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Accounting Policies of Polygenta Technologies Ltd. Company

Mar 31, 2016

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 31st MARCH 2016. Overview Polygenta Technologies Limited is engaged in the business of manufacturing sustainable polyester filament yarn by recycling post consumer PET flakes using a break-through recycling technology (the Renew process). The polyester yarn products made by Polygenta using the Renew process are sold for various applications in the fields of apparel, denim, home furnishings, floor coverings, and industrial applications.

SIGNIFICANT ACCOUNTING POLICIES: a) Basis of Accounting:

i) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable Accounting Standard as specified in the Companies (Accounting Standards) Rules, 2006 (“the Rules”) and the relevant provisions of the Companies Act, 2013.

ii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for an accrual basis.

iii) 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 the schedule III to 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 Company has ascertained its operating cycle for the purpose of current - noncurrent classification of assets and liabilities.

b) Use of estimates:

The preparation of financial statements is in conformity with Generally Accepted Accounting principles (GAAP), which requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements, and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively.

c) Revenue Recognition:

i) Sales revenue is recognized on transfer of significant risks and rewards of ownership of the goods to the buyer, which is generally on dispatch of goods /Bill of lading. Sales are inclusive of Excise Duty and are net of trade discounts and sales tax.

ii) Export incentives under the various schemes are accounted for in the year of export.

iii) Interest income is recognized on a time proportion basis.

d) Fixed Assets:

Tangible Assets:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment losses. The diminution, if any, in the book value of these assets is provided for in the year of such determination of diminution.

ii) Cost of acquisition comprises all costs incurred to bring the assets to their location and working condition up to the date the assets are put to use. The cost of construction is composed of those constituent assets that relate directly to completion of specific fixed assets and those that are attributable to the construction activity in general and can be allocated to specific fixed assets up to the date such fixed assets are put to use.

Intangible Assets:

The Company capitalizes software where it is reasonably estimated that the software has an enduring useful life.

e) Capital Work in Progress:

Capital work in progress represents all costs directly attributable and incurred for setting up new manufacturing and/or modifying existing manufacturing facility including pre-operative expenses for trial run and borrowing costs incurred prior to the date of commencement of commercial production.

Expenditure attributable to construction of fixed assets are identified and allocated on a systematic basis to the cost of the related asset.

Any other expenditure which is not directly or indirectly attributable to the construction of the fixed asset is charged off to profit and loss account in the period in which they are incurred.

f) Depreciation / Amortization:

i) Depreciation on Fixed Assets is provided on the Straight Line Method (S.L.M.) by writing off 95% of the cost of the assets over the ''Specified Period'' of the assets in accordance with the provisions of Section 123(2) of the Companies Act, 2013.

ii) Asset put to use prior to 1st April 2014, the carrying value of assets as at 31st March 2014 net of residual value of 5% of the original cost is depreciated over the remaining life of the assets considering the total useful life provided under part C of Schedule II of the Companies Act, 2013.

iii) Depreciation on the amounts capitalized during the year on account of foreign exchange fluctuation is provided prospectively over the residual life of the assets.

iv) The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the carrying value of such assets is reduced to its recoverable amount and the impairment loss is charged to Statement of Profit & Loss. If at the Balance Sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is restated to that effect.

g) Impairment of Assets:

In accordance with Accounting Standard AS 28 on ''Impairment of Assets'' issued and prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Company’s assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of such assets exceeds its recoverable amount. An impairment loss is recognized in the profit and loss account.

h) Lease:

i) Assets acquired under lease, in which the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount.

Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability. Any leasehold land premium is amortized over the period of lease.

ii) Assets acquired under lease wherein a significant portion of the risks and rewards of ownership are retained by the less or are classified as operating leases. Lease rentals are charged to the Profit & Loss account on an accrual basis.

i) Inventories:

i) Inventory of Finished Goods and Semi finished goods are valued at lower of cost and estimated net realizable value. Cost of finished goods and Work-in-process include conversion and other cost incurred in bringing the inventories to their present location and condition. Cost of raw material, consumable and stores & spares and packing materials is computed on weighted average basis.

ii) Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Obsolete, defective and unserviceable stocks are duly provided for.

j) Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

All monetary assets and liabilities in foreign currency are restated at the end of accounting period. With respect to long-term foreign currency monetary items, from April 1, 2011 onwards, the Company has adopted the following policy:

- Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.

