Accounting Policies of Kesar Petroproducts Ltd. Company

Mar 31, 2018

Note No 21. GENERAL INFORMATION

Kesar Petroproducts Limited is a Public Limited Company incorporated on 01st January 1990 for manufacturing Organic Chemicals, Bisphenol-A and is an ongoing concern since then.

A. BASIS FOR PREPARATION OF FINANCIAL STATEMENTS

(a) Statement of Compliance

The shares of the company are listed on Bombay Stock Exchange(BSE).

The Company’s financial statements complies in all material aspects with Indian Accounting Standards (Ind AS) notified under Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Companies Act, 2013 (the Act).

The financial statements up to the year ended 31 March 2017 were prepared in accordance with the Accounting Standards notified under the Companies (Accounting Standard) Rules, 2006 as amended and other relevant provisions of the Act (Previous GAAP).

(c) Use of estimates and judgments

Preparation of these financial statements is in conformity with IndAS. It requires the management to make estimates and assumptions considered in the reported amounts of assets, liabilities (including contingent liabilities), income and expenses. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Actual results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize. Estimates include the useful lives of property plant and equipment and intangible fixed assets, allowance for expected credit loss, future obligations in respect of retirement benefit plans, fair value measurement etc.

(d) Measurement of fair values

Accounting Policies and disclosures requires measurement of fair values for both financial and non-financial assets and liabilities. Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that entity can access at measurement date.

- Level 2 inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and

- Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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 12 months for the purpose of classification of its assets and liabilities as current and non-current

Presentation of financial statements

The Balance Sheet and the Statement of Profit and Loss are prepared and presented in the format prescribed in Schedule III to the Companies Act, 2013 modified in accordance with the requirements of Ind AS. The Cash Flow Statement has been prepared and presented as per the requirements of Ind AS 7 "Statement of Cash Flows". The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in Schedule III to the Act, are presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards.

Amounts in the financial statements are presented in Indian Rupees.

B SIGNIFICANT ACCOUNTING POLICIES B1 REVENUE RECOGNITION

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognized when the goods are dispatched and titles have passed, at which time all the following conditions are satisfied:

- The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

Note No 21. GENERAL INFORMATION (contd.)

- The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

- The amount of revenue can be measured reliably;

- It is probable that the economic benefits associated with the transaction will flow to the Company; and

- The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract. Servicing fees included in the price of products sold are recognized by reference to the proportion of the total cost of providing the servicing for the product sold.

Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on, time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

B2 PROPERTY, PLANT AND EQUIPMENT (PPE)

Property, plant and equipment (including furniture, fixtures, vehicles, etc.) held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses. Freehold land is not depreciated.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes items directly attributable to the construction or acquisition of the item of property, plant and equipment, and, for qualifying assets, borrowing costs capitalized in accordance with the Company’s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as-other property assets, commences when the assets are ready for their intended use.

Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. Depreciation is charged on a pro-rata basis at the straight line method over estimated economic useful lives of its property, plant and equipment generally in accordance with that provided in the Schedule II to the Act.

Depreciation of an asset begins when it is available for use. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that it is classified as held for sale) in accordance with Ind AS 105 and the date that the asset is de-recognized. Therefore depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.

However under usage methods of depreciation the depreciation charge can be zero while there is no production.

Depreciation on additions/ deductions is calculated pro-rata from/ to the month of additions/ deductions.

An item of property, plant and equipment is derecognized upon disposal. Any gain or loss arising on the disposal of an item of property plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in the statement or profit and loss. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis

B3 INTANGIBLE ASSETS

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful

lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.

B4 IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS

The carrying amount of assets are reviewed at each Balance Sheet date, to assess , if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the assets exceeds the recoverable amount. Recoverable amount is the higher of fair value less costs of disposal and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired.

When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

B5 INVENTORIES :

Inventories are valued at the lower of cost, determined on the weighted average basis and Net Realizable Value (NRV).

The cost of Finished Goods and Work in Progress comprises raw material, direct labour, other direct cost and appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs of Inventories also include all the cost incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. NRV is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated cost necessary to make the sale.

B6 FOREIGN CURRENCY TRANSACTIONS :

In preparing the financial statements of the Company, transactions in currencies other than the company’s functional currency (foreign currencies)are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognized in profit or loss in the period in which they arise.

Foreign currency derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.

