Mar 31, 2014
Basis of preparation of financial statements
The financial statements have been prepared in accordance with
Generally Accepted Accounting Principles in India and comply with
Accounting Standards notified by The Companies (Accounting Standards)
Rules, 2006 and the relevant provisions of the Companies Act, 1956 (the
Act). The financial statements have been prepared under the historical
cost convention (except for revaluation of certain fixed assets) on
accrual basis.
The accounting policies, in all material aspects, have been
consistently applied by the company and are consistent with those used
in the previous year.
The preparation of the financial statements in conformity with
Generally Accepted Accounting Principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities and contingent liabilities at the date of financial
statements and income and expenses for the reporting period. Estimates
and assumptions are reviewed on an ongoing basis.
The significant accounting policies followed by the Company are stated
below:a)Revenue Recognition Revenue from sale of goods is recognized
upon passage of title to the customers, which generally coincides with
delivery. Sales are stated net of Returns, Allowances and Discounts and
are inclusive of excise duty but exclusive of sales tax / value added
tax.
a) Revenue Recognition
Revenue from Interest is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
b(I) Fixed Assets Fixed assets are stated at cost of acquisition
inclusive of duties (net of CENVAT), taxes, incidental expenses,
erection/commissioning expenses up to the date the asset is put to use
or revalued amount, as the case may be. Fixed assets are classified as
tangible and Intangible assets.
b(ii) Expenditure on New Projects Expenses directly related to
construction activities are capitalized. Pre-operative and other
indirect expenses incurred during construction period are also
capitalized to the extent related to or incidental to construction.
Trial run expenses for trial production prior to commissioning of the
project are also capitalized. All such expenses are allocated to
various assets proportionately on completion of the project. Sales and
value of stock out of trial run and any other income attributable to
the project are deducted from the total of project expenses.
c) Depreciation and Amortisation
(i)Depreciation is provided on tangible fixed assets on the
straight-line method at the rates and in the manner prescribed in
Schedule XIV of the Act, except on Plant and machinery, which is
provided at 5.15% per annum based on management estimates.
Depreciation on additions / disposals during the year is provided on
pro-rata basis with reference to the date of addition / disposal.
Leasehold improvements are amortised over the period of the lease.
(ii)Individual assets costing Rs.5, 000/- or less is depreciated in
full in the year of purchase.
(iii)Depreciation on intangible assets is amortized over useful life of
the asset, not exceeding five years.
d) Impairment of Asset
An asset is treated as impaired when the carrying cost exceeds the
recoverable value. An impairment loss is charged to the Statement of
Profit and Loss in the year in which the asset is identified as
impaired. The impairment loss recognized in the prior accounting
periods is reversed if there has been any change in the estimate of the
recoverable amount.
e) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the long term investments.
f) Inventories
Inventories are valued at lower of cost and net realisable value. The
mode of valuation is as follows:
Raw Materials and Packing Materials : At or under cost on FIFO basis
Work-in-progress : At or under cost
Finished Goods & Traded Goods : At cost or net realisable value
whichever is lower
Manufactured : At cost or net realisable value
whichever is lower
Cost of Finished Goods Manufactured, Work-in-progress is determined by
considering Materials, Labour, Depreciation and related Overheads. Net
realizable value is the estimated selling price in the ordinary course
of business, less estimated costs to complete the sale.
g) Employee benefits
Long Term Benefits
(i)The company has a defined benefit plan for Post-employment benefit
in the form of Gratuity for all employees which is administered through
Life Insurance Corporation of India (LIC). Liability for above defined
benefit plan is provided on the basis of actuarial valuation, as at the
Balance Sheet date, carried out by LIC. The actuarial method used for
measuring the liability is the Projected Unit Credit method. The
company presents its gratuity liability as current and non-current
based on actuarial valuation. The fair value of the plan asset is
reduced from the gross obligation to disclose the obligation on net
basis in the Balance Sheet. Actuarial gains / losses are also
recognized in the Statement of Profit & Loss of the year.