- In other cases such differences are accumulated in a “Foreign currency monetary item translation difference account” and amortized to Statement of Profit & loss over the balance life of the long term monetary item.

In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognized as income or expense over the period of the contract. Gains or losses on cancellation/settlement of forward exchange contracts are recognized as income or expenses.

All other exchange differences are dealt with in the Statement of Profit & Loss.

k) Employee Benefits:

Liabilities in respect of employee benefits are dealt with as under:

i) The Company has a defined contribution plan for a Provident Fund at a percentage of salary / wages for eligible employees and the Company’s contributions thereto are charged to the Profit & Loss Account.

ii) Gratuity: A contribution is made to the Trust administered by the Trustees and managed by ICICI Prudential for an amount actuarially valued at fiscal year-end.

iii) The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of un-utilized leave balance is provided based on an actuarial valuation carried out by an independent actuary at the fiscal year-end and charged to the Profit & Loss account.

l) Borrowing Costs:

General and specific Borrowing Costs (including exchange differences) directly attributable to the acquisition, construction and production of a qualifying asset are capitalized as part of the cost of such asset up to date when such asset is ready for its intended use. Other borrowing costs are charged to the profit & loss account.

m) Taxation:

i) Income tax expense comprises current tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

ii) Provision for income tax is made on the basis of estimated taxable income for the current accounting period in accordance with the Income Tax Act, 1961.

iii) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date.

iv) Deferred tax assets are recognized only to the extent that there is virtual certainty that the assets can be realized in future. However, where there is un-absorbed depreciation or a carry-forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or up to reflect the amount that is reasonably / virtually certain to be realized.

v) Tax credit is recognized in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date.

n) Provisions, Contingent Liabilities and Contingent Assets:

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii) Contingent liabilities are disclosed by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved.

iii) Contingent Liabilities are disclosed unless the possibility of the outflow of resources is remote.

iv) Contingent Assets are neither recognized nor disclosed in the financial statements.

c) Terms & Rights attached to equity shares

i) Equity shares having a par value of ''10, Each holder of equity shares is entitled to one vote per share.

ii) The Company declares and pays dividends in Indian rupees. In the event of dividend being declared by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

iii) In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amount in proportion to their shareholding.

iv) The Equity Shares held by PerPETual Global Technologies Limited are subject to lock-in for a period up to end of six months from the date of Trading Approval of the resultant equity shares arising out of conversion of CCPS mentioned below.

Terms & Rights attached to Compulsory Convertible Preference Shares (CCPS)

i) CCPS shall be convertible into the Equity Shares in the ratio of 1 : 1 within 18 months from the date of allotment

i.e. and 24th February,2015.

ii) The CCPS are under lock in till the date of conversion to Equity shares. The resultant Equity shares shall be subject to lock-in for a period of three years from the date of Trading Approval of the aforesaid resultant equity shares from BSE Limited.

e) The company has neither allotted shares pursuant to a contract without receiving cash, by way of bonus shares nor it has bought back shares during the immediately preceding five years from the date of balance sheet.

As rescheduled, the Secured External Commercial Borrowings are repayable at variable intervals commencing from 15th January 2014 and ending at 15th July 2017.

The unsecured External Commercial Borrowing is repayable in two installments in 12th January 2022 and 21st November 2022.

Terms of Repayment of Loan 2014-15

As rescheduled, the Secured External Commercial Borrowings are repayable at variable intervals commencing from 15th January 2014 and ending at 15th July 2017.

The unsecured External Commercial Borrowing is repayable in two installments in 20th December 2021 and 28th September 2022.


