Accounting Policies of Hind Industries Ltd. Company

Mar 31, 2015

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial statement of the company have been prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principal in India to comply with the accounting standard notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Account) Rule, 2014 and the relevant provision of the Companies Act, 2013.

B. USE OF ESTIMATES

The preparation of financial statements is in

conformity with Indian GAAP which requires that

the management of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balance of the assets and liabilities and the disclosures relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of fixed assets, provision for doubtful debt/advances, future obligation in respect of retirement benefit plans etc. Actual results could differ from these estimates.

C. FIXED ASSETS

1. Tangible Assets

a. Fixed Assets are stated at original cost, less depreciation, except in case of leasehold land which is stated at revalued cost.

b. Cost of fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Borrowing cost related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or construction are included in the book value of the assets.

c. All costs relating to up-gradations / enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature.

d. Impairments

(i) The carrying amounts of assets are reviewed at

each Balance Sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(ii) After impairment, depreciation is provided on

the revised carrying amount of the assets over its remaining useful life. As on March 31, 2015, none of the fixed assets were considered impaired.

2. Intangible Assets and Amortization

Intangible Assets and related expenditure are recognized as per criteria specified in Accounting Standard - 26 (AS-26) on "Intangible Assets" issued by the Institute of Chartered Accountants of India.

All costs, including Finance Cost till the commencement of commercial production are capitalized in costs of Intangible Assets. Also Intangible Assets relating to projects which have been decided to be shelved by the company are amortized over the period of 10 years.

D. DEPRECIATION:

Depreciation is provided on the Straight Line Method over the estimated useful life of the assets as prescribed in Schedule II of the Companies Act, 2013.

The Intangible Assets is no longer in use amortized over the period of 10 years.

Leasehold Land is being amortized over the period of lease.

E. INVESTMENTS:

Long Term investments in equity shares of subsidiary company are stated at cost. Provision for diminution is to be made, if the decline in value is other than temporary in nature.

F. INVENTORIES:

Inventories are stated at lower of cost or net realizable value. The cost of various categories of inventories is arrived at as under: -

a. Raw material and packing material is valued at cost on FIFO basis.

b. Stores & spares purchased are taken as consumption during the year.

c. Finished goods are valued at lower of cost or net realizable value.

d. By Product are valued at net realizable value.

G. REVENUE RECOGNITION:

i) Sales

Sales of goods are accounted for on C&F basis and are net of discount and sales return.

ii) Purchases

Purchases are accounted exclusive of animal's waste and other materials returned to the suppliers as per practice prevailing in the trade.

iii) Expenditure

The benefit under Duty Drawback on Raw

Material has been reduced from raw material expenses on its realisable value.

H. BORROWING COST:

Financial income and borrowing costs include interest income on bank deposit and interest expense on loans.

Interest income is accrued evenly over the period of the corresponding instrument.

Borrowing cost are recognized in the period to which they relate, regardless of how the fund have been utilized, except where it relates to the financing of construction or development of the assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowing outstanding during the period to the average amount of accumulated expenditure incurred for the assets during the period.

I. RETIREMENT BENEFITS:

a) Gratuity and Leave Encashment

The liability for Gratuity and Leave Encashment as at the yearend is ascertained on the basis of actuarial valuation and accordingly charged to the statement of profit and loss.

b) Provident Fund

Eligible employees receive benefit from provident fund, which is defined contribution plan for which both employees and the company make monthly contribution to the provident fund equal to a specified percentage. Retirement benefits in the form of provident fund are charged to the statement of profit and loss account of the year when contribution to the fund is due. The company has no further obligations under the provident fund plan beyond its monthly contribution.

J. FOREIGN EXCHANGE TRANSACTIONS:

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account for the year.

c) All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognized in the statement of profit and loss for the year.

d) Any profit and loss arising on cancellation or

renewal of a forward exchange contract made during the year is recognized as income or as expense on the occurrence of the event.

K. TAXATION:

Current Tax :

Provision for Current Income Tax is made on the taxable income using the applicable tax rates and tax laws.

Deferred Tax :

Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent period is recognized using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

Excise Duty, Sales Tax and Value Added Tax:

Excise duty is accounted on the basis of payment made in respect of removal of goods. Sales Tax / Value Added Tax are charged to statement of profit and loss.