(ii)Defined contribution plans are Provident fund scheme, Employees
State Insurance Scheme and Government administered Pension Fund scheme
for the employees. The company makes specific monthly contribution,
which is recognized in the Statement of Profit and Loss in the
financial year to which they relate. The Company has no further
obligation beyond its monthly contributions.
Short Term Benefits
(i)Employee benefits, such as salaries, wages, performance incentives,
etc are recognized as an expense at actual amounts in the Statement of
Profit and Loss of the year in which the related service is rendered.
(ii)Earned Leave Encashment: Earned leave accrued during the year is
available for encashment as per the rules of the Company. The amount is
paid and charged to the Statement of Profit and Loss every year.
h) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rate
prevailing at the date of transactions. Monetary assets and
liabilities denominated in foreign currency as at the end of the year
are stated at the exchange rate prevailing at the year-end / forward
contract rates. Realised gains / losses on transactions during the year
and exchange difference on restatement at the year-end are charged to
the Statement of Profit and Loss. Forward exchange premium or discount
in respect of forward exchange contract is recognized over the life of
the contract. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for the
year.
Investments in foreign companies are considered at the exchange rate
prevailing on the date of their acquisition.
i)Taxation
Tax expense comprises of current tax and deferred tax charge or
release. Current income- tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax
Act. Deferred income tax reflects the impact of current year''s timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. 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 recognised only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised. Deferred tax asset arising
on account of unabsorbed depreciation or carry forward tax losses are
recognized only if there is virtual certainty supported by convincing
evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company write downs the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably or virtually
certain, as the case may be, that sufficient income will be available
against which deferred tax asset can be realized.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the company will
pay normal tax during the specified period. In the year in which MAT
credit becomes eligible to be recognized as an asset, an asset is
created by way of credit to the statement of profit and loss as MAT
credit entitlement,. The company reviews the same at each balance sheet
date and write downs the carrying amount of MAT Credit Entitlement to
the extent there is no longer convincing evidence to that effect that
the company will pay normal Income tax during the specified period.
j) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 "Provisions,
Contingent Liabilities and Contingent Assets" are not discounted to its
present value and are determined based on management estimates required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current
management estimates.
k) Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of such
assets till such time as the assets are ready for their intended use or
sale. Qualifying assets are assets that necessarily require a
substantial period of time to get ready for their intended use or sale
All the other borrowing costs are recognized as an expense in the
period in which they are incurred.
l)Segmental Reporting
The Company operates only in one business segment namely Pharma
formulations.
m)Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the 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 and the number of shares
outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
n)Leases
Lease of assets where all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Operating lease rentals are recognized as an expense in the Statement
of Profit and Loss on a straight-line basis over the lease term.
o)Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss in the year in which it is incurred.
Capital expenditure on research and development is shown as additions
to fixed assets.
Mar 31, 2013
Basis of preparation of financial statements
The financial statements have been prepared in accordance with
Generally Accepted Accounting Principles in India and comply with
Accounting Standards notified by The Companies (Accounting Standards)
Rules, 2006 and the relevant provisions of the Companies Act, 1956 {the
Act). The financial statements have been prepared under the historical
cost convention (except for revaluation of certain fixed assets) on
accrual basis.
The accounting policies, in all material aspects, have been
consistently applied by the company and are consistent with those used
in the previous year.
The preparation of the financial statements in conformity with
Generally Accepted Accounting Principles requires the management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities and contingent liabilities at the date of financial
statements and income and expenses for the reporting period. Estimates
and assumptions are reviewed on an ongoing basis.
The significant accounting policies followed by the Company are stated
below:
a) Revenue Recognition
Revenue from sale of goods is recognized upon passage of title to the
customers, which generally coincides with delivery. Sales are stated
net of Returns, Allowances and Discounts and are inclusive of excise
duty but exclusive of sales tax / value added tax.
Revenue from Interest is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
b) (i) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties (net
of CENVAT), taxes, incidental expenses, erection/commissioning expenses
up to the date the asset is put to use or revalued amount, as the case
may be. Fixed assets are classified as tangible and intangible assets.
(ii) Expenditure on New Projects
Expenses directly related to construction activities are capitalized.
