedures of the US FDA and other Global Health Authorities in filing of Abbreviated New Drug Applications ("ANDA"), Market Authorisation/Site Variation Licenses for CRAMS and MHRA procedure for Market Authorisation / Site Variation Licenses.

This is in accordance with the requirements of Accounting Standard 26 of the Institute of Chartered Accountants of India.

The Cost of each ANDA / MA / Site Variation Licenses for CRAMS is amortised to the extent of recovery of developmental costs as applicable as per terms of agreement or over a period of ten years from the date on which the product covered by ANDA / Market Authorisations / Site Variation licenses for CRAMS is Commercially marketed, whichever is earlier.

- Product Development Costs:

Product Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Any expenditure carried forward is amortised over the period of expected future economic benefit from the related project, not exceeding ten years.

1.4 Depreciation

Depreciation on fixed assets other than leasehold land is provided on Straight Line Method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Ministry of Corporate Affairs from time to time. Leasehold land is not amortised.

1.5 Impairment of Assets

The company identifies impairable assets at the year end in terms of cash generating unit concept based on para - 5 to 13 of AS-28 issued by ICAIforthe purpose of arriving at impairment loss thereon being the difference between the book value and recoverable value of relevant assets. Impairment loss, if any, when crystallizes is charged against revenue of the year.

1.6 Expenditure during construction period

In case of new projects and substantial expansion of existing factories, expenditure incurred including financing costs prior to commencement of commercial production is capitalized. All pre-operative and trial run expenditure accumulated as Capital Work in Progress is allocated on pro- rata basis depending on the prime cost of the assets.

1.7 Inventories

Inventories are valued at the lower of cost (net of CENVAT Credit and Input VAT) or Net Realisable Value as under:

Raw Materials, Packing Materials and Stores - At Weighted Average Cost on FIFO basis.

Work in Process - At Cost (Direct Cost plus Conversion Cost) upto estimated stage of completion.

Finished Goods - At Cost (Direct cost plus Conversion Cost and Excise Duty) or Net Realisable Value, whichever is lower.

1.8 Customs / Excise duty

Excise Duty on finished goods and Custom Duty on imported materials are accounted on production of packed finished goods / receipt of material in custom bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence provision for excise duty is not made.

1.9 Foreign Currency Transaction

Purchase of imported raw materials, capital goods and components are accounted based on presentation memos from bank on the date of the transaction. In respect of liabilities on imports of raw materials, capital goods and components for which invoices / bills are not received, the liability is accounted based on the exchange rates prevailing on the date of the balance sheet.

Export Sales of finished goods are accounted on the basis of export invoices on the invoice date. In respect of the unrealised exports, the receivables are accounted based on the exchange rates prevailing on the date of the balance sheet.

1.10 Miscellaneous Expenditure

Expenditure on launch of new products and their sales promotion for domestic markets are being amortised over a period of 60 months.

1.11 Research and Development

Capital expenditure on research and development is capitalized as fixed assets. Other expenditure on R&D is expensed as incurred.

1.12 Investments

Long term investments are stated at cost less any provision for permanent diminution in the value. The current investments are valued at lower of cost or market value.

1.13 Employee Benefits

Liability for Gratuity is accounted on accrual basis.

Annual contributions to Provident Fund & ESIC are accounted on accrual basis and charged to the Statement of Profit & Loss.

1.14 Revenue Recognition

The company recognizes sale of goods on the invoice date. Sales comprise of amounts invoiced for goods sold, including excise duty wherever applicable but net of returns and trade discounts.

Dividend Income is accounted on receipt of the same.

CRAMS milestone revenues are recognised on signing of Agreement with respective parties.

1.15 Income Tax

Current Year:

Provision for current tax has been made in accordance with the Income Tax Laws prevailing for the relevant assessment years.

Deferred Tax:

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing difference that result between the profit offered for income taxes and profit as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the balance sheet date. The effect on deferred assets and liabilities of a change in tax rates is recognized in the period that includes the enactment /substantive enactment date. Deferred tax assets on timing difference are recognized only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. However, deferred tax assets on the timing difference when unabsorbed depreciation and losses carried forward exist, are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Deferred tax assets are reassessed for the appropriateness of their respective carrying amounts at each balance sheet date.

The Company offsets , on a year on year basis, the current and noncurrent assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.


