Accounting Policies of Elder Pharmaceuticals Ltd. Company

Jun 30, 2014

I. Basis of Accounting Policies:

The financial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub-section (3C) of section 211 of the Companies Act, 1956.

The Company has sold and transferred its branded domestic formulations business in India and Nepal to Torrent Pharmaceuticals Limited on a slump sale basis. The proceed of sale and transfer was primarily utilised to repay financial obligations to banks/institutions. The Company has major liabilities towards vendors, statutory dues, payment to fixed deposit holders and non-convertible debenture holders. Although these events or conditions may cast significant doubt on the Company''s ability to continue as a going concern, it has detailed plans to strengthen its business operations. The Company is negotiating with the banks to infuse additional finance to streamline its operations. Based on the detailed evaluation of the current situation, plans formulated and active discussions underway, the management is confident of raising adequate finance, rescheduling debt and receiving continued support from the parties. The Company has got strong and adequate fixed assets capital base to raise additional resources and funds.

Therefore, the management holds the view that the Company will realize its assets and discharge liabilities in the normal course of business. Accordingly, the financial statements have been prepared on the basis that the Company is a going concern and that no adjustments are required to the carrying value of assets and liabilities

ii. Use of Estimates:

The preparation of financial statements requires the Management of the company to make estimates and assumptions that affect the reported balance of Assets & Liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iii. Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets.

When an asset is scrapped or otherwise disposed of, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Profit and Loss Account.

iv. Depreciation:

Depreciation on fixed assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act.

The softwares are an integral part of hardware and accordingly considered part of computers.

v. Investments:

Long term investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided for.

vi. Intangible Assets:

Intangible Assets are initially measured at cost and amortized so as to reflect the pattern in which the assets'' economic benefits are consumed.

Expenditure on acquiring trade marks is being amortized over a period of five years.

vii. Inventories:

a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost (net of input tax credit availed) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking raw material/packing material cost (net of input tax credit availed), labour and relevant appropriate overheads.

viii. Foreign currency transactions:

Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the transactions occur.

Outstanding balances of foreign currency monetary items are reported using the year end rates. Non-monetary items carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rate that existed when the values were determined.

Exchange differences arising as a result of the above are recognised as income or expense, as the case may be, in the profit and loss account.

In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure, as the case may be, over the period of the contracts. Any profit or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

ix. Derivatives Instruments and Hedge Accounting:

The Company is exposed to foreign currency fluctuation on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contracts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract. Exchange differences on such contracts are recognised in the profit and loss account in the reporting period in which the rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profit and loss account.

x. Foreign operations :

The financial statements of integral foreign operations are translated as if the transactions of the foreign operations have been those of the Company itself.

In translating the financial statements of a non-integral foreign operation for incorporation in the financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange difference which has been deferred and which relate to the operation are recognised as income or expense in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classification of a foreign operation, the transaction procedures applicable to the revised classification are applied from the date of the change in classification.

xi. Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes.

Revenue from rendering of services is recognized on completion of service.

xii. Export Benefits / Incentives :

Benefits on account of entitlement of export incentives are recognized as and when the right to receive the same is established.

xiii. Leases :

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xiv. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account in the year it is incurred. Capital expenditure is included in the respective heads under fixed assets.

xv. Retirement Benefits :

a) . Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profit & Loss Account.

b) . Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards

Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvi. Borrowing Costs :

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use.

Other borrowing/ financing costs are charged to the Profit & Loss Account.

xvii. Taxation:

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income tax as applicable to the financial year.

Deferred income tax reflect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date.

In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosures have been made towards contingent liabilities, if any

xviii. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of a past event. it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimates can be made.

Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date.

A disclosure 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 or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is required.

