Accounting Policies of Parabolic Drugs Ltd. Company

Mar 31, 2016

SIGNIFICANT ACCOUNTING POLICIES

The company''s summarized significant accounting policies are stated as below -

A. CONVENTION

The Financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP). The Company has prepared these Financial Statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standard) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 2013. The Financial Statements have been prepared on accrual basis and under

the historical cost convention.

B. BASIS OF ACCOUNTING

The financial statements have been prepared in accordance with the historical cost convention on accrual basis in accordance with Accounting Standard -1 "Disclosure of Accounting Policies".

All assets and liabilities have been classified as current or noncurrent as per the company''s normal operating cycle and other criteria set out in the Companies Act, 2013 based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained in Additional Notes.

C. FIXED ASSETS

All the fixed assets are stated at cost of acquisition less accumulated de precaution and impairment loss, if any. Cost of acquisition of fixed assets includes all direct cost relating to the acquisition and installation of fixed assets as per Accounting Standard 10- "Accounting for Fixed Assets".

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use are capitalized in accordance with Accounting Standard -16 "Borrowing costs".

Expenditure and outlays of money on uncompleted Fixed Assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

D. DEPRECIATION

Depreciation on Fixed assets, Tangible and Intangible, have been provided on continuous process basis on the basis of useful life of assets as prescribed under Schedule II of the Companies Act, 2013. During the year, depreciation on all the fixed assets has been provided at the rates applicable to continuous process industry on the straight-line method.

E. IMPAIRMENT OF ASSETS

The company provides for impairment loss, if any, to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired.

F. PRE-OPERATIVE EXPENSES

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalization, all expenses are disclosed under pre-operative expenses pending allocation/capitalization and allocated to cost of fixed assets on capitalization.

G. INVENTORIES

Inventories are valued in accordance with Accounting Standard -2 "Valuation n of Inventories" and the method of valuation is given as under:

H. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the econ omit benefits will flow to the company. The following specific recognition criteria must also be met before revenue is recognized.

Sale of Goods

Revenue from sale of Goods is recognized at the point of dispatch of finished goods. The VAT liability has been provided as per the VAT Returns filed. The additional liability arising at the time of assessment will be booked as & when arise. Sales are exclusive of VAT. Excise Duty deducted from Revenue (Gross) is the amount that is included in the Revenue (Gross) and not the entire amount of liability arising during the year.

Interest Income

Interest Income is recognized on time proportionate basis taking into account the am out outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the statement of Profit and Loss.

Income from Job Work

Income from job work is recognized on the basis of work executed as per the contract/a agreement.

DEPB(Duty Entitlement Pass Book) Income

DEPB income is recognized by the Company after the admission of export benefit credited against the DEPB license realized from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognized on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of customs duty on import of raw material by the Company is also included within DEPB income.

Investment Income

Income from Investments is accounted on an accrual basis, inclusive of related tax deducted at source. Income from Dividends is accounted when the right to receive such dividends is established.

I. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11-"The Effects of changes in Foreign Exchange Rates". Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting company''s monetary items at rates different from those at which they were initially recorded during the year are recognized as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognized in the profit and loss account.

J. INVESTMENTS

The company follows AS-13 "Accounting for investments" for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

K. RETIREMENT AND OTHER EMPLOYEE BENEFITS

Retirement Benefits are accounted i n accordance with Accounting Standard -15 "Accounting for retirement benefits in the financial statements of employers" as follows:

Defined Contribution Plan:

Retirement benefit in the form of provident fund is a defined contribution scheme. The company makes regular monthly contributions to Provident Funds and such paid/payable amounts are charged against revenue.

Defined Benefit Plans:

Liability in respect of defined benefit plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date .The actuarial gains or losses are recognized immediately in the profit and loss account.

L. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs" Costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalized to respective projects and all other borrowing costs are recognized in the profit and loss account in the period in which they are incurred.

M. SEGMENT REPORTING

The company is exclusively in the Pharmaceutical business segment and thus there is not more than one reportable segment, therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting" has not been considered necessary.

N. TAXES ON INCOME

The company provides for Current tax as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws.

Deferred tax is recognized on timing differences between taxable income and accounting income subject to the consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Further, in respect of Deferred tax asset, it is recognized to the extent there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

O. EARNING PER SHARE

Basic Earnings per Share is calculated by dividing the net earnings after tax for the year attributable le to equity shareholders by weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share net profit or loss for the year attributable to equity shareholders and weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

P. RESEARCH AND DEVELOPMENT EXPENSES

In accordance with the Accounting Standard -26 "Intangible Assets", Cost Incurred on research an d development expenses of revenue nature are recognized as intangible assets and amortized on a straight line basis over a period of five years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding five years.

Capital expenditure on Research & Development is shown under "R&D Equipment" under Fixed Assets and depreciation have been have been provided on continuous process basis on the basis of useful life of assets as prescribed under Schedule II of the Companies Act, 2013.