Mar 31, 2012

1.1 Accounting Standards

The Accounts have been prepared in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

1.2 Basis of Accounting

The financials are prepared under the historical cost convention on an accrual basis and comply with the Accounting Standards issued by the Institute of Chartered Accountants of India referred to in Section 211(3C) of the Companies Act, 1956.

1.3 Fixed Assets

a Fixed assets are stated at cost along with costs directly attributable to bring the assets to their working condition as reduced by CENVAT credit and Input VAT.

b Intangibles:

- Internally Generated Intangible Assets - ANDA / Market Authorisations / Site Variation Licenses for CRAMS: ANDA / Market Authorisation / Site Variation Licenses for CRAMS costs represent expenses incurred on development of process / product and compliance with regulatory procedures of the US FDA and other Global Health Authorities in filing of Abbreviated New Drug Applications ("ANDA"), Market Authorization/Site Variation Licenses for CRAMS and MHRA procedure for Market Authorization / Site Variation Licenses.

This is in accordance with the requirements of Accounting Standard 26 of the Institute of Chartered Accountants of India. The Cost of each ANDA / MA / Site Variation Licenses for CRAMS is amortised to the extent of recovery of developmental costs as applicable as per terms of agreement or over a period of ten years from the date on which the product covered by ANDA / Market Authorizations / Site Variation licenses for CRAMS is Commercially marketed, whichever is earlier.

Product Development Costs:

- Product Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Any expenditure carried forward is amortised over the period of expected future economic benefit from the related project, not exceeding ten years.

1.4 Depreciation

Depreciation on fixed assets other than leasehold land is provided on Straight Line Method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs from time to time. Leasehold land is not amortised.

1.5 Impairment of Assets

The company identifies impairable assets at the year end in terms of cash generating unit concept based on para - 5 to 13 of AS-28 issued by ICAI for the purpose of arriving at impairment loss thereon being the difference between the book value and recoverable value of relevant assets. Impairment loss, if any, when crystallizes is charged against revenue of the year.

1.6 Expenditure during construction period

In case of new projects and substantial expansion of existing factories, expenditure incurred including financing costs prior to commencement of commercial production is capitalized. All pre-operative and trial run expenditure accumulated as Capital Work in Progress is allocated on a pro- rata basis depending on the prime cost of the assets.

1.7 Inventories

Inventories are valued at the lower of cost (net of CENVAT Credit and Input VAT) or Net Realisable Value as under: Raw Materials, Packing Materials and Stores - At Weighted Average Cost on FIFO basis.

Work in Process - At Cost (Direct Cost plus Conversion Cost) upto estimated stage of completion.

By-Products - At Net Realisable Value.

Finished Goods - At Cost (Direct cost plus Conversion Cost and Excise Duty) or Net Realisable Value, whichever is lower.

1.8 Customs / Excise duty

Excise Duty on finished goods and Custom Duty on imported materials are accounted on production of packed finished goods / receipt of material in custom bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence provision for excise duty does not arise.

1.9 Foreign Currency Transaction

Purchase of imported raw materials, capital goods and components are accounted based on presentation memos from bank on the date of the transaction. In respect of liabilities on imports of raw materials, capital goods and components for which invoices / bills are not received, the liability is accounted based on the exchange rates prevailing on the date of the balance sheet.

Export Sales of finished goods are accounted on the basis of export invoices on the invoice date. In respect of the unrealised exports, the receivables are accounted based on the exchange rates prevailing on the date of the balance sheet.

1.10 Miscellaneous Expenditure

Expenditure on launch of new products and their sales promotion for domestic markets are being amortised over a period of 60 months.

1.11 Research and Development

Capital expenditure on research and development is capitalized as fixed assets. Other expenditure on R&D is expensed as incurred.

1.12 Investments

Long term investments are stated at cost less any provision for permanent diminution in the value. The current investments are valued at lower of cost or market value.

1.13 Employee Benefits

Liability for Gratuity is accounted on accrual basis. Annual contributions to Provident Fund & ESIC are accounted on accrual basis and charged to the Statement of Profit & Loss.

1.14 Revenue Recognition

The company recognizes sale of goods on the invoice date. Sales comprise of amounts invoiced for goods sold, including excise duty wherever applicable but net of returns and trade discounts.

Dividend Income is accounted when right to receive dividend is established.

CRAMS milestone revenues are recognised on signing of Agreement with respective parties.

