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Accounting Policies of Polar Pharma India Ltd. Company

Mar 31, 2012

1.1 Basis of Accounting:

The Financial statements have been prepared on the historical cost convention basis, except where otherwise stated. The financial statements have been prepared to comply in all material respects with the notified accounting standard by Companies Accounting Standard Rules, 2006 and relevant provisions of Companies Act, 1956.

1.2 Recognition of Income and Expenditure:

(a) The revenue from sale of goods is recognized on passing of title of the goods which generally coincides with delivery.

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except in case of National Savings Certificate.

(b) Export incentive under the Duty Entitlement Pass Book (DEPB) Scheme is recognized at the time of shipment.

(c) Insurance claim is accounted for on reasonable certainty of realization.

1.3 Fixed Assets:

Fixed assets are stated at cost of acquisition including any attributable cost for bringing the asset to its working condition for its intended use less accumulated depreciation and impairment losses (other than freehold land for which no depreciation is charged).

1.4 Depreciation:

a) Leasehold land is for a period of 90 years and accordingly 1/90th value thereof is being amortized every year..

b) All other assets are depreciated under the straight line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. Plant & Machinery are considered as continuous process plant on technical assessment and are accordingly depreciated.

1.5 Capital Work in Progress:

Capital Work in Progress is being valued at cost and includes advances given by the company

1.6 Inventories:

Description Basis of Valuation Cost Formula

i) Raw Materials At lower of cost or net realizable value. FIFO Basis

ii) Stores & Spares At lower of cost or net realizable value FIFO Basis

iii) Finished Goods At lower of cost or net realizable value FIFO Basis

iv) Work in Progress At lower of estimated cost or net realizable value. FIFO Basis However.raw materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

1.7 Employment Benefits:

The Employees gratuity fund scheme managed by LIC is a defined benefit plan.The present value of obligation is determined based on actuarial valuation. Acturial gains/losses are immedietly taken to profit and loss accounts. The Company contributes premium to the LIC from time to time.

Short term compensated absences are provided on accrual basis. Long term compensated absences are provided on the basis of actuarial valuation carried by an actuary as at the end of the year

The company provides for all benefits (conditional or unconditional) like Leave Travel Assistance Allowance, Medical Reimbursements etc. which an employee becomes entitled to as a result of rendering of the service.In estimating the cost of such benefit, the probability of the employee availing such benefit is considered.

1.8 Borrowing Costs:

The financing cost incurred during the construction period on loans specifically borrowed for projects is capitalized at the actual borrowing rates.

The financing cost incurred on general borrowing used for projects is capitalized at the weighted average cost. The amount of such borrowing is determined after setting off the amount of internal accruals.

1.9 Preliminary Expenses:

Preliminary expenses and Share issue expenses are amortized over a period of 10 years.

1.10 Investments

Long Term Investments are carried at cost less provision for permanent dimunition in value of investments. Current Investments are carried at lower of cost or fair value.

1.11 Taxes on Income

Income Tax expense comprises current tax & deferred tax charge or realisation. The deferred tax charge or credit is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised if there is virtual certainty of realisation of such assets. Such assets are reviewed at each Balance Sheet date to reassess realisation.

1.12 Foreign Currency Transactions

Initial Recognition:- Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion:- Foreign Currency monetary items are reported using the closing rate.Non-Monetary items which are carried in items of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences; 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, or reported in previous financial statements, are recognisesd as income or as expenses in the year in which they arise except those arising from investments in non integral operations.

Forward Exchange Contracts:- The company enters into forward exchange contracts to hedge its risks associated with foreign currency fluctuations. The premium or discount arising at the inception of the contract is amortised as expense or income over the life of the contract. Exchange differences on such contract are recognised in statement of profit and loss in the year in which the exchange rates change. Any profit/loss on cancellation or renewal of the forward exchange contract is recognised as income or as expense for the year.

1.13 Segment Reporting:

There is no identifiable business segment as the company is only dealing in latex prophylactics.

1.14 Earning Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.15 Impairment of Assets:

Impairment losses, if any, are recognized in accordance with AS-28.

1.16 Provisions, Contingent liabilities and Contingent assets:

A provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of the resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet dtae. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Provision for Warranty is made on Export and domestic sales @ 0.25% of total sales pertaining to warranty period i.e 3years for Export sales and 5 years for sales made to Government of India. The percentage has been arrived at by the management based on its past experience and trend analysis.

Contingent Liabilities not required to be provided for in the books of account are disclosed by way of note in the accounts. Contingent assets are not recognized in the accounts.


Mar 31, 2011

1 Basis of Accounting:

"The Financial statements have been prepared on the historical cost convention basis, except where otherwise stated. The financial statements have been prepared to comply in all material respects with the notified accounting standard by Companies Accounting Standard Rules, 2006 and relevant provisions of Companies Act, 1956."

