Accounting Policies of Jenburkt Pharmaceuticals Ltd. Company
Mar 31, 2019
A.1 BASIS OF PREPARATION AND PRESENTATION
The financial statements have been prepared on the historical cost basis except for following assets and liabilities which have been measured at fair value amount:
(i) Certain financial assets and liabilities
(ii) Defined benefit plans - plan assets and
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013 (the Act) and guidelines issued by Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rule, 2015 and relevant amendment rules issued thereafter.
Companyâs financial statements are presented in Indian Rupees (Rs.), which is also its functional currency.
A.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of classifications of its assets and liabilities as current and non-current.
b) Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition/ construction, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any non-refundable taxes or levies and any cost directly attributable to bringing the assets to its working condition for its intended use and adjustments arising from exchange rate variations attributable to the assets.
Leasehold land is acquired by the company from Gujarat Industrial Development Corporation (GIDC) for a lease period of 99 years. The said leasehold land is stated in the balance-sheet under property plant and equipment at its cost of acquisition and it is not depreciated.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre - operative expenses and disclosed under Capital Work - in - Progress.
Depreciation on Property, Plant and Equipment is provided using written down value method except in case of building and godowns which are depreciated using straight line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II;
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
Fully depreciated property, plant and equipment are retained in the financial statements at estimated realisable value until they are no longer in use and disposed off.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its tangible fixed assets recognised as of April 01st, 2016 i.e. transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date as per IND AS 101.
c) Leases
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Leased assets: Assets held under finance leases are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
d) Intangible assets
Intangible Assets that are acquired by the Company and that have finite useful lives are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use and adjustments arising from exchange rate variations attributable to the intangible assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Intangible assets are de-recognised either on their disposal or where no future economic benefits are expected from their use. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
A summary of amortisation policies applied to the Companyâs intangible assets to the extent of depreciable amount is, as follows:
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of April 01st, 2016 i.e. transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
e) Research and Development Expenditure
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are charged to the Statement of Profit and Loss. Research and Development expenditure incurred on capital assets are depreciated over its useful life as determined by the management by complying with the requirement of Schedule II of Companies Act, 2013.
f) Finance Cost
Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.
g) Inventories
Items of inventories consisting of raw-material, packing material, work in progress, finished goods and stock in trade are measured at lower of cost and net realisable value after providing for obsolescence, if any, based on first in first out method for raw-material, packing material and stock in trade and batch costing method for work in progress and finished goods.
Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads (taken at standard cost derived from the actual cost as on 31st March, 2018) net of recoverable taxes incurred in bringing them to their respective present location and condition.
The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
h) Impairment of non-financial assets - property, plant and equipment and intangible assets
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any.
When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognised in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
i) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Decommissioning liability
The Company records a provision for decommissioning costs towards site restoration activity. Decommissioning costs are provided at the present value of future expenditure using a current pre-tax rate expected to be incurred to fulfil decommissioning obligations and are recognized as part of the cost of the underlying assets. Any change in the present value of the expenditure, other than unwinding of discount on the provision, is reflected as adjustment to the provision and the corresponding asset. The change in the provision due to the unwinding of discount is recognized in the Statement of Profit and Loss.
j) Employee Benefits Expense Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
Post-Employment Benefits Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Superannuation Fund and Pension Scheme. The Companyâs contribution is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined Benefit Plans Gratuity
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 days salary (Basic Salary) for every completed year of service as per the Payment of Gratuity Act 1972.
Liabilities with regard to Gratuity Plan are determined by actuarial valuation performed by an independent actuary at the end of each Balance Sheet date using the projected unit credit method. The Company makes contributions as per the ascertained liability, and the contributions are invested in a scheme with Life Insurance Corporation of India as permitted by Indian Law.
The Company recognizes the net obligation of the defined benefit plan in its Balance Sheet as asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income and are not reclassified to profit and loss in subsequent periods.
The current service cost of the defined benefit plan, recognised in the profit or loss as employee benefits expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognised in profit or loss in the period of a plan amendment. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss.
Leave Encashment
The Company also pays Leave Encashment to the Employees as follows:
Office Employees - 21 days leave salary (Basic Salary) for every completed year of service upto a maximum of 120 days.
Field Employees - 30 days leave salary (Basic Salary) for every completed year of service upto a maximum of 120 days.
The liability in respect of leave encashment is calculated using the projected unit credit method with actuarial valuations being carried out by at the end of each annual reporting period by the Life Insurance Corporation. The Company makes contributions as per the ascertained liability, and the contributions are invested in a scheme with Life Insurance Corporation of India.
The Company recognizes the net obligation of the defined benefit plan in its Balance Sheet as asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in the profit and loss account.
k) Tax Expenses
The tax expense for the period comprises current and deferred tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the comprehensive income or in equity. In which case, the tax is also recognised in other comprehensive income or equity.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax statement used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
l) Foreign currencies transactions and translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss.
m) Revenue Recognition
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Sale of goods are recorded net of trade discounts, rebates, central sales tax, value added tax, goods and service tax and gross of excise duty.
Interest income
Interest Income is recognised on a time proportion basis taking into account the amount outstanding and applicable interest rate.
Dividends
Revenue is recognised when the Companyâs right to receive the payment has been established.
Export Benefits
The Company recognises export benefits only when there is reasonable assurance that the conditions attached to them will be complied with, and the benefits will be received.
n) Financial Instruments
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
B. Subsequent measurement
a) Financial assets carried at amortised cost (AC)
A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are carried at amortized cost using the effective interest method. For trade and other receivables and loans and advances maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. Also receivables, loans and advances below transaction value of Rs.50 lakhs are taken at carrying amount as the effect of amortization is immaterial.
b) Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the profit or loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
c) Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
C. Equity Investments
All equity investments are measured at fair value, with value changes recognised in âOther Comprehensive Incomeâ.
All fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. On sale of investment the gain or loss arising are reclassified to profit and loss account.
Impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
ii) Financial liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
o) Share Capital
Equity instruments are contracts that evidence a residual interest in the net assets of a company after deducting all of its liabilities. Ordinary shares are classified as equity. Equity instruments are recorded at the proceeds received.
p) Dividend Distribution
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Board of Directors.
q) Buy Back of Shares
The Company bought back 59,922 equity shares during the year 2017-18. As a result of this buyback the paid-up equity share capital of 4649300 equity shares of Rs.10/- each was reduced to 4589378 equity shares of Rs.10/- each. All the 59922 equity shares were extinguished, on 3rd January, 2018.
r) Segment Reporting
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
The company operates only in single type of product i.e. pharmaceutical formulations and therefore there is a single primary segment as required by IND AS 108. The secondary segmental reporting in the case of the company is on the basis of geographical location of customers as under:
s) 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 a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate 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 obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Liabilities are not recognized but are disclosed in notes.
