Accounting Policies of MPS Pharma Ltd. Company

Mar 31, 2015

A) Basis of preparation of financial statements

The financial statement have been prepared and presented under the historical cost convention on an accrual basis of accounting and in accordance with the accounting principles generally accepted in India and comply with the accounting standards referred in the Companies (Accounting Standards) Rules 2006 which continue to apply under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Account) rules, 2014 and other relevant provisions of the Companies Act, 1956 to the extent applicable.

b) Uses of Estimates

The preparation of financial statements in conformity with Generally accepted Accounting Principles (GAAP) in India requires management to make estimates and assumptions that affect the application of the accounting policies and the reported amount of asserts, liabilities, income and expenses and the disclosure of contingent liabilities on the date of financial statement. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Estimates and underlying assumptions are review on an ongoing basis.

c) Current and Non-current classification

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 schedule III of the Companies Act, 2013. Based on the nature of it's activates and the time between the acquisition of assets for processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

d) Revenue Recognition

Revenue from sale of goods in the course of ordinary activities is recognized when the significant risk and rewards in respect of ownership are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods as well as regarding its collection. Revenue is net of excise duty & sales tax.

Export incentive entitlements are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made, and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

e) Tangible Fixed Assets and Depreciation

Tangible fixed assets are stated at the cost of acquisition or construction, less accumulated depreciation and impairment losses, if any. The cost of an item or tangible fixed asset comprises its purchase price excluding cenvat credit but including of non-refundable taxes or levies and any attributable cost of bringing the asset to its working condition for its intended use. Advances paid towards acquisition of tangible fixed assets outstanding at each Balance sheet date, are shown in fixed assets schedule as advances paid.

Depreciation on fixed assets upto 31st March 2014 was provided on straight line method at the higher of the rates determined by the Company based on the estimated useful life of the assets or the rates specified in Schedule XIV of the Companies Act, 1956.

Pursuant to the notification of the Schedule II of the Companies Act, 2013 with effect from 01st April, 2014, depreciation for the year has been provided as per the rates determined in Part C of Schedule II or based on estimated useful life of the assets determined by the management. Accordingly, for assets which has no residual life as at 1st April, 2014, the book value has been adjusted against Surplus (net of deferred tax)

The policy of company is to provide depreciation on the Building, Plant & Machinery and Other Fixed Assets from the date of commercial production/put to use.

f) Impairment of Assets

In accordance with Accounting Standard 28(AS 28) an "Impairment of assets" where there is an indication of impairment of the Company's assets, the carrying amounts of the Company's assets are reviewed at each balance sheet date to determine whether there is any impairment. An impairment loss is recognized whenever the carrying amount of an asset or a cash generating unit exceeds its recoverable amount. Impairment loss is recognized in the statement of profit & loss.

g) Borrowing Costs

Borrowing costs are interest and other costs incurred by the Company in connection with the borrowing of funds. Borrowing cost directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use is capitalised. All other borrowing costs are treated as period cost and charged to the profit and loss account in the year in which it was incurred.

h) Inventories

Inventories comprises raw materials, work-in-progress, finished goods, stock-in-trade and stores and spares are carried at the lower of cost and net realizable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition In case of manufactured inventories and WIP, fixed production overheads are allocated on the basis of normal capacity of production facilities. Excise duty liability is included in the valuation of closing inventory of finished goods.

Net realizable value is the estimated selling prices in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

i) Employee Retirement Benefits

1. Defined contribution plan: Company's contribution paid/payable during the year to provident fund, ESIC and labour welfare fund are charged to statement of profit and loss account on due basis.

2. Defined benefit plan : Company's liabilities towards gratuity and long term compensated absences are generally provided for based on actuarial valuation carried out at the close of each year.

j) Foreign Exchange Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign currency transaction settled during the period are recognized in the statement of Profit & Loss.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are transacted at period end rates. The resultant exchange differences are recognised in the Statement of Profit & Loss. Non - monetary assets are at the rate prevailing on the date of transaction.

k) Income taxes

Current Tax: Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is based on the results for the year, in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) Credit: Minimum Alternate Tax credit is recognized, as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit & Loss Account and shown as MAT Credit Entitlement under Loans & Advances. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

Deferred Tax: Deferred Tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income & accounting income computed for the current accounting year and reversal of earlier years' timing difference. Deferred Tax Assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses, which are recognized to the extent that there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

l) Investments

Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. The provision for any diminution in the value of long term investments is made only if such a decline is other than temporary.

m) Cash Flow Statement

Cash flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, financing and investing activities of the Company are segregated.

n) Provisions & Contingencies

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. Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the account. Contingent Assets are neither recognized nor disclosed in the financial statements.