Mar 31, 2014

A) Basis of Accounting:

i) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable Accounting Standard as specified in the Companies (Accounting Standards) Rules, 2006 ("the Rules") and the relevant provisions of the Companies Act, 1956, read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013,to the extent applicable.

ii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for an accrual basis.

iii) 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 the revised schedule VI to the Companies Act, 1956 read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle for the purpose of current - noncurrent classification of assets and liabilities.

b) Use of estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting principles (GAAP), which requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively.

c) Revenue Recognition:

i) Sales revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer, which is generally on despatch of goods/Bill of lading. Sales are inclusive of Excise Duty and are net of trade discounts and sales tax.

ii) Export incentives under the various schemes are accounted for in the year of export.

iii) Revenues from the sale of consultancy projects are recognised as and when the advisory commitments are rendered as per the terms of the contract.

iv) Interest income is recognised on a time proportion basis.

d) Fixed Assets

Tangible Assets

i) Fixed Assets are stated at cost less accumulated depreciation and impairment losses. The diminution, if any, in the book value of these assets is provided for in the year of such determination of diminution.

ii) Cost of acquisition comprises all costs incurred to bring the assets to their location and working condition up to the date the assets are put to use. The cost of construction is composed of those constituent assets that relate directly to completion of specific fixed assets and those that are attributable to the construction activity in general and can be allocated to specific fixed assets up to the date such fixed assets are put to use.

Intangible Assets

The Company capitalises software where it is reasonably estimated that the software has an enduring useful life.

e) Capital Work in Progress

Capital work in progress represents all costs directly attributable and incurred for setting up new manufacturing and/or modifying existing manufacturing facility including pre-operative expenses for trial run and borrowing costs incurred prior to the date of commencement of commercial production.

Expenditure attributable to construction of fixed assets are identified and allocated on a systematic basis to the cost of the related asset.

Any other expenditure which is not directly or indirectly attributable to the construction of the Project / construction of the fixed asset is charged off to profit and loss account in the period in which they are incurred

f) Depreciation / Amortisation

i) Leasehold land premium is amortised over the period of lease.

ii) Depreciation is provided on Straight Line Method at the rates and in the manner as specified in Schedule XIV to the Companies Act, 1956.

iii) "Continuous process plant", as defined in Schedule XIV, has been considered on a technical assessment and depreciation provided accordingly.

iv) The capital expenditure incurred on any leasehold premise are amortised over the period of its lease.

g) Impairment of Assets

In accordance with Accounting Standard AS28 on ''Impairment of Assets'' issued and prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Company''s assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. An impairment loss is recognised in the profit and loss account.

h) Lease

i) Assets acquired under lease, in which the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability. Any leasehold land premium is amortised over the period of lease.

ii) Assets acquired under lease wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss account on an accrual basis.

i) Inventories

i) Inventory of Finished Goods and Semi finished goods are valued at lower of cost and estimated net realisable value. Cost of finished goods and Work-in-process include conversion and other cost incurred in bringing the inventories to their present location and condition. Cost of raw material, consumable and stores & spares and packing materials is computed on weighted average basis.

ii) Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Obsolete, defective and unserviceable stocks are duly provided for.

j) Foreign Currency Transactions

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

All monetary assets and liabilities in foreign currency are restated at the end of accounting period. With respect to long-term foreign currency monetary items, from April 1, 2011 onwards, the Company has adopted the following policy:

- Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.

- In other cases such differences are accumulated in a "Foreign currency monetary item translation difference account" and amortised to Statement of Profit & loss over the balance life of the long term monetary item, up to 31.03.2020

In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expenses.