1. NPPA had served a show cause notice to your Company alleging that a Company''s product was violating a NPPA''s standing order. However, after a Personal Hearing and detailed submission, NPPA passed a written order stating that your Company''s product did not violate the standing order. Subsequently, NPPA reviewed its own order, without having any power to review, issued show cause notices and demand notice to your Company. Your Company subsequently filed a writ petition against the demand of NPPA, at the Hon''ble High Court of Bombay. The matter was settled in favor of your company. The NPPA after over a year filed a Special Leave Petition (SLP) (demanding Rs.16.45 crore) at the Hon''ble Supreme Court. DPCO, 1995, explicitly debars NPPA to review its own order, the very reason cited by Hon''ble High Court of Bombay, while quashing the show cause notices and demand notice in their judgment dated 08th August, 2013 and 26th September, 2013. Your Company has been legally advised, that based on the facts and merits of the case, the demand raised by NPPA is not likely to crystallize.
2. The Ministry of Health and Family Welfare, Government of India, vide its notification dated 10th March, 2017, based on the recommendation of Kokate Committee banned 344 Fixed Dose Combinations (FDCs) with immediate effect. Your Company''s seven products are affected by the said notifications which in terms of value and volume do not have substantial impact on the sales and profitability of the Company. Many Companies including your Company challenged the said notifications at the Hon''ble High Court of Delhi. The Hon''ble High Court, Delhi passed an order on 1st December, 2017 quashing all the notifications of the Ministry. Subsequently, the Ministry filed a special leave petition at The Honâble Supreme Court against said the Judgment of the Hon''ble High Court, Delhi. The Honâble Supreme Court provided itâs judgment on 15th December, 2017, by setting aside the said judgment of Delhi High Court dated 1st December, 2017. However, the Honâble Supreme Court said that the court was not clear about the conclusion arrived at by Kokate Committee for banning 344 5 FDCs. In order to analyse in greater depth the court felt that these cases should go to the Drug Technical Advisory Board (DTAB) and / or its sub-committee formed for the said purpose, for having relook into these matters. The Honâble Supreme Court instructed the DTAB/its sub-committee to provide report after hearing the petitioners in the said 344 ( 5) FDCs, the sub-committee was formed to relook into the cases of banning drugs after hearing the concerned parties, including your Company. In September 2018, the subcommitteeâs report was lodged at Supreme Court indicating that 343 drugs out of (344 5) drugs, after evaluation, be prohibited and that 6 drugs may be restricted/regulated. Your Companyâs seven products falls under the said 343 prohibited drugs list. Soon after the Government issued fresh Standing Orders, prohibiting manufacturing & marketing the said banned drugs. Your company filed petition at Honâble High Court of Delhi against such orders. The Management is of the opinion that the said restrictions will not substantially impact the sales and profitability of the Company. Your Company prayed for stay against the said prohibition by filing suit against Union of India, at Honâble High Court of Delhi in September, 2018. The Court had after hearing the Company instructed the Government that no coercive steps be taken against the Company, their stockiest and dealers. The Company had to cease manufacturing the products, till further order. Your Company await the Honâble High Court of Delhi. The Honâble High Court of Delhi stayed the order but asked the companies to cease manufacturing and allowed marketing of existing stocks.
3. The Assistant Director, Employee State Insurance Corporation (ESIC), had on 18.05.2018, issued order under Section 45A of E.S.I. Act 1948, ordering the Company to pay Rs.75,296/- being contribution @6.50% on alleged omitted wages for the month of March 2013 and to pay Rs.19,66,946/being contribution @6.50% on Head Quarter allowance and other expenses during the year 2013-14 and 2014-15. Your company has been regular in paying contribution to ESIC. However, the subject order is based on alleged wrong interpretation by the Assistant Director ESIC, that Head Quarter Allowance paid by the company to its Field Force cadre is a part of wages. As the Company is not in agreement with the interpretation of ESIC, has filed petition on 23.10.2018 at Employees Insurance Court, Mumbai, challenging the order of the Assistant Director, ESIC. The Company has also deposited on 05.10.2018, an amount of Rs.10,21,121/- as 50% of the Demand as per requirement. The company has got an Interim Order from the ESIC Court, Mumbai, staying the Demand under Section 45A and restraining the ESI Corporation from proceeding to recover any amount on the basis of said orders pending hearing and disposal of main application.
4. Performance bank guarantees issued to Government Medical Store Depot against supply orders of medicines is amounting to Rs.1267822 as on 31st March 2019.
t) Micro Small and Medium Enterprises:
Based on the information and/ or the copy of MSME registration certificate submitted by the vendor, the Company, has identified Micro, Small and Medium Enterprises, The Company has paid interest on pending payments made to Micro & Small Enterprises beyond 45 days, from the date, they have furnished the certificate of registration with MSME to the company.
u) Cash and Cash Equivalents:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Mar 31, 2018
Significant Accounting Policies
A. CORPORATEINFORMATION
Jenburkt Pharmaceuticals Limited (âthe Companyâ) is a listed entity incorporated in India and is listed on BSE Limited.
The registered office of the company is situated at Nirmala Apartments, 93, Jayprakash Road, Adhere (W), Mumbai -400 058.
The Company is in the business of manufacturing, producing, developing and marketing a wide range of branded Pharmaceuticals and health care products.
B. SIGNIFICANTACCOUNTING POLICIES
B.1 BASIS OFPREPARATIONAND PRESENTATION
The financial statements have been prepared on the historical cost basis except for following assets and liabilities which have been measured at fair value amount:
i) Certain financial assets and liabilities
ii) Defined benefit plans - plan assets and
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âIn ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013, together with the comparative period data as at and for the year ended March 31, 2017. Further, the Company has prepared the opening balance sheet as at April 01, 2016 (the transition date) in accordance with Indiâs.
Upton the year ended March 31, 2017, the Company has prepared its financial statements in accordance with the requirement of Generally Accepted Accounting Principles (GAAP) prevalent in India, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006 and considered as âPrevious GAAPâ.
These financial statements are the Company''s first In AS compliant financial statements.
Companyâs financial statements are presented in Indian Rupees (''), which is also its functional currency.
B.2 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a) Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of classifications of its assets and liabilities as current and non-current.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Gains or losses arising from DE recognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognised.
Fully depreciated property, plant and equipment are retained
b) Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition/ construction, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost, any non-refundable taxes or levies and any cost directly attributable to bringing the assets to its working condition for its intended use and adjustments arising from exchange rate variations attributable to the assets.
Leasehold land is acquired by the company from Gujarat Industrial Development Corporation (GIDC) for a lease period of 99 years. The said leasehold land is stated in the balance-sheet under property plant and equipment at its cost of acquisition and it is not depreciated.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre - operative expenses and disclosed under Capital Work - in - Progress.
Depreciation on Property, Plant and Equipment is provided using written down value method except in case of building and god owns which are depreciated using straight line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II; in the financial statements at estimated realizable value until they are no longer in use and disposed of.
For transition to Indiâs, the Company has elected to continue with the carrying value of all of its tangible fixed assets recognized as of April 01, 2016 i.e. transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date as per INDAS 101.
c) Leases
Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Leased assets: Assets held under finance leases are initially recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognized immediately in Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalized.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
d) Intangible assets
Intangible Assets that are acquired by the Company and that have finite useful lives are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortization/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use and adjustments arising from exchange rate variations attributable to the intangible assets.
