Accounting Policies of Naperol Investments Ltd. Company

Mar 31, 2023

Significant accounting policies

2.1 Basis of preparation, measurement and significant
accounting policies

The principal accounting policies applied in the
preparation of these financial statements are set out
below. These policies have been consistently applied to
all the years presented, unless otherwise stated.

(a) Basis of preparation

(i) Compliance with Ind AS
Statement of compliance:

The financial statements are prepared in
accordance with the Indian Accounting Standards
("Ind-AS") as specified under Section 133 of the
Companies Act, 2013 read with the Rule 3 of
the Companies (Indian Accounting Standards)
Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016 and the
provisions of Companies Act, 2013. The financial
statements are presented in lakhs of Indian rupees
rounded off to two decimal places, except per
share information, unless otherwise stated.
Accounting policies have been consistently
applied except where a newly issued accounting
standard is initially adopted or a revision to an
existing accounting standard requires a change in
the accounting policy hitherto in use.

These financial statements have been prepared
on the historical cost basis and certain financial

instruments which are measured at fair values at
the end of each reporting period, as explained in
the accounting policies below.

(ii) Recent pronouncements

Ministry of Corporate Affairs ("MCA") notifies new
standard or amendments to the existing standards
under Companies (Indian Accounting Standards)
Rules as issued from time to time. On March
31, 2023, MCA amended the Companies (Indian
Accounting Standards) Rules, 2015 by issuing
the Companies (Indian Accounting Standards)
Amendment Rules, 2023, applicable from April 01,
2023, as below:

Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose
their material accounting policies rather than their
significant accounting policies. Accounting policy
information, together with other information, is
material when it can reasonably be expected to
influence decisions of primary users of general
purpose financial statements. The Company does
not expect this amendment to have any significant
impact on its financial statements.

Ind AS 12 - Income Taxes
The amendments clarify how companies account
for deferred tax on transactions such as leases and
decommissioning obligations. The amendments
narrowed the scope of the recognition exemption
in paragraphs 15 and 24 of Ind AS 12 (recognition
exemption) so that it no longer applies to
transactions that, on initial recognition, give
rise to equal taxable and deductible temporary
differences. The Company does not expect this
amendment to have any significant impact on its
financial statements.

Ind AS 8 - Accounting Policies, Changes in
Accounting Estimates and Errors
The amendments will help entities to distinguish
between accounting policies and accounting
estimates. The definition of a change in
accounting estimates has been replaced with a
definition of accounting estimates. Under the new
definition, accounting estimates are "monetary
amounts in financial statements that are subject

to measurement uncertainty". Entities develop
accounting estimates if accounting policies require
items in financial statements to be measured in a
way that involves measurement uncertainty.

None of the amendments notified by MCA, which
are applicable from April 01, 2023, are expected
to have any material impact on the financial
statements of the Company.

(iii) Current vis-a-vis non-current classification

The assets and liabilities reported in the balance
sheet are classified on a "current / non-current
basis".

An asset is classified as current when it is expected
to be realised or intended to be sold or consumed
in normal operating cycle, held primarily for the
purpose of trading, expected to be realised within
twelve months after the reporting period, or cash
or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting period.

A liability is classified as current when it is expected
to be settled in normal operating cycle, it is held
primarily for the purpose of trading, it is due to be
settled within twelve months after the reporting
period, or there is no unconditional right to defer
the settlement of the liability for at least twelve
months after the reporting period.

The Company has determined its operating cycle
as twelve months for the purpose of current -
non-current classification of assets and liabilities.
Deferred tax assets and liabilities, and all assets
and liabilities which are not current are classified
as non-current assets and liabilities.

The derivatives designated in hedging relationship
and separated embedded derivatives are classified
basis the hedged item and host contract respectively.

(b) Business combinations/Asset Acquisition

The acquisition method of accounting is used
to account for all business combinations (other
than common control business combinations),
regardless of whether equity instruments or
other assets are acquired. The acquisition date
is the date on which control is transferred to the

acquirer. Judgement is applied in determining the
acquisition date and determining whether control is
transferred from one party to another. The excess
of the consideration transferred over the fair value
of the net identifiable assets acquired is recorded
as goodwill. The cost of acquisition also includes
the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business
combination are measured initially at their fair value
on the date of acquisition. Goodwill is not amortised
but it is tested for impairment annually, or more
frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at
cost less accumulated impairment losses.

Business combinations arising from transfers of
interests in entities that are under the common
control are accounted for using the pooling of
interest method and as per the provisions of the
Scheme approved by the regulator.

Ind AS 103 Business Combinations clarifies that
while businesses usually have outputs, outputs are
not required for an integrated set of activities and
assets to qualify as a business. To be considered
a business an acquired set of activities and
assets must include, at a minimum, an input and
a substantive process that together significantly
contribute to the ability to create outputs.

Ind AS 103 Business Combinations provides
an optional concentration test that permits a
simplified assessment of whether an acquired set
of activities and assets is not a business. Under
the optional concentration test, the acquired
set of activities and assets is not a business if
substantially all the fair value of the gross assets
acquired is concentrated in a single identifiable
asset or group of similar assets.

The Company has opted to apply optional
concentration test in respect of acquisition of
Naperol Investments Limited. Refer Note 3C of the
financial statements for details.

(c) Segment reporting:

Operating segments are reported in a manner
consistent with the internal reporting provided to

the Chief Operating Decision-Maker (CODM).

The Chief Executive Officer and Director of National
Peroxide Limited has been identified as CODM
and he is responsible for allocating resources,
assessing the financial performance on only one
type of business i.e. investment activity.

The Company has identified with the reportable
segment of ''Investment Activity’ based on
information reviewed by the CODM.

(d) Foreign currency translation:

(i) Functional and presentation currency

Items included in the financial statements of each
of the Company entities are measured using the
currency of the primary economic environment
in which the entity operates (''the functional
currency’). The financial statements are presented
in ''Indian Rupees’ (''), which is the Company’s
functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into
the functional currency using the exchange rates
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement
of such transactions and from the translation of
monetary assets and liabilities denominated in
foreign currencies at year end exchange rates are
generally recognised in profit or loss. They are
deferred in equity if they relate to qualifying cash
flow hedges.

Non-monetary items that are measured at fair
value in a foreign currency are translated using the
exchange rates at the date when the fair value was
determined. Translation differences on assets and
liabilities carried at fair value are reported as part of
the fair value gain or loss. For example, translation
differences on non-monetary assets and liabilities
such as equity instruments held at fair value
through profit or loss are recognised in profit
or loss as part of the fair value gain or loss and
translation differences on non-monetary assets
such as equity investments classified as FVOCI are
recognised in other comprehensive income.

(e) Revenue recognition and other income
recognition:Dividend Income

Dividends are recognised in profit or loss only
when the right to receive payment is established, it
is probable that the economic benefits associated
with the dividend will flow to the Company, and the
amount of the dividend can be measured reliably.

Rental Income

Rental income from investment property leased
out under operating leases is recognised in the
statement of comprehensive income on a straight¬
line basis over the term of the lease.