All other exchange differences are dealt with in the Statement of Profit & Loss.

k) Employee Benefits

Liabilities in respect of employee benefits are dealt with as under:

i) The Company has a defined contribution plan for a Provident Fund at a percentage of salary / wages for eligible employees and the Company''s contributions thereto are charged to the Profit & Loss Account.

ii) Gratuity: A contribution is made to the Trust administered by the Trustees and managed by ICICI Prudential for an amount actuarially valued at fiscal year-end.

iii) The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of un-utilised leave balance is provided based on an actuarial valuation carried out by an independent actuary at the fiscal year-end and charged to the Profit & Loss account.

l) Borrowing Costs

General and specific Borrowing Costs (including exchange differences) directly attributable to the acquisition, construction and production of a qualifying asset are capitalised as part of the cost of such asset up to date when such asset is ready for its intended use. Other borrowing costs are charged to the profit & loss account.

m) Taxation

i) Income tax expense comprises current tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

ii) Provision for income tax is made on the basis of estimated taxable income for the current accounting period in accordance with the Income Tax Act, 1961.

iii) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date.

iv) Deferred tax assets are recognised only to the extent that there is virtual certainty that the assets can be realised in future. However, where there is un-absorbed depreciation or a carry-forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or up to reflect the amount that is reasonably / virtually certain to be realised.

v) Tax credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date.

n) Provisions, Contingent Liabilities and Contingent Assets

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii) Contingent liabilities are disclosed by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved.

iii) Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2013

A) Basis of Accounting:

i) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable Accounting Standard as specified in the Companies (Accounting Standards) Rules, 2006 ("the Rules") and the relevant provisions of the Companies Act, 1956, to the extent applicable.

ii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for an accrual basis.

iii) 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 the 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 realisation in cash and cash equivalents, the Company has ascertained its operating cycle for the purpose of current-noncurrent classification of assets and liabilities.

b) Use of Estimates:

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles (GAAP), which requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements, and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively.

c) Revenue Recognition:

i) Sales revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer, which is generally on despatch of goods /Bill of lading. Sales are inclusive of Excise Duty and are net of trade discounts and sales tax.

ii) Export incentives under the various schemes are accounted for in the year of export.

iii) Revenues from the sale of consultancy projects are recognised as and when the advisory commitments are rendered as per the terms of the contract.

iv) Interest income is recognised on a time proportion basis.

d) Fixed Assets:

Tangible Assets:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment losses. The diminution, if any, in the book value of these assets is provided for in the year of such determination of diminution.

ii) Cost of acquisition comprises all costs incurred to bring the assets to their location and working condition up to the date the assets are put to use. The cost of construction is composed of those constituent assets that relate directly to completion of specific fixed assets and those that are attributable to the construction activity in general and can be allocated to specific fixed assets up to the date such fixed assets are put to use.

Intangible Assets:

The Company capitalises software where it is reasonably estimated that the software has an enduring useful life.

e) Capital Work in Progress:

Capital work in progress represents all costs directly attributable and incurred for setting up new manufacturing and/or modifying existing manufacturing facility including pre-operative expenses for trial run and borrowing costs incurred prior to the date of commencement of commercial production.

Expenditure attributable to construction of fixed assets are identified and allocated on a systematic basis to the cost of the related asset.

Any other expenditure which is not directly or indirectly attributable to the construction of the Project / construction of the fixed asset is charged off to profit and loss account in the period in which they are incurred.

f) Depreciation / Amortisation :

i) Leasehold land premium is amortised over the period of lease.

ii) Depreciation is provided on Straight Line Method at the rates and in the manner as specified in Schedule XIV to the Companies Act, 1956.

iii) "Continuous process plant", as defined in Schedule XIV, has been considered on a technical assessment and depreciation provided accordingly.

iv) The capital expenditure incurred on any leasehold premise are amortised over the period of its lease.

g) Impairment of Assets:

In accordance with Accounting Standard AS28 on ''Impairment of Assets'' issued and prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Company''s assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. An impairment loss is recognised in the profit and loss account.

h) Lease:

i) Assets acquired under lease, in which the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair

value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability. Any leasehold land premium is amortised over the period of lease.

ii) Assets acquired under lease wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss account on an accrual basis.

i) Inventories:

i) Inventory of Finished Goods and Semi finished goods are valued at lower of cost and estimated net realisable value. Cost of finished goods and Work-in-process include conversion and other cost incurred in bringing the inventories to their present location and condition. Cost of raw material, consumable and stores & spares and packing materials is computed on weighted average basis.

ii) Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Obsolete, defective and unserviceable stocks are duly provided for.

j) Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

All monetary assets and liabilities in foreign currency are restated at the end of accounting period. With respect to long-term foreign currency monetary items, from April 1, 2011 onwards, the Company has adopted the following policy:

- Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.