B7 EMPLOYEES BENEFITS :

Company’s contributions paid/ payable during the year to Provident Fund and Employees’ State Insurance Corporation (ESIC) are recognized in the Profit & Loss Account; Provident Fund contributions are made to a Trust administered by the company. The interest rate payable to the members of this trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the company. The remaining contributions are made to a Government Administered Employee Pension Fund towards which the company has no further obligations beyond its monthly contributions.

Defined benefits and other long term employee benefits are provided on the basis of actuarial valuation made at the end of each financial year. Actuarial gain or losses arising from such valuation are charged to Other Comprehensive Income in the year in which they arise.

B8 RESEARCH & DEVELOPMENT EXPENDITURE

Expenditure on research activities is recognized as an expense in the period in which it is incurred where no internally generated asset can be recognized.

B9 FINANCIAL INSTRUMENTS

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

Financial Assets

All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets

Investments in debt instruments that meet the following conditions are subsequently measured at amortized cost (unless the same are designated as fair value through profit or loss (FVTPL)):

- The asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

- The contractual terms of instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (unless the same are designated as fair value through profit or loss)

- The asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets; and

- The contractual terms of instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Debt instruments at FVTPL are a residual category for debt instruments and all changes are recognized in profit or loss.

Investments in equity instruments are classified as FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in Other Comprehensive Income (OCI) for equity instruments which are not held for trading.

Interest income, dividend income and exchange difference (on debt instrument) on Fair Value Through Other Comprehensive Income (FVTOCI) debt instruments is recognized in profit or loss and other changes in fair value are recognized in OCI and accumulated in other equity. On disposal of debt instruments FVTOCI the cumulative gain or loss previously accumulated in other equity is reclassified to profit & loss. However in case of equity instruments at FVTOCI cumulative gain or loss is not reclassified to profit & loss on disposal of investments.

Financial Liabilities and Equity Instruments Classification as debt or equity

Debt and equity instruments issued by Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Financial liabilities

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance Costs’ Line item.

The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability.

a. Loans and borrowings are subsequently measured at amortized costs using Effective Interest Rate method.

b. Financial liabilities at fair value through profit or loss (FVTPL) are subsequently measured at fair value.

c. Financial guarantee contracts are subsequently measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.

d. Financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

e. Other Secured Loans from M/s Malvika Harbopharma (P) Ltd are secured by 1st charge all the Fixed Assets including the Housing Colony.

f. Disclosure regarding parties and transactions as required by Ind AS-24 issued by the Institute of Chartered Accountants of India are us under:

B10 Impairment of financial assets (Expected Credit Loss Model)

The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, debt instruments at FVTOCI, lease receivables, trade receivables, other contractual rights to receive cash or other financial asset and financial guarantees not designated at FVTPL

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract/agreement and all the cash flows that the Company expects to receive (i.e.. all cash shortfalls), discounted at the original effective interest rate. The Company estimates cash flows by considering all contractual terms of the financial instrument, through the expected life of the financial instrument.

The Company measures the loss allowance for a financial instrument at an amount equal to the life-time expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk has not increased significantly, the Company measures the loss allowance at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if the default occurs within 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.

When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of a change in the amount of the expected credit loss. To achieve that, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.

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Mar 31, 2016

NOTE 1: Corporate information & history:

Kesar Petro products Limited is a Public Company incorporated on 01 January 1990 for manufacturing organic chemicals, Bisphenol-A and is an ongoing concern since then. The company is listed in the Bombay Stock Exchange Limited.

NOTE 2: (a) Basis of preparation of financial statements:

The accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

(b) Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat/ Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition.

(d) Impairment:

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on Fixed Assets has been provided based on the life assigned to each asset in accordance with the Schedule II of Companies Act, 2013 and based on internal technical evaluation..

(f) Investments:

Long term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long term investments are stated at the lower of cost and fair value.

(g) Inventories:

i) Raw materials including consumables and stores & spares are valued at cost. The cost determined on the basis of FIFO method.

ii) Work-in-process is valued at cost of materials and labor together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method.

iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less.

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets.

(i) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax:

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

(j) Foreign Currency Transactions:

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

b) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(k) Revenue Recognition:

i. Revenue in respect of sale of products is recognized at the point of dispatch to customers.

ii. Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii. Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv. Income from Services is recognized as and when the services are rendered.

v. Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

vi. Dividend income is recognized when the right to receive dividend is established.

vii. Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(l) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(m) Secured Loans:

a. Other Secured Loans from M/s. Malvika Harbopharma (P) Ltd are secured by a 1st charge upon all the Fixed Assets including the Housing Colony.