L. CONTIGENT LIABILITIES & PROVISION:

1. In terms of the requirement of Accounting Standard - 29 (AS-29) on "Provisions, Contingent Liabilities and Contingent Assets".

(a) Where as a result of past events, there is a present obligation that probably requires an outflow of resources and reliable estimates can be made of the amount of obligation- an appropriate provision is created and disclosed;

(b) Where as a result of past events, there is a possible obligation that may, but probably will not require an outflow of resources-no provision is recognized but appropriate disclosure is made as contingent liability unless the possibility of outflow is remote.

2. The income tax assessments of the company have been completed upto the assessment year 2010-11. The disputed demand outstanding upto the said assessment year is Rs. 77.52 crores. Based on decisions of Appellate authorities and the interpretations of other relevant provisions, the company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision is considered necessary.

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Mar 31, 2014

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared under the Historical Cost convention, in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards notified by the Central Government of India under the Companies Act, 1956 (the Act) read with general circular 15/2013, dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with accounting principles generally accepted in India.

All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the revised schedule VI to the Companies Act, 1956.

B. USE OF ESTIMATES

The preparation of financial statements is in conformity with GAAP which requires that the management of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balance of the assets and liabilities and the disclosures relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of fixed assets, provision for doubtful debt / advances, future obligation in respect of retirement benefit plans etc. Actual results could differ from these estimates.

C. FIXED ASSETS

1. Tangible Assets

a. Fixed Assets are stated at original cost, less depreciation, except in case of leasehold land which is stated at revalued cost.

b. Cost of fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Borrowing cost related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or construction are included in the book value of the assets.

c. All costs relating to up-gradations/ enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature.

d. Impairments

(i) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.

(ii) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

2. Intangible Assets and Amortization

Intangible Assets and related expenditure are recognised as per criteria specified in Accounting Standard - 26 (AS-26) on “Intangible Assets” issued by the Institute of Chartered Accountants of India.

All costs, including Finance Cost till the commencement of commercial production are capitalized in costs of Intangible Assets. Also Intangible Assets relating to projects which have been decided to be shelved by the company are amortised over the period of 10 years.

D. DEPRECIATION

Depreciation is provided on Straight Line Method at the rate and in the manner specified in Schedule XIV of the Companies Act, 1956. Depreciation on addition/ deletion is calculated on pro rata basis.

The Intangible Assets is no longer in use amortised over the period of 10 years.

Leasehold Land is being amortised over the period of lease.

E. INVESTMENTS

Long Term investments in equity shares of subsidiary company are stated at cost. Provision for diminution is to be made, if the decline in value is other than temporary in nature.

F. INVENTORIES

Inventories are stated at lower of cost or net realizable value. The cost of various categories of inventories is arrived at as under: -

a. Raw material and packing material is valued at cost on FIFO basis.

b. Stores & spares purchased are taken as consumption during the year.

c. Finished goods are valued at lower of cost or net realizable value.

d. By Product are valued at net realisable value.

G. REVENUE RECOGNITION

i) Sales

Sales of goods are accounted for on C&F basis and are net of discount and sales return.

ii) Purchases

Purchases are accounted exclusive of animal’s waste and other materials returned to the suppliers as per practice prevailing in the trade.

iii) Expenditure

The benefit under Duty Drawback on Raw Material has been reduced from raw material expenses on its realisable value.

H. BORROWING COST

Financial income and borrowing costs include interest income on bank deposit and interest expense on loans.

Interest income is accrued evenly over the period of the corresponding instrument.

Borrowing cost are recognized in the period to which they relate, regardless of how the fund have been utilized, except where it relates to the financing of construction or development of the assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowing outstanding during the period to the average amount of accumulated expenditure incurred for the assets during the period.

I. RETIREMENT BENEFITS

a) Gratuity and Leave Encashment

The liability for Gratuity and Leave Encashment as at the year end is ascertained on the basis of actuarial valuation and accordingly charged to the statement of profit and loss.

b) Provident Fund

Eligible employees receive benefit from provident fund, which is defined contribution plan for which both employees and the company make monthly contribution to the provident fund equal to a specified percentage. Retirement benefits in the form of provident fund are charged to the statement of profit and loss account of the year when contribution to the fund is due. The company has no further obligations under the provident fund plan beyond its monthly contribution.