(f) Income tax:

The income tax expense or credit for the period
is the tax payable on the current period’s taxable
income based on the applicable income tax rate
adjusted for changes in deferred tax assets and
liabilities attributable to temporary differences and
unused tax losses. Tax expenses comprises of
current tax and deferred tax.

Current tax

The current income tax charge is calculated on
the basis of the tax laws enacted or substantively
enacted at the end of the reporting period.
Management periodically evaluates positions
taken in tax returns with respect to situations
in which applicable tax regulation is subject to
interpretation. It establishes provisions where
appropriate on the basis of amounts expected to
be paid to the tax authorities.

Current and deferred tax is recognised in statement
of profit and loss, except to the extent that it relates
to items recognised in Other Comprehensive
Income or directly in equity. In that case, the tax
is also recognised in Other Comprehensive Income
or directly in equity, respectively.

Deferred tax

Deferred income tax is provided in full, using the
liability method, on temporary differences arising

between the tax bases of assets and liabilities and
their carrying amounts in the financial statements
at the balance sheet date. Deferred income tax is
determined using tax rates (and laws) that have
been enacted or substantially enacted by the
balance sheet date and are expected to apply when
the related deferred income tax asset is realised or
the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will be
available to utilize those temporary differences and
losses.

(g) Impairment of non-financial assets:

Assets are tested for impairment, wherever
events or changes in circumstances indicate that
the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs of
disposal and value in use. For the purposes of
assessing impairment, assets are Compared at
the lowest levels for which there are separately
identifiable cash inflows which are largely
independent of the cash inflows from other assets
or group of assets (cash-generating units). Non¬
financial assets that suffered an impairment are
reviewed for possible reversal of the impairment at
the end of each reporting period.

(h) Cash and Cash Equivalents:

Cash and cash equivalents in the balance sheet
comprise cash at bank and on hand, and short¬
term deposits with original maturities of three
months or less that are readily convertible to
known amounts of cash and which are subject to
an insignificant risk of changes in value. For the
purpose of statement of cashflow cash and cash
equivalent consist of cash and short-term deposit
as defined above.

(i) Trade Receivables:

Trade receivables are amounts due from
customers for assets given on lease in the

ordinary course of business. Trade receivables are
recognised initially at the amount of consideration
that is unconditional unless they contain
significant financing components, when they are
recognised at fair value. The Company holds the
trade receivables with the objective to collect the
contractual cash flows and therefore measures
them subsequently at amortised cost using the
effective interest method, less loss allowance.

(j) Inventories:

I nventories are valued at lower of cost and net
realizable value. In the case of raw materials,
packing materials, traded goods and stores and
spares parts, cost is determined in accordance
with the moving weighted average principle. Costs
include the purchase price, non - refundable
taxes and delivery and handling costs. Cost of
finished goods includes all costs of purchases,
direct materials, direct labour and appropriate
proportion of variable and fixed overheads
expenditure, the latter being allocated on the basis
of normal operating capacity. Cost of inventories
also include all other costs incurred in bringing the
inventories to their present location and condition.
The net realisable value is the estimated selling
price in the ordinary course of business less the
estimated costs of completion and estimated
costs necessary to make the sale.

(k) Investments and other financial instruments:

(i) Financial Instruments

Financial assets and financial liabilities are
recognised when the Company becomes a party
to the contractual provisions of the instruments.
Initial recognition and measurement

Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue
of financial assets and financial liabilities (other
than those measured at fair value through profit
or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of

financial assets or financial liabilities at fair value
through profit or loss are recognised immediately
in Profit or loss.

(ii) Classification and subsequent measurement of
financial assets

The classification of a financial asset depends
on the entity’s business model for managing the
financial assets and the contractual terms of the
cash flows. The Company classifies its financial
assets in the following measurement categories:

• those to be measured subsequently at fair
value (either through other comprehensive
income, or through profit or loss), and

• those measured at amortised cost
Financial assets measured at amortised cost
Financial assets that are held for the collection
of contractual cash flow where those cash flows
represent solely payments of principal and interest
are measured at amortised cost Interest income
from these financial assets is included in finance
income using the effective interest rate method.

Financial assets measured at fair value through
other comprehensive Income (FVTOCI)

Assets that are held for the collection of contractual
cash Flows and for selling the financial assets,
where the assets cash flows represent solely
payments of principal and interest, are measured
at fair value through other comprehensive income
(FVTOCI). Changes in fair value of instrument is
taken to other comprehensive income which are
reclassified to profit or loss.

Financial assets measured at fair Value through
profit or loss (FVTPL)

Financial assets that do not meet the criteria for
amortised cost or FVTOCI are measured as fair
value through profit or loss. A gain or loss on a debt
investment that is subsequently measured at fair
value through profit or loss. Dividend income from
these financial assets is included in other income
once the Company’s right to receive the dividend
is established and it is probable that the economic
benefits associated with the dividend will flow to
the entity.

Investments in equity instruments at FVTOCI

On initial recognition, the Company can make
an irrevocable election (on an instrument-by¬
instrument basis) to present the subsequent
changes in fair value in other comprehensive
income for investments in equity instruments. This
election is not permitted if the equity investment
is held for trading. These elected investments are
initially measured at fair value plus transaction
costs. Subsequently, they are measured at fair value
with gains and losses arising from changes in fair
value recognised in other comprehensive income
and accumulated in the reserve equity instruments
through other comprehensive income’. The
cumulative gain or loss is not reclassified to profit
or loss on disposal of the investments. Dividends
on these investments in equity instruments are
recognised in the statement of profit and loss All
the equity instruments held by the Company are
measured at FVTOCI.

Impairment of Financial Assets

The Company assesses on a forward-looking
basis the expected credit losses associated with its
assets carried at amortised cost. The impairment
methodology applied depends on whether there
has been a significant increase in credit risk.

For trade receivables only, the Company applies
the simplified approach permitted by Ind AS 109-
''Financial Instruments’, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.

Derecognition of Financial Assets

A financial assets is derecognised only when
the Company has transferred the right to receive
cash flows from the financial assets or retains
the contractual rights to receive the cash flows of
the financial assets, but assumes a contractual
obligation to pay cash flows to one or more
recipients.

Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership
of the financial asset. In such cases, the financial
asset is derecognised. Where the entity has not

transferred substantially all risks and rewards of
ownership of the financial asset, the financial asset
is not derecognised.

Where the entity has neither transferred a financial
asset nor retains substantially all risks and rewards
of ownership of the financial asset, the financial
asset is derecognised if the Company has not
retained control of the financial asset. Where the
Company retains control of the financial asset, the
asset is continued to be recognised to the extent of
continuing involvement in the financial asset.

(iii) Financial Liabilities & Equity Instruments

An instruments issued by a company are classified
as either financial liabilities or as equity in
accordance with the substance of the contractual
arrangements and the definitions of a financial
liability and an equity instrument.

Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Company are
recognised at the proceeds received, net of direct
issue costs. Repurchase of the Company’s own
equity instruments is recognised and deducted
directly in equity. No gain or loss is recognised in
Statement of Profit and Loss on the purchase, sale,
issue or cancellation of the Company’s own equity
instruments. Dividend paid on equity instruments
are directly reduced from equity.