(n) Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under:-

A. NAME OF RELATED PARTY AND THEIR RELATIONSHIP

a. Associate Company Nil

b. Directors i) Shri Nazirsaheb M. Sayyed

ii) Shri. Mohit Kaushik

iii) Shri Sunil Sawant

iv) Smt. Snehalata Sharma

v) Shruti Sharma

c. Relatives of Key Managerial Personnel i)Manali More - Chief Financial Officer ( Appointed w.e.f.

5^th December,2015)

ii) Anil Rajkotia - Company Secretary & Compliance Officer

(o) Provisions, contingent liabilities and contingent assets:

A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which 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. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

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

(p) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company''s primary business segment is Chemicals. As the Company''s business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(q) Cash and Cash Equivalents:

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

(r) The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31.20 Lacs (PY Rs. 31.20 Lacs) shall be repayable after nine years in five equal annual installments. (s) The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee.

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Mar 31, 2015

(a) Basis of preparation of financial statements:

The accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

(b) Use of estimates:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision of accounting estimates is recognized prospectively in current and future period.

(c) Fixed Assets:

Fixed assets are stated at historical cost less accumulated depreciation and impairment losses if any and net of Cenvat/ Value Added Tax. Cost includes all attributable expenses in bringing the assets to its working condition.

The Company has revalued Fixed Assets, for the year ended 31.03.2015. The Revaluation of the year ended 31.03.2015 has resulted into a Profit of Rs.280,656,260.05/- and the same has been credited to the Revaluation Reserve Account and shown in the Balance Sheet as at 31.03.2015 under the head, Reserves & Surplus.

(d) Impairment:

The carrying amount of asset is reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount.

(e) Depreciation:

Depreciation on Fixed Assets has been provided based on the life assigned to each asset in accordance with the Schedule II of Companies Act, 2013 and based on internal technical evaluation, with effect from 01.04.2014.

(f) Investments:

Long term investments are stated at cost, less provision for other than temporary diminution in value. Current investments, except for current maturities of long term investments are stated at the lower of cost and fair value.

(g) Inventories:

i) Raw materials including consumables and stores & spares are valued at cost. The cost determined on the basis of FIFO method.

ii) Work-in-process is valued at cost of materials and labour together with relevant factory overheads. The cost of work in progress is determined on the basis of weighted average method

iii) The finished goods are valued at cost inclusive of excise duty (or) net realizable value whichever is less

(h) Research and Development:

Revenue expenditure on Research and Development is charged to the Profit and Loss Account and Capital Expenditure is added to the cost of fixed assets.

(i) Taxation:

1. Current Tax:

Provision for taxation has been made on assessable profits of the Company as determined Under the Income Tax Act, 1961.

2. Deferred Tax:

In terms of AS.22, the deferred tax for timing differences between the book and tax profit arising out of capital expenditure on research and development, depreciation and provisions for the year is accounted by using the tax rates and laws that have been in force as of the Balance Sheet date.

(j) Foreign Currency Transactions:

a) Transactions in foreign currency are recorded on initial recognition at the exchange rate prevailing at the time of the transaction.

b) Monetary items (i.e. receivables, payables, loans, etc.) denominated in foreign currency are reported using the closing exchange rate on each balance sheet date.

c) The exchange difference arising on the settlement of monetary items on reporting these items at rates different from rates at which these were initially recorded / reported in previous financial statements are recognized as income/expense in the period in which they arise.

(k) Revenue Recognition:

i. Revenue in respect of sale of products is recognized at the point of dispatch to customers.

ii. Sales comprise of value of sale of goods (Net of returns) excluding Sales Tax and Excise Duty.

iii. Revenue in respect of investments is recognized as and when these incomes are ascertained and quantified.

iv. Income from Services is recognized as and when the services are rendered.

v. Export benefits are recognized in the profit and loss account when the right to receive credit as per the terms of the entitlement is established in respect of exports made.

vi. Dividend income is recognized when the right to receive dividend is established.

vii. Lease income under operating lease is recognized in Profit and Loss Account on the basis of accrual of income as per terms of the agreement.