J. FOREIGN EXCHANGE TRANSACTIONS

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Exchange differences arising on foreign currency transactions settled during the year are recognised in the profit and loss account for the year.

c) All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognised in the statement of profit and loss for the year.

d) Any profit and loss arising on cancellation or renewal of a forward exchange contract made during the year is recognised as income or as expense on the occurrence of the event.

K. TAXATION

Current Tax:

Provision for Current Income Tax is made on the taxable income using the applicable tax rates and tax laws.

Deferred Tax:

Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent period is recognized using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

Excise Duty, Sales Tax and Value Added Tax:

Excise duty is accounted on the basis of payment made in respect of removal of goods. Sales Tax / Value Added Tax is charged to statement of profit and loss.

L. CONTIGENT LIABILITIES & PROVISION

1. In terms of the requirement of Accounting Standard - 29 (AS-29) on “Provisions, Contingent Liabilities and Contingent Assets”.

(a) Where as a result of past events, there is a present obligation that probably requires an outflow of resources and reliable estimates can be made of the amount of obligation- an appropriate provision is created and disclosed;

(b) Where as a result of past events, there is a possible obligation that may, but probably will not require an outflow of resources-no provision is recognized but appropriate disclosure is made as contingent liability unless the possibility of outflow is remote.

2. The income tax assessments of the company have been completed upto the assessment year 2010-11. The disputed demand outstanding upto the said assessment year is Rs. 77.52 crores. Based on decisions of Appellate authorities and the interpretations of other relevant provisions, the company has been legally advised that the demand is likely to be either deleted or substantially reduced and accordingly no provision is considered necessary.

Primary Security : Secured against the current assets of the company including raw material, work in progress, finished goods and advance to suppliers existing and future (stocks at Sahibabad and other places) of Rs. 49.35 Crore. Share of Bank Rs. 19.74 Crore (40%) valued as at 31st January 2013.

Equitable Mortgage of residential flat at 69, Cat III, 2nd and 3rd Floor and servant quarter No. 6, Siddartha Enclave, DDA, SFS Scheme, Ashram, New Delhi in the name of Mr. Sirajuddin Qureshi and fixed assets of the company (present & future) owned by M/s. Hind Industries Limited.

Personal guarantee of the following promoter directors ;

Mr. Sirajuddin Qureshi Rs. 8.68 crores as on 13.06.2012

Mrs. Kiran Qureshi Rs. 5.36 crores as on 13.06.2012

Indian Bank :

Primary :

Packing Credit: DPN by the company and 1st pari passu charge on the current assets of the company including raw material, work in progress, finished goods and advance to suppliers existing and future ( stock at Sahibabad and other places ). Entire book debts to be hypothecated to the consortium.

FBN / FBP / DP / DA 90 days : DPN by the company and documents of title to goods covered by foreign bills purchased / negotiated against firm contracts / drawn under irrevocable LCs of prime banks.

Cheque BP : DPN by the company and Agreement for bills purchased ( for local / out station cheques ).

Bank Guarantee : Counter guarantee by the company. Pledge of fixed deposits equivalent to 10% ( as margin ) of guarantee amount.

Collateral : 2nd charge on the fixed assets of the company WDV Rs. 30.21 crore ( as per ABS as on 31.03.2011 including capital work in progress). (Share of Bank 60% Rs. 18.13 crore). {Existing status (upgraded charges) prevailing after adjustment of liability of first charge holders to be continued}.

Equitable Mortgage of residential flat at 69, Cat III, 2nd and 3rd Floor and servant quarter No. 6, Siddartha Enclave, DDA, SFS Scheme, Ashram, New Delhi in the name of Mr. Sirajuddin Qureshi valued Rs. 1.80 crore as per valuation dt. 12.05.2011 of our panel valuer S.K.Jain (Share of Bank 60% Rs. 1.08 crores).

Pledge of fixed deposit of Rs. 0.93 crore as on (corpus fund equivalent to 5% of the sanctioned FBP/FBN limit for the consortium i.e Rs. 18.50 crore). Share of Bank being Rs. 0.56 crore.