- In other cases such differences are accumulated in a "Foreign currency monetary item translation difference account" and amortised to Statement of Profit & loss over the balance life of the long term monetary item, up to 31.03.2020

In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expenses. All other exchange differences are dealt with in the Statement of Profit & Loss.

k) Employee Benefits:

Liabilities in respect of employee benefits are dealt with as under:

i) The Company has a defined contribution plan for a Provident Fund at a percentage of salary / wages for eligible employees and the Company''s contributions thereto are charged to the Profit & Loss Account.

ii) Gratuity: A contribution is made to the Trust administered by the Trustees and managed by ICICI Prudential for an amount actuarially valued at fiscal year-end.

iii) The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of un-utilised leave balance is provided based on an actuarial valuation carried out by an independent actuary at the fiscal year-end and charged to the Profit & Loss account.

l) Borrowing Costs:

General and specific Borrowing Costs (including exchange differences) directly attributable to the acquisition, construction and production of a qualifying asset are capitalised as part of the cost of such asset up to date when such asset is ready for its intended use. Other borrowing costs are charged to the profit & loss account.

m) Taxation:

i) Income tax expense comprises current tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

ii) Provision for income tax is made on the basis of estimated taxable income for the current accounting period in accordance with the Income Tax Act, 1961.

iii) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date.

iv) Deferred tax assets are recognised only to the extent that there is virtual certainty that the assets can be realised in future. However, where there is un-absorbed depreciation or a carry-forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or up to reflect the amount that is reasonably / virtually certain to be realised.

v) Tax credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date.

n) Provisions, Contingent Liabilities and Contingent Assets:

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii) Contingent liabilities are disclosed by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved.

iii) Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2012

A) Basis of Accounting:

i) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable Accounting Standard as specified in the Companies (Accounting Standards) Rules, 2006 ("the Rules") and the relevant provisions of the Companies Act, 1956, to the extent applicable.

ii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for an accrual basis.

iii) 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 the 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 realisation in cash and cash equivalents, the Company has ascertained its operating cycle for the purpose of current - non current classification of assets andliabilities.

b) Use of Estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting Principles (GAAP), which requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements, and reported amounts of revenue and expenses for that year. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively.

c) Revenue Recognition:

i) Sales revenue is recognised on transfer of significant risks and rewards of ownership of the goods to the buyer, which is generally on despatch of goods /BillI of lading. Sales are inclusive of Excise Duty and are net of trade discounts and sales tax.

ii) Export incentives under the "Duty Entitlement Pass Book Scheme" are accounted for in the year of export.

iii) Revenues from the sale of consultancy projects are recognised as and when the advisory commitments are rendered as perthe terms of the contract.

iv) Interest income is recognised on a time proportion basis.

d) Fixed Assets:

Tangible Assets:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment losses. The diminution, if any, in the book value of these assets is provided for in the year of such determination of diminution.

ii) Cost of acquisition comprises all costs incurred to bring the assets to their location and working condition up to the date the assets are put to use. The cost of construction is composed of those constituent assets that relate directly to completion of specific fixed assets and those that are attributable to the construction activity in general and can be allocated to specific fixed assets up to the date such fixed assets are put to use.

Intangible Assets:

The Company capitalises software where it is reasonably estimated that the software has an enduring useful life.

e) Capital Work in Progress:

Capital work in progress represents all costs directly attributable and incurred for setting up new manufacturing and/or modifying existing manufacturing facility including pre-operative expenses for trial run and borrowing costs incurred prior to the date of commencement of commercial production.

Expenditure attributable to construction of fixed assets are identified and allocated on a systematic basis to the cost of the related asset.