(l) Earnings Per Share (EPS):

The basic EPS is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year.

Diluted EPS is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year except where the results would be anti dilutive.

(m) Secured Loans:

a. Loans from Financial Institutions assigned to the New Promoters are secured by equitable mortgage of immovable assets (excluding Housing Colony), hypothecation of all the company's moveable assets, (except Book Debts), both present & future, personal guarantees of the then Managing Director and a charge upon the assets of the company as per the Deeds of Assignment duly entered into by the company which exceed over Rs. 6500.00 Lacs in favour of the Secured Lenders per se.

b. Other Secured Loans from M/s. Malvika Harbopharma (P) Ltd are secured by a 1st charge upon all the Fixed Assets including the Housing Colony.

c. Loans from M/s. Invent Assets Reconstruction Company Limited are secured by a 2nd charge upon all the Fixed Assets.

M/s. Invent Assets Reconstruction Company Limited (IARCL) has initiated recovery procedure under the provisions of the Securitization &Reconstruction Of Financial Assets &Enforcement Of Security Interest Act, 2002 wherein it has taken possession of the Residential Colony located at Lote, Ratnagiri. The possession by IARCL has been in consultation with the 1st charge holders M/s. Malvika Harbopharma Private Limited who retain the say in all the settlement of dues of the said loans.

(n) Disclosure regarding parties and transactions as required by AS - 18 issued by the Institute of Chartered Accountants of India are as under:-

B. TRANSACTIONS WITH RELATED PARTY:

The company has not entered into any transactions with related party within the meaning of Accounting Standard 18 "Related Parties Disclosure".

(o) Provisions, contingent liabilities and contingent assets:

A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which 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. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

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

(p) Segment Reporting:

Based on the guiding principles given in Accounting Standards on "Segment Reporting (AS-17) issued by the ICAI and on the basis of Management Certification, the Company's primary business segment is Chemicals. As the Company's business activity falls within a single primary business segment, the disclosure requirements of AS-17 in this regard does not arise.

(q) Cash and Cash Equivalents:

Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

(r) The company has opted for Deferral Scheme of Sales Tax liability w.e.f. 01/07/2003. Accordingly the sales tax liability of Rs. 31,19,762 (PY Rs. 31,19,762) shall be repayable after nine years in five equal annual installments.

(s) The figures of the previous years have been regrouped/rearranged wherever necessary and the figures are rounded off to the nearest rupee.

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Mar 31, 2014

1. BASIS OF PREPARATION OF ACCOUNTS:

a. The company had been referred to the BIFR for a Rehabilitation Scheme in the year 2005-2006 and accordingly has been restructured and has commenced commercial production in the year 2009- 2010.During the year, the company has been declared out of the purview of the Sick Companies definition as per BIFR Order dated 09/12/2013. The accounts of the company have been prepared on "Going Concern Basis".

b. The accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

2. METHOD OF ACCOUNTING:

The accounts of the company have been prepared on accrual basis of accounting except for encashment of leave salary and gratuity, which are accounted for on cash basis. The same is not in consonance with the provisions of AS-15 "Accounting for Retirement Benefits in Financial Statements" issued by the Institute of Chartered Accountants of India.

3. FIXED ASSETS:

a. Tangible Fixed Assets are stated at their historical costs less depreciation and upon provision of Impairment Losses duly recognized as per the provisions of AS28 issued by the Institute of Chartered Accountants of India. Cost of Acquisition or construction is inclusive of taxes and other incidental expenses up to date, the assets are put to use.

b. Modifications or cost of improvements to the existing Plant & Machinery is capitalized if it increases its useful life as well as capacity of the plant. All other replacement costs are charged to the Profit & Loss Account.

4. DEPRECIATION

1. Depreciation on Plant & Machinery, Buildings has been provided on SLM basis for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956. Plant & Machinery is treated as a continuous process plant, since the same is required and designed to operate throughout the year.

2. In the case of other Fixed assets, depreciation is provided on Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

5. INVESTMENTS

Investments are all long term and are stated at costs.

6. VALUATION OF INVENTORY

The Stocks of Materials, Stores, Spares and Packing Materials are valued at cost based on weighted average method. Stock-in -Process and Finished Goods are valued at cost or net realizable values, whichever is lower.