Q. AMORTISATION OF EXPENSES

Preliminary Expenses are amortized over a period of ten years.

R. EXPORT BENEFITS/ INCENTIVES

Export entitlements under Duty Entitlement pass Book [DEPB] Scheme are recognized in the Profit & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance license scheme for import of raw material are accounted for on purchase of raw material and/ or export sales.

S. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard -29- "Provisions, Contingent Liabilities and Contingent Assets", which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

T. USE OF ESTIMATES

In preparing companies financial statement in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.

U. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Company''s policies which provide principles on the use of such financial derivatives consistent with the company''s risk management strategy. The company does not use derivative financial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realized gain/loss in respect of the settled/terminated contracts is recognized in the profit and loss account.

V. CASH AND CASH EQUIVALENTS

Cash and Cash Equivalents for the purpose of cash flow statement comprise cash at bank, cash in hand and short term investments with an original maturity of three months or Less.

W CASH AND CASH EQUIVALENTS (FOR T HE PURPOSE OF CASH FLOW STATEMENT)

Cash flows are prepared using the Indirect Method, whereby profit / loss before extra ordinary items and tax is adjusted for the affects 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 available information.

X. OPERATING CYCLE

Based on the varied nature of products / activities of the company and the normal time between acquisition of assets and their realization in cash and cash equivalents, the company has considered its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and noncurrent.

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Mar 31, 2014

A. CONVENTION

The financial statements have been prepared in accordance with the applicable Accounting Standards referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under subsection (1)(a) of section 642 and relevant provisions of the Companies Act, 1956. The financial statements have also been prepared in accordance with relevant presentational requirements of the Companies Act, 1956. The accounting policies have been consistently applied by the company unless otherwise stated.

B. BASIS OF ACCOUNTING

The financial statements have been prepared in accordance with the historical cost convention on accrual basis in accordance with Accounting Standard -1 "Disclosure of Accounting Policies".

All assets and liabilities have been classified as current or non current as per the company''s normal operating cycle and other criteria set out in revised schedule VI to the Companies Act, 1956 based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained in Additional Notes.

C. FIXED ASSETS

All the fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any. Cost of acquisition of fixed assets includes all direct cost relating to the acquisition and installation of fixed assets as per Accounting Standard 10 "Accounting for Fixed Assets".

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use are capitalized in accordance with Accounting Standard -16 "Borrowing costs".

Expenditure and outlays of money on uncompleted Fixed Assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

D DEPRECIATION

Depreciation on Fixed assets, Tangible and Intangible, have been provided on continuous process basis at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. During the year, depreciation on all the fixed assets has been provided at the rates applicable to continuous process industry on the straight-line method.

E IMPAIRMENT OF ASSETS

The company provides for impairment loss, if any, to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired.

F PRE-OPERATIVE EXPENSES

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalization, all expenses are disclosed under pre-operative expenses pending allocation/capitalization and allocated to cost of fixed assets on capitalization.

G INVENTORIES

Inventories are valued in accordance with Accounting Standard -2 "Valuation of Inventories" and the method of valuation is given as under:

(i) Raw Material, Stores and Spares and Packing Materials

Lower of Cost or Net Realizable Value whichever is less on FIFO Basis. However, materials and other items held for use in the production of finished goods are not written down below cost if the products in which they will be used are expected to be sold at or above cost.

(ii) Works in Process / Semi Fin- ished Goods

At cost up to estimated stage of completion. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

(iii) Finished Goods

Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished goods includes excise duty.

H. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefits will flow to the company. The following specific recognition criteria must also be met before revenue is recognized.

Sale of Goods

Revenue from sale of Goods is recognized at the point of dispatch of finished goods. The VAT liability has been provided as per the VAT Returns filed. The additional liability arising at the time of assessment will be booked as & when arise. Sales are exclusive of VAT. Excise Duty deducted from Revenue (Gross) is the amount that is included in the Revenue (Gross) and not the entire amount of liability arising during the year.

Interest Income

Interest Income is recognized on time proportionate basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the statement of Profit and Loss.

Income from Job Work

Income from job work is recognized on the basis of work executed as per the contract/agreement.

DEPB (Duty Entitlement Pass Book) Income

DEPB income is recognized by the Company after the admission of export benefit credited against the DEPB license realized from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognized on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of customs duty on import of raw material by the Company is also included within DEPB income.

Investment Income

Income from Investments is accounted on an accrual basis, inclusive of related tax deducted at source. Income from Dividends is accounted when the right to receive such dividends is established.

I. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11 "The Effects of changes in Foreign Exchange Rates". Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting company''s monetary items at rates different from those at which they were initially recorded during the year are recognized as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognized in the profit and loss account.