Pre-operative and other indirect expenses incurred during construction
period are also capitalized to the extent related to or incidental to
construction. Trial run expenses for trial production prior to
commissioning of the project are also capitalized. All such expenses
are allocated to various assets proportionately on completion of the
project. Sales and value of stock out of trial run and any other income
attributable to the project are deducted from the total of project
expenses.
c) Depreciation and Amortisation
(i) Depreciation is provided on tangible fixed assets on the
straight-line method at the rates and in the manner prescribed in
Schedule XIV of the Act, except on Plant and machinery, which is
provided at 5.15% per annum based on management estimates.
Depreciation on additions / disposals during the year is provided on
pro-rata basis with reference to the date of addition / disposal.
Leasehold improvements are amortised over the period of the lease.
(ii) Individual assets costing Rs.5,000/- or less is depreciated in
full in the year of purchase.
(iii) Depreciation on intangible assets is amortized over useful life
of the asset, not exceeding five years.
d) Impairment of Asset
An asset is treated as impaired when the carrying cost exceeds the
recoverable value. An impairment loss is charged to the Statement of
Profit and Loss in the year in which the asset is identified as
impaired. The impairment loss recognized in the prior accounting
periods is reversed if there has been any change in the estimate of the
recoverable amount.
e) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
Investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline otherthan temporary in the value of the long term investments.
f) Inventories
Inventories are valued at lowerof cost and net realisable value. The
mode of valuation is as follows: Raw Materials and Packing Materials :
At or under cost on FIFO basis Work-in-progress : At or under cost
Finished Goods Purchased : At cost or net realisable value whichever is
lower
Finished Goods Manufactured : At cost or net realisable value whichever
is lower
Cost of Finished Goods Manufactured, Work-in-progress is determined by
considering Materials, Labour, Depreciation and related Overheads. Net
realizable value is the estimated selling price in the ordinary course
of business, less estimated costs to complete the sale.
g) Employee benefits Long Term Benefits
(i) The company has a defined benefit plan for Post-employment benefit
in the form of Gratuity for all employees which is administered through
Life Insurance Corporation of India (LIC). Liability for above defined
benefit plan is provided on the basis of actuarial valuation, as at the
Balance Sheet date, carried out by LIC. The actuarial method used for
measuring the liability is the Projected Unit Credit method. The
company presents its gratuity liability as current and non-current
based on actuarial valuation. The fair value of the plan asset is
reduced from the gross obligation to disclose the obligation on net
basis in the Balance Sheet. Actuarial gains / losses are also
recognized in the Statement of Profit & Loss of the year.
(ii) Defined contribution plans are Provident fund scheme, Employees
State Insurance Scheme and Government administered Pension Fund scheme
for the employees. The company makes specific monthly contribution,
which is recognized in the Statement of Profit and Loss in the
financial year to which they relate. The Company has no further
obligation beyond its monthly contributions.
Short Term Benefits
(i) Employee benefits, such as salaries, wages, performance incentives,
etc are recognized as an expense at actual amounts in the Statement of
Profit and Loss of the year in which the related service is rendered.
(ii) Earned Leave Encashment: Earned leave accrued during the year is
available for encashment as per the rules of the Company. The amount is
paid and charged to the Statement of Profit and Loss every year.
h) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rate
prevailing at the date of transactions. Monetary assets and
liabilities denominated in foreign currency as at the end of the year
are stated at the exchange rate prevailing at the year-end / forward
contract rates. Realised gains / losses on transactions during the year
and exchange difference on restatement at the year-end are charged to
the Statement of Profit and Loss. Forward exchange premium or discount
in respect of forward exchange contract is recognized over the life of
the contract. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for the
year.
