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Accounting Policies of Nirlon Ltd. Company

Mar 31, 2016

1.1 Basis for preparation of financial statements :

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (‘GAAP'') in India under the historical cost convention on accrual basis except if specifically stated otherwise. These financial statements have been prepared to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act, 2013 read with rules 7 of Companies (Accounts) Rules, 2014.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquisition, cost of improvements, borrowing costs and any other cost attributable in bringing the assets to the condition required for their intended use.

b. Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on the written down value method based on the useful life specified in Schedule II of the Companies Act, 2013.

ii) Intangible Assets are amortized over the estimated useful life of the asset.

c. Borrowing Cost :

Borrowing costs include interest and other charges incurred in connection with the borrowing of funds and is recognized as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition / construction of qualifying assets, and incurred till all the activities necessary to prepare the qualifying asset for its intended use are complete, which are capitalized as the cost of that asset.

d. Forward Contracts:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates :

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects till the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortized as expense or income over the life of the contract.

e. Taxes on Income Current Tax

Provision for Income Tax is determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of Minimum Alternative TAX under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement”.

Deferred Tax

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the balance sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in a situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized.

f. Employee Stock Compensation Cost :

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortized over the vesting period.

g. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the yearend are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.

h. Employee Benefits :

i) Defined Benefit Plan :

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

Company''s contribution paid / payable for Provident Fund, ESIC and Pension Fund for the year is recognized in the statement of Profit and Loss.

iii) Long Term Employee benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits :

Short term benefits are recognized as an expense in the statement of profit and loss of the year in which the related services are rendered.

v) Actuarial gains / losses :

Actuarial gains / losses are immediately recognized in the statement of profit and loss and are not deferred.

i. Revenue Recognition:

i) License fee income and income incidental to it is accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis. j. Leave & License :

Leave & License payments are recognized as an expense in the statement of profit and loss.

Leave & License income is recognized based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & License agreements are amortized over the lock in period of respective licensees.

b. Rights, Preferences and Restrictions attached to the shares Equity shares

i) The Company has only one class of equity shares having a par value of Rs, 10 / -.

Each holder of equity shares is entitled to one vote per share. The shareholders have the right to receive interim dividends declared by the Board of Directors and final dividend proposed by the Board of Directors and approved by the shareholders.

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. The shareholders have all other rights as are available to equity shareholders as per the provisions of the Companies Act, 2013, read together with the Memorandum of Association & Articles of Association of the Company, as applicable.

d. Shares Issued to Nirlon Employees Stock Option Trust

In accordance with Nirlon ESOP 2012, during the financial year 2013-14 the Company had issued 7,17,656 shares of Rs, 10 each at a premium of Rs, 31.3 per share to the Nirlon Employees Stock Option Trust. The Company had provided a loan of Rs, 296.39 lakh to the Trust for subscribing such shares. As on 31st March, 2016, 6,80,000 (previous year 6,80,000) options have been exercised equal to 6,80,000 number of shares. In accordance with the provision of the Guidance Note on Accounting for Employee Share-based payments, the outstanding loan amount given to the Trust is disclosed as recoverable under the head ‘Share Capital & Securities Premium Reserves''.

Nirlon ESOP Plan 2012

Pursuant to the Resolution passed by the Shareholders of the Company by way of postal ballot on May 23, 2012, the Company granted 7,15,000 stock options to its employees at an issue price of Rs, 41.30 per share on May 30, 2012 in accordance with Nirlon ESOP 2012. Each option entitles the holder to purchase one Equity Share of the Company at the issue price.

The weighted average contractual life for the stock options was 5 years and they vested at the rate of 15%, 20%, 25%, 40% at the end of 15 months, 30 months, 42 months, 54 months respectively from the date of grant. During the year 2014-15, the Nomination and Remuneration committee has vide its Resolution dated February 9, 2015, accelerated the vesting period for all the unvested options to February 15, 2015 and accelerated the exercise period for all the options upto September 30, 2016. Accordingly all the options granted have been already vested.

(a) The Board of Directors, in their meeting held on 28th April 2016 has proposed a dividend of 7.50% i.e Rs, 0.75 per equity share on the face value of Rs, 10 / - (previous year Rs, 0.75 per equity share of Rs, 10 / - each) . The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting. Dividend amounting to Rs, 675.88 lakh (previous year Rs, 675.88 lakh) and dividend distribution tax thereon amounting to Rs, 137.62 lakh (previous year Rs, 137.62 lakh) is appropriated during the year.

