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Accounting Policies of Mold-Tek Packaging Ltd. Company

Mar 31, 2016

1. SIGNIFICANT ACCOUNTING POLICIES

A. Method of accounting

a. These financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on accrual basis.

b. The Company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties.

c. The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Examples of such estimates include provisions for doubtful receivables, employee benefits, provision for income taxes, the useful lives of depreciable fixed assets and provisions for impairment. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known/ materialize.

B. Fixed assets

a. Fixed assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits in accordance with Accounting Standards 10 and 26 issued by the Institute of Chartered Accountants of India (ICAI). Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by ICAI.

b. Expenditure not specifically identified to any asset and incurred in respect of fixed assets not commissioned is carried forward as expenditure pending allocation and forms part of capital work-in-progress.

C. Depreciation

Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule II to the Companies Act, 2013 except for leasehold buildings, wherein depreciation is provided on the basis of estimated useful life.

D. Impairment of assets

The Company periodically tests its assets for impairment and if the carrying values are found in excess of value in use, the same is charged to the statement of profit and loss as per AS 28. The impaired loss charged to the statement of profit and loss will be reversed in the year on the event and to that extent of enhancement in estimate of value in use.

E. Investments

Investments are either classified as current or long-term based on the management''s intention at the time of purchase. Long-term investments are carried in the books of accounts at cost of acquisition. Current investments are carried in the books of accounts at the lower of cost or fair value. Decline in market value of long-term and current investments, if any are considered in accordance with Accounting Standard 13.

Notes forming part of the Financial Statements

Cost includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.

G. Interest and financial charges

a. Documentation, commitment and service charges other than for term loans are spread over the tenure of the finance facility.

b. Interest on hire purchase finance is charged to the statement of profit and loss as per Accounting Standard ''Accounting for Leases'' issued by ICAI.

H. Loans under deferred credit/hire purchase

The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be cancelled in favor of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in secured loans. The corresponding amount of future interest is reflected as deferred interest under loans & advances.

I. Revenue recognition

Turnover includes excise duties, and sales tax/VAT collections reduced by sale returns and quantity discounts. Excise duty is excluded as a separate line item. Dividend income is recognized when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

J. Employee benefits

a. Gratuity

1. Post-employment and other long-term benefits are recognized as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined based on actuarial valuation.

2. In accordance with the Payment of Gratuity Act, 1972, Mold-Tek provides for gratuity, a defined benefit retirement plan (''the Gratuity plan'') covering eligible employees of the Company. The gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the group.

3. Liabilities with regard to the gratuity plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method as per the Accounting Standard 15. The Company contributes the ascertained liabilities to the ''Mold-Tek Packaging Limited Employees Gratuity Trust'' (The Trust). Trustees administer contributions made to the Trust and contributions are deposited in a scheme with Life Insurance Corporation as permitted by the law.

b. Provident fund

Eligible employees of the Company receive provident fund benefits, a defined contribution plan. Contributions of the Company as employer are expensed as incurred/accrued.

c. Liability for leave encashment

Leave encashment in accordance with the policy of the Company and are provided based on the actuarial valuation as pronounced in Accounting Standard 15 of ICAI.

d. Employee share based payments

Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the guidance note on ''Accounting for Employee Share Based Payments'', issued by ICAI. The excess of market value of the stock on the date of grant over the exercise price of the option is recognized as deferred employee stock compensation and is charged to the statement of profit and loss on straight-line method over the vesting period of the options or on exercising of the options. The unamortized portion of cost is shown under stock options outstanding. In case of lapsed options, during the year of such lapsing, the compensation expenses charged earlier are reversed along with balance of deferred employee compensation pertaining to such lapsed options.

K. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange gains or losses on recognition of transaction within the accounting year relating to fixed assets till the date of its put to use are capitalized while in respect of others the impact is recognized in the statement of profit and loss. Outstanding monetary transactions denominated in foreign currencies at the yearend are restated at year end rates.

L. Taxes on income

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by ICAI. Deferred tax asset over and above the liability accounted in earlier period is neither disclosed nor recognized in the books.

M. Miscellaneous expenditure

Preliminary expenses are amortized over a period of 5 years.

N. Leases

Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The rental obligations, net of interest charges, are reflected in loans and advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as operating leases and recorded as expenses as and when payments are made over the lease term.

O. Earnings per share

The basic earnings per share (''BEPS'') is calculated by dividing the net profit or loss after taxes for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The diluted earnings per share (''DEPS'') is calculated after adjusting the weighted average number of equity shares to give extent of the potential equity shares on the fully convertible warrants outstanding.