2. Recognition of Income and Expenditure:

(a) The revenue from sale of goods is recognized on passing of title of the goods which generally coincides with delivery.

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except in case of National Savings Certificate.

(b) Export incentive under the Duty Entitlement Pass Book (DEPB) Scheme is recognized at the time of shipment.

(c) Insurance claim is accounted for on reasonable certainty of realization.

3 Fixed Assets:

Fixed assets are stated at cost of acquisition including any attributable cost for bringing the asset to its working condition for its intended use less accumulated depreciation and impairment losses (other than freehold land for which no depreciation is charged).

4 Depreciation:

a) Leasehold land is for a period of 90 years and accordingly 1/90th value thereof is being amortized every year..

b) "All other assets are depreciated under the straight line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. Plant & Machinery are considered as continuous process plant on technical assessment and are accordingly depreciated."

5 Capital Work in Progress:

Capital Work in Progress is being valued at cost and includes advances given by the company.

6 Inventories:

Description Basis of Valuation Cost Formula

i) Raw Materials At lower of cost or net realizable value. FIFO Basis

ii) Stores & Spares At lower of cost or net realizable value FIFO Basis

iii) Finished Goods At lower of cost or net realizable value FIFO Basis

iv) Work in Progress At lower of estimated cost or net realizable value. FIFO Basis

"However.raw materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost."

7 Employment Benefits:

The Employees' Gratuity Fund Scheme managed by LIC is a defined benefit plan. The present value of obligation is determined based on acturial valuation. Acturial gains / losses are immediately taken to Profit and Loss A/c. The Company contributes premium to LIC from time to time.

Short term compensated absences are provided on accrual basis. Long term compensated absences are provided on the basis of actuarial valuation carried by an actuary as at the end of the year

The company provides for all benefits (conditional or unconditional) like Leave Travel Assistance Allowance, Medical Reimbursements etc. which an employee becomes entitled to as a result of rendering of the service. In estimating the cost of such benefit, the probability of the employee availing such benefit is considered.

8 Borrowing Costs:

The financing cost incurred during the construction period on loans specifically borrowed for projects is capitalized at the actual borrowing rates.

The financing cost incurred on general borrowing used for projects is capitalized at the weighted average cost. The amount of such borrowing is determined after setting off the amount of internal accruals.

9 Preliminary Expenses:

Preliminary expenses and Share issue expenses are amortized over a period of 10 years.

10 Investments

Long Term Investments are carried at cost less provision for permanent dimunition in value of investments. Current Investments are carried at lower of cost or fair value.

11 Taxes on Income

"Income Tax expense comprises current tax & deferred tax charge or realisation. The deferred tax charge or credit is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised if there

is virtual certainty of realisation of such assets. Such assets are reviewed at each Balance Sheet date to reassess realisation."

12 Foreign Currency Transactions

"Initial Recognition:- Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction."

Conversion:- Foreign Currency monetary items are reported using the closing rate.Non-Monetary items which are carried in items of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

"Exchange Differences; 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, or reported in previous financial statements, are recognisesd as income or as expenses in the year in which they arise except those arising from investments in non integral operations."

Forward Exchange Contracts:- The company enters into forward exchange contracts to hedge its risks associated with foreign currency fluctuations. The premium or discount arising at the inception of the contract is amortised as expense or income over the life of the contract. Exchange differences on such contract are recognised in statement of profit and' loss in the year in which the exchange rates change. Any profit/loss on cancellation or renewal of the forward exchange contract is recognised as income or as expense for the year.

13 Segment Reporting:

There is no identifiable business segment as the company is only dealing in latex prophylactics.

14 Earning Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.

"For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares."

15 Impairment of Assets:

"Impairment losses, if any, are recognized in accordance with AS-28."

16 "Provisions, Contingent liabilities and Contingent assets: "

"A provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of the resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet dtae. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Provision for Warranty is made on Export and domestic sales @ 0.25% of total sales pertaining to warranty period i.e 3 years for Export sales and 5 years for sales made to Government of India. The percentage has been arrived at by the management based on its past experience and trend analysis."

Contingent Liabilities not required to be provided for in the books of account are disclosed by way of note in the accounts.

Contingent assets are not recognized in the accounts.


Mar 31, 2010

1. Basis of Accounting:

The Financial statements have been prepared on the historical cost convention basis, except where otherwise stated. The financial statements have been prepared to comply in all material respects with the notified accounting standard by Companies Accounting Standard Rules, 2006 and relevant provisions of Companies Act, 1956.