Financial Liabilities

Subsequent measurement of financial liabilities
Financial liabilities at fair value through profit and
loss

Financial liabilities at fair value through profit and
loss include financial liabilities held for trading.
The Company has not designated any financial
liabilities upon initial recognition at fair value
through profit and loss.

Financial liabilities measured at amortised cost

All the financial liabilities are subsequently
measured at amortised cost using the effective
interest rate method. Amortised cost is calculated
by taking into account any discount or premium on

acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as
finance costs in the statement of profit and loss.
Company does not owe any financial liabilities
which is held for trading.

Derecognition of Financial Liabilities

A financial liability (or, where applicable, a part of a
financial liability) is primarily derecognised when,
and only when, the obligation under the liability is
discharged or cancelled or expires.

Effective interest method

The effective interest method is a method of
calculating the amortised cost of a financial asset
or financial liability and of allocating interest
income/ interest expenses over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash receipts/
payments (including all fees and points paid or
received that form an integral part of the effective
interest rate, transaction costs and other premiums
or discounts) through the expected life of the debt
instrument, or, where appropriate, a shorter period,
to the net carrying amount on initial recognition.

Derivatives and hedging activities

The Company enters into derivative financial
instruments to manage its exposure to interest
rate and foreign exchange rate risks such as cross
currency interest rate swaps.

Derivatives are initially recognized at fair value on
the date a derivative contract is entered into and
are subsequently re-measured to their fair value at
the end of each reporting period. The accounting
for subsequent changes in fair value depends on
whether the derivative is designated as a hedging
instrument, and if so, the nature of the item
being hedged, and the type of hedge relationship
designated.

The Company designates derivatives as hedges
of a particular risk associated with the cash
flows of recognized assets and liabilities (cash
flow hedges). The Company has designated the
cross-currency interest rate swap as a cash flow
hedge for changes in both interest rate and foreign
exchange rates.

At the inception of the hedge relationship, the
Company documents the relationship between
the hedging instrument and the hedged item,
along with its risk management objectives
and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the
hedge and on an ongoing basis, the Company
documents whether the hedging instrument is
highly effective in offsetting changes in fair values
or cash flows of the hedged item attributable to the
hedged risk.

The full fair value of a hedging derivative is
classified as a non-current asset or liability when
the remaining maturity of the hedged item is more
than 12 months; it is classified as a current asset
or liability when the remaining maturity of the
hedged item is less than 12 months.

Cash flow hedges that qualify for hedge
accounting

The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognized in cash flow hedging
reserve within equity. The gain or loss relating to
the ineffective portion is recognized immediately in
profit or loss, within other gains/(losses).

Amounts previously recognized in other
comprehensive income and accumulated in equity
relating to effective portion as described above
are reclassified to profit or loss in the periods
when the hedged item affects profit or loss, in
the same line as the recognized hedged item.
However, when the hedged forecast transaction
results in the recognition of a non-financial
asset or a non-financial liability, such gains and
losses are transferred from equity (but not as a
reclassification adjustment) and are included in
the initial measurement of the cost of the non¬
financial asset or non-financial liability.

Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies for
hedge accounting. Any gain or loss recognized in
other comprehensive income and accumulated
in equity at that time remains in equity and is
recognized when the forecast transaction is
ultimately recognized in profit or loss. When a
forecast transaction is no longer expected to
occur, the gain or loss accumulated in equity is
reclassified immediately in profit or loss.

I f the hedge ratio for risk management purposes
is no longer optimal but the risk management
objective remains unchanged and the hedge
continues to qualify for hedge accounting, the
hedge relationship will be rebalanced by adjusting
either the volume of the hedging instrument or the
volume of the hedged item so that the hedge ratio
aligns with the ratio used for risk management
purposes. Any hedge ineffectiveness is calculated
and accounted for in profit or loss at the time of the
hedge relationship rebalancing.

Embedded derivatives

Derivatives embedded in a host contract that
is an asset within the scope of Ind AS 109 are
not separated. Financial assets with embedded
derivatives are considered in their entirety when
determining whether their cash flows are solely
payment of principal and interest.

Derivatives embedded in all other host contract are
separated only if the economic characteristics and
risks of the embedded derivative are not closely
related to the economic characteristics and risks
of the host and are measured at fair value through
profit or loss. Embedded derivatives closely related
to the host contracts are not separated.

Derivatives that are not designated as hedges

The Company enters certain derivative contracts
to hedge risk which are not designated as hedges.
Such contracts are accounted for at fair value
through profit or loss and are included in other
gains/(losses).

(l) Offsetting Financial Instruments:

Financial assets and liabilities are offset, and the
net amount reported in the balance sheet when
there is a legally enforceable right to offset the
recognised amounts and there is an intention to
settle on a net basis or realise the asset and settle
the liability simultaneously. The legally enforceable
right must not be contingent on future events
and must be enforceable in the normal course of
business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.

(m) Property, plant and equipment:

Freehold land is carried at cost and is not
Depreciated. All other items of property, plant
and equipment are stated at historical cost less
depreciation and impairment, if any. Historical cost
includes expenditure that is directly attributable to
the acquisition of the items.

Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as a separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during
the reporting period in which they are incurred.

Expenditure incurred on assets which are not ready
for their intended use comprising direct cost, related
incidental expenses and attributable borrowing cost
are disclosed under Capital Work-in-Progress.

Depreciation methods, estimated useful lives and
residual value:

Depreciation is calculated using Straight Line
Method (SLM) to allocate their cost, net of their
residual values, over their estimated useful lives.
The useful lives have been determined based on
technical evaluation done by the management,
which is in line with those specified by Schedule
II to the Companies Act, 2013. The residual values
are at 5% of the original cost of the asset.

The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at the end of
each reporting period.

An asset’s carrying amount is written down
immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These
are included in profit or loss within other gains/
(losses).

(n) Intangible assets:

Intangible assets being computer software, are
stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses,
if any.

Amortization is recognised on a straight-line basis
over their estimated useful lives. The estimated
useful life and amortization method are reviewed
at the end of each reporting period, with the effect
of any changes in estimate being accounted for on
a prospective basis.

Gains or losses arising from the retirement or
disposal of an intangible asset are determined
as the difference between the disposal proceeds
and the carrying amount of the asset and are
recognised as income or expense in the Statement
of Profit and Loss.

Cost of software is amortised over a period of 5
years being the estimated useful life.

(o) Investment Property

I nvestment properties are properties held to earn
rentals and/or for capital appreciation (including
property under construction for such purposes).
Investment properties are measured initially at
cost, including transaction costs.

Subsequent to initial recognition, investment
properties are measured in accordance with Ind
AS 16’s requirements for cost model. Investment
property includes freehold land.

An investment property is derecognised upon
disposal or when the investment property is
permanently withdrawn from use and no future
economic benefits are expected from the disposal.
Any gain or loss arising on derecognition of the
property (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in profit or loss in the period
in which the property is derecognised.