For transition to Indiâs, the Company has elected to continue with the carrying value of all of its intangible assets recognized as of April 01, 2016 i.e. transition date, measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
e) Research and Development Expenditure
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are charged to the Statement of Profit and Loss. Research and Development expenditure incurred on capital assets are depreciated over its useful life as determined by the management by complying with the requirement of Schedule
II of Companies Act, 2013.
f) Finance Cost
Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.
g) Inventories
Items of inventories consisting of raw-material, packing material, work in progress, finished goods and stock in trade are measured at lower of cost and net realizable value after
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Intangible assets are de-recognized either on their disposal or where no future economic benefits are expected from their use. Gains or losses arising from DE recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
providing for obsolescence, if any, based on first in first out method for raw-material, packing material and stock in trade and batch costing method for work in progress and finished goods.
Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads net of recoverable taxes incurred in bringing them to their respective present location and condition.
The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale
h) Impairment of non-financial assets - property, plant and equipment and intangible assets
The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset orgy is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
An impairment loss is recognized in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
i) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Decommissioning liability
The Company records a provision for decommissioning costs
towards site restoration activity. Decommissioning costs are provided at the present value of future expenditure using a current pre-tax rate expected to be incurred to fulfill decommissioning obligations and are recognized as part of the cost of the underlying assets. Any change in the present value of the expenditure, other than unwinding of discount on the provision, is reflected as adjustment to the provision and the corresponding asset. The change in the provision due to the unwinding of discount is recognized in the Statement of Profit and Loss.
j) Employee Benefits Expense Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expense during the period when the employees render the services.
Post-Employment Benefits Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund, Superannuation Fund and Pension Scheme. The Companyâs contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined Benefit Plans
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 days salary (Basic Salary) for every completed year of service as per the Payment of Gratuity Act 1972.
The Company also pays Leave Encashment to the Employees as follows:
Office Employees - 21 days leave salary (Basic Salary) for every completed year of service up to a maximum of 120 days.
Field Employees - 30 days leave salary (Basic Salary) for every completed year of service up to a maximum of 120 days.
The liability in respect of defined benefit plans is calculated using the projected unit credit method with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to benchmark yields available on government bonds as at the valuation date with terms matching that of the liabilities and the salary increase rate take into account inflation, seniority, promotion and other relevant factors. The current service cost of the defined benefit plan, recognized in the profit or loss as employee benefits expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized in profit or loss in the period of a plan amendment. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in profit or loss. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to OCI in the period in which they arise and is reflected immediately in retained earnings and is not reclassified to profit or loss,. Pursuant to above necessary adjustments have been undertaken in the current period.
The Company has made arrangements with the Life Insurance Corporation of India (LIC) to fulfill the above liabilities payable to the employees at the time of retirement or otherwise.
k) Tax Expenses
The tax expense for the period comprises current and deferred tax. Tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in the comprehensive income or in equity. In which case, the tax is also recognized in other comprehensive income or equity.
Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax statement used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
l) Foreign currencies transactions and translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and Loss
m) Revenue Recognition
Revenue from sale of goods is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Sale of goods are recorded net of trade discounts, rebates, central sales tax, value added tax, goods and service tax and gross of excise duty.
Interest income
Interest Income is recognized on a time proportion basis taking into account the amount outstanding and applicable interest rate.
Dividends
Revenue is recognized when the Companyâs right to receive the payment has been established.
Export Benefits
The Company recognizes export benefits only when there is reasonable assurance that the conditions attached to them will be complied with, and the benefits will be received
n) Financial Instruments i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognized using trade date accounting.
B. Subsequent measurement
a) Financial assets carried at amortized cost (AC)
A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets are carried at amortized cost using the effective interest method. For trade and other receivables and loans and advances maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
b) Financial assets at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the profit or loss. On DE recognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to profit or loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
c) Financial assets at fair value through profit or loss (FVTPL)
A financial asset which is not classified in any of the above categories are measured at FVTPL.
C. Equity Investments
All equity investments are measured at fair value, with value changes recognized in âOther Comprehensive Incomeâ.
All fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognized in the OCI. On sale of investment the gain or loss arising are reclassified to profit and loss account.
Impairment of financial assets
In accordance with In AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognized from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analyzed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECLisused.
ii) Financial liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognized in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
DE recognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for DE recognition under In AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
o) Share Capital
Equity instruments are contracts that evidence a residual interest in the net assets of a company after deducting all of its liabilities. Ordinary shares are classified as equity. Equity instruments are recorded at the proceeds received.
p) Dividend Distribution
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Board of Directors.
q) Buy Back of Shares
The Company successfully completed buyback of its own shares. 208330 equity shares of Rs,.10/- each, which were offered to be brought back by tender routes at Rs,.576/- for each equity share, aggregating to Rs,.1199.98 lac. The offer was open from 6th to 19th December, 2017. Total 59,922 equity shares were offered and accepted under the buyback and Rs,.345.15 lac paid on 27th December, 2017 under the offer, to the shareholders, who tendered their shares under the offer. As a result of this buyback the paid-up equity share capital of 4649300 equity shares of Rs,.10/- each was reduced to 4589378 equity shares of Rs,.10/- each. All the 59922 equity shares were extinguished, on 3rd January, 2018.
r) Segment Reporting
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
disclosure is made. Contingent Liabilities are not recognized but are disclosed in notes.
1. National Pharmaceutical Pricing Authority (NPPA) had served a Show Cause Notice to the company alleging that a company''s product was violating NPPA''s standing order. However after a Personal hearing and detailed submissions filed by the Company before them, NPPA passed a written order, that the Company''s product did not violate the said standing order. Subsequently, NPPA reviewed its own order and issued Show Cause and Demand Notice to the Company. The Company subsequently filed a writ petition against the Show Cause and Demand notice of NPPA, before the humble High Court of Bombay, and the same was quashed by the humble High Court of Bombay. The matter was settled in favor of the company. The NPPA after over a year filed a Special Leave Petition (SLP) (citing demand notice for ''.16.45 Cr) at humble Supreme Court, where the matter is pending for hearing. The company has been legally advised, that based on the facts and merits of the case, the demand raised by NPPA is not likely to crystalline and therefore the same is not recognized.
2. Based on recommendation of Ministry of Health and Family Welfare, the Central Government on 10th March 2016 issued notifications prohibiting the manufacturing and sale of certain fixed combination drugs. The said notifications, inter-alia, affects the manufacturing and sales of 7 products manufactured by the Company. However, Company had filed a writ petition in humble High Court of Delhi challenging the said notifications. The humble High Court, Delhi passed an order quashing all the notifications of the Ministry. However, the Ministry have filed special leave petition challenging the said order at Supreme Court. The humble Supreme Court provided its judgment on 15th December, 2018, by setting aside the said judgment of Delhi High Court dated 1st December, 2017. But said that the court was not clear about the conclusion arrived at by Kolkata Committee for banning 344 5 Fixed Dose Combinations. In order to analyses in greater depth the court felt that these cases should go to the Drug Technical Advisory Board (DTAB) and / or its subcommittee forward for the said purpose, for having relook into these matters. The court laid down three parameters for DTAB / sub-committee to satisfy itself. The humble Supreme Court has given six (6) months to them for completing the whole procedure, as stated above. Consequent to above your Company is free to manufacture, market and distribute all the seven products, covered under banned Fixed Dose Combinations, till further order of the humble Supreme Court. The Management is of the opinion that even if the said notifications are upheld and coming in to effect, the same will not substantially impact the sales and profitability of the Company.
s) 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 a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate 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 obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or
3. The Company has discounted certain Export Sales Bills with Bank of Baroda, Bhavnagar Branch, which are not due for payment as on 31st March 2018 amounting to USD 351401.89 and Euro 135838.60.