7. RETIREMENT BENEFITS:

The company has various schemes of Retirement Benefits such as Provident Fund, Gratuity, Leave Encashment. The liability for gratuity and Leave Encashment has however not been actuarially determined and the company continues to account for such liability on actual payment basis.

8. REVENUE RECOGNITION

The company recognizes revenue on sale of product, net of discounts and applicable taxes viz VAT, Sales Tax CST etc, when the product is shipped to customer i.e. when the risk and rewards of the ownership is passed on to the customer. The income from services is recognized net of taxes. The Turnover for the year includes Sale Value of Goods& Services excluding rebates& discounts.

9. FOREIGN CURRENCY TRANSACTIONS

The transactions of involving Foreign Exchange on revenue account, for foreign travel, imports, exports income / loss are accounted at exchange rate prevailing on the date of transaction and unsettled transactions are translated at the rate prevailing at the year end. Any income or expense on account of exchange difference on transaction is recognized in the Profit & Loss Account, except ion the case where they relate to acquisition of Fixed Assets. Premium on forward contract is also accounted for in proportions over the period of contract.

10. EXPENDITURE ON BENEFITS OF ENDURING NATURE

Revenue Expenditure on retrenchment expenses including expenses related thereto whose benefits are to be received in coming years are treated as deferred expenditure and such expenditures are amortized over a period of 10 years.

11. CENVAT BENEFIT

Cenvat benefit is accounted for on accrual basis on purchase of raw materials and Capital Goods

12. GOVERNMENT GRANTS

Revenue grants are recognized in the Profit & Loss Accounts. Capital Grants are credited to Capital Reserves.

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Mar 31, 2012

1) BASIS OF PREPARATION OF ACCOUNTS:

a. The company had been referred to the BIFR for a Rehabilitation Scheme in the year 2005-2006 and accordingly has been restructured and has commenced commercial production in the year 2009-2010. The accounts of the company have been prepared on "Going Concern Basis".

b. The accounts have been prepared on historical cost basis ignoring changes' if any' in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

2) METHOD OF ACCOUNTING:

The accounts of the company have been prepared on accrual basis of accounting except for encashment of leave salary and gratuity' which are accounted for on cash basis. The same is not in consonance with the provisions of AS-15 "Accounting for Retirement Benefits in Financial Statements" issued by the Institute of Chartered Accountants of India.

3) FIXED ASSETS:

(a) Tangible Fixed Assets are stated at their historical costs less depreciation and upon provision of Impairment Losses duly recognized as per the provisions of AS28 issued by the Institute of Chartered Accountants of India. Cost of Acquisition or construction is inclusive of taxes and other incidental expenses up to date' the assets are put to use.

(b) Modifications or cost of improvements to the existing Plant & Machinery is capitalized if it increases its useful life as well as capacity of the plant. All other replacement costs are charged to the Profit & Loss Account.

4) DEPRECIATION

1. Depreciation on Plant & Machinery' Buildings has been provided on SLM basis for the period of use at the rates prescribed in Schedule XIV to the Companies Act' 1956. Plant & Machinery is treated as a continuous process plant' since the same is required and designed to operate throughout the year.

2. In the case of other Fixed assets' depreciation is provided on Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act' 1956.

5) INVESTMENTS

Investments which are all long term are stated at costs.

6) VALUATION OF INVENTORY

a) The Stocks of Materials' Stores' Spares and Packing Materials are valued at cost based on weighted average method. Stock-in -Process and Finished Goods are valued at cost or net realizable values' whichever is lower.

During the year no production operations have been undertaken by the company accept on job working basis. In view of the same' we anticipate a significant reduction in the valuation of the Stocks of Materials' Stores' Spares and Packing Materials of the company as valued by the management due to expiration of its useful life' obsolescence and damages. However the management has not provided for any diminution or devaluation in the values of the same. The above devaluation could not be quantified by us and in our opinion the value of the stock remains overstated and the losses remain equivalents understated as shown in the report due to the same.

7) RETIREMENT BENEFITS:

The company has various schemes of Retirement Benefits such as Provident Fund' Gratuity' Leave Encashment. The liability for gratuity and Leave Encashment has however not been actuarially determined and the company continues to account for such liability on actual payment basis.

8) REVENUE RECOGNITION

The company recognizes revenue on sale of product' net of discounts and applicable taxes viz VAT' Sales Tax CST etc' when the product is shipped to customer ie. when the risk and rewards of the ownership is passed on to the customer. The income from services is recognized net of taxes. The Turnover for the year includes Sale Value of Goods & Services excluding rebates & discounts.