(p) Non-current assets (or disposal group) held for
sale and discontinued operations:

Non-current assets and disposal groups classified
as held for sale are measured at the lower of their
carrying value and fair value less costs to sell.
Assets and disposal groups are classified as held
for sale if their carrying value will be recovered
through a sale transaction rather than through
continuing use. This condition is only met when the
sale is highly probable and the asset, or disposal
group, is available for immediate sale in its present
condition and is marketed for sale at a price that is
reasonable in relation to its current fair value.
Where a disposal group represents a separate
major line of business or geographical area of
operations, or is part of a single coordinated plan
to dispose of a separate major line of business or
geographical area of operations, then it is treated
as a discontinued operation. The post-tax profit
or loss of the discontinued operation together
with the gain or loss recognised on its disposal
are disclosed as a single amount in the statement
of profit and loss, with all prior periods being
presented on this basis.

(q) Trade and other payables:

These amounts represent liabilities for services
provided to the Company prior to the end of
financial year which are unpaid. Trade and other
payables are presented as current liabilities
unless the payment is not due within 12 months
of reporting period. Trade and other payables are
initially recognised at fair value and subsequently
measured at amortized cost using the effective
interest method.

(r) Borrowings:

Borrowings are initially recognized at fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised in
profit or loss over the period of borrowings using
the effective interest method. Fees paid on the
establishment of loan facilities are recognized as
transaction costs of the loan to the extent that it
is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until
the draw down occurs. To the extent there is no
evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as
a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Borrowings are removed from the Balance Sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial liability
that has been extinguished or transferred to
another party and the consideration paid, including
any non-cash assets transferred or liabilities
assumed, is recognized in profit or loss as other
gains / (losses).

Borrowings are classified as current liabilities
unless the Company has an unconditional right
to defer settlement of the liability for at least 12
months after the reporting period.

(s) Borrowing costs:

General and specific borrowing costs that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period of time that is required to
complete and prepare the asset for its intended
use or sale. Qualifying assets are assets that
necessarily take a substantial period of time to get
ready for their intended use or sale.

Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period
in which they are incurred.

---

Mar 31, 2018

1) General information:

National Peroxide Limited (“NPL”, “Company”) is a public limited Company established in 1954 and is listed on BSE Limited, Mumbai. NPL a pioneer in India for peroxygen chemicals is the largest manufacturer of Hydrogen Peroxide in India, with an installed capacity of 95 KTPA on 50% w/w. basis. Company’s registered office is situated at Neville House, J. N. Heredia Marg, Ballard Estate, Mumbai - 400 001.

2) Significant accounting policies and critical estimate and judgments:

2.1 Basis of preparation, measurement and significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

(i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the company under Ind AS. Refer note 43 for an explanation on how the transition from previous GAAP to Ind AS has affected the company’s financial position, financial performance and Cash flows.

(ii) Historical cost convention

The financial statements have been prepared on historical cost basis, except for the following:

- Certain financial assets and financial liabilities are measured at fair value;

- Defined benefit plans - plan assets are measured at fair value;

(iii) Amended standards adopted by the Company

The amendments to Ind AS 7 require disclosure of changes in liabilities arising from financing activities, see note 18.

(iv) Standards issued but not effective

Ind AS 115 - Revenue from Contracts from Customers

On March 28, 2018, the Ministry of Corporate Affairs issued Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 - Revenue from Contracts with Customers. The accounting standard is applicable to the Company from April 1, 2018. This will replace (i) Ind AS 18 which covers contracts for goods and services, (ii) Ind AS 11 which covers construction contracts, and (iii) Guidance Note on Accounting for Real Estate Transactions which covers revenue recognition for property development projects.

The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. Appendix B to Ind AS 21 - Foreign currency transactions and advance consideration

The appendix clarifies how to determine the date of transaction for the exchange rate to be used on initial recognition of a related asset, expense or income where an entity pays or receives consideration in advance for foreign currency-denominated contracts. For a single payment or receipt, the date of the transaction should be the date on which the entity initially recognises the non-monetary asset or liability arising from the advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments or receipts for one item, date of transaction should be determined as above for each payment or receipt, the effective date for adoption of Ind AS 21 is financial periods beginning on or after April 1, 2018.

Ind AS 12 - Income taxes regarding recognition of deferred tax assets on unrealised losses

The amendments clarify the accounting for deferred taxes where an asset is measured at fair value and that fair value is below the asset’s tax base.

(v) Current vis-a-vis non-current classification

The assets and liabilities reported in the balance sheet are classified on a “current / non-current basis”, with separate reporting of assets held for sale and liabilities. Current assets, which include cash and cash equivalents, are assets that are intended to be realized, sold or consumed during the normal operating cycle of the Company or in the 12 months following the balance sheet date; current liabilities are liabilities that are expected to be settled during the normal operating cycle of the Company or within the 12 months following the close of the financial year. The deferred tax assets and liabilities are classified as non-current assets and liabilities.

(b) Segment reporting:

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM).

The Chief Executive Officer and Director of National Peroxide Limited has been identified as CODM and he is responsible for allocating resources, assess the financial performance of the company and make strategic decisions.

The Company has identified one reportable segment ‘manufacturing of peroxides’ based on information reviewed by the CODM.

(c) Foreign currency translation;

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in ‘Indian Rupees’ (INR), which is the Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on nonmonetary assets such as equity investments classified as FVOCI are recognized in other comprehensive income.

(d) Revenue recognition:

Revenue is measured at the fair value of the consideration received or receivable. Revenue is inclusive of excise duty and net of trade discounts, rebates, state value added tax, service tax and goods and service tax (GST). With regard to sale of products, income is reported when practically all risks and rewards connected with the ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

(e) Income tax:

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in Profit or Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

(f) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company, as lessee, are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless, the payments are structured to increase in line with expected general inflation, to compensate for the lessor’s expected inflationary cost increases.

(g) Impairment of non-financial assets:

Assets are tested for impairment, wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(h) Cash and Cash Equivalents :

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Balance sheet.

(i) Trade Receivables:

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

(j) Inventories:

Inventories are valued at lower of cost and net realisable value. In the case of raw materials, packing materials and stores and spares parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non - refundable taxes and delivery and handling costs. Cost of finished goods and work in-progress include all costs of purchases, direct materials, direct labour and appropriate proportion of variable and fixed overheads expenditure. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.

(k) Investments and other financial assets:

(i) Classification

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through Other Comprehensive Income or through profit or loss) and

- those measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

(ii) Measurement

At initial recognition, the Company measures financial assets at its fair value plus, in the case of financial assets not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial assets. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit or Loss.

Equity instruments

The Company subsequently measures all equity investments at fair value. The Company’s management has elected to present fair value gains and losses on equity investments in Other Comprehensive Income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividend from such investments are recognised in the Statement of Profit and Loss as other income when the Company’s right to receive payments is established.

Changes in fair value of financial assets at fair value through profit or loss are recognized in other gain / (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses), if any on equity investments measured at FVOCI are recognised in statement of profit and loss. Investment in subsidiary is carried at cost less impairment loss, if any.

Transition to Ind AS: On transition to Ind AS, the Company has elected to use the previous GAAP carrying amount of its investment in subsidiary on the date of transition as its deemed cost on that date.

(iii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109- ‘Financial Instruments’, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

(iv) Derecognition of financial assets

A financial asset is derecognised only when:

- The Company has transferred the rights to receive cash flows from the financial asset or

- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

(l) Income recognition:

Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividend

Dividend are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.