1.15 Income Tax Current Year:

Provision for current tax has been made in accordance with the Income Tax Laws prevailing for the relevant assessment years.

Deferred Tax:

Deferred Income taxes are recognized for the future tax consequence attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities because of a change in tax rates is recognized in the Statement of Profit and Loss using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainity that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.16 PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if

a. the Company has a present obligation as a result of past event,

b. a probable outflow of resources is expected to settle the obligation; and

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

Contingent liability is not recognized but disclosed in the Notes to the Accounts.

The Contingent Assets are neither recognized, nor disclosed.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

Contingent liabilities and commitments (to the extent not provided for)

(Rs in lacs)

Particulars 2011-12 2010-11

Contingent Liabilities

(a) Claims against the company not acknowledged as debt 174.09 -

(b) Guarantees and Letter of Credit 14,947.22 1,558.83

(c) Other money for which the company is contingently liable Sales Tax

Sales Tax (BST,CST) - 03-04 20.21 11.51

Sales Tax (BST,CST) - 04-05 7.90 7.62

Sales Tax (CST) - 06-07 3.23 -

15,152.65 1,577.96

MAT liability of Rs. 32.48 Lacs for 2007-08 has been provided out of abundant precaution. If paid, it will be eligible for credit against A.Y 2008-09.

1.17 Foreign Exchange Transactions

As required by Accounting Standard 11 "the effect of changes in the foreign exchange rates", the company has restated its assets & liabilities at the closing exchange rate prevailing at the Balance Sheet date.

1.18 Accounting for Employee benefits

Liabilities for gratuity & other retirement benefits are accounted on accrual basis.

All the other borrowing costs are recognized as expenses in the period in which they are incurred.

1.19 Segment Reporting as per AS 17 BUSINESS SEGMENTS

The Company is primarily engaged in a single business segment of manufacturing and marketing of Pharmaceutical Formulations and is managed as one entity, for its various activities and is governed by a similar set of risks and returns.

(b) Parties where control exists

Subsidiary Companies

Nova Pharmaceuticals Australasia Pty Ltd

Marksans Pharma (UK) Limited

(c) Related party relationships where transaction have taken place during the year

Nova Pharmaceuticals Australasia Pty Ltd - Subsidiary Company Marksans Pharma (UK) Limited - Subsidiary Company

1.20 Due to loss during the period, remuneration paid / payable to the Directors is in accordance with the provisions of Schedule XIII of the Companies Act, 1956 and has been approved by the Remuneration Committee of Directors of the Company

1.20 Accounting for Leases

Assets acquired under finance leases are recognised at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments 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.

Lease rentals in respect of assets taken under operating leases are charged to the statement of Profit and Loss on a straight line basis over the lease term.

The Company has taken various residential and commercial premises on cancelable operating lease or leave & license agreement .The lease agreement which are non cancelable are for period of three years. The rental expenses of such cancelable operating lease are recognized as rent expenses in the Statement of Profit and Loss. The Leasing arrangements, which are cancelable range between 11 months and 3 years, are usually renewable by mutual consent on mutually agreeable terms. Under these arrangements, generally interest free deposits have been given.

1.21 Earnings per share

As per Accounting standard 20 "Earnings Per Share" issued by ICAI, basic earnings per share is calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

1.22 The Company has not received any informations from "Suppliers" regarding their status under Micro, Small and Medium enterprises Development Act, 2006 and hence disclosures, if any, relating to the amounts as at year end together with interest paid/payable as required under the said Act have not been given.

1.23 Additional information pursuant to the provisions of paragraphs 3, 4C, 4D of Part II of Schedule VI to the Companies Act, 1956 (figures in brackets relates to the previous year)

1.24 Till the year ended 31 March 2011,the company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of it's financial statements. During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to conform to this year's classifiction. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements.

However, it singificantly impacts presentation and disclosures made in the financial statements, particularly presentation of balance sheet.


Mar 31, 2010

(a) Accounting Standards

The Accounts have been prepared to comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

(b) Basis of Accounting

The financial are prepared under the Historical cost convention on an accrual basis and comply with the Accounting Standards issued by the Institute of Chartered Accountant of India referred to in Section 211(3C) of the Companies Act, 1956.

(c) Fixed Assets

1. Fixed assets are stated at cost along with costs directly attributable to bring the assets to their working condition as reduced by CENVAT credit and Input VAT.