Personal guarantee of the following promoter directors ;

Mr. Sirajuddin Qureshi Rs. 8.00 crores as on 31.03.2011

Mrs. Kiran Qureshi Rs. 4.90 crores as on 31.03.2011

Term Loan from Jammu & Kashmir Bank.

Equitable mortgage of immovable property situated at A-1, Phase-I, Okhla Industrial Area, standing in the name of M/s Islamuddin & Co, one of the group Companies valued at Rs. 43.62 crores as per valuation report dated 18 th June, 2011; Escrow of rentals of M/s Islamuddin & Co with retention balance of Rs. 20.00 lacs at any point of time together with FDR for Rs. 57.19 lacs to provide minimum cushion for one month’s repayment.

Extention of charges on immovable property proposed in the Term Loan facility of group concern M/s Hind Airlink Pvt. Ltd consisting of office No: 2A on ground floor and office No: 2A in Basement, A Wing, Mittal Tower Premises Cooperative Society Limited, C.S. No. : 1957, 210 Nariman Point Mumbai valued at Rs. 20.13 crores as per valuation report dated 15.06.2010 of M/s Basavraj Masanagi & Co.

Corporate guarantee of M/s Hind Agro Industrial Limited having net worth of Rs. 93.08 crores. Personal guarantee of all three promotor directors of the borrower company namely:- Mr. Sirajuddin Qureshi (NW Rs. 7.94 crores) Mrs. Kiran Qureshi (NW Rs. 4.14 crores)

Dr. Naseem Qureshi (NW Rs. 2.43 crores)

Guarantee of the mortgator, M/s Islamuddin & Co., and M/s Hind Airlink Private Ltd.

Loan from LIC for the purpose of business needs of the company is secured by keyman policy of Mr. Sirajuddin Qureshi.

The loan is payable on demand with the prior notice of three months from LIC and bearing 9% p.a. half yearly compound rate of interest from the date of loan disbursed.

Provision for Doubtful Debts.

Periodically, the Company evaluates all customer dues to the Company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, general economic factors, which could affect the customer’s ability to settle. The Company normally provides for trade receivable outstanding for six months or longer from the invoice date, as at the Balance Sheet date. The Company pursues the recovery of the dues, in part or full.

EMPLOYEE BENEFITS :

Defined Benefit Plan : The company provides for its liabilty towards gratuity as per the acruarial valuation.

FINANCIAL ASSUMPTION :

a) Discount Rate : The rate used to discount post employment benefit obligations ( both funded and unfunded ) has been determined by reference to market yields at the balance sheet date on government bonds. The currency and term of the government bonds is consistent with the currency and estimated term of the post employment benefit obligations.

b) Salary Increase : Salary increase is taken in to account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

c) Rate of Return on Plan Assets : The liability is not funded and rate of return on plan assets is not relevant to this report.

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Mar 31, 2012

A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared under the Historical Cost convention, in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the revised schedule VI to the Companies Act, 1956.

B. USE OF ESTIMATES

The preparation of financial statements is in conformity with GAAP which requires that the management of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balance of the assets and liabilities and the disclosures relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of fixed assets, provision for doubtful debt/advances, future obligation in respect of retirement benefit plans etc. Actual results could differ from these estimates.

C. FIXED ASSETS

1. Tangible Assets

a. Fixed Assets are stated at original cost, less depreciation, except in case of leasehold land which is stated at revalued cost.

b. Cost of fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Borrowing cost related to the acquisition or construction of the qualifying fixed assets for the period up to the completion of their acquisition or construction are included in the book value of the assets.

c. All costs relating to up-gradations/ enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature.

d. Impairments

(i) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (ii) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

2. Intangible Assets and Amortization

Intangible Assets and related expenditure are recognised as per criteria specified in Accounting Standard 26 (AS-26) on "Intangible Assets" issued by the Institute of Chartered Accountants of India. All costs, including Finance Cost till the commencement of commercial production are capitalized in costs of Intangible Assets. Also Intangible Assets relating to projects which have been decided to be shelved by the company are amortised over the period of 10 years.

D. DEPRECIATION

Depreciation is provided on Straight Line Method at the rate and in the manner specified in Schedule XIV of the Companies Act, 1956. Depreciation on addition/deletion is calculated on pro rata basis.

The Intangible Assets is no longer in use amortised over the period of 10 years. Leasehold Land is being amortised over the period of lease.