(m) Offsetting Financial Instruments:

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty. (n) Property, plant and equipment:

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Transition to Ind AS:

On transition to Ind AS, the Company has elected to continue with carrying value of all of its property, plant and equipment recognized as at April 1, 2016 measured as per the provisions of previous GAAP and use that carrying value as demand cost of property, plant and equipment.

Depreciation methods, estimated useful lives and residual value:

Depreciation is calculated using Straight Line Method (SLM) to allocate their cost, net of their residual values, over their estimated useful lives prescribed in Schedule II to the Companies Act, 2013.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains / (losses).

(o) Trade and other payables:

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless the payment is not due within 12 months of reporting period. Trade and other payables are initially recognized at fair value and subsequently measured at amortised cost using the effective interest method.

(p) Borrowings:

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of borrowings using the effective interest method.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains / (losses).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(q) Borrowing costs:

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred.

(r) Provisions and Contingent Liabilities :

Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Contingent liabilities

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

(s) Employee benefits:

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Post employee obligations

The Company operates the following post-employment schemes:

- defined benefit plans such as gratuity, pension and provident fund contributions made to a trust in case of certain employees

- defined contribution plans such as provident fund and superannuation fund.

Pension and gratuity obligations

The liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets.

The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Provident fund contributions made to a trust administered by the Company

In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the

Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of the interest earnings of the fund is determined on the basis of actuarial valuation.

Defined contribution plans

The Company pays provident fund contributions to publicly administered provident funds as per local regulations and superannuation contributions to superannuation fund. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Further the obligations liability or asset recognised in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

(iii) Other long-term employee benefit obligations

The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in Statement of Profit or Loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(t) Contributed equity:

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax from the proceeds.

(u) Dividend:

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

(v) Earnings per share:

Basic earnings per share

Basic earnings per share is calculated by dividing:.

- the profit attributable to owners of the Company

- by the weighted average number of equity shares outstanding during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

(w) Rounding of Amounts:

All amounts disclosed in financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.

2.2 Critical accounting estimates and judgements:

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

- Estimation of current tax expense and payable - Note (e) above

- Recognition of deferred tax - Note (e) above

- Estimation of useful life - Note (n) above

- Estimation of defined benefit obligation - Note (s) above

i) The Company has availed the deemed cost exemption in relation to the Property, plant and equipment on the date of transition and hence the net block carrying amount has been considered as the gross block carrying on that date. Refer below for the gross block value and the accumulated depreciation on April 1, 2016 under the previous GAAP.

Rights, preferences and restrictions attached to equity shares

The Company has one class of equity share having a par value of '' 10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting, except in case of interim dividend.

In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholdings.

Pursuant to the scheme of arrangement sanctioned by National Company Law Tribunal vide its order dated June 22, 2017, and filed with the Registrar of Companies on August 2, 2017, N.W. Exports Limited and Sunflower Investments and Textiles Limited, both having investment in Macrofil Investments Limited, has been amalgamated into Nowrosjee Wadia and Sons Limited ("NWS"). Post-merger, NWS became the holding company of Macrofil Investments Limited which holds 33.38% shareholding in the Company. Accordingly, NWS became the holding Company of the Company and Ben Nevis Investments Limited became the ultimate holding company of the Company.

Nature and purpose of reserves General reserve

The Company has transferred a portion of the net profit of the Company before declaring dividend to general reserve pursuant to the earlier provisions of the Companies Act, 1956. Mandatory transfer to general reserve is not required under the Companies Act, 2013.

Retained earnings

Retained earnings are the profits that the Company has earned till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Further, it also includes the impact of remeasurements of the defined benefit obligations, net of tax.

FVOCI - Equity instruments

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserves within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Terms of repayment

Repayable in 10 quarterly instalments of '' 500 lakhs beginning from April 15, 2015 and carrying an interest rate of 10.25% per annum payable on monthly basis. The current maturity amount as at March 31, 2018 is '' NIL (March 31, 2017 ''1,000 lakhs and April 1, 2016 '' 3,000 lakhs) of the loan has been shown under note 22 - Other current financial liabilities.

Nature of security

Secured by a first charge by way of Hypothecation of plant and machinery and other movables and second charge on industrial land at Kalyan and building thereon by way of mortgage.

Nature of security

i) Primary Security:

First pari passu charge by way of hypothecation over the Company''s entire stocks of inventory and receivables along with other working capital banks under consortium.

ii) Collateral

Second pari passu charge on the entire fixed assets of the Company including land located at NRC Road, P.O. Atali, via Mohone, Kalyan, Dist. Thane.

Disclosure of amounts payable to vendors as defined under the “Micro, Small and Medium Enterprise Development Act, 2006” is based on the information available with the Company regarding the status of registration of such vendors under the said Act. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly, there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous years.

(i) Embezzlement of funds of the Company

1. During the current financial year, the Company’s management has identified instances of embezzlement of its funds by certain employees of the Company, including senior management employees, whose services have since been terminated. Based on the management’s scrutiny and the forensic investigation report, the amount of the embezzlement is Rs,3,702.98 lakhs. The Company has initiated criminal proceedings against these employees including filing of FIR and application for other appropriate action with the Joint Commissioner of Police, Economic Offences Wing. Pending the recovery procedures, the financial statements have been adjusted to give effect to the above embezzlement. The total amount of such embezzlement is Rs, 3,702.98 lakhs, pertaining entirely to the period upto March 31, 2017. Of these, Rs,1,459.54 lakhs were accounted as cost of materials consumed and other expenses prior to the Ind AS transition date of April 1, 2016 and Rs, 347.32 lakhs, during the previous financial year ended March 31, 2017. The balance amount of Rs, 1,896.12 lakhs, which were shown as recoverable under the head “Balance with Excise, Customs, Sales Tax etc.” has now been debited to equity for Rs,1,081.17 lakhs as on the Ind AS transition date of April 1, 2016 and to Exceptional Items “Loss on account of embezzlement of funds” for Rs,814.95 lakhs during the previous financial year ended March 31, 2017. The net impact after considering the tax effect of the above adjustments now effected is Rs,706.99 lakhs as at the Ind AS transition date of April 1, 2016 and Rs,532.92 lakhs in the previous financial year ended March 31, 2017. Further the Company has reclassified Rs,347.32 lakhs charged to the Statement of Profit and Loss during the previous financial year ended March 31, 2017 as exceptional items, “Loss on account of Embezzlement of funds”.

2. The Board has appointed Mr. Suresh Khurana as CEO and Director of the Company and Mr. S. Raja as Vice President - Commercial and Finance of the Company on December 15, 2017, immediately on termination of the earlier senior management team. The Board also appointed new internal auditors. The new Management, from January 2018, commenced by focusing on addressing gaps in entity level controls; identifying mitigating compensating controls for system gaps, revisiting the Chart of Authority, reviewing all the identified gaps in business processes, instituting new / compensating controls and maker checker controls more specifically in areas like review and approval of bank payments, journal entries, cost of goods sold ledger, reconciliation of direct and indirect taxes, reperformance of inventory valuation etc., and ensured design of controls was in place and gaps were remediated as at the beginning of January 2018. The new Management, assisted by the internal auditors subsequently tested all the controls for adequacy and operating effectiveness as on March 31, 2018.