These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

o) Earning per share

Earnings per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period.

For the purpose of calculating Diluted Earnings per Share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period after adjusted for the effects of all dilutive potential equity shares.

p) Other Accounting policies

Accounting Policies not specifically referred to are in accordance with generally accepted accounting principles.

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Mar 31, 2014

A) Basis of Accounting

These financial statements have been prepared and presented on the accrual basis of accounting and comply with the Accounting Standards prescribed in the Companies (Account Standards) rules 2006 issued by the Central Government and in compliance with the applicable Accounting Standards((AS) referred to in sub-section (3C) of Section 211 (read with section 133 of Companies Act, 2013) of the said Act. The accounting policies, except otherwise stated, have been consistently applied by the Company.

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of the services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.

b) Uses of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires management to judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and disclosure of contingent liabilities on the date of the financial statements. Difference between the actual results and estimates are recognized in the year in which the results are known/materialized.

c) Revenue Recognition

Revenue from sale of goods in the course of ordinary activities is recognized when the significant risk and rewards in respect of ownership are transferred to the customer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods as well as regarding its collection. Revenue is net of excise duty & sales tax.

Export incentive entitlements are recognized as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made, and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

d) Tangible Fixed Assets and Depreciation

Tangible fixed assets are stated at the cost of acquisition or construction, less accumulated depreciation and impairment losses, if any. the cost of an item or tangible fixed asset comprises its purchase price excluding cenvat credit but including of non refundable taxes or levies and any attributable cost of bringing the asset to its working condition for its intended use. Advances paid towards acquisition of tangible fixed assets outstanding at each Balance sheet date, are shown in fixed assets schedule as advances paid.

Depreciation on tangible fixed assets, is provided on a pro-rata basis, using the straight-line method and at the rates specified in Schedule-XIV to the Companies Act, 1956. Depreciation on fixed assets costing upto Rs. 5000/- is provided @ 100% over a period of one(1) year. The policy of company is to provide depreciation on the Building, Plant & Machinery and Other Fixed Assets from the date of commercial production/put to use.

e) Impairment of Assets

An asset is impaired if there is sufficient indication that the carrying cost would exceed the recoverable amount of cash generating asset. In that event an impairment loss so computed would be recognized in the accounts in the relevant year.

f) Borrowing Costs

Borrowing costs are interest and other costs incurred by the Company in connection with the borrowing of funds. Borrowing cost directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use is capitalised. All other borrowing costs are treated as period cost and charged to the profit and loss account in the year in which it was incurred.

g) Inventories

Inventories comprises raw materials, work-in-progress, finished goods, stock-in-trade and stores and spares are carried at the lower of cost and net realizable value. Cost of inventories comprises all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition In case of manufactured inventories and WIP, fixed production overheads are allocated on the basis of normal capacity of production facilities. Excise duty liability is included in the valuation of closing inventory of finished goods.

Net realizable value is the estimated selling prices in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

h) Employee Retirement Benefits

1. Defined contribution plan: Company''s contribution paid/payable during the year to provident fund, ESIC and labour welfare fund are charged to statement of profit and loss account on due basis.

2. Defined benefit plan : Company''s liabilities towards gratuity and long term compensated absences are provided for based on actuarial valuation carried out at the close of each year. The actuarial valuation is done by an Independent Actuary as per projected unit credit method.

i) Foreign Exchange Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign currency transaction settled during the period are recognized in the statement of Profit & Loss.

Monetary assets and liabilities denominated in foreign currencies as at the Balance Sheet date are transacted at period end rates. The resultant exchange differences are recognised in the Statement of Profit & Loss. Non –monetary assets are at the rate prevailing on the date of transaction.

j) Income taxes

Current Tax: Provision for Taxation is ascertained on the basis of assessable profit computed in accordance with the provisions of Income Tax Act, 1961.