E. INVESTMENTS

Long Term investments in equity shares of subsidiary company are stated at cost. Provision for diminution is to be made, if the decline in value is other than temporary in nature.

F. INVENTORIES

Inventories are stated at lower of cost or net realizable value. The cost of various categories of inventories is arrived at as under : -

a. Raw material and packing material is valued at cost on FIFO basis.

b. Stores & spares purchased are taken as consumption during the year.

c. Finished goods are valued at lower of cost or net realizable value.

d. By Product are valued at net realizable value.

G. REVENUE RECOGNITION

i) Sales

Sales of goods are accounted for on C&F basis and are net of discount and sales return.

ii) Purchases

Purchases are accounted exclusive of animal's waste and other materials returned to the suppliers as per practice prevailing in the trade.

iii) Depreciation

Depreciation is provided under the Straight Line Method at the rates and in the manner prescribed in schedule XIV of the Companies Act, 1956.

iv) Expenditure

The duty credit scrip benefit under Duty Entitlement Pass Book on Post Export (DEPB- Post Export), 2009 and Duty Drawback on Raw Material has been reduced from raw material expenses on its realisable value.

H. BORROWING COST

Financial income and borrowing costs include interest income on bank deposit and interest expense on loans.

Interest income is accrued evenly over the period of the corresponding instrument. Borrowing cost are recognized in the period to which they relate, regardless of how the fund have been utilized, except where it relates to the financing of construction or development of the assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowing outstanding during the period to the average amount of accumulated expenditure incurred for the assets during the period.

I. RETIREMENT BENEFITS

a) Gratuity and Leave Encashment

The liability for Gratuity and Leave Encashment as at the year end is ascertained on the basis of actuarial valuation and accordingly charged to the statement of profit and loss.

b) Provident Fund

Eligible employees receive benefit from provident fund, which is defined contribution plan for which both employees and the company make monthly contribution to the provident fund equal to a specified percentage. Retirement benefits in the form of provident fund are charged to the statement of profit and loss account of the year when contribution to the fund is due. The company has no further obligations under the provident fund plan beyond its monthly contribution.

J. FOREIGN EXCHANGE TRANSACTIONS

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Exchange differences arising on foreign currency transactions settled during the year are recognised in the profit and loss account for the year.

c) All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognised in the statement of profit and loss for the year.

d) Any profit and loss arising on cancellation or renewal of a forward exchange contract made during the year is recognised as income or as expense on the occurrence of the event.

K. TAXATION Current Tax

Provision for Current Income Tax is made on the taxable income using the applicable tax rates and tax laws.

Deferred Tax

Deferred tax arising on account of timing differences and which are capable of reversal in one or more subsequent period is recognized using the tax rates and tax laws that have been enacted or substantively enacted. Deferred tax assets are not recognised unless there is virtual certainty with respect to the reversal of the same in future years.

Excise Duty, Sales Tax and Value Added Tax

Excise duty is accounted on the basis of payment made in respect of removal of goods. Sales Tax /Value Added Tax is charged to statement of profit and loss.

L. CONTINGENT LIABILITIES & PROVISION

In terms of the requirement of Accounting Standard 29 (AS-29), on "Provisions, Contingent Liabilities and Contingent Assets".

(a) Where as a result of past events, there is a present obligation that probably requires an outflow of resources and reliable estimates can be made of the amount of obligation- an appropriate provision is created and disclosed;

(b) Where as a result of past events, there is a possible obligation that may, but probably will not require an outflow of resources-no provision is recognized but appropriate disclosure is made as contingent liability unless the possibility of outflow is remote.

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Mar 31, 2010

A.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Financial Statements have been prepared under the Historical Cost convention, in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

A.2 Use of Estimates

The preparation of financial statements is in conformity with GAAP which requires that the management of the company makes estimates and assumptions that affect the reported amounts of income and expenses of the period, the reported balance of the assets and liabilities and the disclosures relating to contingent liabilities as on the date of the financial statements. Examples of such estimates include the useful life of fixed assets, provision for doubtful debt / advances, future obligation in respect of retirement benefit plans etc. Actual results could differ from these estimates.