9) FOREIGN CURRENCY TRANSACTIONS

The transactions of involving Foreign Exchange on revenue account' for foreign travel' imports' exports income / loss are accounted at exchange rate prevailing on the date of transaction and unsettled transactions are translated at the rate prevailing at the year end. Any income or expense on account of exchange difference on transaction is recognized in the Profit & Loss Account' except ion the case where they relate to acquisition of Fixed Assets. Premium on forward contract is also accounted for in proportions over the period of contract.

10) EXPENDITURE ON BENEFITS OF ENDURING NATURE

Revenue Expenditure on retrenchment expenses including expenses related thereto whose benefits are to be received in coming years are treated as deferred expenditure and such expenditures are amortized over a period of 10 years.

11) CENVAT BENEFIT

Cenvat benefit is accounted for on accrual basis on purchase of raw materials and Capital Goods

12) GOVERNMENT GRANTS

Revenue grants are recognized in the Profit & Loss Accounts. Capital Grants are credited to Capital Reserves.

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Mar 31, 2011

I) BASIS OF PREPARATION OF ACCOUNTS:

The company had been referred to the BIFR for a Rehabilitation Scheme in the year 2005-2006 and accordingly has been restructured and has commenced commercial production in the year 2009-2010. The accounts of the company have been prepared on "Going Concern Basis".

The accounts have been prepared on historical cost basis ignoring changes, if any, in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on - accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles,

II) METHOD OF ACCOUNTING:

The accounts of the company have been prepared on accrual basis of accounting except for encashment of leave salary and gratuity, which are accounted for on cash basis. The same is not in consonance with the provisions of AS-15 "Accounting for Retirement Benefits in Financial Statements" issued by the Institute of Chartered Accountants of India.

III) FIXED ASSETS:

(a) Fixed Assets are stated at their historical costs less depreciation and upon provision of Impairment Losses duly recognized asper the provisions of AS28 issued by the Institute of Chartered Accountants of India. Cost of Acquisition or construction is inclusive of taxes and other incidental expenses up to date, the assets are put to use.

(b) Modifications or cost of improvements to the existing Plant & Machinery is capitalized if it increases its useful life as well as capacity of the plant. All other replacement costs are charged to the Profit & Loss Account.

IV) DEPRECIATION

a) Depreciation on Plant & Machinery, Buildings has been provided on SLM basis for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956. Plant & Machinery is treated as a continuous process plant, since the same is required and designed to operate throughout the year.

b) In the case of other Fixed assets, depreciation is provided on Written Down Value method at the rates ' prescribed in Schedule XIV to the Companies Act, 1956.

V) INVESTMENTS

Investments which are all long term are stated at costs.

VI) VALUATION OF INVENTORY

a) The Stocks of Materials, Stores, Spares and Packing Materials are valued at cost based on weighted average method. Stock-in -Process and Finished Goods are valued at cost or net realizable values, whichever is lower.

During the year no production operations have been undertaken by the company. In view of the same, we anticipate a significant reduction in the valuation of the Stocks of Materials, Stores, Spares and Packing Materials of the company as valued by the management due to expiration of its useful life, obsolescence and damages. However the management has not provided for any diminution or devaluation in the values of the same. The above devaluation could not be quantified by us and in our opinion the value of the stock remains overstated and the losses remain equivalents understated as shown in the report due to the same.

VII) RETIREMENT BENEFITS:

The company has various schemes of Retirement Benefits such as Provident Fund, Gratuity, Leave Encashment. The liability for gratuity and Leave Encashment has however not been actuarially determined and the company continues to account for such liability on actual payment basis.

VIII) REVENUE RECOGNITION

Sales Turnover for the year includes Sale Value of Goods, Excise Duty and excludes rebates, discounts.

IX) FOREIGN CURRENCYTRANSACTIONS

The transactions of involving Foreign Exchange on revenue account, for foreign travel, imports, exports income / loss are accounted at exchange rate prevailing on the date of transaction and unsettled transactions are translated at the rate prevailing at the year end. Any income or expense on account of exchange difference on transaction is recognized in the Profit & Loss Account, except ion the case where they relate to acquisition of Fixed Assets. Premium on forward contract is also accounted for in proportions over the period of contract.