P. Contingent liabilities & assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2014

A. Method of accounting

a. The financial statements are prepared on a going concern basis with historical costs, in accordance with the Accounting Standards specified in sub-section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable to the Company.

b. The Company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties.

c. The preparation of financial statements requires the management of the Company to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

B. Fixed assets

a. Fixed assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits in accordance with Accounting Standards 10 and 26 issued by ICAI. Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India (ICAI).

b. Expenditure not specifically identified to any asset and incurred in respect of fixed assets not commissioned is carried forward as expenditure pending allocation and forms part of capital work-in-progress.

C. Depreciation

Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule XIV to the Companies Act, 1956 except for leasehold buildings, wherein depreciation is provided on the basis of estimated useful life.

Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/ or discarded having outlived their utility are charged off during the year.

D. Impairment of assets

The Company periodically tests its assets for impairment and if the carrying values are found in excess of value in use the same is charged to the Statement of Profit and Loss as per AS 28. The impaired loss charged to Statement of Profit and Loss will be reversed to that extent in the year in of change in estimate of value in use.

E. Investments

Investments are either classified as current or long-term based on the management''s intention at the time of purchase. Long-term investments are carried in the books of accounts at cost of acquisition. Current investments are carried in the books of accounts at the lower of cost and fair value. Decline in market value of long-term and current investments, if any are considered in accordance with Accounting Standard 13.

F. Inventories

Inventories are valued as follows:

Raw material

At lower of applicable weighted average of landed cost net of CENVAT benefits or market value.

Finished goods

At lower of applicable weighted average cost (including conversion costs) or market value.

Work-in-process

At applicable weighted average cost including conversion costs to the stage of manufacture.

Returned goods

At applicable raw material cost net of estimated reprocessing cost.

Moulds

At cost including conversion costs after providing for appropriate wear & tear.

Consumables, packing & bought outs At cost.

Cost includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.

G. Interest and financial charges

a. Documentation, commitment and service charges other than for term loans are spread over the tenure of the finance facility.

b. Interest on hire purchase finance is charged to the Statement of Profit and Loss as per Accounting Standard Accounting for leases issued by ICAI.

H. Loans under deferred credit/hire purchase

The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be cancelled in favor of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of future interest is reflected as deferred interest under loans & advances.

I. Revenue recognition

Turnover includes excise duties, sales tax/VAT collections, and freight recoveries; reduced by sale returns and quantity discounts. Excise duty is excluded as a separate line item. Dividend income is recognised when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

J. Employee benefits

a. Gratuity

Post-employment and other long term benefits are recognized as an expense in the Statement of Profit and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined based on actuarial valuation.

In accordance with the Payment of Gratuity Act, 1972, Mold-Tek provides for gratuity, a defined benefit retirement plan (''the gratuity plan'') covering eligible employees of the Company. The gratuity plan provides a lump- sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the group.

Liabilities with regard to the gratuity plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method as per the Accounting Standard 15. The Company contributes the ascertained liabilities to the ''Mold-Tek Packaging Limited Employees Gratuity Trust'' (The Trust). Trustees administer contributions made to the Trust and contributions are deposited in a scheme with Life Insurance Corporation as permitted by the law.

b. Provident fund

Eligible employees of the company receive provident fund benefits, a defined contribution plan. Contributions of the Company as employer are expensed as incurred/accrued.

c. Liability for leave encashment

Leave encashment in accordance with the policy of the Company and are provided based on the actuarial valuation as pronounced in Accounting Standard 15 of ICAI.

d. Employee share based payments

Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the guidance note on Accounting for Employee Share Based Payments'', issued by the Institute of Chartered Accountants of India (ICAI). The excess of market value of the stock on the date of grant over the exercise price of the option is recognized as deferred employee stock compensation and is charged to the Statement of Profit and Loss on straight-line method over the vesting period of the options or on exercising of the options. The unamortised portion of cost is shown under stock options outstanding. In case of lapsed options, the compensation expenses charged earlier are reversed along with balance of deferred employee compensation pertaining to such lapsed options.

K. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange gains or losses on recognition of transaction within the accounting year relating to fixed assets are capitalized while in respect of others the impact is recognized in the Statement of Profit and Loss. Outstanding monetary transactions denominated in foreign currencies at the year end are restated at year end rates.

L. Taxes on income

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

M. Miscellaneous expenditure

Preliminary expenses are amortized over a period of 5 years.

N. Leases

Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The rental obligations, net of interest charges, are reflected in loans and advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as operating leases and recorded as expenses as and when payments are made over the lease term.