A.3 FIXED ASSETS

a) Fixed Assets are stated at original cost, less depreciation, except in case of leasehold land which is stated at revalued cost.

b) Cost of fixed assets comprises purchase price, duties, levies and any directly attributable cost of bringing the assets to its working condition for the intended use. Borrowing cost related to the acquisition or construction of the qualifying fixed assets for the period upto the completion of their acquisition or construction are included in the book value of the assets.

c) All costs relating to upgradations / enhancements are generally charged off as revenue expenditure unless they bring significant additional benefits of lasting nature.

d) Capital work in progress comprises of fixed assets acquired and other incidental cost that are not ready for intended use as on the balance sheet date.

e) Impairments

(i) The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. (ii) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. A.4 INVESTMENTS

Long Term investments in equity shares of subsidiary company are stated at cost. Provision for diminution is to be made, if the decline in value is other than temporary in nature. A.5 INVENTORIES

Inventories are stated at lower of cost or net realizable value. The cost of various categories of inventories is arrived at as under: -

(a) Raw material and packing material is valued at cost on FIFO basis.

(b) Stores & spares purchased are taken as consumption during the year.

(c) The realizable costs of inventories of finished goods are arrived at Direct Costing Method, based on FIFO formula.

A.6 REVENUE RECOGNITION

i) Sales: Sales of goods are accounted for on C&F basis and are net of discount and sales return.

ii) Purchases : Purchases are accounted exclusive of animals waste and other materials returned to the suppliers as per practice prevailing in the trade.

III) Depreciation :

a) Depreciation is provided under the Straight Line Method at the rates and in the manner prescribed in schedule

IV of the Companies Act, 1956.

b) Leasehold land is being amortized over the period of lease.

VI) Expenditure

The duty credit scrip benefit under Vishesh Krishi and Gram Udyog Yojna (VKGUY), 2008 has been reduced from freight and forwarding expenses on its realisable value.

The duty credit scrip benefit under Duty Entitlement Pass Book on Post Export (DEPB-Post Export), 2009 has been reduced from raw material expenses on its realisable value.

A.7 BORROWING COST

Financial income and borrowing costs include interest income on bank deposit and interest expense on loans.

Interest income is accrued evenly over the period of the corresponding instrument.

Borrowing cost are recognized in the period to which they relate, regardless of how the fund have been utilized, except where it relates to the financing of construction or development of the assets requiring a substantial period of time to prepare for their intended future use. Interest is capitalized up to the date when the asset is ready for intended use. The amount of interest capitalized for the period is determined by applying the interest rate applicable to appropriate borrowing outstanding during the period to the average amount of accumulated expenditure incurred for the assets during the period.

A.8 RETIREMENT BENEFITS

a) Gratuity and Leave Encashment

The liability for Gratuity and Leave Encashment as at the year end is ascertained on the basis of actuarial valuation and accordingly provided for.

b) Provident Fund

Eligible employees receive benefit from provident fund, which is defined contribution plan for which both employees and the company make monthly contribution to the provident fund equal to a specified percentage. Retirement benefits in the form of provident fund are charged to profit and loss account of the year when contribution to the fund is due.

The company has no further obligations under the provident fund plan beyond its monthly contribution.

A.9 FOREIGN EXCHANGE TRANSACTIONS

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

Exchange differences arising on foreign currency transactions settled during the year are recognised in the profit and loss account for the year.

All foreign currency denominated monetary assets and liabilities are translated at the exchange rates prevailing on the Balance Sheet date. The resultant exchange differences are recognised in the profit and loss account for the year.

A.10 TAXATION

Tax expenses comprises of Current Income Tax and Wealth Tax. *

Current Tax liabilities have been determined as per the tax laws prevailing during the year and accounted for accordingly.

Deferred Tax liabilities and Assets have been accounted for as per AS-22.

A.11 CONTINGENT LIABILITIES & PROVISIONS

In terms of the requirement of Accounting Standard 29 (AS-29) on "Provisions, Contingent Liabilities and Contingent Assets".

(a) Where as a result of past events, there is a present obligation that probably requires an outflow of resources and reliable estimates can be made of the amount of obligation- an appropriate provision is created and disclosed;

(b) Where as a result of past events, there is a possible obligation that may, but probably will not require an outflow of resources-no provision is recognized but appropriate disclosure is made as contingent liability unless the possibility of outflow is remote.