I) Taxation
Tax expense comprises of current tax and deferred tax charge or
release. Current income- tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax
Act. Deferred income tax reflects the impact of current year''s timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. 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 recognised only to the extent that there is reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised. Deferred tax asset arising on
account of unabsorbed depreciation or carry forward tax losses are
recognized only if there is virtual certainty supported by convincing
evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company write downs the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably or virtually
certain, as the case may be, that sufficient income will be available
against which deferred tax asset can be realized.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the company will
pay normal tax during the specified period. In the year in which MAT
credit becomes eligible to be recognized as an asset, an asset is
created by way of credit to the statement of profit and loss as MAT
credit entitlement,. The company reviews the same at each balance sheet
date and write downs the carrying amount of MAT Credit Entitlement to
the extent there is no longer convincing evidence to that effect that
the company will pay normal Income tax during the specified period.
j) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 "Provisions,
Contingent Liabilities and Contingent Assets" are not discounted to
its present value and are determined based on management estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates,
k) Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of such
assets till such time as the assets are ready for their intended use or
sale. Qualifying assets are assets that necessarily require a
substantial period of time to get ready for their intended use or sale
All the other borrowing costs are recognized as an expense in the
period in which they are incurred,
i) Segmental Reporting
The Company operates only in one business segment namely Pharma
formulations.
m) Earnings PerShare
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the 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 and the number of shares
outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
n)Leases
Lease of assets where all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Operating lease rentals are recognized as an expense in the Statement
of Profit and Loss on a straight-line basis overthe lease term.
o) Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss in the year in which it is incurred.
Capital expenditure on research and development is shown as additions
to fixed assets.
Mar 31, 2012
A) Revenue Recognition
Revenue from sale of goods is recognized upon passage of title to the
customers, which generally coincides with delivery. Sales are stated
net of Returns, Allowances and Discounts and are inclusive of excise
duty but exclusive of sales tax / value added tax.
Revenue from Interest is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
b(i) Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties (net
of CENVAT), taxes, incidental expenses, erection/commissioning expenses
up to the date the asset is put to use. Fixed assets are classified as
tangible and intangible assets.
b(ii) Expenditure on New Projects
Expenses directly related to construction activities are capitalized.
Pre-operative and other indirect expenses incurred during construction
period are also capitalized to the extent related to or incidental to
construction. Trial run expenses for trial production prior to
commissioning of the project are also capitalized. All such expenses
are allocated to various assets proportionately on completion of the
project. Sales and value of stock out of trial run and any other income
attributable to the project are deducted from the total of project
expenses.
c) Depreciation and Amortisation
(i) Depreciation is provided on tangible fixed assets on the
straight-line method at the rates and in the manner prescribed in
Schedule XIV of the Act, except on Plant and machinery, which is
provided at 5.15% per annum based on management estimates. Leasehold
improvements are amortised over the period of the lease.
(ii) Individual assets costing Rs.5,000/- or less is depreciated in
full in the year of purchase.
(iii) Depreciation on intangible assets is amortized over useful life
of the asset, not exceeding five years.
Inventories
d) Inventories are valued at lower of cost and net realisable value.
The mode of valuation is as follows: Raw Materials and Packing
Materials At or under cost on FIFO basis
Cost of Finished Goods Manufactured, Work-in-progress is determined by
considering Materials, Labour, Depreciation and related Overheads.
e) Employee benefits Long Term Benefits
(i) The Company has a defined plan for Post-Employment benefit in the
form of Gratuity for all employees, which is administered through Life
Insurance Corporation of India (LIC). Liability for above defined
benefit plan is provided on the basis of actuarial valuation as at the
Balance Sheet date, carried out by LIC. The actuarial method used for
measuring the liability is the Projected Unit Credit method. The amount
as above and the actuarial gain / loss are recognized in the Statement
of Profit and Loss of the year.
(ii) Defined contribution plans are Provident fund scheme, Employees
State Insurance Scheme and Government administered Pension Fund scheme
for the employees. The company makes specific monthly contribution,
which is recognized in the Statement of Profit and Loss in the
financial year to which they relate. The Company has no further
obligation beyond its monthly contributions.
Short Term Benefits
(i) Employee benefits, such as salaries, wages, performance incentives,
etc are recognized as an expense at actual amounts in the Statement of
Profit and Loss of the year in which the related service is rendered.