3. Additionally, the new management has re-performed several procedures viz., reviewing sales and purchase price, analyzing customer / vendor wise sales / purchase price, reviewing scrap sales, reviewing key contracts entered into etc., to ensure that there were no transactions / account balances during the year ended and as at March 31, 2018 that were impacted by the embezzlement.

# These are investment in equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than profit or loss as these are strategic investments and the Company considered this to be more relevant.

## Inter corporate deposits include interest accrued till the year end, whereas the same has been classified under other financial assets in the financial statements.

(b) Fair value hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

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Mar 31, 2017

Corporate Information

National Peroxide Limited (NPL) is a public limited Company established in 1954 and is listed on BSE Limited, Mumbai.

NPL a pioneer in India for peroxygen chemicals is the largest manufacturer of Hydrogen Peroxide in India, with an installed capacity of 95 KTPA on 50% w/w. basis.

1. SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of Accounting and Preparation of Standalone Financial Statements:

The standalone financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”) as applicable. The standalone financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the standalone financial statements are consistent with those followed in the previous year.

(b) use of Estimates:

The preparation of the standalone financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the standalone financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.

(c) Property, Plant and Equipment & Depreciation:

Property, Plant and Equipment acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalized up to the date when the asset is ready for its intended use.

Depreciable amount for Property, Plant and Equipment is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on Property, Plant and Equipment has been provided on the straight line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

(d) Impairment of Property, Plant and Equipment:

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the Company’s assets/cash generating units. If any indication exists, an asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. When there is indication that the impairment loss recognized for an asset in earlier accounting period no longer exists or may have decrease, such reversal impairment loss is recognized in the Statement of Profit and Loss.

(e) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the year as determined in accordance with the applicable tax rates and the provisions of Income Tax Act, 1961.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognized in the standalone financial statements.

Deferred tax assets are recognized with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilized. When the Company carried forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilized.

(f) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(g) Inventories:

“Inventories are valued at the lower of the cost and the net realizable value.

In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs.

Cost of finished goods is determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realizable value is estimated at the expected selling price less estimated completion and selling costs.

(h) Revenue Recognition:

Sales include products net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all risks and rewards connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognized when the right to receive such dividend is established. Interest on securities is recognized evenly over the period of the instrument..

(i) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognized in the period to which they relate, regardless of how the funds have been utilized, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for its intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(j) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognized as income or expenses in the Statement of Profit and Loss.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the yearend are translated at closing-date rates, and unrealized translation differences are included in the Statement of Profit and Loss.

(k) Employee Benefits:

a. Short-term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

b. Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(i) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(ii) Defined-benefit plans

For defined-benefit plans in the form of gratuity fund and pension, the cost of providing benefits are determined using the projected unit credit method, with actuarial valuations being carried out at each Balance Sheet date. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognized in the Statement of Profit and Loss.

c. Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encased or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on a ailment of encashment of such accrued benefit or where the a ailment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(l) Provisions and Contingencies:

A provision is recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized but are disclosed in the notes to the standalone financial statement.

(m) Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with lessor are recognized as operating leases. Lease rentals under the operating leases are recognized in the Statement of Profit and Loss on a straight line basis over lease term.

(n) Earnings per share:

Basic earnings per share is calculated by dividing the net profit/(loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit/(loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(o) Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(p) Dividend to Equity Shareholders:

Dividend to Equity Shareholders is recognized as a liability and deducted from shareholders funds in the period in which the dividend is approved by the equity shareholders in the general meeting.

(q) Operating Cycle:

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

---

Mar 31, 2016

(a) Basis of Accounting and Preparation of Standalone Financial Statements:

The standalone financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 (“the 2013 Act”) as applicable. The standalone financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the standalone financial statements are consistent with those followed in the previous year.

(b) Use of Estimates:

The preparation of the standalone financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the standalone financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize.

(c) Fixed assets and depreciation:

- Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalized up to the date when the asset is ready for its intended use.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.

(d) Impairment of fixed assets:

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the Company’s fixed assets. If any indication exists, an asset’s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. Reversal of impairment loss is recognized immediately as income in the Statement of Profit and Loss.

(e) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the year as determined in accordance with the applicable tax rates and the provisions of Income Tax Act, 1961.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognized in the standalone financial statements.

Deferred tax assets are recognized with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilized. When the Company carried forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognized only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilized.

(f) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(g) Inventories:

Inventories are valued at the lower of the cost and the net realizable value.

In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs.

Cost of finished goods is determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realizable value is estimated at the expected selling price less estimated completion and selling costs.

(h) Revenue Recognition:

Sales include products net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all risks and rewards connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognized when the right to receive such dividend is established. Interest on securities is recognized evenly over the period of the instrument.

(i) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognized in the period to which they relate, regardless of how the funds have been utilized, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for its intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(j) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognized as income or expenses in the Statement of Profit and Loss.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the yearend are translated at closing-date rates, and unrealized translation differences are included in the Statement of Profit and Loss.

(k) Employee Benefits:

a. Short-term Employee Benefits

Short term employee benefits are recognized as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

b. Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(i) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(ii) Defined-benefit plans

For defined-benefit plans in the form of gratuity fund and pension, the cost of providing benefits are determined using the projected unit credit method, with actuarial valuations being carried out at each Balance Sheet date. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognized in the Statement of Profit and Loss.

c. Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encased or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on a ailment of encashment of such accrued benefit or where the a ailment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(l) Provisions and Contingencies:

A provision is recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognized but are disclosed in the notes to the standalone financial statement.

(m) Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with less or are recognized as operating leases. Lease rentals under the operating leases are recognized in the Statement of Profit and Loss on a straight line basis over lease term.

(n) Earnings per share:

Basic earnings per share is calculated by dividing the net profit/(loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit/(loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(o) Cash flow statement:

Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(p) Operating Cycle:

Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

---

Mar 31, 2014

Corporate Information

National Peroxide Limited (NPL) is a public limited Company established in 1954 and is listed on BSE Limited, Mumbai. NPL a pioneer in India for peroxygen chemicals is the largest manufacturer of Hydrogen Peroxide in India, with an installed capacity of 84,000 mTPA on 50% w/w. basis.

(a) Basis of Accounting and Preparation of Financial Statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/ 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

(b) use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.

(c) Fixed assets and depreciation:

- Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule xIv to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates. Accordingly, certain electronic items are depreciated at 33.33%. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase.

(d) Impairment of fixed assets:

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the Company''s fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. Reversal of impairment loss is recognised immediately as income in the Statement of Profit and Loss.

(e) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carried forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each Balance Sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

(f) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(g) Inventories:

Inventories are valued at the lower of the cost and the net realisable value.

In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs. Cost of finished goods is determined using the absorption costing principles.

Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads.

Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(h) Revenue Recognition:

Sales include products net off trade discounts and exclude sales tax, state value added tax and service tax. With regard to sale of products, income is reported when practically all risks and rewards connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognised when the right to receive such dividend is established. Interest on securities is recognised evenly over the period of the instrument.