Any other expenditure which is not directly or indirectly attributable to the construction of the Project / construction of the fixed asset is charged off to profit and loss account in the period in which they are incurred.

f) Depreciation /Amortisation:

i) Leasehold land premium is amortised overthe period of lease.

ii) Depreciation is provided on Straight Line Method at the rates and in the manner as specified in Schedule XIV to the Companies Act, 1956.

iii) "Continuous process plant", as defined in Schedule XIV, has been considered on a technical assessment and depreciation provided accordingly.

iv) The capital expenditures incurred on any leasehold premise are amortised overthe period of its lease.

g) Impairment of Assets:

In accordance with Accounting Standard AS28 on Impairment of Assets' issued and prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Company's assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. An impairment loss is recognised in the profit and loss account.

h) Lease:

i) Assets acquired under lease, in which the Company has substantially all the risks and rewards of ownership, are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability. Any leasehold land premium is amortised over the period of lease.

ii) Assets acquired under lease wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Profit & Loss account on an accrual basis.

i) Inventories:

i) Inventory of Finished Goods and Semi finished goods are valued at lower of cost and estimated net realisable value. Cost of finished goods and Work-in-process include conversion and other cost incurred in bringing the inventories to their present location and condition. Cost of raw material, consumable and stores & spares and packing materials is computed on weighted average basis.

ii) Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Obsolete, defective and unserviceable stocks are duly provided for.

j) Foreign Currency Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

All monetary assets and liabilities in foreign currency are restated at the end of accounting period. With respect to long-term foreign currency monetary items, from April 1, 2011 onwards, the Company has adopted the following policy:

Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated overthe balance life of the asset.

In other cases such differences are accumulated in a "Foreign currency monetary item translation difference account" and amortised to Statement of Profit & loss over the balance life of the long term monetary item, up to 31.03.2020

In respect of forward exchange contracts, the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract. Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expenses.

All other exchange differences are dealt with in the Statement of Profit & Loss.

k) Employee Benefits:

Liabilities in respect of employee benefits are dealt with as under:

i) The Company has a defined contribution plan for a Provident Fund at a percentage of salary / wages for eligible employees and the Company's contributions thereto are charged to the Profit & Loss Account.

ii) Gratuity: A contribution is made to the Trust administered by the Trustees and managed by ICICI Prudential for an amount actuarially valued atfiscal year-end.

iii) The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of un-utilised leave balance is provided based on an actuarial valuation carried out by an independent actuary at the fiscal year-end and charged to the Profit & Loss account.

I) Borrowing Costs:

General and specific Borrowing Costs (including exchange differences) directly attributable to the acquisition, construction and production of a qualifying asset are capitalised as part of the cost of such asset up to date when such asset is ready for its intended use Other borrowing costs are charged to the profit & loss account.

m) Taxation:

i) Income tax expense comprises current tax and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

ii) Provision for income tax is made on the basis of estimated taxable income for the current accounting period in accordance with the Income Tax Act, 1961.

iii) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date.

iv) Deferred tax assets are recognised only to the extent that there is virtual certainty that the assets can be realised in future. However, where there is un-absorbed depreciation or a carry-foraard loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realisation of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or up to reflect the amount that is reasonably/virtually certain to be realised.

v) Tax credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date.

n) Provisions. Contingent Liabilities and Contingent Assets:

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation.

ii) Contingent liabilities are disclosed by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved.

iii) Contingent Assets are neither recognised nor disclosed in the financial statements.


Mar 31, 2010

A) Basis of Accounting:

i) The financial statements are prepared under historical cost convention, on a going concern basis and in accordance with the applicable Accounting Standard as specified in the Companies (Accounting Standards) Rules, 2006 ("the Rules") and the relevant provisions of the Companies Act, 1956, to the extent applicable.

ii) All expenses and income to the extent ascertainable with reasonable certainty are accounted for an accrual basis.

b) Use of estimates

The preparation of financial statements is in conformity with Generally Accepted Accounting principles (GAAP) which requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements and reported amounts of revenue and expenses for that year. Actual result could differ from these estimates. Any revision to accounting estimates is recognised prospectively.