2. Recognition of Income and Expenditure:

(a) The revenue from sale of goods is recognized on passing of title of the goods which generally coincides with delivery.

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable except in case of National Savings Certificate.

(b) Export incentive under the Duty Entitlement Pass Book (DEPB) Scheme is recognized at the time of shipment.

(d) Expenses of enduring nature incurred during the year is accounted for in the year of expenditure as per AS-26 issued by The Institute of Chartered Accountants of India. The earlier year balances are being amortized over a period of five years from the year of incurrence.

(e) Insurance claim is accounted for on reasonable certainty of realization.

3. Fixed Assets:

Fixed assets are stated at cost of acquisition including any attributable cost for bringing the asset to its working condition for its intended use less accumulated depreciation and impairment losses (other than freehold land for which no depreciation is charged).

4. Depreciation:

a) Leasehold land is for a period of 90 years and accordingly 1 /90th value thereof is being amortized every year.

b) All other assets are depreciated under the straight line method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956. Plant & Machinery are considered as continuous process plant on technical assessment and are accordingly depreciated.

5. Capital Work in Progress:

Capital Work in Progress is being valued at cost and includes advances given by the company.

6. Inventories:

Description Basis of Valuation Cost Formula

i) Raw Materials At lower of cost or net realizable value. FIFO Basis

ii) Stores & Spares At lower of cost or net realizable value FIFO Basis

iii) Finished Goods At lower of cost or net realizable value FIFO Basis

iv) Work in Progress At lower of estimated cost or net realizable value. FIFO Basis

However, raw materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

7. Employment Benefits:

Gratuity is a defined benefit super annuation liability and the company has contributed to LIC for a gratuity fund maintained with it. The company calculates annual contribution to the fund based on acturial valuation done by LIC and provision in the account is made accordingly at the end of the year.

Short term compensated absences are provided on accrual basis. Long term compensated absences are provided on the basis of actuarial valuation carried by an actuary as at the end of the year.

The company provides for all benefits (conditional or unconditional) like Leave Travel Assistance Allowance, Medical Reimbursements etc. which an employee becomes entitled to as a result of rendering of the service. In estimating the cost of such benefit, the probability of the employee availing such benefit is considered.

Actuarial gains/losses are immediately taken to profit and loss account and not deferred. The company has made treatment in accordance with the transitional provisions of AS15(revised) by making the required adjustments with the revenue reserves at the beginning of the year.

8. Borrowing Costs :

The financing cost incurred during the construction period on loans specifically borrowed for projects is capitalized at the actual borrowing rates.

The financing cost incurred on general borrowing used for projects is capitalized at the weighted average cost. The amount of such borrowing is determined after setting off the amount of interna) accruals.

9. Preliminary Expenses:

Preliminary expenses and Share issue expenses are amortized over a period of 10 years.

10. Investments

Long Term Investments are carried at cost less provision for permanent dimunition in value of investments. Current Investments are carried at lower of cost or fair value.

11. Taxes on Income

Income Tax expense comprises current tax & deferred tax charge or realisation. The deferred tax charge or credit is recognised subject to the consideration of prudence in respect of deferred tax assets on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognised if there is virtual certainty of realisation of such assets. Such assets are reviewed at each Balance Sheet date to reassess realisation.

12. Foreign Currency Transactions

Initial Recognition:- Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion:- Foreign Currency monetary items are reported using the closing rate. Non-Monetary items which are carried in items of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences; 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, or reported in previous financial statements, are recognisesd as income or as expenses in the year in which they arise except those arising from investments in non integral operations.

Forward Exchange Contracts:- The company enters into forward exchange contracts to hedge its risks associated with foreign currency fluctuations. The premium or discount arising at the inception of the contract is amortised as expense or income over the life of the contract. Exchange differences on such contract are recognised in statement of profit and loss in the year in which the exchange rates change. Any profit/loss on cancellation or renewal of the forward exchange contract is recognised as income or as expense for the year.

13. Segment Reporting:

There is no identifiable business segment as the company is only dealing in latex prophylactics.

14. Earning Per Share:

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

15. Impairment of Assets:

Impairment losses, if any, are recognized in accordance with AS-28 issued by The Institute of Chartered Accountants of India.

16. Provisions, Contingent liabilities and Contingent assets :

A provision is recognised when there is a present obligation as a result of past event and it is probable that an outflow of the resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Provision for Warranty is made on Export and domestic sales @ 0.25% of total sales pertaining to warranty period i.e 3years for Export sales and 5 years for sales made to Government of India. The percentage has been arrived at by the management based on its past experience and trend analysis.

Contingent Liabilities not required to be provided for in the books of account are disclosed by way of note in the accounts.

Contingent assets are not recognized in the accounts.

 
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