Minimum Alternate Tax (MAT) Credit: Minimum Alternate Tax credit is recognized, as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit & Loss Account and shown as MAT Credit Entitlement under Loans & Advances. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

Deferred Tax: Deferred Tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income & accounting income computed for the current accounting year and reversal of earlier years'' timing difference. Deferred Tax Assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses, which are recognized to the extent that there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

k) Investments

Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as long-term investments. The provision for any diminution in the value of long term investments is made only if such a decline is other than temporary.

l) Cash Flow Statement

Cash flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, financing and investing activities of the Company are segregated.

m) Provisions & Contingencies

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. Liabilities which are material, and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the account. Contingent Assets are neither recognized nor disclosed in the financial statements.

These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

n) Earning per share

Earnings per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period.

For the purpose of calculating Diluted Earnings per Share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period after adjusted for the effects of all dilutive potential equity shares.

o) Other Accounting policies

Accounting Policies not specifically referred to are in accordance with generally accepted accounting principles.

Pursuant to approval of shareholders by way of Special Resolution accorded in compliance with provisions of Section 81(1A) and other applicable provisions, if any, of the Companies Act, 1956 (including any amendment(s) or re-enactment thereof), and in-principle approval received from BSE Limited, copies of which are placed before the meeting and initialed by the Chairman for the purpose of identification thereof, and subject to the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 (hereinafter referred to as "SEBI (ICDR) Regulations") and in accordance with other existing Guidelines, rules and regulations of the Securities and Exchange Board of India ("SEBI") including the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 and subject to enabling provisions of the Memorandum and Articles of Association of the Company, the Board of Directors hereby allot 56,75,350 (Fifty Six Lakhs Seventy Five Thousand Three Hundred and Fifty Only) Equity Shares of Rs. 10/- (Rupees Ten Only) each and 40,82,650 (Forty Lakhs Eighty Two Thousand Six Hundred and Fifty Only) Warrants, to be convertible at the option of warrant holders in one or more tranches, within 18 months from the date of allotment into equivalent number of fully paid up Equity Share of face value of Rs.10/- each for cash at an exercise price of Rs. 10/- (Rupees Ten only) each or such other price as may be determined in accordance with the provisions of SEBI (ICDR) Regulations, 2009, on Preferential basis to the persons belonging to the Promoters and Non-Promoter. In Principal Approval of the above mentioned Equity Shares & Shares Warrants has been received from BSE on 21.11.2013.

A. The company has only one class of shares having a par value of Rs10/- per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholder''s in the ensuring General Meeting.

B. In the event of liquidation of the company, the holder of equity shares will be entitled to receive remaining assets of the company in proportion to their number of equity shares after distribution of all preferential amounts.

(a) Term loan from Indian Overseas Bank of Rs. 90,65,098/- which carries interest base rate 3.75% and is repayable in 60 installments of Rs. 2,06,000/- from October, 2012. The loan is secured by all immovable & movable fixed assets of the company.

(b) Term loan from Indian Overseas Bank of Rs. 1,95,59,433/- which carries interest base rate 3.75% and is repayable in 84 installments of Rs. 3,28,000/- from October, 2012. The loan is secured by all immovable & movable fixed assets of the company.

(c) Term loan includes Working Capital Term Loan of Rs. 1,24,72,000/- from Indian Overseas Bank which carries interest base rate 3.75% and is repayable in 60 monthly installments of Rs. 2,83,000/- from October, 2012. The loan is secured by 1st charge on the current and fixed assets of the company.

(d) Vehicle Finance loan carries interest @ 10% p.a. and repayable in 36 equal monthly installments. The loan is secured by hypothecation of vehicle.

Working capital loan availed from Indian overseas bank are secured by hypothecation of inventories and book debts ( present & future) also first charge by way of mortgage on all immovable properties and by way of hypothecation on all the fixed assets of the company both present & future and guaranteed by director/promoter. The said facility is repayable on demand.

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Mar 31, 2013

A) Basis of Preparation of Financial Statements

The Financial statements of the company have been prepared to comply with all material aspects of the applicable Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the relevant provision of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention and on the basis of going concern basis. The company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis.

All assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle and other criteria set out in Revised Schedule VI to the Companies Act, 1956. Based on the nature of the services and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current or non-current classification of assets and liabilities.

b) Uses of Estimates

The presentation of financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management''s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

c) Fixed Assets & Depreciation

1. Fixed Assets

i. Fixes Assts are stated at cost of acquisition less accumulated depreciation. Cost includes all expenses, borrowing cost and other incidental expenses incurred up to the date of installation/put to use.

ii) Convert Credit/Value Added tax availed on purchase of fixed assets are reduced from the cost of respective assets.