4. Performance bank guarantees issued to Government Medical Store Depot against supply orders of medicines is amounting to Rs,.1609694ason 31st March 2018.
t) Micro Small and Medium Enterprises:
Based on the information available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act 2006, to whom the company has to make payments as on year ended on 31st March, 2018, for sales / services together with interest thereon and hence no additional disclosure has been made.
u) Cash and Cash Equivalents:
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
Forth purpose of the statements of cash flows, cash and cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
C. CRITICAL ACCOUNTING JUDGMENTS AND KEYSOURCES OFESTIMATION UNCERTAINTY
The preparation of the Companyâs financial statements requires management to make judgment, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods
a) Decommissioning Liabilities
The liability for decommissioning costs are recognized when the Company has obligation to perform site restoration activity. The recognition and measurement of decommissioning provisions involves the use of estimates and assumptions. These include; the timing of abandonment of well and related facilities which would depend upon the ultimate life of the field, expected utilization of assets by other fields, the scope of abandonment activity and pre-tax rate applied for discounting.
b) Depreciation / amortization and useful lives of property plant and equipment / intangible assets Property, plant and equipment / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortization to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortization for future periods is revised if there are significant changes from previous estimates.
c) Recoverability of trade receivable
Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of nonpayment.
d) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
e) Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or Cash Generating Units (CGUâs) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
f) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on Companyâs past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
D. FIRSTTIMEADOPTIONOFINDAS
Explanation to transition to In AS
In AS 101 -âFirst-time Adoption of Indian Accounting Standardsâ requires that all In AS and interpretations that are issued and effective for the first In AS financial statements which is for the year ended March 31, 2018 for the Company, be applied retrospectively and consistently for all financial years presented, except for the following for which the Company has availed certain exemptions and complied with the mandatory exceptions provided in In AS 101, as described below.
The Company has recognized all assets and liabilities whose recognition is required by In AS and has not recognized items of assets or liabilities which are not permitted by In AS, reclassified items from previous GAAP to In AS as required under In AS and applied In AS in measurement of recognized assets and liabilities. Set out below are the Indiâs 101 optional exemptions availed as applicable and mandatory exceptions applied in the transition from previous Agapitos Indiâs.
DE recognition of financial assets and financial liabilities
The Company has applied the DE recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after the transition date.
Classification and measurement of financial assets
The Company has assessed conditions for classification of the financial assets on the basis of the facts and circumstances that were existent on the date of transition to Indiâs.
Determining whether an arrangement contains a lease
The Company has applied Appendix C of In AS 17 âDetermining whether an Arrangement contains a Leaseâ to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date
Deemed cost of property, plant and equipment and intangible assets
On transition to Indiâs, the Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognized as at April 01, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment and intangible assets.
Mar 31, 2017
1. Basis of Preparation of Financial Statements:
The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India (''Indian GAAP''). The GAAP comprises mandatory Accounting Standards as prescribed under Section 133 of the Companies Act, 2013, (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act, (to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied.
2. Fixed Asset:
a. Property, Plant and Equipment:
Property, Plant and Equipment are carried at the cost of acquisition or construction, less accumulated depreciation/accumulated impairment, if any. Subsequent cost are included in the asset''s carrying amount or recognized as separate assets, as appropriate, only when it is possible that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use.
b. Intangible Assets:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.
3. Depreciation:
Depreciation on tangible fixed assets is provided using the Written down value method (except on factory building and go down at Sihor on which depreciation has been provided on straight line basis) at the rate prescribed in schedule II of the Companies Act, 2013 on the useful life of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc. Useful life of tangible assets adopted is not different then the useful life prescribed in Part C of Schedule II of the Companies Act, 2013. Intangible Assets including trademarks are amortized over the estimated useful economic life.
4. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors; such impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
5. Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are restated at year end exchange rates. Exchange rate differences arising on the settlement of foreign currencies monetary items or on reporting Company''s foreign currency monetary items at rates different from those at which they were initially recorded during the year or reported in the previous year financial statements are recognized as income or expense in the year in which they arise.
6. Investments:
All the investments are long term investments, which are intended to be held for more than one year from the date on which such investments are made, are stated at cost. Diminutions in value of an investment which are temporary in nature are not recognized.
7. Inventories:
Inventories are valued at the lower of cost and net realizable value cost is computed based on following first in first out method. Cost of finished goods and work in progress include all cost of purchases, conversion cost and other cost incurred in bringing the inventories to their present location and condition. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
8. Revenue Recognition:
Revenue is recognized to the extent that is probable that the economic benefits will flow to the Company and can be reliably measured.
Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sale of goods are recorded net of trade discounts, rebates, Sales tax, Value Added Tax and gross of Excise Duty.
Interest Income is recognized on a time proportion basis taking into account the amount outstanding and applicable interest rate. Dividend Income on investments is accounted for when the right to receive the payment is established.
9. Employee Benefit:
i) Short Term employee benefits are recognized as expense at the undiscounted amount in the Profit & Loss Account of the Year in which the related services is rendered.
ii) Post Employment and long term benefits are recognized as expenditure in the Profit & Loss Account for the Year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation technique. Refer the detailed remark in Schedule no. 22.
iii) Certain employees are also participants in the superannuation plan which is a defined contribution plan. The Company has no obligation towards the superannuation plan beyond its monthly contribution.
10. Provision for Current and Deferred Tax:
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.
The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain, that sufficient future taxable income will be available.
Provision for Current taxes is made after taking into consideration benefits admissible under the provision of Income Tax Act 1961. Deferred Tax resulting from âTiming Differenceâ between taxable and accounting income is accounted for using the tax rates in force that are substantively enacted as on the balance sheet date. Deferred tax assets is recognized and carried forward only to the extent that there is a virtual certainty assets will be realized in future.
11. Research and development:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred.
Research and Development expenditure incurred on capital assets are depreciated over its useful life as determined by the management by complying with the requirement of Schedule II of Companies Act, 2013.