O. Earnings per share

The basic earnings per share (''BEPS'') is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The diluted earnings per share (''DEPS'') is calculated after adjusting the weighted average number of equity shares to give effect to the potential equity shares on the fully convertible warrants outstanding.

P. Contingent liabilities & assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2013

A. Method of accounting

a. The financial statements are prepared on a going concern basis with historical costs, in accordance with the Accounting Standards specified in sub-section (3C) of Section 211 of the Companies Act 1956, to the extent applicable to the Company.

b. The Company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties.

c. The preparation of financial statements requires the management of the Company to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

B. Fixed assets

a. Fixed assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits. Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India (ICAI).

b. Expenditure not specifically identified to any asset and incurred in respect of fixed assets not commissioned is carried forward as expenditure pending allocation and forms part of capital work-in-progress.

C. Depreciation

Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule XIV to the Companies Act, 1956 except for leasehold buildings, wherein depreciation is provided on the basis of estimated useful life.

Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/ or discarded having outlived their utility are charged off during the year.

D. Impairment of assets

In the opinion of the management, there are no assets of the Company carried in the financial statements whose value in use stands diminished vis-à-vis their carrying cost, and hence no provision is considered necessary.

E. Investments

Investments are either classified as current or long-term based on the management''s intention at the time of purchase. Long-term investments are carried in the books of accounts at cost of acquisition. Current investments are carried in the books of accounts at the lower of cost and fair value. Decline in market value of long-term and current investments, if any, are considered in accordance with Accounting Standard 13.

F. Inventories

Inventories are valued as follows:

Raw material At lower of applicable weighted average of landed cost net of CENVAT benefits or market value.

Finished goods At lower of applicable weighted average cost (including conversion costs) or market value.

Work-in-process At applicable weighted average cost including conversion costs to the stage of manufacture.

Returned goods At applicable raw material cost net of estimated reprocessing cost.

Moulds At cost including conversion costs after providing for appropriate wear & tear.

Consumables, packing & bought outs At cost.

Cost includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.

G. Interest and financial charges

a. Documentation, commitment and service charges other than for term loans are spread over the tenure of the finance facility.

b. Interest on hire purchase finance is charged to the Statement of Profit and Loss as per Accounting Standard Accounting for leases issued by ICAI.

H. Loans under deferred credit/hire purchase

The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be cancelled in favour of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of future interest is reflected as deferred interest under loans & advances.

I. Revenue recognition

Turnover includes excise duties, sales tax/vat collections, and freight recoveries; reduced by sales returns and quantity discounts. Excise duty is excluded as a separate line item. Dividend income is recognized when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

J. Employee benefits

a. Gratuity

Post-employment and other long term benefits are recognized as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined based on actuarial valuation

In accordance with the Payment of Gratuity Act, 1972, Mold-Tek provides for gratuity, a defined benefit retirement plan (Mold-Tek Packaging Ltd Employees Gratuity Scheme) covering eligible employees of the Company. The gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the group.

Liabilities with regard to the gratuity plan are determined by actuarial valuation at each Balance Sheet date using the projected unit credit method as per the Accounting Standard 15. The Company contributes the ascertained liabilities to the ''Mold-Tek Packaging Limited Employees Gratuity Trust'' (''The Trust''). The Trustees administer contributions made to the Trust and contributions are deposited in a scheme with Life Insurance Corporation of India as permitted by the law.

b. Provident fund

Eligible employees of the Company receive provident fund benefits, a defined contribution plan. Contributions of the Company as employer are expensed as incurred/accrued.

c. Liability for leave encashment

Leave encashment is also considered as a long term liability and provided for on the basis of actuarial valuation, estimated during the year as per Accounting Standard 15.

d. Employee share based payments

Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the guidance note on ''Accounting for Employee Share Based Payments'', issued by ICAI. The excess of market value of the stock on the date of grant over the exercise price of the option is recognized as deferred employee stock compensation and is charged to the Statement of Profit and Loss on straight- line method over the vesting period of the options. The unamortized portion of cost is shown under stock options outstanding.

K. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange gains or losses on recognition of transaction within the accounting year relating to fixed assets are capitalized while in respect of others the impact is recognized in the Statement of Profit and Loss. Outstanding monetary transactions denominated in foreign currencies at the year end are restated at year end rates.

L. Taxes on income

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by ICAI.

M. Miscellaneous expenditure

Preliminary expenses are amortized over a period of 5 years.

N. Leases

Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The rental obligations, net of interest charges, are reflected in loans and advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as operating leases and recorded as expenses as and when payments are made over the lease term.