2. Depreciation

Depreciation is provided on straight line method at the rates specified in schedule XIV of the Companies Act, 1956 on pro rata basis. The policy of company is to provide depreciation on the Building, Plant & Machinery and Other Fixed Assets from the date of commercial production/put to use.

d) Impairment of Assets

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statements of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is increase/reverses where there has been change in the estimate o recoverable value. The recoverable value is the higher of the assets net selling prices and value in use.

e) Borrowing Costs

Borrowing costs directly attributable to the acquisition or construction of fixed assets are capitalized as part of the cost of the assets, upto the date the assets is put to use. Other costs are charged to the statement of profit and loss account in the year in which they are incurred.

f) Inventories

Inventories are valued at lower of cost or net realizable value (Cost is determined on weighted average basis). The Cost of work-in-progress and finished goods comprises of raw materials, direct labour, other direct costs and related production overheads & Excise duty as applicable. Net realizable value is the estimate of the selling price in the ordinary course of business as applicable.

g) Employee Retirement Benefits

1. Defined contribution plan : Company''s contribution paid/payable during the year to provident fund, ESIC and labor welfare fund are charged to statement of profit and loss account.

2. Defined benefit plan : Company''s liabilities towards gratuity and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the statement of profit and loss account as income or expenses. Obligations is measured at the present value of estimated future cash flow using a discounted rate that is determined by the reference to market yields at the balance sheet date on government bonds where the currency and terms of government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

h) Foreign Currency Transactions

1. Transactions in foreign currency are recorded at the exchange rate prevailing as on date of transaction.

2. Foreign currency assets/liabilities as on the balance sheet date are translated at the exchange rate prevailing on the date of balance sheet.

I) Taxes on Income

Tax expenses comprised of current tax, deferred tax charge or credit. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. The deferred tax charged or credit is recognized using prevailing enacted or substantively annexed tax rate where there is unabsorbed depreciation or carry forward losses, deferred tax assets are recognized only if there is virtual certainty or realization such assets. Other deferred tax assets are recognized only to the extent there is reasonable certainty of realization in future. Deferred tax assets/liabilities are reviewed as at each balance sheet date based on developments during the period. MAT Credit Entitlement is shown under the current Assets in the Balance Sheet. The same will be charged to profit & loss account in coming years as per provisions of Section 115JB of Income Tax Act, 1961.

j) Investments

Investments: Long term investments are stated at cost. Provision for diminution in value is made only if, in the opinion of management such a decline is other than temporary.

k) Revenue Recognition

Sales are recognized when goods are supplied and are recorded net of returns, sales tax & excise duty. Expenses are accounted for on accrual basis.

l) Provisions & Contingencies

A provision is recognized when the company has a present obligation as a result of past event. It is probable that an outflow of resources embodying economic benefit will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on the best estimate of the expenditure required to settle the obligation at the balance sheet date.

These are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

m) Earning per share

In accordance with the Accounting Standard-20(AS-20) "Earning Per Share" issued by the Institute of Chartered Accountants of India, earning per share is computed by dividing the profit after tax with the weighted average number of shares outstanding at the year end.

n) Other Accounting policies

Accounting Policies not specifically referred to are in accordance with generally accepted accounting principles.

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Mar 31, 2012

A) Basis of Preparation

The Financial Statements are prepared to comply in all material aspects with applicable accounting principles in India, the accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 and are in consonance with generally accepted accounting principles.

b) Fixed Assets

All Fixed Assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. In case of fixed assets acquired for new project/expansions, interest cost on borrowings and other related expenses incurred up to the date of completion of project are capitalized.

c) Depreciation on Fixed Assets

Depreciation is provided pro-rata to the period of use on the Straight Line method at the rates prescribed under Schedule XIV to the Companies Act, 1956 on fixed assets used for the purpose of business. No Depreciation is provided if there is any deletion of assets during the year.

d) Impairment of Assets

The Company assesses at each Balance sheet whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the assets. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit & Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

e) Inventories

Inventories are valued at lower of cost or net realizable value (Cost is determined on weighted average basis). The Cost of work-in-progress and finished goods comprises of raw materials, direct labor, other direct costs and related production overheads & Excise duty as applicable. Net realizable value is the estimate of the selling price in the ordinary course of business as applicable.

f) Employee Retirement Benefits

Short Term Employee benefits- All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expenses during the months.