J. INVESTMENTS

The company follows AS-13 "Accounting for investments" for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

K. RETIREMENT AND OTHER EMPLOYEE BENEFITS

Retirement Benefits are accounted in accordance with Accounting Standard 15 "Accounting for retirement benefits in the financial statements of employers" as follows:

Defined Contribution Plan:

Retirement benefit in the form of provident fund is a defined contribution scheme. The company makes regular monthly contributions to Provident Funds and such paid/payable amounts are charged against revenue.

Defined Benefit Plans:

Liability in respect of defined benefit plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date .The actuarial gains or losses are recognized immediately in the profit and loss account.

L. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs". Costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalized to respective projects and all other borrowing costs are recognized in the profit and loss account in the period in which they are incurred.

M. SEGMENT REPORTING

The company is exclusively in the Pharmaceutical business segment and thus there is not more than one reportable segment, therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting" has not been considered necessary.

N. TAXES ON INCOME

The company provides for Current tax as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws.

Deferred tax is recognized on timing differences between taxable income and accounting income subject to the consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Further, in respect of Deferred tax asset, it is recognized to the extent there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

O. EARNING PER SHARE

Basic Earning per Share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share net profit or loss for the year attributable to equity shareholders and weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

P. RESEARCH AND DEVELOPMENT EXPENSES

In accordance with the Accounting Standard -26 "Intangible Assets", Cost incurred on research and development expenses of revenue nature are recognized as intangible assets and amortized on a straight line basis over a period of five years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding five years.

Capital expenditure on Research & Development is shown under "R&D Equipment" under Fixed Assets and depreciation have been provided at the rates and in the manner provided according to Schedule VI of the Companies Act 1956.

Q. AMORTISATION OF EXPENSES

Preliminary Expenses are amortized over a period of ten years.

R. EXPORT BENEFITS/ INCENTIVES

Export entitlements under Duty Entitlement pass Book [DEPB] Scheme are recognized in the Profit & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance license scheme for import of raw material are accounted for on purchase of raw material and/ or export sales.

S. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard-29 "Provisions, Contingent Liabilities and Contingent Assets", which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

T. USE OF ESTIMATES

In preparing company''s financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Difference between actual results and estimates are recognised in the period in which the results are known/ materialised.

U. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Company''s policies which provide principles on the use of such financial derivatives consistent with the company''s risk management strategy. The company does not use derivative financial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realized gain/ loss in respect of the settled/terminated contracts is recognized in the profit and loss account.

V. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of not more than three months.

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Mar 31, 2013

A. CONVENTION

The fi nancial statements have been prepared in accordance with the applicable Accounting Standards referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under subsection (1)(a) of section 642 and relevant provisions of the Companies Act, 1956. The fi nancial statements have also been prepared in accordance with relevant presentational requirements of the Companies Act, 1956. The accounting policies have been consistently applied by the company unless otherwise stated.

B. BASIS OF ACCOUNTING

The fi nancial statements have been prepared in accordance with the historical cost convention on accrual basis in accordance with Accounting Standard -1 "Disclosure of Accounting Policies" .

All assets and liabilities have been classifi ed as current or non current as per the company''s normal operating cycle and other criteria set out in revised schedule VI to the Companies Act, 1956 based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

The accounting policies adopted in the preparation of fi nancial statements are consistent with those of previous year, except for the change in accounting policy explained in Additional Notes.

C. FIXED ASSETS

All the fi xed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any. Cost of acquisition of fi xed assets includes all direct cost relating to the acquisition and installation of fi xed assets as per Accounting Standard 10- "Accounting for Fixed Assets" .

Borrowing costs directly attributable to acquisition or construction of fi xed assets, which necessarily take substantial period of time to get ready for their intended use are capitalized in accordance with Accounting Standard -16 "Borrowing costs" .

Expenditure and outlays of money on uncompleted Fixed Assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

D. DEPRECIATION

Depreciation on Fixed assets, Tangible and Intangible assets, have been provided on continuous process basis at the rates and in the manner specifi ed in Schedule XIV to the Companies Act, 1956. During the year, depreciation on all the fi xed assets has been provided at the rates applicable to continuous process industry on the straight-line method.

E. IMPAIRMENT OF ASSETS

The company provides for impairment loss, if any, to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash fl ows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to Profi t and Loss Account in the year in which an asset is identifi ed as impaired.

F. PRE-OPERATIVE EXPENSES

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalization, all expenses are disclosed under pre-operative expenses pending allocation/capitalization and allocated to cost of fi xed assets on capitalization.

G. INVENTORIES

Inventories are valued in accordance with Accounting Standard -2 "Valuation of Inventories" and the method of valuation is given as under:

(i) Raw Material, Stores and Spares and Packing Materials

Lower of Cost or Net Realizable Value whichever is less on FIFO Basis. However, materials and other items held for use in the production of fi nished goods are not written down below cost if the products in which they will be used are expected to be sold at or above cost.