O. Earnings per share

The basic earnings per share (''BEPS'') is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The diluted earnings per share (''DEPS'') is calculated after adjusting the weighted average number of equity shares to give effect to the potential equity shares on the fully convertible warrants outstanding.


Mar 31, 2012

A. Method of accounting

i. The financial statements are prepared on a going concern basis with historical costs, in accordance with the Accounting Standards specified in sub-section (3C) of Section 211 of the Companies Act 1956, to the extent applicable to the Company.

ii. The Company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties.

iii. The preparation of financial statements requires the management of the company to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

iv. For the year ended 31st March, 2012, the revised Schedule VI notified under the Companies Act, 1956 is applicable to the Company for presentation and disclosures in financial statements. The Company has reclassified the previous year's figures in accordance with the revised Schedule VI as applicable in the current year.

b. Fixed assets

i. Fixed assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits. Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India (ICAI).

ii. Expenditure not specifically identified to any asset and incurred in respect of fixed assets not commissioned is carried forward as expenditure pending allocation and forms part of capital work in progress.

c. Depreciation

Straight-line method of depreciation is adopted on the basis of and at rates prescribed by Schedule XIV to the Companies Act, 1956 except for leasehold buildings, wherein depreciation is provided on the basis of estimated useful life.

Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/ or discarded having outlived their utility are charged off during the year.

d. Impairment of assets

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to profit and loss account in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of the recoverable amount.

e. Investments

Investments are either classified as current or long-term, based on the management's intention at the time of purchase. Long-term investments are carried in the books of accounts at cost of acquisition. Current investments are carried in the books of accounts at the lower of cost and fair value. Decline in market value of long-term and current investments, if any, are considered in accordance with Accounting Standard 13.

Cost includes material cost, labour, factory overheads and depreciation and excludes interest on borrowings.

g. Interest and financial charges

i. Documentation, commitment and service charges are spread over the tenure of the finance facility.

ii. Interest on hire purchase finance is charged to Statement of Profit and Loss on diminishing balance method as per the guidance note of the Institute of Chartered Accountants of India (ICAI).

h. Loans under deferred credit/hire purchase

The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be cancelled in favor of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of future interest is reflected as deferred interest under loans & advances.

i. Revenue recognition

Revenue is recognized only when it can be reliably measured and is reasonable to expect ultimate collection. Revenue from operations includes sale of goods, sales tax, VAT, excise duty, adjusted for discounts and sale returns. Dividend income is recognized when right to receive is established. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.

j. Employee benefits

i. Gratuity & provident fund

Post employment and other long term benefits are recognized as an expense in the statement of profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amounts payable determined based on actuarial valuation.

In accordance with the Payment of Gratuity Act, 1972, Mold-Tek provides for gratuity, a defined benefit retirement plan ('the Gratuity plan') covering eligible employees of the Company. The gratuity plan provides a lump- sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment with the group.

Liabilities with regard to the gratuity plan are determined by actuarial valuation at each balance sheet date using the projected unit credit method as per the Accounting Standard

15. The Company contributes the ascertained liabilities to a scheme with Life Insurance Corporation as permitted by the law.

Eligible employees of the company receive provident fund benefits, a defined contribution plan. Contributions of the Company as employer are expensed as incurred/accrued.

ii. Liability for leave encashment

Leave encashment also considered as long term liability and provided for on the basis of actuarial valuation, estimated during the year.

iii. Employee share based payments

Measurement and disclosure of the employee share-based payment plans is done in accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the guidance note on 'Accounting for Employee Share Based Payments', issued by the Institute of Chartered Accountants of India (ICAI). The excess of market value of the stock on the date of grant over the exercise price of the option is recognized as deferred employee stock compensation and is charged to profit and loss account on straight-line method over the vesting period or on exercise of the options. The unamortized portion of cost is shown under stock options outstanding.

k. Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange gains or losses on conclusion of transaction within the accounting year relating to fixed assets are capitalized while in respect of others the impact is recognized in the Statement of Profit and Loss. Outstanding monetary transactions denominated in foreign currencies at the year end are restated at year end rates.

l. Taxes on income

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India. Deferred tax asset is not recognized in the books.

m. Miscellaneous expenditure

Preliminary expenses are amortized over a period of 5 years.

n. Leases

Assets taken on lease where the Company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The amount recorded is the lesser of the present value of the cumulative minimum lease rentals along with other incidental expenses during the lease term or the asset's fair value.