X) EXPENDITURE ON BENEFITS OF ENDURING NATURE

Revenue Expenditure on retrenchment expenses including expenses related thereto whose benefits are to be received in coming years are treated as deferred expenditure and such expenditures are amortized over a period of 5 years.

XI) CENVAT BENEFIT.

Convert benefit is accounted for on accrual basis on purchase of raw materials and Capital Goods

XII) GOVERNMENT GRANTS

Revenue grants are recognized in the Profit & Loss Accounts. Capital Grants are credited to Capital Reserves.

XIII) CONTINGENT LIABILITIES

Contingent Liabilities are disclosed by way of note to the accounts

---

Mar 31, 2010

I) BASIS OF PREPARATION OF ACCOUNTS:

The production process was in-operative since 18th August, 2004 and the plant was under closure since 18th November, 2004. However the new management after taking over the Company under the BIFR Scheme sactioned on 26th March, 2007 has resumed production in the Company with a new product. The management estimates that full scale commercial production shall be achieved during next financial year. The Net Worth of the company as at 31st March, 2004 had been completely eroded and it had become a Sick Industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the sick industrial Companies (Special Provisions) Act, 1985 (SICA). A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December, 2005. The Honorable bench of BIFR has in its meeting held on 26th March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17th August, 2007. The effect of the same has been duly considered in preparation of the accounts. (ReferNote: B-1&2 of Schedule Q).

The accounts have been prepared on historical cost basis, after derating the assets as p[er the BIFR Scheme (SS-07) ignoring changes, if any, in the purchasing power of money and on accounting principles of going concern. All revenues and expenses are accounted on accrual basis. Accounting policies not specifically referred to otherwise are consistent and are in consonance with generally accepted accounting principles.

II) METHOD OF ACCOUNTING:

The accounts of the company have been prepared on accrual basis of accounting except for encashment of leave salary and gratuity, which are accounted for on cash basis. The same is not in consonance with the provisions of AS-15 "Accounting for Retirement Benefits in Financial Statements" issued by the Institute of Chartered Accountants of India.

III) FIXEDASSETS:

(a) Fixed Assets are stated at their historical costs less depreciation and upon provision of Impairment Losses duly recognized as per the provisions of AS28 issued by the Institute of Chartered Accountants of India. Cost of Acquisition or construction is inclusive of taxes and other incidental expenses up to date, the assets are put to use.

(b) Modifications or cost of improvements to the existing Plant & Machinery is capitalized if it increases its useful life as well as capacity of the plant. All other replacement costs are charged to the Profit & Loss Account.

IV) DEPRECIATION

a) Leasehold land is amortized overthe lease period

b) Depreciation on Plant & Machinery, Buildings has been provided on SLM basis for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956. Plant & Machinery is treated as a continuous process plant, since the same is required and designed to operate throughout the year.

c) In the case of other Fixed assets, depreciation is provided on Written Down Value method at the rates prescribed in Schedule XIV to the Companies Act, 1956.

V) INVESTMENTS

Investments which are all long term are stated at costs.

VI) VALUATION OF INVENTORY

a) Stocks of Materials, Stores, Spares and Packing Materials are valued at cost based on weighted average method. Stock-in -Process and Finished Goods are valued at cost or net realizable values, whichever is lower.

VII) RETIREMENT BENEFITS:

The company has various schemes of Retirement Benefits such as Provident Fund, Gratuity, Leave Encashment. The liability for gratuity and Leave Encashment has however not been actuarially determined and the company continues to account for such liability on actual payment basis.

VIII) REVENUE RECOGNITION

Sales Turnover for the year includes Sale Value of Goods, Excise Duty and excludes rebates, discounts.

IX) FOREIGN CURRENCYTRANSACTIONS

There are no foreign currecy transactions in the Company except that the supplies of the products is made to a100% EOU in lNR.

X) EXPENDITURE ON BENEFITS OF ENDURING NATURE

Revenue Expenditure on retrenchment expenses including expenses related thereto whose benefits are to be received in coming years are treated as deferred expenditure and such expenditures are amortized over a period of 5 years. -

XI) CENVAT BENEFIT

Cenvat benefit is accounted for on accrual basis on purchase of raw materials and Capital Goods

XII) GOVERNMENT GRANTS

Revenue grants are recognized in the Profit & Loss Accounts. Capital Grants are credited to Capital Reserves.