(ii) Works in Process / Semi Finished Goods

At cost up to estimated stage of completion. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

(iii) Finished Goods Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished goods includes excise duty.

H. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefi ts will fl ow to the company. The following specifi c recognition criteria must also be met before revenue is recognized.

Sale of Goods

Revenue from sale of Goods is recognized at the point of dispatch of fi nished goods. The VAT liability has been provided as per the VAT Returns fi led. The additional liability arising at the time of assessment will be booked as & when arise. Sales are exclusive of VAT. Excise Duty deducted from Revenue (Gross) is the amount that is included in the Revenue (Gross) and not the entire amount of liability arising during the year.

Interest Income

nterest Income is recognized on time proportionate basis taking into account the amount outstanding and the applicable nterest rate. Interest income is included under the head "Other Income" in the statement of Profi t and Loss.

Income from Job Work

ncome from job work is recognized on the basis of work executed as per the contract/agreement.

DEPB(Duty Entitlement Pass Book) Income

DEPB income is recognized by the Company after the admission of export benefi t credited against the DEPB license realized from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognized on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of customs duty on import of raw material by the Company is also included within DEPB income.

Investment Income

ncome from Investments is accounted on an accrual basis, inclusive of related tax deducted at source. Income from Dividends is accounted when the right to receive such dividends is established.

I. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11-"The Effects of changes in Foreign Exchange Rates" . Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting company''s monetary items at rates different from those at which they were initially recorded during the year are recognized as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognized in the profi t and loss account.

J. INVESTMENTS

The company follows AS-13 "Accounting for investments" for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

K. RETIREMENT AND OTHER EMPLOYEE BENEFITS

Retirement Benefi ts are accounted in accordance with Accounting Standard -15 "Accounting for retirement benefi ts in the fi nancial statements of employers" as follows:

Defi ned Contribution Plan:

Retirement benefi t in the form of provident fund is a defi ned contribution scheme. The company makes regular monthly contributions to Provident Funds and such paid/payable amounts are charged against revenue.

Defi ned Benefi t Plans:

Liability in respect of defi ned benefi t plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date .The actuarial gains or losses are recognized immediately in the profi t and loss account.

L. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs" Costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalized to respective projects and all other borrowing costs are recognized in the profi t and loss account in the period in which they are incurred.

M. SEGMENT REPORTING

The company is exclusively in the Pharmaceutical business segment and thus there is not more than one reportable segment, therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting" has not been considered necessary.

N. TAXES ON INCOME

The company provides for Current tax as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws.

Deferred tax is recognized on timing differences between taxable income and accounting income subject to the consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Further, in respect of Deferred tax asset, it is recognized to the extent there is virtual certainty that there will be suffi cient future taxable income available to realize such assets.

O. EARNING PER SHARE

Basic Earning per Share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share net profi t or loss for the year attributable to equity shareholders and weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

P. RESEARCH AND DEVELOPMENT EXPENSES

In accordance with the Accounting Standard -26 "Intangible Assets" , Cost incurred on research and development expenses of revenue nature are recognized as intangible assets and amortized on a straight line basis over a period of fi ve years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding fi ve years.

Capital expenditure on Research & Development is shown under "R&D Equipment" under Fixed Assets and depreciation have been provided at the rates and in the manner provided according to Schedule VI of the Companies Act 1956.

Q. AMORTISATION OF EXPENSES

Preliminary Expenses are amortized over a period of ten years.

R. EXPORT BENEFITS/ INCENTIVES

Export entitlements under Duty Entitlement pass Book [DEPB] Scheme are recognized in the Profi t & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance license scheme for import of raw material are accounted for on purchase of raw material and/ or export sales.

S. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard -29- "Provisions, Contingent Liabilities and Contingent Assets" , which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to fi nancial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

T. USE OF ESTIMATES

In preparing company''s fi nancial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of fi nancial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Difference between actual results and estimates are recognised in the period in which the results are known/ materialised.

U. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Company''s policies which provide principles on the use of such fi nancial derivatives consistent with the company''s risk management strategy. The company does not use derivative fi nancial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realized gain/ loss in respect of the settled/terminated contracts is recognized in the profi t and loss account.

V. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purposes of cash fl ow statement comprise cash at bank and in hand and short term investments with an original maturity of not more than three months.

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Mar 31, 2012

The company's summarized significant accounting policies are stated as below -

A. CONVENTION

The financial statements have been prepared in accordance with the applicable Accounting Standards referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under subsection (1)(a) of section 642 and relevant provisions of the Companies Act, 1956. The financial statements have also been prepared in accordance with relevant presentational requirements of the Companies Act, 1956. The accounting policies have been consistently applied by the company unless otherwise stated.

B. BASIS OF ACCOUNTING

The financial statements have been prepared in accordance with the historical cost convention on accrual basis in accordance with Accounting Standard -1 "Disclosure of Accounting Policies".