12. Provisions and Contingent Liabilities:
i) 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 a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate 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 obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Liabilities are not recognized but are disclosed in notes.
ii) National Pharmaceutical Pricing Authority (NPPA) had served a Show Cause Notice to the company alleging that a company''s product was violating NPPA''s standing order. However after a Personal hearing and detailed submissions filed by the Company before them, NPPA passed a written order, that the Company''s product did not violate the said standing order. Subsequently, NPPA reviewed its own order and issued Show Cause and Demand Notice to the Company. The Company subsequently filed a writ petition against the Show Cause and Demand notice of NPPA, before the Hon''ble High Court of Bombay, and the same was quashed by the Hon''ble High Court of Bombay. The matter was settled in favour of the company. The NPPA after over a year filed a Special Leave Petition (SLP) (citing demand notice for Rs. 16.45 Cr) at Hon''ble Supreme Court, where the matter is pending for hearing. The company has been legally advised, that based on the facts and merits of the case, the demand raised by NPPA is not likely to crystallize and therefore the same is not recognized.
iii) Based on recommendation of Ministry of Health and Family Welfare, the Central Government on 10th March 2016 issued notifications prohibiting the manufacturing and sale of certain fixed combination drugs. The said notifications, inter-alia, affects the manufacturing and sales of 7 products manufactured by the Company. However, Company had filed a writ petition in Hon''ble High Court of Delhi challenging the said notifications. The Hon''ble High Court, Delhi passed an order quashing all the notifications of the Ministry. However, the Ministry have filed special leave petition challenging the said order at Supreme Court and the matter is pending for hearing before Supreme Court. According to the managementsâ view, the sale and profitability of the Company will not be substantially affected.
15. Cash and Cash Equivalents:
Cash and Cash Equivalents for the purpose of cash flow statement comprise cash on hand and cash at bank including fixed deposit with original maturity period of three months or less and short term highly liquid investments with an original maturity of three months or less.
16. Indian Accounting Standards
The Ministry of Corporate Affairs (MCA), through its notification in Official Gazette dated February 16th, 2015 notified the Indian Accounting Standards (Ind AS) applicable to certain classes of Company. Ind AS would replace the existing Indian GAAP prescribed under section 133 of Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2015. Based on subsequent notification issued by MCA, Ind AS would be applicable to the company from the period beginning from April 1st, 2017.
Mar 31, 2016
33 SIGNIFICANT ACCOUNTING POLICIES
of Jenburkt Pharmaceuticals Limited as at 31st March, 2016
1. Basis of Preparation of Financial Statements:
The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India (âIndian GAAPâ). The GAAP comprises mandatory Accounting Standards as prescribed under Section 133 of the Companies Act, 2013, (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act, (to the extent notified) and guidelines issued by Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied.
2. Fixed Asset:
a. Tangible Assets:
Tangible fixed assets are carried at the cost of acquisition or construction, less accumulated depreciation/ accumulated impairment, if any. The cost of fixed assets comprises of its purchase price, including import duties and other non-refundable taxes or levies and any directly attributable cost of bringing the asset to its working condition for its intended use.
b. Intangible Assets:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment loss, if any.
3. Depreciation:
Depreciation on tangible fixed assets is provided using the Written down value method (except on factory building and go down at Sihor on which depreciation has been provided on straight line basis) at the rate prescribed in schedule II of the Companies Act, 2013 on the useful life of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc. Useful life of tangible assets adopted is not different then the useful life prescribed in Part C of Schedule II of the Companies Act, 2013. Intangible Assets including trademarks are amortized over the estimated useful economic life.
4. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors; such impairment loss is recognized wherever the carrying amount of asset exceeds its recoverable amount.
5. Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are restated at year end exchange rates. Exchange rate differences arising on the settlement of foreign currencies monetary items or on reporting Companyâs foreign currency monetary items at rates different from those at which they were initially recorded during the year or reported in the previous year financial statements are recognized as income or expense in the year in which they arise.
6. Investments:
All the investments are long term investments, which are intended to be held for more than one year from the date on which such investments are made, are stated at cost. Diminutions in value of an investment which are temporary in nature are not recognized.
7. Inventories:
Items of inventories are valued (as per guidelines laid down by the Institute of Chartered Accountants of India in Accounting Standard-2 (Revised) titled âValuation of Inventoriesâ as follows :
i Raw and Packing Materials At cost on the basis of First in First out Method.-to be deleted
ii Work in progress At cost or net realizable value whichever is lower including appropriate overheads incurred thereon.
iii Finished Goods At cost or net realizable value whichever is lower inclusive of
cost of materials, labour and other related overheads.
8. Revenue Recognition:
Revenue is recognized to the extent that is probable that the economic benefits will flow to the Company and can be reliably measured.
Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sale of goods are recorded net of trade discounts, rebates, Sales tax, Value Added Tax and gross of Excise Duty.
Interest Income is recognized on a time proportion basis taking into account the amount outstanding and applicable interest rate.
Dividend Income on investments is accounted for when the right to receive the payment is established.
9. Employee Benefit:
i) Short Term employee benefits are recognized as expense at the undiscounted amount in the
Profit & Loss Account of the Year in which the related services is rendered.
ii) Post Employment and long term benefits are recognized as expenditure in the Profit & Loss
Account for the Year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation technique.
iii) Certain employees are also participants in the superannuation plan which is a defined contribution plan. The Company has no obligation to the superannuation plan beyond its monthly contribution.
10. Provision for Current and Deferred Tax:
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable income for the current accounting year in accordance with the Income Tax Act, 1961.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax profits for the year is accounted for, using the tax rates and laws that have been substantively enacted as of the Balance Sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that these would be realized in future.
The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain, that sufficient future taxable income will be available.
Provision for Current taxes is made after taking into consideration benefits admissible under the provision of Income Tax Act 1961. Deferred Tax resulting from âTiming Differenceâ between taxable and accounting income is accounted for using the tax rates in force that are substantively enacted as on the balance sheet date. Deferred tax assets is recognized and carried forward only to the extent that there is a virtual certainty assets will be realized in future.
11. Research and development:
Revenue expenditure on research is expensed under the respective heads of the account in the period in which it is incurred.
Research and Development expenditure incurred on capital assets are depreciated over its useful life as determined by the management by complying with the requirement of Schedule II of Companies Act, 2013.
12. Provisions and Contingent Liabilities:
1. 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 a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate 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 obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Liabilities are not recognized but are disclosed in notes.
.
Mar 31, 2015
1. Basis of Preparation of Financial Statements:
The financial statements have been prepared and presented under the
historical cost convention, on the accrual basis of accounting in
accordance with the accounting principles generally accepted in India
('Indian GAAP') and comply with the Accounting standards prescribed in
the Companies (Accounting Standards) Rules, 2006 which continue to
apply under Section 133 of the Companies Act, 2013, ('the Act') read
with Rule 7 of the Companies (Accounts) Rules, 2014 and other relevant
provisions of the Companies Act, 1956, to the extent applicable.
2. Fixed Asset:
a. Tangible Assets:
Tangible fixed assets are carried at the cost of acquisition or
construction, less accumulated depreciation/ accumulated impairment, if
any. The cost of fixed assets comprises of its purchase price,
including import duties and other non- refundable taxes or levies and
any directly attributable cost of bringing the asset to its working
condition for its intended use.
b. Intangible Assets:
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment loss, if any.