(i) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans. Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(j) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Statement of Profit and Loss.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealised translation differences are included in the Statement of Profit and Loss.

(k) Employee Benefits:

a. Short-term Employee Benefits

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

b. Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(i) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(ii) Defined-benefit plans

For defined-benefit plans in the form of gratuity fund and pension, the cost of providing benefits are determined using the projected unit credit method, with actuarial valuations being carried out at each Balance Sheet date. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

c. Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(l) Provisions and Contingencies:

A provision is recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement.

(m) Operating Lease:

Lease arrangements where risks and rewards incidental to ownership of an assets substantially vest with lessor are recognised as operating leases. Lease rentals under the operating leases are recognised in the Statement of Profit and Loss on a straight line basis.

(n) Earnings per share:

Basic earnings per share is calculated by dividing the net profit/(loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is calculated by dividing the net profit/(loss) after tax as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(o) Cash flow statement:

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(p) Operating Cycle:

Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

---

Mar 31, 2013

(a) Basis of Accounting:

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(b) use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management''s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(c) Fixed assets and depreciation:

- Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any. The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates. Accordingly, certain electronic items are depreciated at 33.33%. Assets costing less than Rs. 5,000 are fully depreciated in the year of purchase. Extra shift depreciation is applied to applicable items of plant and machinery for days additional shifts are worked.

(d) Impairment of fixed assets:

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the Company''s fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. Reversal of impairment loss is recognised immediately as income in the Statement of Profit and Loss.

(e) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

(f) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(g) Inventories:

Inventories are valued at the lower of the cost and the net realisable value. In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs. Cost of finished goods is determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods. Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(h) Revenue Recognition:

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax. With regard to sale of products, income is reported when practically all risks and rights connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognised when the right to receive such dividend is established. Interest on securities is recognised evenly over the period of the instrument.

(i) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(j) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Statement of Profit and Loss.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealised translation differences are included in the Statement of Profit and Loss.

(k) Employee Benefits:

a. Short-term Employee Benefits

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

b. Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(i) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(ii) Defined-benefit plans

Expenses for defined-benefit gratuity and pension are calculated as at the Balance Sheet date by independent actuaries in a manner that distributes expenses over the employee''s working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

c. Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(l) Provisions and Contingencies:

A provision is recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement.

(m) Operating Lease:

Assets acquired on lease where significant portion of the risks and rewards incidental to ownership are effectively retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on a straight line basis over the lease period.

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Mar 31, 2012

(a) Basis of Accounting

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(b) Use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management's evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(c) Fixed assets and depreciation:

- Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any. The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalised up to the date when the asset is ready for its intended use.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates. Accordingly, certain electronic items are depreciated at 33.33%. Assets costing less than Rs 5,000 are fully depreciated in the year of purchase. Extra shift depreciation is applied to applicable items of plant and machinery for days additional shifts are worked.

(d) Impairment of fixed assets:

Consideration is given at each Balance Sheet date to determine whether there is any indication of impairment of the carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. Reversal of impairment loss is recognised immediately as income in the Statement of Profit and Loss.

(e) Deferred Revenue Expenditure:

Monthly pension costs are amortised over the period of payment.

(f) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period.

Deferred tax is calculated to correspond to the tax effect arising when final tax is determined. Deferred tax corresponds to the net effect of tax on all timing differences which occur as a result of items being allowed for income tax purposes during a period different from when they were recognised in the financial statements.

Deferred tax assets are recognised with regard to all deductible timing differences to the extent that it is probable that taxable profit will be available against which deductible timing differences can be utilised. When the Company carries forward unused tax losses and unabsorbed depreciation, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing evidence that sufficient future taxable income will be available against which deferred tax assets can be realised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced by the extent that it is no longer probable that sufficient taxable profit will be available to allow all or a part of the aggregate deferred tax asset to be utilised.

(g) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(h) Inventories:

Inventories are valued at the lower of the cost and the net realisable value.

In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs.

Cost of finished goods is determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(i) Revenue Recognition:

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax. With regard to sale of products, income is reported when practically all risks and rights connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognised when the right to receive such dividend is established. Interest on securities is recognised evenly over the period of the instrument.

(j) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(k) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Statement of Profit and Loss.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealised translation differences are included in the Statement of Profit and Loss.

(l) Employee Benefits:

(a) Short-term Employee Benefits

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(b) Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(i) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(ii) Defined-benefit plans

Expenses for defined-benefit gratuity and pension are calculated as at the Balance Sheet date by independent actuaries in a manner that distributes expenses over the employee's working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognised in the Statement of Profit and Loss.

(c) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(m) Provisions and Contingencies:

A provision is recognised when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement.

(n) Operating Lease:

Assets acquired on lease where significant portion of the risks and rewards incidental to ownership are effectively retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on a straight line basis over the lease period.

The Company has only one class of shares referred to as equity shares having a par value of Rs 10. Each holder of equity shares is entitled to one vote per share.

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

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

In last 5 years, no classes of shares has been issued either by payment being received in cash or brought back nor bonus issues made by the Company.

Following are the names of the shareholders with numbers of Equity Shares holding more than 5 percent of the total Equity Shares:

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Mar 31, 2011

(a) Basis of Accounting:

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India, the provisions of the Companies Act, 1956, and the applicable Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006. All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(b) Use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on managements evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

(c) Fixed Assets and Depreciation:

- Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.

The acquisition value includes the purchase price (excluding refundable taxes) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Examples of directly attributable expenses included in the acquisition value are delivery and handling costs, installation, legal services and consultancy services.

Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use, is funded by borrowings, the corresponding borrowing costs are capitalised up to the date when the asset is ready for its intended use.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956, unless the use of a higher rate or an accelerated charge is justified through technical estimates: Accordingly, certain electronic items are depreciated at 33.33%. Assets costing less than ? 5,000 are fully depreciated in the year of purchase. Extra shift depreciation is applied to applicable items of plant and machinery for days additional shifts are worked.

(d) Impairment of fixed assets:

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companys fixed assets. If any indication exists, an assetss recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is greater of the net selling price and value in use. Reversal of impairment loss is recognised immediately as income in the profit and loss account.

(e) Deferred Revenue Expenditure:

Monthly pension costs are amortised over the period of payment. (Refer Note 5 below).

(f) Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period.

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 are capable of reversal in one or more subsequent periods. 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 such deferred tax assets can be realised.

(g) Investments:

Investments are either classified as current or long-term investments. Current investments are carried at lower of cost and market value. Long-term investments are carried at cost of acquisitions, net of diminution in value, if any, which is other than temporary.

(h) Inventory:

Inventories are valued at the lower of the cost and the net realisable value. In the case of raw materials, packing materials and stores and spare parts, cost is determined in accordance with the moving weighted average principle. Costs include the purchase price, non-refundable taxes and delivery and handling costs. Cost of finished goods is determined using the absorption costing principles. Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads. Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(i) Revenue Recognition:

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all risks and rights connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognised when the right to receive such dividend is established. Interest on securities is recognised evenly over the period of the instrument.

(j) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(k) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Profit and Loss Account.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealised translation differences are included in the Profit and Loss Account.