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Mar 31, 2012

I. Basis of Accounting Policies:

The financial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub-section (3C) of section 211 of the Companies Act, 1956.

ii. Use of Estimates:

The preparation of financial statements requires the Management of the Company to make estimates and assumptions that affect the reported balance of Assets & Liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iii. Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets. When an asset is scrapped or otherwise disposed of, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Profit and Loss Account.

iv. Depreciation:

Depreciation on Fixed Assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act. The softwares are an integral part of hardware and accordingly considered part of computers. Depreciation includes Rs. 35.30 lacs being Amortisation of Leasehold Lands and pertains to earlier years.

v. Impairment of Assets:

The Company identifies impairable fixed assets based on cash generating unit concept at the year-end in terms of Para 5 to 13 of AS-28 issued by Institute of Chartered Accountants of India (ICAI) for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss, when crystallized, is charged against revenue of the year.

vi. Investments:

Long term investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided for.

vii. Intangible Assets:

Intangible Assets are initially measured at cost and amortized so as to reflect the pattern in which the assets' economic benefits are consumed. Expenditure on acquiring trade marks is being amortized over a period of five years.

viii. Inventories:

a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost (net of input tax credit availed) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking Raw Material/Packing Material cost (net of input tax credit availed), labour and relevant appropriate overheads.

ix. Foreign currency transactions:

Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the transactions occur. Outstanding balances of foreign currency monetary items are reported using the year end rates. Non-monetary items carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rate that existed when the values were determined. Exchange differences arising as a result of the above are recognised as income or expense, as the case may be, in the profit and loss account. In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure, as the case may be, over the period of the contracts. Any profit or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

x. Derivatives Instruments and Hedge Accounting:

The Company is exposed to foreign currency fluctuation on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contacts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract. Exchange differences on such contracts are recognised in the profit and loss account in the reporting period in which the rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profit and loss account.

xi. Foreign operations :

The financial statements of integral foreign operations are translated as if the transactions of the foreign operations have been those of the Company itself. In translating the financial statements of a non-integral foreign operation for incorporation in the financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange difference which has been deferred and which relate to the operation are recognised as income or expense in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classification of a foreign operation, the transaction procedures applicable to the revised classification are applied from the date of the change in classification.

xii. Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes. Revenue from rendering of services is recognized on completion of service.

xiii. Export Benefits / Incentives :

Benefits on account of entitlement of export incentives are recognized as and when the right to receive the same is established.

xiv. Leases :

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xv. Research and Development :

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account in the year it is incurred.

Capital expenditure is included in the respective heads under fixed assets.

xvi. Retirement Benefits :

a) Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profit & Loss Account.

b) Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvii. Borrowing Costs :

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use. Other borrowing/ financing costs are charged to the Profit & Loss Account.

xviii. Taxation:

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income Tax as applicable to the financial year.

Deferred income tax reflect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted or substantively enacted at the Balance Sheet date. In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosures have been made towards contingent liabilities, if any

xix. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of a past event. it is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimates can be made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date. A disclosure 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 or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is required.

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Mar 31, 2011

I. Basis of Accounting Policies:

The financial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub-section (30 of section 211 of the Companies Act, 1956.

ii. Use of Estimates:

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balance of Assets & Liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iii. Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets.

When an asset is scrapped or otherwise disposed of, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is reflected in the Profit and Loss Account.

iv. Depreciation:

Depreciation on fixed assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act.

The softwares are an integral part of hardware and accordingly considered part of computers.

v. Impairment of Assets.

The Company identifies impairable fixed assets based on cash generating unit concept at the year-end in terms of Para 5 to 13 of AS-28 issued by Institute of Chartered Accountants of India (ICAI) for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets. Impairment loss, when crystallized, is charged against revenue of the year.

vi. Investments.

Long term investments are stated at cost. Diminution in value, if any, which is of a temporary nature, is not provided for.

vii. Intangible Assets:

Intangible Assets are initially measured at cost and amortized so as to reflect the pattern in which the assets' economic benefits are consumed.

Expenditure on acquiring trade marks is being amortized over a period of five years.

viii. Inventories:

a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost (net of input tax credit availed) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking Raw Material/Packing Material cost (net of input tax credit availed), labour and relevant appropriate overheads.

ix. Foreign currency transactions:

Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the transactions occur.