All assets and liabilities have been classified as current or non current as per the company's normal operating cycle and other criteria set out in revised schedule VI to the Companies Act, 1956 based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained in Additional Notes.

C. FIXED ASSETS

All the fixed assets are stated at cost of acquisition less accumulated depreciation and impairment loss, if any. Cost of acquisition of fixed assets includes all direct cost relating to the acquisition and installation of fixed assets as per Accounting Standard 10- "Accounting for Fixed Assets".

Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use are capitalized in accordance with Accounting Standard -16 "Borrowing costs".

Expenditure and outlays of money on uncompleted Fixed Assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

D. DEPRECIATION

Depreciation on Fixed assets, Tangible and Intangible, have been provided on continuous process basis at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956. During the year, depreciation on all the fixed assets has been provided at the rates applicable to continuous process industry on the straight-line method.

E. IMPAIRMENT OF ASSETS

The company provides for impairment loss, if any, to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is charged to Profit and Loss Account in the year in which an asset is identified as impaired.

F. PRE-OPERATIVE EXPENSES

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalization, all expenses are disclosed under pre-operative expenses pending allocation/capitalization and allocated to cost of fixed assets on capitalization.

G. INVENTORIES

Inventories are valued in accordance with Accounting Standard -2 "Valuation of Inventories" and the method of valuation is given as under:

(i) Raw Material, Stores and Spares and Packing Materials

Lower of Cost or Net Realizable Value whichever is less on FIFO Basis. However, materials and other items held for use in the production of finished goods are not written down below cost if the products in which they will be used are expected to be sold at or above cost.

(ii) Works in Process / Semi Finished Goods

At cost up to estimated stage of completion. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.

(iii) Finished Goods

Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished goods includes excise duty.

H. REVENUE RECOGNITION

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefits will flow to the company. The following specific recognition criteria must also be met before revenue is recognized.

Sale of Goods

Revenue from sale of Goods is recognized at the point of dispatch of finished goods. The VAT liability has been provided as per the VAT Returns filed. The additional liability arising at the time of assessment will be booked as & when arise. Sales are exclusive of VAT. Excise Duty deducted from Revenue (Gross) is the amount that is included in the Revenue (Gross) and not the entire amount of liability arising during the year.

Interest Income

Interest Income is recognized on time proportionate basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "Other Income" in the statement of Profit and Loss.

Income from Job Work

Income from job work is recognized on the basis of work executed as per the contract/agreement.

DEPB (Duty Entitlement Pass Book) Income

DEPB income is recognized by the Company after the admission of export benefit credited against the DEPB license realized from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognized on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of customs duty on import of raw material by the Company is also included within DEPB income.

Investment Income

Income from Investments is accounted on an accrual basis, inclusive of related tax deducted at source. Income from Dividends is accounted when the right to receive such dividends is established.

I. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11-"The Effects of changes in Foreign Exchange Rates". Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting company’s monetary items at rates different from those at which they were initially recorded during the year are recognized as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognized in the profit and loss account.

J. INVESTMENTS

The company follows AS-13 "Accounting for investments" for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

K. RETIREMENT AND OTHER EMPLOYEE BENEFITS

Retirement Benefits are accounted in accordance with Accounting Standard -15 "Accounting for retirement benefits in the financial statements of employers" as follows:

i) Defined Contribution Plan:

Retirement benefit in the form of provident fund is a defined contribution scheme. The company makes regular monthly contributions to Provident Funds and such paid/payable amounts are charged against revenue.

ii) Defined Benefit Plans:

Liability in respect of defined benefit plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date .The actuarial gains or losses are recognized immediately in the profit and loss account.

L. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs" Costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalized to respective projects and all other borrowing costs are recognized in the profit and loss account in the period in which they are incurred.

M. SEGMENT REPORTING

The company is exclusively in the Pharmaceutical business segment and thus there is not more than one reportable segment, therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting" has not been considered necessary.

N. TAXES ON INCOME

The company provides for Current tax as the amount of tax payable in respect of taxable income for the period, measured using the applicable tax rates and tax laws.

Deferred tax is recognized on timing differences between taxable income and accounting income subject to the consideration of prudence, measured using the tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. Further, in respect of Deferred tax asset, it is recognized to the extent there is virtual certainty that there will be sufficient future taxable income available to realize such assets.

O. EARNING PER SHARE

Basic Earning per Share is calculated by dividing the net earnings after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earning per share net profit or loss for the year attributable to equity shareholders and weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

P. RESEARCH AND DEVELOPMENT EXPENSES

In accordance with the Accounting Standard -26 "Intangible Assets", Cost incurred on research and development expenses of revenue nature are recognized as intangible assets and amortized on a straight line basis over a period of five years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding five years.

Capital expenditure on Research & Development is shown under "R&D Equipment" under Fixed Assets and depreciation have been provided at the rates and in the manner provided according to Schedule VI of the Companies Act 1956.