c) Revenue Recognition:

i) Sale of goods is recognised on transfer of significant risks and rewards of ownership which is generally on date of dispatch /BNI of lading. Sales include Excise Duty and are net off discounts and sales tax. ii) Export incentives underthe "Duty Entitlement Pass Book Scheme" are accounted in the year of Export.

d) FixedAssets:

i) Fixed Assets are stated at cost less accumulated depreciation. The diminution, if any, in the book value of these assets is provided for in the year of such determination of diminution.

ii) The original cost of Fixed Assets is inclusive of freight, duties, taxes (net of cenvat credit and VAT), incidental expenses relating to the acquisition, cost of installation/erection, pre-operative expenses related to and incurred during implementation/expansion of new/existing projects up to the date of the assets are put to use, as applicable.

iii) In accordance with AS 28 on Impairment of Assets prescribed by Companies (Accounting Standards) Rules, 2006, where there is an indication of impairment of the Companys assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognised whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss is recognised in the profit and loss account.

e) Capital Work in Progress:

Capital work in progress represent all costs directly attributable and incurred for setting up new manufacturing and/or modifying existing manufacturing facility including pre operative expenses for trial run and borrowing cost incurred prior to date of commencement of commercial production.

f) Depreciation /Amortisation:

i) Leasehold land premium is amortized over the period of lease.

ii) Depreciation is provided on Straight Line Method at the rates and in the manner as specified in Schedule

XIV to the Companies Act, 1956. iii) "Continuous process plant" as defined in the said Schedule has been considered on technical assessment and depreciation provided accordingly. iv) The Capital expenditure incurred on the leasehold premise is amortised overthe period of its lease.

g) Lease:

i) Assets acquired under lease where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such assets are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost; so as to obtain a constant periodic rate of interest on the out standing liability Leasehold land premium is amortized overthe period of lease.

ii) Assets acquired as lease wherein significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating lease. Lease rental are charged to the Profit & loss account on accrual basis.

h) Inventories:

i) Inventories are valued at lower of cost and estimated net realizable value.

ii) Cost of raw material, components and stores & spares and packing material is computed on Weighted average basis. iii) Cost of finished goods and Work-in-process include conversion and other cost incurred in bringing the inventories to their present location and condition.

i) Foreign Currency Transaction:-

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Current assets and current liabilities are translated at the year end rate. The difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of current assets and current liabilities at the end of the year is recognised as income or expense as the case may be.

b) In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense overthe period of the contract

c) Gains or losses on cancellation/settlement of forward exchange contracts are recognised as income or expenses.

j) Employee Benefits:

Liabilities in respect of employee benefits are dealt with as under:

i) The Company has defined contribution plan for Provident Fund at a percentage of salary /wages for eligible employees and the Companys contribution thereto are charged to the Profit & Loss Account.

ii) Gratuity: Contribution made to the Trust administered by the Trustees and managed by ICICI Prudential for an amount actuarially valued at the year end.

iii) The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilized leave balance is provided based on actuarial valuation carried out by an independent actuary at the financial year end and charged to the Profit & Loss account.

k) Borrowing Costs:

Borrowing Costs attributable to the acquisition, construction and production of a qualifying asset are capitalized as part of the cost of such asset up to date when such asset is ready for its intended use. Other borrowing costs are charged to the profit & loss account.

I) Taxation:

i) Income tax expense comprises current tax, fringe benefit tax (i.e. amount of tax for the period determined in accordance with the income tax law) and deferred tax charge or credit (reflecting the tax effects of timing differences between accounting income and taxable income for the year).

ii) The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only to the extent that there is virtual certainty that the assets can be realised in future; however where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain as the case may be to be realised.

iii) Tax credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAAofthe Income tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within the statutory time frame and is reviewed at each balance sheet date.

m) Provisions, Contingent Liabilities and Contingent Assets:

i) Provisions in respect of present obligations arising out of past events are made in the accounts when reliable estimates can be made of the amount of the obligation. ii) Contingent liabilities are disclosed by way of note to financial statements after careful evaluation by the management of the facts and legal aspects of the matter involved.

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