(l) Employee Benefits:

(i) Short-term Employee Benefits

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(iii) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(iv) Defined-benefit plans

Expenses for defined-benefit gratuity are calculated as at the balance sheet date by independent actuaries in a manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognised in the Profit and Loss Account.

(v) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of,encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(m) Provisions and Contingencies:

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

(n) Cash Flow Statements:

Cash-flow statements are prepared in accordance with "Indirect Method" as explained in the Accounting Standard on Cash Flow Statements (AS-3) notified under the Companies (Accounting Standards) Rules, 2006.

(o) Earnings per Share:

Basic Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.

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Mar 31, 2010

(a)Basis of Accounting:

The financial statements are prepared as per historical cost convention and in accordance with the generally accepted accounting principles in India,the provisions of the Companies Act,1956,and the applicable Accounting Standards notified under the Companies (Accounting Standards)Rules,2006.All income and expenditure having material bearing on the financial statements are recognised on accrual basis.

(b)Use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amount of assets and liabilities,revenues and expenses and disclosure of contingent liabilities.Such estimates and assumptions are based on managements evaluation of relevant facts and circumstances as on the date of financial statements.The actual outcome may diverge from these estimates.

(c)Fixed Assets and Depreciation:

• Tangible fixed assets and depreciation

Tangible fixed assets acquired by the Company are reported at acquisition value,with deductions for accumulated depreciation and impairment losses,if any.

The acquisition value includes the purchase price (excluding refundable taxes)and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use.Examples of directly attributable expenses included in the acquisition value are delivery and handling costs,installation,legal services and consultancy services. Where the construction or development of any such asset requiring a substantial period of time to set up for its intended use,is funded by borrowings,the corresponding borrowing costs are capitalised up to the date when the asset is ready for its intended use.

Depreciation is provided on a straight line basis at rates and in the manner specified in Schedule XIV to the Companies Act, 1956,unless the use of a higher rate or an accelerated charge is justified through technical estimates.Accordingly,certain electronic items are depreciated at 33.33%.Assets costing less than Rs.5,000 are fully depreciated in the year of purchase. Extra shift depreciation is applied to applicable items of plant and machinery for days additional shifts are worked.

(d)Impairment of fixed assets:

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companys fixed assets.If any indication exists,an assetss recoverable amount is estimated.An impairment loss is recognised whenever the carrying amount of the assets exceeds its recoverable amount.The recoverable amount is greater of the net selling price and value in use.Reversal of impairment loss is recognised immediately as income in the profit and loss account.

(e)Deferred Revenue Expenditure:

Monthly pension costs are amortised over the period of payment.(Refer Note 5 below).

(f)Taxes on Income:

Current tax is determined as the amount of tax payable in respect of taxable income for the period. 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 are capable of reversal in one or more subsequent periods.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 such deferred tax assets dan be realised.

(g)Investments:

Investments are either classified as current or long-term investments.Current investments are carried at lower of cost and market value.Long-term investments are carried at cost of acquisitions,net of diminution in value,if any,which is other than temporary.

(h)Inventory:

Inventories are valued at the lower of the cost and the net realisable value. In the case of raw materials,packing materials and stores and spare parts,cost is determined in accordance with the moving weighted average principle.Costs include the purchase price,non-refundable taxes and delivery and handling costs. Cost of finished goods is determined using the absorption costing principles.Costs include the cost of materials consumed, labour and a systematic allocation of variable and fixed production overheads.Excise duties at the applicable rates are also included in the cost of finished goods.

Net realisable value is estimated at the expected selling price less estimated completion and selling costs.

(i) Revenue Recognition:

Sales include products and services, net off trade discounts and exclude sales tax, state value added tax and service tax.

With regard to sale of products, income is reported when practically all risks and rights connected with ownership have been transferred to the buyer. This usually occurs upon dispatch, after the price has been determined and collection of the receivable is reasonably certain.

Revenue from dividend on securities is recognised when the right to receive such dividend is established. Interest on securities is recognised evenly over the period of the instrument.

(j) Financial Income and Borrowing Cost:

Financial income and borrowing cost include interest income on bank deposits and interest expense on loans.

Interest income is accrued evenly over the period of the instrument.

Borrowing cost are recognised in the period to which they relate, regardless of how the funds have been utilised, except where it relates to financing of construction or development of assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalised up to the date when the asset is ready for its intended use. The amount of interest capitalised (gross of tax) for the period is determined by applying the interest rate applicable to appropriate borrowings outstanding during the period to the average amount of accumulated expenditure for the assets during the period.

(k) Foreign Currency Transactions:

Transactions in foreign currencies are translated to the reporting currency based on the exchange rate on the date of the transaction. Exchange differences arising on settlement thereof during the year are recognised as income or expenses in the Profit and Loss Account.

Cash and bank balances, receivables and liabilities (monetary items) in foreign currencies as at the year end are translated at closing-date rates, and unrealised translation differences are included in the Profit and Loss Account.

(l) Employee Benefits:

(i) Short-term Employee Benefits

Short term employee benefits are recognised as an expense at the undiscounted amount expected to be paid over the period of services rendered by the employees to the Company.

(ii) Long-term Employee Benefits

The Company has both defined-contribution and defined-benefit plans, of which some have assets in special funds or securities. The plans are financed by the Company and in the case of some defined contribution plans by the Company along with its employees.

(iii) Defined-contribution plans

Annual contribution payable to the Provident Fund and Superannuation Fund (based on the percentage of salary) are charged as an expense as they fall due, that is, in the same period as the employment gives rise to the contribution. Company also contributes to an established Provident Fund for certain employees where it is obliged to meet the interest shortfall, if any.

(iv) Defined-benefit plans

Expenses for defined-benefit gratuity are calculated as at the balance sheet date by independent actuaries in a manner that distributes expenses over the employees working life. These commitments are valued at the present value of the expected future payments, with consideration for calculated future salary increases, using a discount rate corresponding to the interest rate estimated by the actuary having regard to the interest rate on government bonds with a remaining term that is almost equivalent to the average balance working period of employees. Actuarial gains and losses are immediately recognised in the Profit and Loss Account.

(v) Other Employee Benefits

Compensated absences which accrue to employees and which can be carried to future periods but are expected to be encashed or availed in twelve months immediately following the year end are reported as expenses during the year in which the employees perform the services that the benefit covers and the liabilities are reported at the undiscounted amount of the benefits after deducting amounts already paid. Where there are restrictions on availment of encashment of such accrued benefit or where the availment or encashment is otherwise not expected to wholly occur in the next twelve months, the liability on account of the benefit is actuarially determined using the projected unit credit method.

(m) Provisions and Contingencies:

A provision is recognised when the Company has a present legal or constructive obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised but are disclosed in the notes to the financial statement. A contingent asset is neither recognised nor disclosed.

(n) Cash Flow Statements:

Cash-flow statements are prepared in accordance with "Indirect Method" as explained in the Accounting Standard on Cash Flow Statements (AS-3) notified under the Companies (Accounting Standards) Rules, 2006.

(o) Earnings per Share:

Basic Earnings per Share is calculated by dividing the net profit after tax for the year attributable to equity shareholders of the Company by the weighted average number of equity snares outstanding during the year.