Outstanding balances of foreign currency monetary items are reported using the period end rates.

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

Exchange differences arising as a result of the above are recognised as income or expense, as the case may be, in the profit and loss account.

In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure, as the case may be, over the period of the contracts. Any profit or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

x. Derivatives Instruments and Hedge Accounting:

The Company is exposed to foreign currency fluctuation on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contacts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract. Exchange differences on such contracts are recognised in the profit and loss account in the reporting period in which the rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profit and loss account. In the absence of a designation as an effective hedge, loss is recognised in the profit and loss account.

xi. Foreign operations:

The financial statements of integral foreign operations are translated as if the transactions of the foreign operations have been those of the Company itself.

In translating the financial statements of a non-integral foreign operation for incorporation in the financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange difference which has been deferred and which relate to the operation are recognised as income or expense in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classification of a foreign operation, the transaction procedures applicable to the revised classification are applied from the date of the change in classification.

xii. Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes.

Revenue from rendering of services is recognized on completion of service.

xiii. Export Benefits / Incentives :

Benefits on account of entitlement of export incentives are recognized as and when the right to receive the same is established.

xiv. Leases:

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xv. Research and Development:

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account in the year it is incurred.

Capital expenditure is included in the respective heads under fixed assets.

xvi. Retirement Benefits:

a). Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profit & Loss Account.

b). Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvii. Borrowing Costs:

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use.

Other borrowing/ financing costs are charged to the Profit & Loss Account.

xvhl Taxation.

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income tax as applicable to the financial year.

Deferred income tax reflect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax taws enacted or substantively enacted at the Balance Sheet date.

In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosures have been made towards contingent liabilities, if any

xix. Provisions and Contingent Liabilities:

A provision is recognized when the Company has a present obligation as a result of a past event. It is probable that an outflow of resources will be required to settle the obligation, in respect of which reliable estimates can be made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date.

A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably wilt not, require an outflow of resources. Where there is a possible or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is required.

xx. Earning Per Share:

Basic earning 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.

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Mar 31, 2010

I) Basis of Accounting Policies:

The financial statements have been prepared under the historical cost convention on accrual basis in accordance with the Companies (Accounting Standards) Rules, 2006 issued under sub section (3C) of section 211 of the Companies Act, 1956.

ii) Use of Estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balance of assets & liabilities, revenue and expenses and disclosures relating to the contingent liabilities. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future events could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods.

iii) Fixed Assets:

Fixed Assets are stated at their original cost of acquisition or construction including incidental expenses related to acquisition and installation of the concerned assets.

When an asset is scrapped or otherwise disposed off, the cost and related depreciation are removed from the books of account and resultant profit or loss, if any, is refected in the Profit and Loss Account.

iv) Depreciation:

Depreciation on fixed assets is provided on straight line method as per Section 205 (2) (b) of the Companies Act, 1956 at the rates and in the manner prescribed under Schedule XIV to the said Act.

The softwares which are an integral part of hardware are accordingly considered part of computers.

v) Impairment of Assets:

The Company identifies impairable fixed assets based on cash generating unit concept at the year-end in terms of para 5 to 13 of AS-28 issued by Institute of Chartered Accountants of India (ICAI) for the purpose of arriving at impairment loss thereon, if any, being the difference between the book value and recoverable value of relevant assets, impairment loss when crystallized is charged against revenue of the year.

vi) Investments:

Long term investments are stated at cost. Diminution in value, if any, which is of temporary nature, is not provided for.

vii) Intangible Assets :

Intangible Assets are initially measured at cost and amortized so as to refect the pattern in which the asset’s economic benefits are consumed.

Expenditure on acquiring trade marks is being amortized over a period of five years.