(ii) Earned Leave Encashment: Earned leave accrued during the year is
available for encashment as per the rules of the Company. The amount is
paid and charged to the Statement of Profit and Loss every year.
f) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rate
prevailing at the date of transactions. Monetary assets and
liabilities denominated in foreign currency as at the end of the year
are stated at the exchange rate prevailing at the year-end / forward
contract rates. Realised gains / losses on transactions during the year
and exchange difference on restatement at the year-end are charged to
the Statement of Profit and Loss. Forward exchange premium or discount
in respect of forward exchange contract is recognized over the life of
the contract.
g) Research and Development
Revenue expenditure on research and development is charged to the
Statement of Profit and Loss in the year in which it is incurred.
Capital expenditure on research and development is shown as additions
to fixed assets
h) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 "Provisions,
Contingent Liabilities and Contingent Assets" are not discounted to its
present value and are determined based on management estimates required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current
management estimates.
i) Taxation
Tax expense comprises both deferred and current taxes. Current income
tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income Tax Act, 1961. Deferred
income tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on 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 reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized.
j) Segmental Reporting
The Company operates only in one business segment namely Pharma
formulations.
k) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the 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 and the number of shares
outstanding during the period are adjusted for the effects of all
dilutive potential equity shares.
I) Leases
Lease of assets where all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognized as expenses on
accrual basis in accordance with the respective lease agreements.
m) Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of such
assets till such time as the assets are ready for their intended use or
sale. Qualifying assets are assets that necessarily require a
substantial period of time to get ready for their intended use or sale
All the other borrowing costs are recognized as an expense in the
period in which they are incurred.
n) Impairment of Asset
An asset is treated as impaired when the carrying cost exceeds the
recoverable value. An impairment loss is charged to the Statement of
Profit and Loss in the year in which the asset is identified as
impaired. The impairment loss recognized in the prior accounting
periods is reversed if there has been any change in the estimate of the
recoverable amount.
Mar 31, 2011
The financial statements, statement of cash flows and the notes to the
financial statements are the primary responsibility of the management
of Arvind Remedies Limited (the Company).
1. Statement of Significant Accounting Policies Basis of preparation of
financial statements
The financial statements of the Company are prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India and comply with the Accounting Standards
notified by The Companies (Accounting Standards) Rules, 2006 and the
relevant provisions of The Companies Act, 1956 (the Act). The
significant accounting policies followed by the Company are stated
below:
a) Revenue Recognition
Revenue from sale of goods is recognized upon passage of title to the
customers, which generally coincides with delivery. Sales are stated
net of Returns, Allowances and Discounts and are inclusive of excise
duty but exclusive of sales tax / value added tax.
Revenue from Interest is recognized on a time proportion basis taking
into account the amount outstanding and the rate applicable.
b(i)Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties (net
of CENVAT), taxes, incidental expenses, erection/commissioning expenses
up to the date the asset is put to use. Fixed assets are classified as
tangible and intangible assets.
b(ii)Expenditure on New Projects
Expenses directly related to construction activities are capitalized.
Pre-operative and other indirect expenses incurred during construction
period are also capitalized to the extent related to or incidental to
construction. Trial run expenses for trial production prior to
commissioning of the project are also capitalized. All such expenses
are allocated to various assets proportionately on completion of the
project. Sales and value of stock out of trial run and any other income
attributable to the project are deducted from the total of project
expenses.
c) Depreciation and Amortisation
(i) Depreciation is provided on tangible fixed assets on straight-line
method at the rates and in the manner prescribed in Schedule XIV of the
Act, except on Plant and machinery, which is provided at 5.15% per
annum based on management estimates. Leasehold improvements are
amortised over the period of the lease.
(ii) Individual assets costing Rs.5,000/- or less is depreciated in
full in the year of purchase.
(iii) Depreciation on intangible assets is amortized over useful life
of the asset, not exceeding five years.
d) Inventories
Inventories are valued at lower of cost and net realisable value. The
mode of valuation is as follows: Raw Materials and Packing Materials :
At or under cost on FIFO basis
Work-in-progress : At or under cost
Finished Goods
Purchased : At cost or net realisable value whichever is lower
Manufactured : At cost or net realisable value whichever is lower
Cost of Finished Goods Manufactured, Work-in-progress is determined by
considering Materials, Labour, Depreciation and related Overheads.
e) Employee benefits Long Term Benefits
(i) The Company has a defined benefit plan for Post-Employment benefit
in the form of Gratuity for all employees, which is administered
through Life Insurance Corporation of India (LIC). Liability for above
defined benefit plan is provided on the basis of actuarial valuation as
at the Balance Sheet date, carried out by LIC. The actuarial method
used for measuring the liability is the Projected Unit Credit method.