Q. AMORTISATION OF EXPENSES

Preliminary Expenses are amortized over a period of ten years.

R. EXPORT BENEFITS/ INCENTIVES

Export entitlements under Duty Entitlement pass Book [DEPB] Scheme are recognized in the Profit & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance license scheme for import of raw material are accounted for on purchase of raw material and/ or export sales.

S. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard -29- "Provisions, Contingent Liabilities and Contingent Assets", which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

T. USE OF ESTIMATES

In preparing companies financial statement in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates. Difference between actual results and estimates are recognised in the period in which the results are known/ materialised.

U. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Company’s policies which provide principles on the use of such financial derivatives consistent with the company’s risk management strategy. The company does not use derivative financial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realized gain/loss in respect of the settled/terminated contracts is recognized in the profit and loss account.

V. CASH AND CASH EQUIVALENTS

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of not more than three months.

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Mar 31, 2011

A. ACCOUNTING CONVENTION

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules 2006 issued by the Central Government in exercise of the power conferred under subsection (1)(a) of section 642 and relevant provisions of the Companies Act, 1956.The Financial statements have been prepared under the historical cost convention on accrual basis in accordance with Accounting Standard-1 "Disclosure of Accounting Policies". The accounting policies have been consistently applied by the company unless otherwise stated.

B. FIXED ASSETSAND DEPRECIATION

(i) All fixed assets are stated at cost of acquisition less accumulated depreciation & impairment losses. The company capitalized all direct cost relating to the acquisition and installation of fixed assets as per Accounting Standard 10- "Accounting for Fixed Assets". Depreciation on all fixed assets have been provided on continuous process basis at the rates and in the manner specified in Schedule-XIV to the Companies Act, 1956. During the year, depreciation on all the Fixed Assets has been provided at the rate applicable to continuous process industry on the straight-line method.

(ii) Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use are capitalized in accordance with Accounting Standard -16 "Borrowing costs".

Expenditure and outlays of money on uncompleted Fixed Assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

(iii) Pre-Operative Expenses

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalization, all expenses are disclosed under pre-operative expenses pending allocation/capitalization and allocated to cost of fixed assets on capitalization.

C. VALUATION OF INVENTORIES

Inventories are valued in accordance with Accounting Standard -2 "Valuation of Inventories" and the method of valuation is given as under:

(i) Raw Material, Stores and Spares and Packing Materials

Lower of Cost or Net Realizable Value whichever is less on FIFO Basis. However, materials and other items held for use in the production of finished goods are not written down below cost if the products in which they will be used are expected to be sold at or above cost.

(ii) Works in Process/ Semi Finished Goods

At cost up to estimated stage of completion. Cost includes direct materials and labour and aproportion of manufacturing overheads based on normal operating capacity.

(iii) Finished Goods

Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of Finished goods includes excise duty.

D. REVENUE RECOGNITION

As per Accounting Standard -9 "Revenue Recognition", revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefits will flow to the company

Sales of Goods

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of goods are transferred to the customer and is stated net of Trade Discount, Sales return & sales tax, but inclusive of excise duty.

Interest

Interest Revenue is recognized on time proportion basis taking into account amount outstanding and rate applicable.

Incomefrom Job Work

Income from job work is recognized on the basis of work executed as per the contract/agreement.

DEPB Income

DEPB income is recognized by the Company after the admission of export benefit credited against the DEPB license realized from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognized on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of customs duty on import of raw material by the Company is also included within DEPB income.

E. FOREIGN CURRENCYTRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11-"The Effects of changes in Foreign Exchange Rates". Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting company's monetary items at rates different from those at which they were initially recorded during the year are recognized as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognized in the profit and loss account.

F. INVESTMENTS

The company follows AS-13 Accounting for investments" for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

G. RETIREMENT BENEFITS

Retirement Benefits are accounted in accordance with Accounting Standard -15 "Accounting for retirement benefits in the financial statements of employers" as follows:

Defined Benefit Plans

(i) Liability in respect of defined benefit plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date The actuarial gains or losses are recognized immediately in the profit and loss account.

Defined Contribution Plans

(ii) Contribution towards Provident Fund is made to statutory authorities by the management and is charged to profit & loss account on accrual basis.

H. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs" Costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalized to respective projects and all other borrowing costs are recognized in the profit and loss account in the period in which they are incurred which is in accordance with Accounting Standard -16 Borrowing Costs.

I. SEGMENTAL REPORTING

The company is exclusively in the Pharmaceutical business segment and thus there is not more than one reportable segment, therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting" has not been considered necessary.

J. TAXES ON INCOME

As per Accounting Standard -22 "Accounting for Taxes on Income", Tax expenses comprise current tax and deferred tax.

i. Provision for taxation represent income tax including surcharge and education cess as per provision contained in the Income TaxAct, 1961

ii. Deferred Tax is recognized in respect of deferred tax assets (subject to the consideration of prudence) and to the extent there is virtual certainty that the asset will be realized in future and deferred tax liabilities on timing differences, being the difference between Taxable Income & Accounting Income that originate in the period and are capable of reversal in one or more subsequent years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date.