Technical know-how is amortized over their estimated useful lives.

viii) Inventories :

a) Inventories comprise all costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition.

b) Raw Materials, Stores & Spare Parts, Packing Materials, Finished Goods and Work-in-Progress are valued at lower of cost and net realisable value.

c) Cost ( net of Input tax credit availed ) of Raw Materials, Stores & Spare Parts, Packing Materials & Finished Goods is determined on FIFO basis.

d) Cost of Finished Goods and Work-in-Progress is determined by taking raw material/packing material cost (net of input tax credit availed), labour and relevant appropriate overheads.

ix) Foreign currency transactions :

Transactions in foreign currencies are normally recorded at the exchange rate prevailing on the date on which the transactions occur.

Outstanding balances of foreign currency monetary items are reported using the period end rates.

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

Exchange differences arising as a result of the above are recognised as income or expense in the profit and loss account.

In respect of forward contract, the premium or discount on these contracts is recognized as income or expenditure over the period of the contracts. Any profit or loss arising on cancellation or renewal of such contracts is recognized as income or expense of the year.

x) Derivatives Instruments and Hedge Accounting:

The Company is exposed to foreign currency fluctuation on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward exchange and option contracts, where the counter party is a bank. The forward contracts or options are not used for trading or speculation purposes.

In case of forward contract, the difference between the forward rate and the exchange rate, being the premium or discount at the inception of a forward exchange contract is recognised as income/expense over the life of the contract. Exchange differences on such contracts are recognised in the profit and loss account in the reporting period in which the rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the period.

To designate a forward contract or option as an effective hedge, management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows, attributable to the hedged risk. To the extent, hedges are designated effective, neither gain nor loss is recognised in the profit and loss account. In the absence of a designation as an effective hedge, loss is recognised in the profit and loss account.

xi) Foreign operations :

The financial statements of integral foreign operations are translated as if the transactions of the foreign operations have been those of the Company itself.

In translating the financial statements of a non-integral foreign operation for incorporation in the financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non-integral foreign operation are translated at average exchange rate prevailing during the year and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

On the disposal of the non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to the operation are recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised.

When there is a change in the classification of a foreign operation, the transaction procedures applicable to the revised classification are applied for the date of the change in classification.

xii) Sales:

Revenue from sales of goods is being recognized on accrual basis on transfer of ownership to the customers. The sales are stated net of trade discounts, excise duty, sales returns and sales taxes.

Revenue from rendering of services are recognized on completion of service.

xiii) Export Benefits / Incentives :

Benefits on account of entitlement of export incentives are recognized as and when the right to receive is established.

xiv) Leases :

Lease rentals are accounted on accrual basis in accordance with the terms of respective lease agreements.

xv) Research and Development :

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account in the year it is incurred. Capital expenditure is included in the respective heads under fixed assets.

xvi) Retirement Benefits :

a). Contributions to the Provident Fund are made at a pre-determined rate and charged to the Profit & Loss Account.

b). Liability towards Gratuity and Leave Encashment is provided on the basis of actuarial determination. Liability towards Superannuation is provided in accordance with the scheme administered by Life Insurance Corporation of India.

xvii) Borrowing Costs :

Borrowing costs directly attributable to the acquisition or construction of an asset are capitalized as part of the cost of that asset, up to the date such assets are ready for their intended use.

Other borrowing/ financing costs are charged to the Profit & Loss Account

xviii) Taxation :

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provision of Local Income Tax as applicable to the financial year.

Deferred income tax refect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and tax laws enacted on substantively enacted at the Balance Sheet date.

In case where the tax assessments have been completed but the appeals are pending at various appeal fora, the tax payments have been set-off against the provisions in the Balance Sheet. Appropriate disclosure have been made towards contingent liabilities, if any.

xix) Provision and Contingent Liabilities

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 will be required to settle the obligation, in respect of which reliable estimates can be made. Provisions are not discounted to its present value and are determined based on best estimates required to settle the obligation at the Balance Sheet date.

A disclosure 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 or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is required.

xx) Earning per share

Basic earning 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.