(b) At the AGM held on 23rd September, 2014, the shareholders approved the dividend for the year 2013-14 on a prorata basis on the equity shares issued during the year 2013-14. However, subsequently, the Bombay Stock Exchange informed the company that the dividend should not be on a prorata basis as equity shares issued during the year 2013-14 rank pari passu in all respects with the then existing equity shares of the company. Accordingly, the differential dividend of Rs, 115.33 lakh and tax thereon of Rs, 19.61 lakh aggregating to Rs, 134.94 lakh has also been appropriated during the year 2014-15 by debiting the same to surplus.

The loan from HDFC Ltd is secured by a charge in the nature of an equitable mortgage by deposit of title deeds of land situated at Goregaon, Mumbai together with buildings and structures standing thereon, both present and future, and right, title and interest in the license fee receivables.

# The amount of e ach installment is subject to change based on changes in Interest rates & other factors.

* The terms of repayment for Loan 3 will be finalised once the same is securitised, as done for Loans 1 & 2.

In respect of deferred tax assets on unabsorbed depreciation, the same has been recognized based on the current tax laws entailing the benefit over the lifetime of the Company, against any taxable source of income.

The Buyers Credit facility provided by HDFC Bank is repayable on demand. The amount is secured by way of earmarking facilities to this extent, (vide a letter of undertaking from HDFC Ltd to HDFC Bank) out of the total facility granted by HDFC Ltd to the Company. Refer Note 2.3 for security provided to HDFC Ltd.


Mar 31, 2015

A) Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b) Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on the written down value method based on the useful life specified in Schedule II of the Companies Act, 2013.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

c) Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition/construction of qualifying assets and incurred till all the activities necessary to prepare the qualifying asset for its intended use, which are capitalised as the cost of that asset.

d) Forward Contracts:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates.

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects till the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortised as expense or income over the life of the contract.

e) Taxes on Income:

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement".

Deferred Tax

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the Balance Sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in a situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized.

f) Employee Stock Compensation Cost :

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortised over the vesting period.

g) Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the statement of profit and loss.

h) Employee Benefits :

i) Defined Benefit Plan :

The Company provides' for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

The Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits :

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

v) Actuarial gains/losses :

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i) Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

j) Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of the respective licensees.


Mar 31, 2014

1.1 Basis for Preparation of the Financial Statements :

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (''GAAP'') in India under the historical cost convention on accrual basis.These Financial Statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies, (Accounting Standards), Rules, 2006, (as amended) and other relevant provisions of the Companies Act, 1956.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation and Amortization :

i) Depreciation on Fixed Assets has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

iii) Depreciation and amortization on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing cost includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition/construction of qualifying assets, and incurred for all the activities necessary to prepare the qualifying asset for its intended use, which are capitalised as the cost of that asset.

d. Forward Contracts :

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates.

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects for the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortised as expense or income over the life of the contract.

e. Taxes on Income :

Current Tax

Provision for Income Tax is determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "mAt Credit Entitlement".

Deferred Tax

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the Balance Sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business losses exist, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situations of unabsorbed depreciation and carried forward business losses, are recognized only if there is reasonable certainty that they will be realized.

f. Employee Stock Compensation Cost:

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortised over the vesting period.

g. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

h. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company''s contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the related services are rendered.

v) Actuarial Gains/Losses

Actuarial Gains/Losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i. Revenue Recognition :

i) License fee income and income incidental to it, are accounted for on an accrual basis .

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

j. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from licensing are amortised over the lock in period of respective licensees.


Mar 31, 2013

1.1 Basis for preparation of the Financial Statements :

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (''GAAP'') in India under the historical cost convention on an accrual basis.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation and Amortization :

i) Depreciation on Fixed Assets has been provided on the written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

iii) Depreciation and amortization on the revalued portion of Fixed Assets are adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion/construction of qualifying assets and incurred till the commencement of the commercial use of the assets, which are capitalised as the cost of that asset.

d. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

v) Premiums or Discounts arising at the inception of forward contracts entered into to hedge the underlying liability in relation to Capital Projects are adjusted towards the cost of the Project.

e. Taxes on Income:

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

f. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company''s contribution paid /payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related service is rendered.

v) Actuarial Gains/Losses

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

g. Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

h. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of the respective licensees.


Mar 31, 2012

1.1 Basis for preparation of Financial Statements :

The Financial Statements are prepared in accoardance with Generally Accepted Accounting Principles ('GAAP') in India under the historical cost convention on accrual basis.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for its intended use.

b. Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Depreciation and amortization on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion/construction of qualifying assets and incurred till the commencement of the commercial use of the assets, which are capitalised as the cost of that asset.

d. Investments :

Long term investments are stated at Cost less permanent diminution in value, if any. Current investments are stated at the lower of cost or fair value.

e. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

f. Inventory Valuation :

Stores and spares, are valued at cost on a weighted average basis.

g. Taxes on Income: Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

v) Actuarial gains/losses

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i. Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

iv) Processing charges received include excise duty recovered.

j. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & License agreements are amortised over the lock in period of the respective license agreements.