The amount as above and the actuarial gain / loss are recognized in the
Profit and Loss Account of the year.
(ii) Defined contribution plans are Provident fund scheme, Employees
State Insurance Scheme and Government administered Pension Fund scheme
for the employees. The company makes specific monthly contribution,
which is recognized in the Profit and Loss Account in the financial
year to which they relate. The Company has no further obligation beyond
its monthly contributions. Short Term Benefits
(i) Employee benefits, such as salaries, wages, performance incentives,
etc are recognized as an expense at actual amounts in the Profit and
Loss Account of the year in which the related service is rendered.
(ii) Earned Leave Encashment: Earned leave accrued during the year is
available for encashment as per the rules of the Company. The amount
is paid and charged to the Profit and Loss Account every year.
f) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rate
prevailing at the date of transactions. Monetary assets and liabilities
denominated in foreign currency as at the end of the year are stated at
the exchange rate prevailing at the year-end / forward contract rates.
Realised gains / losses on transactions during the year and exchange
difference on restatement at the year-end are charged to the Profit and
Loss Account. Forward exchange premium or discount in respect of
forward exchange contract is recognized over the life of the contract.
g) Research and Development
Revenue expenditure on research and development is charged to the
Profit and Loss Account in the year in which it is incurred. Capital
expenditure on research and development is shown as additions to fixed
assets.
h) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 "Provisions,
Contingent Liabilities and Contingent Assets" are not discounted to its
present value and are determined based on management estimates required
to settle the obligation at the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current
management estimates.
i) Taxation
Tax expense comprises both deferred and current taxes. Current income
tax is measured at the amount expected to the paid to the tax
authorities in accordance with the Income Tax Act, 1961. Deferred
income tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years. Deferred tax is measured based
on 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 reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized.
j) Segmental Reporting
The Company operates only in one business segment namely formulations.
k) Earnings Per Share
Basic earnings per share 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 and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
l) Leases
Lease of assets where all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognized as expenses on
accrual basis in accordance with the respective lease agreements.
m) Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of such
assets till such time as the assets are ready for their intended use or
sale. Qualifying assets are assets that necessarily require a
substantial period of time to get ready for their intended use or sale
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
n) Impairment of Asset
An asset is treated as impaired when the carrying cost exceeds the
recoverable value. An impairment loss is charged to the profit and loss
account in the year in which the asset is identified as impaired. The
impairment loss recognized in the prior accounting periods is reversed
if there has been any change in the estimate of the recoverable amount.
Mar 31, 2010
The financial statements of the Company are prepared under the
historical cost convention in accordance with Generally Accepted
Accounting Principles in India and comply with the Accounting Standards
notified by The Companies (Accounting Standards) Rules, 2006 (as
amended) and the relevant provisions of The Companies Act, 1956 (the
Act). The significant accounting policies followed by the Company are
stated below:
a) Revenue Recognition
Revenue from sale of goods is recognized upon passage of title to the
customers, which generally coincides with delivery. Sales are stated
net of Returns, Allowances and Discounts and are inclusive of excise
duty but exclusive of sales tax / value added tax.
b(i)Fixed Assets
Fixed assets are stated at cost of acquisition inclusive of duties (net
of CENVAT), taxes, incidental expenses, erection/commissioning expenses
up to the date the asset is put to use. Fixed assets are classified as
tangible and intangible assets.
b(ii)Expenditure on New Projects
Expenses directly related to construction activities are capitalized.
Pre-operative and other indirect expenses incurred during construction
period are also capitalized to the extent related to or incidental to
construction. Trial run expenses for trial production prior to
commissioning of the project are also capitalized. All such expenses
are allocated to various assets proportionately on completion of the
project. Sales and value of stock out of trial run and any other income
attributable to the project are deducted from the total of project
expenses.
c) Depreciation and Amortisation (i) Depreciation is provided on
tangible fixed assets on straight-line method at the rates and in the
manner prescribed in Schedule XIV of the Act, except on Plant and
machinery, which is provided at 5.15% per annum based on management
estimates.