Long Term employee benefits plans: Provident Fund contributions are made to Employee Provident Fund Organization framed by Govt. of India in the year 1952. The company & eligible employees make monthly contributions to the Provident Fund Organization equal to specified percentage of the covered employee's salary. The Interest rate payable by the Provident Fund organization to the beneficiaries every year is being notified by the Government. The Company contributes to Employee's State Insurance Fund & Employee's Pension Scheme 1995 & has no further obligation to the plan beyond its monthly contribution.

Gratuity & Leave encashment plan: The Company has Defined Benefits Plan comprising of Gratuity Fund & Leave Encashment Fund. The Liability for the Gratuity & Leave Encashment plan is determined on the basis of an independent actuarial valuation done at the year end. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increase considered takes into account the inflation, seniority, promotion and other relevant factors. Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

g. Taxes on Income

Income Tax & Deferred Tax : Provision for Tax is made on the basis of taxable income for the year at current rates. Tax represents the amount of Income Tax payable in respect of the taxable income for the reporting period. Deferred Tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. The Deferred Tax Asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

h) Investments

Investments: Long term investments are stated at cost as reduced by amounts written off/provision made for diminution in value. Current investments are stated at cost or fair value, whichever is lower.

i) Revenue Recognition

Sales are recognized upon delivery of products and are recorded exclusive of sales tax, excise duty & net of returned.

j) Provisions & Contingencies

The Company recognizes a provision when there is a present obligation as a result of a past event that probably required and outflow of resource & a reliable estimate can be made of the amount of the obligations. A disclose for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood or outflow of resources' is remote, no provisions or disclosure is made.

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Mar 31, 2010

I. Financial Statements: The Financial Statements are prepared to comply in all material aspects with applicable accounting principles in India, the accounting standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956 and are in consonance with generally accepted accounting principles.

II. Fixed Assets: All Fixed Assets are stated at cost less accumulated depreciation. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. In case of fixed assets acquired for new project/expansions, interest cost on borrowings and other related expenses incurred upto the date of completion of project are capitalized.

III. Depreciation: Depreciation is provided pro-rata to the period of use on the Straight Line method at the rates prescribed under Schedule XIV to the Companies Act, 1956 on fixed assets used for the purpose of business. No Depreciation is provided if there is any deletion of assets during the year.

IV. Impairments of Assets: The Company assesses at each Balance sheet whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the assets. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Profit & Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

V. Inventories: Inventories are valued at lower of cost or net realizable value (Cost is determined on weighted average basis). The Cost of work-in-progress and finished goods comprises of raw materials, direct labour, other direct costs and related production overheads & Excise duty as applicable. Net realizable value is the estimate of the selling price in the ordinary course of business as applicable.

VI. Employee Benefits:- Short Term Employee benefits- All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expenses during the months.

Long Term employee benefits plans: Provident Fund contributions are made to Employee Provident Fund Organization framed by Govt. of India in the year 1952. The company & eligible employees make monthly contributions to the Provident Fund Organization equal to specified percentage of the covered employees salary. The Interest rate payable by the Provident Fund organization to the beneficiaries every year is being notified by the Government. The Company contributes to Employees State Insurance Fund & Employees Pension Scheme 1995 & has no further obligation to the plan beyond its monthly contribution.

Gratuity & Leave encashment plan: The Company has Defined Benefits Plan comprising of Gratuity Fund & Leave Encashment Fund. The Liability for the Gratuity & Leave Encashment plan is determined on the basis of an independent actuarial valuation done at the year end. The actuarial valuation method used for measuring the liability is the Projected Unit Credit method. The obligations are measured as the present value of estimated future cash flows discounted at rates reflecting the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increase considered takes into account the inflation, seniority, promotion and other relevant factors. Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

VII. Income Tax & Deferred Tax : Provision for Tax is made on the basis of taxable income for the year at current rates. Tax represents the amount of Income Tax payable in respect of the taxable income for the reporting period. Deferred Tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. The Deferred Tax Asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

VIII. Investments: Long term investments are stated at cost as reduced by amounts written off/provision made for diminution in value. Current investments are stated at cost or fair value, whichever is lower.

IX. Revenue Recognition: Sales are recognized upon delivery of products and are recorded exclusive of sales tax, excise duty & net of returned.

X. Contingent Liability: The Company recognizes a provision when there is a present obligation as a result of a past event that probably required and outflow of resource & a reliable estimate can be made of the amount of the obligations. A disclose for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood or outflow of resources is remote, no provisions or disclosure is made.