3. Depreciation:
Depreciation on tangible fixed assets is provided using the Written
down value method (except on factory building and godown at Sihor on
which depreciation has been provided on straight line basis) at the
rate prescribed in schedule II of the Companies Act, 2013 on the useful
life of the assets as estimated by the management and is charged to the
Statement of Profit and Loss as per the requirement of Schedule II of
the Companies Act, 2013. The estimate of the useful life of the assets
has been assessed based on technical advice which considered the nature
of the asset, the usage of the asset, expected physical wear and tear,
the operating conditions of the asset, anticipated technological
changes, manufacturers warranties and maintenance support, etc. Useful
life of tangible assets adopted is not different then the useful life
prescribed in Part C of Schedule II of the Companies Act, 2013.
Intangible assets including Trademark are amortising over the estimated
useful economic life.
4. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors; such impairment loss is recognized wherever the carrying
amount of asset exceeds its recoverable amount.
5. Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are restated at year end exchange rates.
Exchange rate differences arising on the settlement of foreign
currencies monetary items or on reporting Company's foreign currency
monetary items at rates different from those at which they were
initially recorded during the year or reported in the previous year,
financial statements are recognized as income or expense in the year in
which they arise.
6. Investments:
All the investments are long term investments, which are intended to be
held for more than one year from the date on which such investments are
made, are stated at cost. Diminutions in value of an investment which
are temporary in nature are not recognized.
7. Inventories:
Items of inventories are valued as per guidelines laid down by the
Institute of Chartered Accountants of India in Accounting Standard-2
(Revised) titled "Valuation of Inventories" as follows :
i Raw and Packing Materials At cost on the basis of First in
First out Method.
ii Work in progress At cost or net realizable value
whichever is lower including
appropriate overheads incurred
thereon.
iii Finished Goods At cost or net realizable value
whichever is lower inclusive of
cost of materials, labour and other
related overheads.
8. Revenue Recognition:
Revenue is recognized to the extent that is probable that the economic
benefits will flow to the Company and can be reliably measured.
Revenue from sale of products is recognized when the significant risks
and rewards of ownership of the goods have passed to the buyer. Sale of
goods are recorded net of trade discounts, rebates, Sales tax, Value
Added Tax and gross of Excise Duty.
Interest Income is recognized on a time proportion basis taking into
account the amount outstanding and applicable interest rate.
Dividend Income on investments is accounted for when the right to
receive the payment is established.
9. Employee Benefit:
I) Short Term employee benefits are recognized as expense at the
undiscounted amount in the Profit & Loss Account of the Year in which
the related services is rendered.
ii) Post Employment and long term benefits are recognized as
expenditure in the Profit & Loss Account for the Year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation technique.
10. Provision for Current and Deferred Tax:
Tax expense comprises of current and deferred tax.
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognised to
the extent there is reasonable certainty that these would be realised
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain, that
sufficient future taxable income will be available against which
deferred tax asset can be realised. Any such write-down is reversed to
the extent that it becomes reasonably certain, that sufficient future
taxable income will be available.
Provision for Current taxes is made after taking into consideration
benefits admissible under the provision of Income Tax Act 1961.
Deferred Tax resulting from "Timing Difference" between taxable and
accounting income is accounted for using the tax rates in force that
are substantively enacted as on the balance sheet date. Deferred tax
assets is recognised and carried forward only to the extent that there
is a virtual certainty assets will be realized in future.
Direct taxes grouped under the head "other current assets" are net of
provisions.
11. Research and development:
Revenue expenditure on research is expensed under the respective heads
of the account in the period in which it is incurred.
Research and Development expenditure incurred on capital assets are
depreciated over its useful life as determined by the
management by complying with the requirement of Schedule II of
Companies Act, 2013.
12. Provisions and Contingent Liabilities:
1. 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 a reliable estimate can be made. Provisions are not discounted
to its present value and are determined based on best estimate 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 obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made. Contingent Liabilities
are not recognized but are disclosed in notes.
2. National Pharmaceutical Pricing Authority (NPPA) had served a Show
Cause Notice to the company alleging that a company's product was
violating NPPA's standing order. However after a Personal hearing and
detailed submissions filed by the Company before them, NPPA passed a
written order, that the Company's product did not violate the said
standing order. Subsequently, NPPA reviewed its own order and issued
Show Cause and Demand Notice to the company. The company subsequently
filed a writ petition against the Show Cause and Demand notice of NPPA,
before the Hon'ble High Court of Bombay, and the same was quashed by
the Hon'ble High Court of Bombay. Therefore the matter was settled in
favour of the company. The NPPA after over a year filed a Special Leave
Petition (SLP) (citing demand notice for Rs. 16.45 Cr) at Hon'ble
Supreme Court, where the matter is pending. The company has been
legally advised, that based on the facts and merits of the case, the
demand raised by NPPA is not likely to crystallise and therefore the
same is not recognised.
13. Old provisions no longer required have been written off/back in
surplus in statement of Profit & Loss Account.
14. Corporate Social responsibility:
a) Gross amount required to be spent by the Company during the year
2014-15 is Rs. 18,65,477/-.
b) Amount spent during the year.
Amount (in Rs) Yet to
Sr. Particulars spent in cash * be paid Total
No. in cash (in Rs)
i Amount contributed 1,18,800/- Nil 1,18,800/-
to Giants Groups
of Sihor
ii Amount contributed 20,00,000/- Nil 20,00,000/-
to OM Ram Mantra
Mandir Trust
*Represents actual outflow during the year.
15. Related Party Disclosure:
As per AS-18, the disclosure in respect of transactions with Related
Parties is given below:
Sr. Nature of Namiutere of
No. Expenditure Person/Entity
1 Remuneration Directors
2 Dividend Directors, Relatives
and Associate Enterprise
3 Rent Associate Enterprise
4 Security Deposit Associate Enterprise
Sr. Nature of Amount Paid
No. Expenditure
31st March, 2015 31st March, 2014
1 Remuneration 1,05,82,037.00 1,05,73,589.00
2 Dividend 1,11,33,692.70 90,83,936.40
3 Rent 37,80,000.00 37,80,000.00
4 Security Deposit 30,00,000.00 30,00,000.00
Mar 31, 2014
1. Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost
convention on the ÂAccrual Concept" of accountancy in accordance with
the accounting principles generally accepted in India the applicable
Accounting Standards notified u/s 211(3C) of the Company''s Act, 1956
and specified in Companies (accounting Standard) Rules, read with the
General Circular No. 15/203 Dated September, 12, 2013 issued by the
Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013 pronouncement of the Institute of Chartered
Accountants of India, and the provisions of the Companies Act, 1956 and
the applicable sections of Companies Act, 2013.
2. Fixed Asset:
Fixed assets are stated at historical cost of acquisition /
construction less accumulated depreciation and impairment loss, if any.
Cost includes all expenses related to acquisition and installation of
the concerned assets and excludes any duties/taxes recoverable and
capital subsidy/grant received. Subsequent expenditure incurred on
existing fixed asset is expensed out except where such expenditure
increases the future economic benefits from the existing assets.
3. Depreciation:
Depreciation on fixed asset have been provided on the written down
value method except with reference to factory building and godown at
Sihor on which depreciation has been provided on straight line basis.
The depreciation on fixed assets have been provided on pro-rata basis
commencing from the date of purchase /acquisition/ installation/ from
the date it is put to use.
4. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors; such impairment loss is recognized wherever the carrying
amount of asset exceeds its recoverable amount.
5. Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are restated at year end exchange rates.
Exchange rate differences arising on the settlement of foreign
currencies monetary items or on reporting Company''s foreign currency
monetary items at rates different from those at which they were
initially recorded during the year or reported in the previous year
financial statements are recognised as income or expense in the year in
which they arise.
6. Investments:
Long term investments are stated at cost. Diminutions in value of an
investment which are temporary in nature are not recognized.
7. Revenue Reorganization
Revenue is recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection. Revenue from operation
includes sale of goods, excise duty, value added tax and export
earnings. Dividend income is recognized when right to receive is
established. Interest income is recognized on time proportion basis
taking to account the amount outstanding and the rate is applicable.
8. Excise Duty
Excise is accounted on the basis of payment made in respect of goods
cleared. No provision is made in respect of goods lying in a bonded
warehouse. However the same does not have any impact on the profit
earned by the company
9. Employee Benefit
I) Short Term employee benefits are recognized as expense at the
undiscounted amount in the Profit & Loss Account of the Year
in which the related services is rendered ii) Post Employment and long
term benefits are recognized as expenditure in the Profit & Loss
Account for the Year in which the employee has rendered services. The
expense is recognized at the present value of the amount payable
determined using actuarial valuation technique.
10. Provision for Current and Deferred Tax
Provision for Current taxes is made after taking into consideration
benefits admissible under the provision of Income Tax Act 1961.
Deferred Tax resulting from ÂTiming Difference" between taxable and
accounting income is accounted for using the tax rates in force that
are substantively enacted as on the balance sheet date. Deferred tax
assets is recognized and carried forward only to the extent that there
is a virtual certainty assets will be realized in future.
11. 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 a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate 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 obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made. Contingent Liabilities
are not recognized but are disclosed in notes.
12. Previous year''s figures have been regrouped and rearranged
wherever necessary.
Mar 31, 2012
1. Basis of Preparation of Financial Statements:
The financial statements are prepared under the historical cost
convention on the "Accrual Concept" of accountancy in accordance
with the accounting principles generally accepted in India and they
comply with the Accounting Standards prescribed in the Companies
(accounting Standards) rule, 2006 issued by the Central Government to
the extent applicable and with the applicable provisions of the
Companies Act, 1956.
2. Fixed Asset:
Fixed assets are stated at historical cost of acquisition /
construction less accumulated depreciation and impairment loss, if any.
Cost (Net of Input tax credit received / receivable) compromises the
purchase price and any attributable cost of bringing the asset to its
working condition for its intended use.
3. Depreciation:
Depreciation on fixed asset have been provided on the written down
value method at the rate prescribed in the Schedule XIV of the
Companies Act, 1956 except with reference to factory building and
godown at Sihor on which depreciation has been provided on straight
line basis. The depreciation on fixed assets have been provided on
pro-rata basis commencing from the date of purchase /acquisition/
installation/ from the date it is put to use.
4. Impairment of assets:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors; such impairment loss is recognized wherever the carrying
amount of asset exceeds its recoverable amount.
5. Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are restated at year end exchange rates.
Exchange rate differences arising on the settlement of foreign
currencies monetary items or on reporting Company's foreign currency
monetary items at rates different from those at which they were
initially recorded during the year or reported in the previous year
financial statements are recognized as income or expense in the year in
which they arise.
6. Investments:
Long term investments are stated at cost. Diminutions in value of an
investment which are temporary in nature are not recognized.
7. Inventories:
Items of inventories are valued (as per guidelines laid down by the
Institute of Chartered Accountants of India in Accounting Standard-2
(Revised) titled Valuation of Inventories" as follows :
I Raw & Packing Materials At cost on the basis of First in First out
Method.
II Work in progress At cost or net realizable value whichever is lower
including appropriate overheads incurred thereon.
III Finished Goods At cost or net realizable value whichever is lower
inclusive of cost of materials, labour and other related overheads
8. Revenue Recognition
Revenue is recognized only when it can be reliably measured and it is
reasonable to expect ultimate collection. Revenue from operations
includes sale of goods, excise duty, value added tax and export
earnings. Dividend income is recognized when right to receive is
established. Interest income is recognized on time proportion basis
taking into account the amount outstanding and the rate is applicable.
9. Excise Duty
Excise Duty is accounted on the basis of payment made in respect of
goods cleared. No provision is made in respect of goods lying in a
bonded warehouse. However the same does not have any impact on the
profits earned by the company.
10. Employee Benefit
i). Short Term employee benefits are recognized as expense at the
undiscounted amount in the Profit & Loss Account of the Year in which
the related services is rendered.
ii) Post Employment and long term benefits are recognized as
expenditure in the Profit & Loss Account for the Year in which the
employee has rendered services. The expense is recognized at the
present value of the amount payable determined using actuarial
valuation technique.
11. Provision for Current and Deferred Tax
Provision for Current taxes is made after taking into consideration
benefits admissible under the provision of Income Tax Act 1961.
Deferred Tax resulting from "Timing Difference" between taxable and
accounting income is accounted for using the tax rates in-laws that are
substantively enacted as on the balance sheet date. Deferred tax assets
is recognized and carried forward only to extend that there is a
virtual certainty that the assets will be realized in future.
12. 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 a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate 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 obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made. Contingent Liabilities
are not recognized but are disclosed in notes.
13. Previous year's figures have been regrouped and rearranged
wherever necessary.
Mar 31, 2011
A) Basis of Accounting:
The financial statements are prepared under the historical cost
convention on the ÃAccrual Conceptà of accountancy in accordance with
the accounting principles generally accepted in India and they comply
with the Accounting Standards prescribed in the Companies (accounting
Standards) rule, 2006 issued by the Central Government to the extent
applicable and with the applicable provisions of the Companies Act,
1956.
b) Fixed Asset:
Fixed assets are stated at historical cost of acquisition /
construction less accumulated deprecation and impairment loss, if any.
Cost (Net of Input tax credit received / receivable) compromises the
purchase price and any attributable cost of bringing the asset to its
working condition for its intended use.
c) Depreciation:
Depreciation on fixed asset have been provided on the written down
value method at the rate prescribed in the Schedule XIV of the
Companies Act, 1956 except with reference to factory building and
godown at Sihor on which depreciation has been provided on straight
line basis. The depreciation on fixed assets have been provided on
pro-rata basis commencing from the date of purchase /acquisition/
installation/ from the date it is put to use.
d) Inventories:
Items of inventories are valued (as per guidelines laid down by the
Institute of Chartered Accountants of India in Accounting Standard-2
(Revised) titled ÃValuation of Inventoriesà as follows :
i Raw and Packing Materials At cost on the basis of First in
First out Method.
ii Work in progress At cost or net realisable value
whichever is lower including
appropriate overheads incurred
thereon.
iii Finished Goods At cost or net realisable value
whichever is lower inclusive of
cost of materials, labour and
other related overheads.
e) Foreign Exchange Transactions:
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are restated at year end exchange rates.