The rental obligations, net of interest charges, are reflected in loans and advances. Leases that do not transfer substantially all of the risks and rewards of ownership are classified as operating leases and recorded as expenses as and when payments are made over the lease term.

o. Earnings per share

The basic earnings per share ('BEPS') is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The diluted earnings per share ('DEPS') is calculated after adjusting the weighted average number of equity shares to give effect to the potential equity shares on the fully convertible warrants outstanding.

p. Contingent liabilities and assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

Method of Accounting

a. The financial statements are prepared on a going concern basis with historical costs, in accordance with the Accounting Standards specified in sub section (3C) of Section 211 of the Companies Act 1956, to the extent applicable to the Company.

b. The Company generally recognizes income and expenditure on an accrual basis except those with significant uncertainties.

c. The preparation of financial statements requires the management of the Company to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

Fixed Assets

a. Fixed assets are stated at original cost including taxes, freight and other incidental expenses related to acquisition/installation and after adjustment of CENVAT benefits. Interest/financing costs on borrowed funds attributable to assets are treated in accordance with Accounting Standard 16 issued by the Institute of Chartered Accountants of India (ICAI).

b. Expenditure not specifically identified to any asset and incurred in respect of fixed assets not commissioned is carried forward as expenditure pending allocation and forms part of Capital work-in-progress.

Depredation

Straight-line method of depreciation is adopted on all fixed assets on the basis of and at rates prescribed by Schedule XIV to the Companies Act, 1956 as amended from time to time.

Residual values of assets depreciated on straight line basis to the extent of assets not in use, and/or discarded having outlived their utility are charged off during the year.

Impairment of Assets

In the opinion of the management there are no assets of the Company carried in the financial statements whose realizable value stands diminished vis-a-vis their carrying cost, and hence no provision is considered necessary. Assets considered as having outlived their utility and not in use are charged off by way of reduction of the gross block and corresponding depreciation reserve.

Investments

Long term investments are carried in the books of accounts at cost of acquisition.

Current investments are carried in the books of accounts at the lower of cost and fair value.

Decline in market value of long term and current investments, if any are considered in accordance with Accounting Standard 13.

Inventories

The inventories are valued as follows: (Refer Note 8(b))

Raw Material

At lower of applicable weighted average of landed cost net of CENVAT benefits, or market value.

Finished Goods

At lower of applicable weighted average cost

(including conversion and packing costs) or market value.

Work-in-Process

At applicable weighted average cost including conversion costs to the stage of manufacture.

Returned Goods

At applicable raw material cost net of estimated reprocessing cost.

Moulds

At cost including conversion costs after providing for appropriate wear & tear.

Consumables, Packing & Bought outs

At cost.

Cost includes material cost, labour, factory overheads and depreciation but excludes interest on borrowings.

Interest and Financial Charges

a. Documentation, commitment and service charges are spread over the tenure of the finance facility.

b. Interest on hire purchase finance is charged to Profit and Loss Account on diminishing balance method as per the Guidance Note of the Institute of Chartered Accountants of India (ICAI).

Loans under Deferred Credit/Hire Purchase

The hypothecation rights of assets financed by hire purchase vest with the financing companies and on expiry of agreements will be cancelled in favour of the Company. The cash price of assets thus financed is capitalized and the principal amount along with future interest is reflected in unsecured loans. The corresponding amount of future interest is reflected as deferred interest under Loans & Advances.

Revenue Recognition

Turnover includes excise duties, sales tax/VAT collections, and freight recoveries; and is net of sales returns. Excise duties are separately reflected in the Profit and Loss Account.

Employee Benefits

a. Gratuity

Gratuity provided in respect of employees on the basis of actuarial valuation as per Accounting Standard 15, is estimated during the year in accordance with the provisions of the Payment of Gratuity Act, 1972.

b. Provident Fund

Eligible employees of the Company receive provident fund benefits, a defined contribution plan. Contributions of the Company as employer are expensed as incurred/accrued.

c. Liability for Leave Encashment

Liability for leave is treated as a short term liability and is accounted as and when earned by the employee.

Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange gains or losses on conclusion of transaction within the accounting year relating to fixed assets are capitalized while in respect of others the impact is recognized in the Profit and Loss Account. Out standing monetary transactions denominated in foreign currencies at the year end are restated at year end rates.

Taxes on Income

Provision for current tax is made in accordance with the provisions of the Income Tax Act, 1961. Deferred tax provisioning on account of timing difference between taxable & accounting income, is made in accordance with Accounting Standard 22 issued by the Institute of Chartered Accountants of India.

Deferred tax asset is not recognized in the books.

Miscellaneous Expenditure

Preliminary expenses are amortized over a period of 5 years.

Earnings per Share

The basic earning per share (EPS) is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The diluted earning per share (EPS) is calculated after adjusting the weighted average number of Equity shares to give effect to the potential equity shares on the fully convertible warrants outstanding.

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