Leasehold improvements are amortised over the period of the lease.
(ii) Individual assets costing Rs.5,000/- or less is depreciated in
full in the year of purchase. (iii) Intangible fixed assets are
amortized over useful life of the asset, not exceeding five years.
d) Inventories
Inventories are valued at lower of cost and net realisable value. The
mode of valuation is as
follows: Raw Materials and
Packing Materials : At or under cost on FIFO basis
Work-in-progress : At or under cost
Finished Goods
Purchased : At cost or net realisable value
whichever is lower
Manufactured : At cost or net realisable value
whichever is lower
Cost of Finished Goods Manufactured and Work-in-progress is determined
by considering Materials, Labour, Depreciation and related Overheads.
e) Employee benefits Long Term Benefits (i) The Company has a defined
benefit plan for Post-Employment benefit in the form of
Gratuity for all employees, which is administered through Life
Insurance Corporation of India (LIC). Liability for above defined
benefit plan is provided on the basis of actuarial valuation as at the
Balance Sheet date, carried out by LIC. The actuarial method used for
measuring the liability is the Projected Unit Credit method. The fair
value of the plan asset is reduced from the gross obligation to
recognize the obligation on net basis. The amount as above and the
actuarial gain / loss are recognized in the Profit and Loss Account of
the year. (ii) Defined contribution plans are Provident fund scheme,
Employees State Insurance Scheme and Government administered Pension
Fund scheme for the employees. The company makes specific monthly
contribution, which is recognized in the Profit and Loss Account in the
financial year to which they relate. The Company has no further
obligation beyond its monthly contributions.
Short Term Benefits
(i) Employee benefits, such as salaries, wages, performance incentives,
etc are recognized as an expense at actual amounts in the Profit and
Loss Account of the year in which the related service is rendered.
(ii) Earned Leave Encashment: Earned leave accrued during the year is
available for encashment as per the rules of the Company. The amount
is paid and charged to the Profit and Loss Account every year.
f) Foreign currency transactions
Transactions in foreign currency are recorded at exchange rate
prevailing at the date of transactions. Monetary assets and liabilities
denominated in foreign currency as at the end of the year are stated at
the exchange rate prevailing at the year-end / forward contract rates.
Realised gains / losses on transactions during the year and exchange
difference on restatement at the year-end are charged to the Profit and
Loss Account. Forward exchange premium in respect of forward exchange
contract is recognized over the life of the contract.
g) Research and Development
Revenue expenditure on research and development is charged to the
Profit and Loss Account in the year in which it is incurred. Capital
expenditure on research and development is shown as additions to fixed
assets.
h) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made.
Provisions made in terms of Accounting Standard 29 ÃProvisions,
Contingent Liabilities and Contingent Assetsà are not discounted to
their present value and are determined based on management estimates
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
management estimates.
i) Taxation
Tax expense comprises both deferred and current taxes. Deferred income
taxes reflect the impact of current years timing differences between
taxable income and accounting income and reversal of timing differences
of earlier years. Deferred tax is measured based on 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
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
j) Segmental Reporting
The Company operates only in one business segment namely formulations.
k) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity share soutstanding during the period. For the
purpose of calculating diluted earnings per share, the net profit or
loss for the period attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
l) Leases
Lease of assets where all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognized as expenses on
accrual basis in accordance with the respective lease agreements.
m) Borrowing Cost
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as a part of such
assets till such time as the assets are ready for their intended use or
sale. Qualifying assets are assets that necessarily require a
substantial period of time to get ready for their intended use or sale
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
n) Impairment of Asset
An asset is treated as impaired when the carrying cost exceeds the
recoverable value. An impairment loss is charged to the profit and loss
account in the year in which the asset is identified as impaired. The
impairment loss recognized in the prior accounting periods is reversed
if there has been any change in the estimate of the recoverable amount.