XIII) CONTINGENT LIABILITIES

Contingent Liabilities are disclosed by way of note to the accounts.

---

Mar 31, 2009

I) BASIS OF PREPARATION OF ACCOUNTS:

The production process is in-operative since 18th August, 2004 and the plant is under closure since 18th November, 2004. The Net Worth of the company as at 31" March, 2004 had been completely eroded and it had become a Sick Industrial unit within the meaning of clause (o) of sub section (1) of Section 3 of the sick industrial Companies (Special Provisions) Act, 1985 (SICA). A reference was made to the Board for Industrial and Financial Reconstruction (BIFR) in 2004 and the company has been declared sick on 23rd December, 2005. The Board had appointed State Bank of India as the Operating Agency. Subsequently the Board issued a show cause notice on 28th April, 2006 that considering all the factors, why the company should not be wound up under section 20 of the SICA. In response, one of parties submitted a proposal for revival of the company along with the settlement of the dues of the creditors and change in management. The Honourable bench of BIFR has in its meeting held on 26th March, 2007 sanctioned a Rehabilitation Scheme. The BIFR has issued a final order (SS-07) dated 17th August, 2007. The effect of the same has been duly considered in preparation of the accounts. (Refer Note: B-1 & 2 of Schedule Q). The accounts of the company has been prepared on "Going Concern Basis"

II) METHOD OF ACCOUNTING:

The accounts of the company have been prepared on accrual basis of accounting except for encashment of leave salary and gratuity, which are accounted for on cash basis. The same is not in consonance with the provisions of AS-15 "Accounting for Retirement Benefits in Financial Statements" issued by the Institute of Chartered Accountants of India

III) FIXED ASSETS:

(a) Fixed Assets are stated at their historical costs less depreciation and upon provision of Impairment Losses duly recognized as per the provisions of AS28 issued by the Institute of Chartered Accountants of India. Cost of Acquisition or construction is inclusive of taxes and other incidental expenses up to date, the assets are put to use.

(b) Modifications or cost of improvements to the existing Plant & Machinery is capitalized if it increases its useful life as well as capacity of the plant. All other replacement costs are charged to the Profit & Loss Account.

IV) DEPRECIATION

a) Leasehold land is amortized over the lease period

b) Depreciation on Plant & Machinery, Buildings has been provided on SLM basis for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956. Plant & Machinery is treated as a continuous process plant, since the same is required and designed to operate throughout the year.

c) In the case of other Fixed assets, depreciation is provided on Written Down Value method at the rates prescribed in Schedule XIV to the CompaniesAd, 1956.

V) INVESTMENTS

Investments which are all long term are stated at costs.

VI) VALUATION OF INVENTORY

a) Stocks of Materials, Stores, Spares and Packing Materials are valued at cost based on weighted average method. Stock-in -Process and Finished Goods are valued at cost or net realizable values, whichever is lower.

VII) RETIREMENT BENEFITS:

The company has various schemes of Retirement Benefits such as Provident Fund, Gratuity, Leave Encashment. The liability for gratuity and Leave Encashment has however not been actuarially determined and the company continues to account for such liability on actual payment basis.

VIII) REVENUE RECOGNITION

Sales Turnover for the year includes Sale Value of Goods, Excise Duty and excludes rebates, discounts.

I) FOREIGN CURRENCY TRANSACTIONS

The transactions of involving Foreign Exchange on revenue account, for foreign travel, imports, exports income / loss are accounted at exchange rate prevailing on the date of transaction and unsettled transactions are translated at the rate prevailing at the year end. Any income or expense on account of exchange difference on transaction is recognized in the Profit & Loss Account, except ion the case where they relate to acquisition of Fixed Assets. Premium on forward contract is also accounted for in proportions over the period of contract.

II) EXPENDITURE ON BENEFITS OF ENDURING NATURE

Revenue Expenditure on retrenchment expenses including expenses related thereto whose benefits are to be received in coming years are treated as deferred expenditure and such expenditures are amortized over a period of 5 years.

III) CENVAT BENEFIT

Cenvat benefit is accounted for on accrual basis on purchase of raw materials and Capital Goods

IV) GOVERNMENT GRANTS

Revenue grants are recognized in the Profit & Loss Accounts. Capital Grants are credited to Capital Reserves.

V) CONTINGENT LIABLILITIES

Contingent Liabilities are disclosed by way of note to the accounts.