Mar 31, 2011

1. Basis for preparation of financial statements :

The financial statements are prepared in accoardance with Generally Accepted Accounting Principles ('GAAP') in India under the historical cost convention on accrual basis.

2. Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation :

i) Depreciation on fixed assets has been provided on the written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Depreciation on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in the connection with the borrowing of the funds, and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion / contruction of qualifying assets and incurred till the commencement of the commerical use of the asset which are capitalised as cost of that asset.

d. Investments :

Long term investments are stated at cost less permanent diminution in value, if any. Current investments are stated at lower of cost or fair value.

e. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of Fixed Assets.

f. Inventory Valuation :

Raw materials, Packing materials and Stores and Spares, are valued at cost on a weighted average basis. Materials in transit and semi finished goods are valued at cost.

Finished goods are valued at cost including excise duty or net realisable value, whichever is lower.

g. Taxes on Income:

Current Tax :

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax:

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

i) Defined Benefit Plan :

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Profit and Loss Account.

iii) Long Term Employee benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits :

Short term benefits are recognised as an expense in the profit and loss account of the year in which the related services is rendered.

v) Actuarial gains/losses :

Actuarial gains/losses are immediately recognised in the profit and loss account and are not deferred.

i. Revenue Recognition:

i) Sales and processing charges received include excise duty recovered and excludes sales tax.

ii) Insurance claims, sale of production waste/scrap are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

iv) License fee income and income incidental to it, are accounted for on an accrual basis .

j. Leave & License :

Leave & License payments are recognised as an expense in the profit and loss account.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of respective licensees.


Mar 31, 2010

A. Fixed Assets :

Fixed Assets are stated at cost /revalued amount whereever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any attributable cost of bringing assets to the condition for its intended use. Cost also includes direct expenses incurred upto the date of capitalistion / comission. The cost of Fixed Assets includes additions on account of revaluation of land and buildings done as on 30th June, 2006.

b. Borrowing Cost :

Borrowing costs include interest,fees and other charges incurred in the connection with the borrowing of the funds and is considered as a revenue expenditure for the year in which it is incurred except for borrowing cost attributable to the acquistion / improvement of qualifying capital assets and incurred till the commencement of the commercial use of the asset and which is capitalised as cost of that asset.

All the revenue expenses related to the construction/ development of Nirlon Knowledge Park have been capitalised.

c. Investments :

Investments, being long term, are stated at Cost less permanent diminution in value, if any. Current investment is stated at lower of cost or fair value.

d. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

e. Inventory Valuation :

Raw materials, packing materials and stores and spares, are valued on a weighted average basis. Materials in transit and semi finished goods are valued at cost.

Finished goods are valued at cost including excise duty or net realisable value, whichever is lower.

f. Depreciation :

i) Depreciation on fixed assets has been provided at the rates specified in Schedule XIV of the Companies Act, 1956.

Method of providing Depreciation

a) Continuous Process Plants SLM

b) Other Assets WDV

c) The cost of leasehold land is amortised over the period of the lease.

ii) Depreciation on a revalued portion of Fixed Assets is provided on a basis consistent with the policy for book depreciation and the same is directly adjusted against the Revaluation Reserve.

g. Taxes on Income:

Current Tax:

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax Provision:

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

1) Defined Benefit plan

The Company provides for retirement/post retirements benefits in the form of gratuity. The Company’s liablity towards these benefits is determined using the projected cost method.These benefits are provided based on the acturial valuation on the balance sheet date by an independent actuary.

2) i) Retirement Benefit in the form of Provident

Fund (Defined Contribution Plan) is accounted on an accrual basis and is charged to the Profit and Loss Account for the year.

ii) Retirement benefit in the form of Pension is charged to Profit and Loss Account for the year.

iii) Long term Leave Benefits are provided as per the acturial valuation as on the balance sheet date by an independent actuary using the project unit credit method.

iv) Short term benefits are recognised as an expense in the Profit and Loss Account of the year in which the related services is rendered.

3) Termination benefits

Compensation paid under Voluntary Retirement Scheme is amortised over three years.

i. Revenue Recognition:

i) Sales and processing charges received include excise duty recovered from customers and excludes sales tax.

ii) Insurance claims, sale of production waste/scrap are accounted for in the books on an accrual basis.

iii) Rent/license fee income (excluding Service Tax) and expenses and income incidental to it, are accounted for on an accrual basis.

iv) Overdue Interest receivable from customers is accounted as and when realised.

j. Marketing fees:

Marketing fees are amortised over the lock-in-period of each Licensee.

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