K. EARNING PER SHARE

In accordance with Accounting Standard-20 -"Earnings Per Share" Basic Earning per Share is calculated by dividing the net earnings after tax for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per share net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

L. RESEARCH AND DEVELOPMENT EXPENSES

Cost incurred on research and development expenses of revenue nature are recognized as intangible assets and amortized on a straight line basis over a period of five years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding five years.

Capital expenditure on Research & Development is shown under "R&D Equipment" under Fixed Assets and depreciation have been provided at the rates and in the manner provided according to Schedule VI of the Companies Act 1956.

The above treatment is in accordance with Accounting Standard -26 "Intangible Assets"

M. IMPAIRMENT LOSS

The carrying value of assets of the Cash Generating Unit at each Balance Sheet date is reviewed for impairment as per Accounting Standard -28 "Impairment of Assets". If any indication of such impairment exists, the recoverable amount of those assets is estimated. Impairment loss is recognized, if carrying amount of those assets exceeds their recoverable amount. Recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

N. AMORTISATION OF EXPENSES

Preliminary Expenses are amortized over a period of ten years.

0. EXPORT BENEFITS/INCENTIVES

Export entitlements under Duty Entitlement pass Book [DEPB] Scheme are recognized in the Profit & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance license scheme for import of raw material are accounted for on purchase of raw material and / or export sales.

P. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard -29- "Provisions, Contingent Liabilities and Contingent Assets", which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

Q. USE OF ESTIMATES

In preparing companies financial statement in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

R. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Company's policies which provide principles on the use of such financial derivatives consistent with the company's risk management strategy. The company does not use derivative financial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realized gain/loss in respect of the settled/terminated contracts is recognized in the profit and loss account.

---

Mar 31, 2010

A. ACCOUNTING CONVENTION

The financial statements have been prepared to comply with the Accounting Standards referred to in the Companies (Accounting Standards) Rules, 2006 issued by the Central Government in exercise of the power conferred under sub section (1)(a) of Section 642 and relevant provisions of the Companies Act, 1956.The Financial statements have been prepared under the historical cost convention on accrual basis in accordance with Accounting Standard -1 "Disclosure of Accounting Policies". The accounting policies have been consistently applied by the Company unless otherwise stated.

B. FIXED ASSETS AND DEPRECIATION

(i) All fixed assets are stated at cost of acquisition less accumulated depreciation & impairment losses. The Company capitalised all direct cost relating to the acquisition and installation of fixed assets as per Accounting Standard 10- "Accounting for Fixed Assets”. Depreciation on all fixed assets have been provided on continuous process basis at the rates and in the manner specified in Schedule –XIV to the Companies Act, 1956. During the year, depreciation on all the fixed assets has been provided at the rate applicable to continuous process industry on the straight-line method.

(ii) Borrowing costs directly attributable to acquisition or construction of fixed assets, which necessarily take substantial period of time to get ready for their intended use are capitalised in accordance with Accounting Standard -16 "Borrowing costs”.

Expenditure and outlays of money on uncompleted fixed assets are shown as capital work in progress until such time the same are completed. Capital work in progress is stated at cost.

(iii) Pre-Operative Expenses

Pre-operative expenses represent expenses incurred prior to the date of commencement of commercial production for setting up new manufacturing facilities or expansion of existing facilities. Until capitalisation, all expenses are disclosed under pre-operative expenses pending allocation/capitalisation and allocated to cost of fixed assets on capitalisation.

D. REVENUE RECOGNITION

As per Accounting Standard -9 "Revenue Recognition”, revenue is recognised to the extent that it can be reliably measured and is probable that the economic benefits will flow to the Company.

Sale of Goods:

Revenue from sale of goods is recognised when the significant risks and rewards of ownership of goods are transferred to the customer and is stated net of Trade Discount, Sales return & sales tax, but inclusive of Excise duty.

Interest:

Interest Revenue is recognised on time proportion basis taking into account amount outstanding and rate applicable.

Income from Job Work:

Income from job work is recognised on the basis of work executed as per the contract/agreement.

DEPB Income:

DEPB income is recognised by the Company after the admission of export benefit credited against the DEPB license realised from the Director General of Foreign Trade on eligible exports made by the Company and the gain (recognised on the basis of discount amount and the resultant difference between the license value and purchase value) on purchase of DEPB licenses from exporters for the purpose of payment of Customs duty on import of raw material by the Company is also included within DEPB income.

E. FOREIGN CURRENCY TRANSACTIONS

Foreign Currency Transactions are accounted for in accordance with Accounting Standard-11 "The Effects of Changes in Foreign Exchange Rates”. Transactions in foreign currencies are recorded at the rates prevailing on the date of the transaction. Monetary items denominated in foreign currency are restated at the rate prevailing as on the balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting companys monetary items at rates different from those at which they were initially recorded during the year are recognised as income or expenses in the year in which they arise.