Exchange differences arising on the settlement of foreign currencies
monetary items or on reporting CompanyÃs foreign currency monetary
items at rate different from those at which they were initially
recorded during the year or reported in the previous year financial
statements are recognised as income or expense in the year in which
they arise.
f) Investments:
Long term investments are stated at cost. Diminutions in value of an
investment which are temporary in nature are not recognized.
g) Research and development:
Revenue expenditure on Research & Development is recognized as expense
in the year in which it is incurred.
h) Revenue Recognition:
Revenue in respect of insurance/other claims, commission etc. are
recognised only when it is reasonably certain that the ultimate
collection will be made.
i) Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors; such impairment loss is recognised wherever the carrying
amount of asset exceeds its recoverable amount.
j) Provisions and Contingent Liabilities:
A provision is recognised 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 a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate 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 obligation or a present
obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.
k) Employeesà Retirement Benefits:
The company has classified various retirement benefits as under:-
b) Defined Benefit Plans:
1) Gratuity for employees managed by Life Insurance Corporation of
India, Mumbai.
2) Leave Encashment Benefit for Employeesà at Mumbai.
The company has made an arrangement with LIC of India for gratuity and
leave encashment payable to employees at the time of their retirement
or otherwise. In terms of AS-15 of ICAI, Actuarial valuation was
carried out by an actuary in respect of gratuity and leave encashment
liability as existed on 31.03.2009, including past liability. Based on
the said report, provision in respect of gratuity and leave encashment
was made in accounts for the year ended 31.03.2009, for liability
pertaining to the F.Y. 2008-09. Since the liabilities in respect of
past services was determined at Rs.37,09,599/- and Rs. 29,69,763/- for
gratuity and leave encashment respectively, the company had decided to
recognize the same over a period of 3 years beginning from F.Y. 2008-09
in 3 equal installments of Rs.12,36,533/- and Rs.9,89,921/- each, and
accordingly necessary provisions were made in the accounts.
In the F.Y. 2009-10, the company had contributed a sum of
Rs.36,18,366/- and Rs.31,73,372/- towards gratuity and leave encashment
liability to LIC of India. The said contribution was far in excess of
Current Service Cost (relating to liability of F. Y. 2009-10) and
covered the past liability also.
In the light of the above facts no provision is required to be made in
the accounts of the current F.Y. 2010-11 for the past liability (in
terms of note no. 1(m)(B) of Notes to Accounts for the F.Y. 2008-09)
Contribution for Group Gratuity Scheme of LIC (F.Y. 2010-11)
In the current FY 2010-11, company has made a contribution of
Rs.19,96,238/- which is in excess of Current Service Cost (relating to
liability of FY 2010-11) of Rs.7,05,597/- and recognized past liability
(relating to FY 2008-09) of Rs.7,80,326/- and provision appearing in
the accounts is no longer required.
The contribution made by the company towards Group Gratuity Scheme of
LIC is charged to the Revenue Account.
Leave Encashment for employees at Plant:
Provision for Leave Encashment payable to employees (at plant) at the
time of their retirement or otherwise is estimated based on present
salary drawn by the employees as on the date of Balance Sheet and
accordingly provisions are made in the accounts. Provision for the
current year is Rs 3,44,828/- (Rs 1,52,000/- for the F.Y. 31st March,
2010).
l) Taxes on Income:
Tax expenses comprise of current and differed taxes. Current income tax
is measured at the amount expected to be paid in accordance with the
Indian Income Tax Act.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income to the year
and reversal of timing differences of earlier years. Differed tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance Sheet date.
Mar 31, 2010
A) System of Accounting:
The Company follows accrual System of Accounting for all the items of
revenue and cost.
b) Inflation:
Assets and Liabilities are shown at historical cost. No adjustments are
made for changes in purchasing power of money.
c) Fixed Assets:
Fixed assets are recorded at cost net of cenvat.
d) Depreciation:
Depreciation on fixed asset have been provided on the written down
value method at the rate prescribed in the Schedule XIV of the
Companies Act, 1956 except with reference to factory building and
godown at Sihor on which depreciation has been provided on straight
line basis. The depreciation on fixed assets have been provided on
pro-rata basis commencing from the date of purchase /acquisition/
installation/ from the date it is put to use.
e) Inventories:
Items of inventories are valued (as per guidelines laid down by the
Institute of Chartered Accountants of India in Accounting Standard - 2
(Revised) titled "Valuation of Inventories" as follows:
i Raw and Packing Materials At cost on the basis of first in first out
method.
ii Work in progress At cost or net realisable value whichever is lower
including appropriate overheads incurred thereon._
iii Finished Goods
At cost or net realisable value whichever is lower inclusive of cost of
materials, labour and other related overheads. Stock of finished goods
includes stock of samples valued at cost.
f) Sales:
Sales is inclusive of excise duty, net of VAT.
g) Foreign Currency Transaction:
Foreign currency transactions remaining unsettled at the end of year
are translated at year end rates and foreign currency transactions
pertaining to raw material, settled during the year are accounted on
the basis of actual payment made.
h) Investments:
Investments that are intended to be held for a reasonably long period
are classified as long term investments and valued at cost. Diminutions
in value of an investment which are temporary in nature are not
recognized.
i) Research and Development:
Revenue Expenditure pertaining to Research and Development is charged
to Profit and Loss Account.
j) Revenue Recognition:
Revenue in respect of insurance/other claims, commission etc. is
recognised only when it is reasonably certain that the ultimate
collection will be made.
k) Impairement of Assets:
The carrying amount of assets are reviewed at each Balance Sheet date
for identifying an impairment based on internal / external factors.
Loss on impairment is provided to the extent the carrying amount of
assets exceeds its recoverable amount.
l) Provisions:
The Company recognises provision only when there is a present
obligation as a result of past events and covers a reliable estimate of
amount of obligation can be made.
B. Defined Benefit Plans:
1. Gratuity for employees of Mumbai and Plant s
2. Leave Encashment Benefit for Employees at Mumbai
The company has made an arrangement with LIC of India for gratuity and
leave encashment payable to employees at the time of their retirement
or otherwise. In terms of AS-15 of ICAI Actuarial valuation was carried
out by an actuary in respect of gratuity and leave encashment liability
as existed on 31.03.2009, including past liability. Based on the said
report, provision in respect of gratuity and leave encashment was made
in accounts for the year ended 31.03.2009, for liability pertaining to
the F.Y.2008-09.Since the liabilities in respect of past services
wasdetermined at Rs. 37,09,599/- and Rs.29,69,763/- for gratuity and
leave encashment respectively, the company had decided to recognize the
same over a period of 3 years beginning Financial Year 2008-09 in 3
equal installment of Rs. 12,36,533/-and Rs.9,89,921/-each, and
accordingly necessary provisions were made in the accounts.
However, in current financial year company has contributed a sum of
Rs.36,18,366/- and Rs.31,73,372/- towards Gratuity and leave encashment
liability to LIC of India. The said contribution is in excess of
Current Service Cost (relating to liability of F. Y.2009-10), which
covers past liability of the company also. The contribution to LIC is
charged to Revenue Account.
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