2. Intangibles:

- Internally Generated Intangible assets- DMF/COS & ANDA/Market Authorisations :

DMF/COS & ANDA/Market Authorisation costs represent expenses incurred on development of process and compliance with regulatory procedures of the US FDA in filing Drug Master Files( "DMF") & Abbreviated New Drug Applications ("ANDA") and MHRA/EDQM procedure for Market Authorisation/COS.

This is in accordance with the requirements of Accounting Standard 26 of the Institute of Chartered Accountants of India.

The Cost of each DMF/ANDA is amortised to the extent of recovery of developmental costs as applicable asper terms of agreement or over a period of ten years from the date on which the product covered by DMF/ANDA is Commercially marketed, whichever is earlier.

- Product Development Costs:

Product Development expenditure incurred on an individual project is carried Forward when its future recoverability can reasonably be regarded as assured. Any expenditure carried forward is amortised over the period of expected future economic benefit from the related project, not exceeding ten years.

(d) Depreciation

Depreciation on fixed assets other than leasehold land is provided on Straight Line Method at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 read with the relevant circulars issued by the Department of Company Affairs from time to time. Leasehold land is not amortised.

(e) Impairment of Assets

The company identifies impairable assets at the year end in terms of cash generating unit concept based on para-5 to 13 of AS-28 issued by ICAI for the purpose of arriving at impairment loss thereon being the difference between the book value and recoverable value of relevant assets. Impairment loss, if any, when crystallizes is charged against revenue of the year.

(f) Expenditure during construction period

In case of new projects and substantial expansion of existing factories, expenditure incurred including financing costs prior to commencement of commercial production is capitalized. All pre-operative and trial run expenditure accumulated as Capital Work in Progress is allocated on a pro- rata basis depending on the prime cost of the assets.

(g) Inventories

Inventories are valued at the lower of cost (net of CENVAT Credit and Input VAT) or Net Realisable Value as under :

Raw materials, Packing Material and Stores - At Weighted Average Cost on FIFO basis.

Work in Process - At Cost (Direct Cost plus Conversion Cost) upto estimated stage of completion.

By-Products - At Net Realisable Value.

Finished Goods - At Cost (Direct cost plus Conversion Cost and Excise Duty) or Net Realisable Value, whichever is lower.

(h) Customs / Excise duty

Excise Duty on Finished goods and Custom Duty on imported materials are accounted on production of packed finished goods / receipt of material in Customs bonded warehouses. All the closing stock of finished goods lying at Goa factory is for export, hence Provision for Excise duty does not arise.

(i) Foreign Currency Transaction

`Purchase of imported raw materials, capital goods and components are accounted based on presentation memos from bank on the date of the transaction. In respect of liabilities on imports of raw materials, capital goods and components for which invoices / bills are not received, the liability is accounted based on the exchange rates prevailing on the date of the balance sheet.

Export Sales of finished goods are accounted on the basis of export invoices on the invoice date. In respect of the unrealised exports, the receivables are accounted based on the exchange rates prevailing on the date of the balance sheet.

(j) Miscellaneous Expenditure

Expenditure on launch of new products and their sales promotion and expenditure for registration and for obtaining regulatory approvals for products for overseas market are being amortised over a period of 60 months.

(k) Research and Development

Capital expenditure on research and development is capitalized as fixed assets. Other expenditure on R&D is expensed as incurred.

(l) Investments

Long term investments are stated at cost less any provision for permanent diminution in the value. The current investments are valued at lower of cost or market value.

(m) Employee Benefits

Liability for Gratuity is accounted on accrual basis.

Annual contributions to Provident Fund & ESIC are accounted on accrual basis and charged to the Profit & Loss A/C.

(n) Revenue Recognition

The company recognizes sale of goods on the invoice date. Sales comprise of amounts invoiced for goods sold, including excise duty but net of returns and trade discounts.

Dividend Income is accounted when right to receive dividend is established.

CRAMS revenues are recognizes on signing of Agreement with respective parties.

(o) Income Tax

Current Year:

Provision for Current tax has been made in accordance with the Income Tax Laws prevailing for the relevant assessment years.

Deferred Tax:

Deferred Income taxes are recognized for the future tax consequence attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities because of a change in tax rates is recognized in the Statement of Profit and Loss using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainity that sufficient future taxable income will be available against which such deferred tax assets can be realized.

 
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