Foreign Currency Monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date. Any gains or losses are recognised in the profit and loss account.

F. INVESTMENTS

The Company follows Accounting Standard-13 "Accounting for Investments” for treatment of its investments. Long Term investments are stated at cost. However, provision for diminution in value, other than temporary is made. Current investments are stated at the lower of cost and fair value, which is determined on an individual investment basis.

G. RETIREMENT BENEFITS

Retirement Benefits are accounted in accordance with Accounting Standard -15 "Accounting for retirement benefits in the financial statements of employers” as follows:

Defined Benefit Plans

Liability in respect of defined benefit plans i.e. gratuity and leave encashment, are determined based on actuarial valuation made by an independent actuary as at balance sheet date .The actuarial gains or losses are recognised immediately in the profit and loss account.

Defined Contribution Plans

Contribution towards Provident Fund is made to statutory authorities by the management and is charged to profit & loss account on accrual basis.

H. BORROWING COSTS

Borrowing costs include interest and commitment charges on borrowings. As per Accounting Standard -16 "Borrowing Costs” costs incurred on borrowings directly attributable to development projects, which take substantial period of time to complete, are capitalised to respective projects and all other borrowing costs are recognised in the profit and loss account in the period in which they are incurred which is in accordance with Accounting Standard -16 "Borrowing Costs.”

I. SEGMENTAL REPORTING

The Company has considered Manufacturing of Bulk Drugs as only one business segment. Since there is not more than one reportable segment therefore the disclosure in the context of Accounting Standard 17 "Segment Reporting” has not been considered necessary.

J. TAXES ON INCOME

As per Accounting Standard -22 "Accounting for Taxes on Income”, Tax expenses comprise current tax and deferred tax. i. Provision for taxation represent income tax including surcharge and education cess as per provision contained in the Income Tax Act, 1961.

ii. Deferred Tax is recognised in respect of deferred tax assets (subject to the consideration of prudence) and to the extent there is virtual certainty that the asset will be realised in future and deferred tax liabilities on timing differences, being the difference between Taxable Income & Accounting Income that originate in the period and are capable of reversal in one or more subsequent years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the balance sheet date.

K. EARNING PER SHARE

In accordance with Accounting Standard-20 –"Earnings Per Share” Basic Earning per Share is calculated by dividing the net earnings after tax for the period attributable to equity Shareholders by weighted average number of Equity Shares outstanding during the period. For the purpose of calculating diluted earning per share net profit or loss for the period attributable to Equity Shareholders and weighted average number of Equity Shares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares.

L. RESEARCH AND DEVELOPMENT EXPENSES

Cost incurred on research and development expenses of revenue nature are recognised as intangible assets and amortised on a straight line basis over a period of five years. Subsequent expenditure on research and development of revenue nature are also added to the cost of intangibles and also written off in succeeding five years.

Capital expenditure on research and development is shown under "R&D Equipment” under Fixed Assets and depreciation have been provided at the rates and in the manner provided according to Schedule VI of the Companies Act, 1956.

The above treatment is in accordance with Accounting Standard -26 "Intangible Assets”

M. IMPAIRMENT LOSS

The carrying value of assets of the Cash Generating Unit at each Balance Sheet date is reviewed for impairment as per Accounting Standard -28 "Impairment of Assets”. If any indication of such impairment exists, the recoverable amount of those assets is estimated. Impairment loss is recognised, if carrying amount of those assets exceeds their recoverable amount. Recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor.

N. AMORTISATION OF EXPENSES

Preliminary Expenses are amortised over a period of ten years.

O. EXPORT BENEFITS/INCENTIVES

Export entitlements under Duty Entitlement Pass Book [DEPB] Scheme are recognised in the Profit and Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made.

Obligations/entitlements on account of Advance License Scheme for import of raw material are accounted for on purchase of raw material and / or export sales.

P. CONTINGENT LIABILITIES AND PROVISIONS

In accordance with Accounting Standard -29 "Provisions, Contingent Liabilities and Contingent Assets”, which are material and where future outcome cannot be ascertained with reasonable certainty are treated as contingent and disclosed in notes on accounts to financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

Q. USE OF ESTIMATES

In preparing Companys financial statements in conformity with the accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.

R. FINANCIAL DERIVATIVES HEDGING TRANSACTIONS

The use of Financial Derivatives Hedging Contracts is governed by the Companys policies which provide principles on the use of such financial derivatives consistent with the Companys risk management strategy. The Company does not use derivative financial instruments for speculative purposes.

Financial Derivatives Hedging Contracts are accounted on the date of their settlement/termination and realised gain/loss in respect of the settled/terminated contracts is recognised in the profit and loss account.