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Accounting Policies of Shilpa Medicare Ltd. Company

Mar 31, 2016

CORPORATE INFORMATION

Shilpa Medicare Limited is a listed Company engaged in the manufacturing of Bulk Drugs/API & Intermediates. Shilpa Medicare Limited (SML) started its operations as API manufacturer way back in 1987 at Raichur, Karnataka- India. The commercial production in the SML was started in November 1989. In November 1993, Shilpa Medicare was converted into a Public Limited Company. The Company was listed on Bombay Stock Exchange on Jun 19, 1995 and National Stock Exchange (NSE) on Dec 03, 2009. Subsequently; Shilpa Medicare has gained World Health Organization-Good Manufacturing Practices (GMP) Certificate recognition

SML is presently dealing in high-quality Active Pharmaceutical Ingredients (APIs), Intermediates, Formulations, New Drug Delivery Systems, Peptides / Biotech products and Specialty Chemicals etc. using sophisticated technology meticulously in order to comply with laid down international standards/ specifications. Today SML is among the world''s leading suppliers of Oncology/non-Oncology APIs and intermediates.

1. Basis of Preparation

The financial statements have been prepared to comply in all material aspects with applicable accounting principal in India and as notified under the Companies Act 2013 and the other relevant provisions of the Act. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

1.1 Significant Accounting Policies

a) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2016, as per the revised schedule VI notified under the Companies Act 2013. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year where ever required.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the USFDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the amount have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on ascertain useful life of assets under Straight Line Method (SLM) prescribed in Schedule II of the Companies Act, 2013, with exception of those assets whose useful life is ascertain by the management.

ii. Intangible assets are amortized over their useful life/period of ten years.

iii. The Company follows the policy of charging depreciation on pro-rate basis on the assets acquired or disposed off during the year.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

iii. Non-current investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature.

iv. On Disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss Account/.

g) Inventory:

i. Raw-Materials, Stores & Spares and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress are valued at estimated cost.

iii. Finished goods are valued at estimated cost or net realizable value whichever is lower.

iv. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight- line basis over the lease term.

j) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

(i) Sale of products:

Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. 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.

(ii) Development Charges:

Development charges are earned over the time period of the development activity and are recognized on the basis of each mile-stones identified in the agreement

k) Other Income

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

ii. Dividend income is recognized when right to receive is established.

l) 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 reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference 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 the previous financial statements, are recognized as income or as expense for revenue items and are capitalized/transferred to Foreign Currency Monetary Item Translation Difference Account (FCTR) in case of Investments in subsidiaries respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense in the year of payment.

o) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

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

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.


Mar 31, 2014

Basis of Preparation

The financial statements have been prepared to comply with all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and as notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

The Accounting policies adopted in the presentation of financial statements are consistent with those of previous year.

a) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2014,as per the revised schedule VI notified under the Companies Act 1956. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the US FDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the expenses have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of India.

ii. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores, and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

(i) Sale of products:

Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. 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.

(ii) Development Charges:

Development charges are earned over the time period of the development activity and are recognized on the basis of each mile-stones identified in the agreement

k) Other Income

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

ii. Dividend income is recognized when right to receive is established. l) 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 reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference 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 the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

o) Taxes on Income:

Tax expense comprises of Current and Deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

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

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.


Mar 31, 2013

A) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2013,as per the revised schedule VI notified under the Companies Act 1956. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the US FDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the expenses have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of India.

ii. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores and Packing Materials are valued at cost — Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Revenue Recognition:

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods. Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements/ Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

k) Other Income

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

ii. Dividend income is recognized when right to receive is established.

l) 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 reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference 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 the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

o) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

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

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.


Mar 31, 2012

A) Presentation and disclosure of financial statements :

During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates :

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

d) Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies Act 1956 of India. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements/ Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

k) Other Income

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

l) 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 reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference 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 the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

n) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

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

b) Rights, Preferences and restrictions attached to each class of Shares:

Equity Shares: The Company has one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(e) On 22.03.2012, 500,000 equity shares of Face value of Rs.2/- each were issued at a premium of Rs.348/- per share upon conversion of share warrants which were issued by the Company in the year 2010-2011.


Mar 31, 2011

Basis of preparation of financial statements:

(a) The financial statements are prepared on historical cost convention and on the presumption of going concern in accordance with generally accepted accounting principles in India the applicable mandatory Accounting Standards and the relevant provisions of the Companies Act, 1956 of India adopted consistently by the Company.

(b) The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

Use of Estimates :

The preparation of financial statements in conformity with generally accounting principles requires management to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the said reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

Fixed Assets:

a) Tangible Assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

b) Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies Act, 1956 of India. Intangible assets are amortized over their useful life/ a period of ten years.

Impairment:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

Investments:

a. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

b. Current investments are stated at lower of cost and fair value.

Inventory:

a) Raw-Materials, Stores and Packing Materials are valued at cost – Cost is determined on FIFO basis.

b) Work-in-progress & finished goods are valued at estimated cost or net realizable value whichever is lower.

Employee Benefits:

Employee benefits of short term nature are recognized as expenses as and when it accrues. Long Term employee benefits/ post employment benefits (e.g. gratuity), both funded and non-funded, are recognized as expense based on actuarial valuation at year end which takes into account actuarial gains and losses.

Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements / Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

Foreign Currency Transactions:

Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. The exchange difference arising out of these transactions are dealt in profit and loss account.

Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fl uctuation. In respect of transactions covered by Forward Exchange Contract, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

Taxes on Income:

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is provided in conformity with Accounting Standard-22 issued by the Institute of Chartered Accountants of India based on the timing difference between the accounting income and the taxable income.


Mar 31, 2010

Basis of preparation of financial statements:

(a) The financial statements are prepared on historical cost convention and on the presumption of going concern in accordance with generally accepted accounting principles in India and the applicable mandatory Accounting Standards and the relevant provisions of the Companies Act, 1956 of India as adopted consistently by the Company.

(b) The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

Use of Estimates

The preparation of financial statements in conformity with generally accounting principles requires management to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the said reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

Fixed Assets:

a) Tangible Assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

b) Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of

India. Intangible assets are amortized over their useful life/ a period of ten years.

Impairment:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

Investments:

a. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

b. Current investments are stated at lower of cost and fair value. Inventory:

a) Raw-Materials, Stores and Packing Materials are valued at cost - Cost is determined on FIFO basis.

b) Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower. Employee Benefits:

Employee benefits of short term nature are recognized as expenses as and when it accrues. Long Term employee benefits/ post employment benefits (e.g. gratuity), both funded and non-funded, are recognized as expense based on actuarial valuation at year end which takes into account actuarial gains and losses.

Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements / Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

Foreign Currency Transactions:

Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. The exchange difference arising out of these transactions are dealt in profit and loss account.

Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

Taxes on Income:

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is provided in conformity with Accounting Standard-22 issued by the Institute of Chartered Accountants of India based on the timing difference between the accounting income and the taxable income.

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