Mar 31, 2015
(a) Basis of preparation
The Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on accrual basis. These financial
statements have been prepared to comply in all material respects with
the accounting standards notified under section 133 of Companies Act,
2013 ("the Act") read with Rules 7 of the Company (Accounts) Rules,
2014.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
(b) Use of estimates
The preparation of financial statements in confirmity with Generally
Accepted Accounting Principals require management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
contingent liabilities as at the reported date and the reported amounts
of revenue and expenses during the reporting period. Although these
estimates are based on management's best knowledge of current events
and actions the Company may undertake in future, actual results
ultimately may differ from estimates. Any revision to accounting
estimates is recongnised prospectively in current and future periods.
(c) Tangible fixed assets
Tangible fixed assets are stated at cost of acquisition net of CENVAT
(wherever applicable), less accumulated depreciation and impairment
losses if any. Cost comprises the purchase price and any cost
attributable to bringing the assets to its working condition for its
intended use.Subsequent expenditure related to an item of fixed asset
is added to its book value only if it increases the future benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including day
to day repair and maintenance and cost of replacing parts, are charged
to the Statement of Profit and Loss for the period during which such
expenses are incurred. Losses arising from the retirement of, and gain
or losses arising from disposal of tangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of
asset and recognised as income or expense in the Statement of Profit
and Loss.
(d) Depreciation
Depreciation has been calculated on Straight Line Method at the useful
lives, which are equal to useful lives specified as per schedule II to
the Act. Depreciation and amortisation on addition to fixed assets is
provided on pro-rata basis from the date the assets are ready for
intended use. Depreciation and amortisation on sale/discard from fixed
assets is provided for up to the date of sale, deduction or discard of
fixed assets as the case may be.Schedule II to the Act has become
applicable to the Company with effect from April 1, 2014. Accordingly,
the Company has determined the useful life of its assets as per
Schedule II except plant & machinery whose useful life has been
determined with the help of an expert Northern India Textile Research
Association ("NITRA").The tangible fixed assets for which useful life
is different than the one prescribed in the Schedule II are as follows:
Description of Useful Life of Assets Useful life as per
the Assets as per Schedule-II Valuation Report
(In Years) (In Years)
Plant & Machinery 15 30 - 35
In accordance with the transitional provisions of Schedule II, in
respect of assets where the remaining useful life is 'Nil', their
carrying amount aggregating Rs. 770,530 after retaining the residual
value as on April 1, 2014 as determined by the management has been
charged to statement of profit and loss.
As a consequence, had the company not adopted Schedule II to the Act,
depreciation for the year would have been lower by Rs. 13,866,631 loss
for the year would have been lower by Rs. 13,866,631 and the written
down value of assets as at March 31, 2015 would have been Rs.
616,729,942 as against the reported wriiten down value Rs. 602,118,294.
Impact of change in estimates of useful lives on subsequent periods is
not realistically ascertainable.
(e) 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. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
(f) Inventories
Raw materials, packaging materials and stores and spare parts are
valued at lower of cost and net realisable value. Cost includes
purchase price, (excluding those subsequently recoverable by the
enterprise from the concerned revenue authorities), freight inwards and
other expenditure incurred in bringing such inventories to their
present location and condition. In determining the cost, weighted
average cost method is used.Work in progress, manufactured finished
goods and traded goods are valued at the lower of cost and net
realisable value. Cost of work in progress and manufactured finished
goods is determined on the weighted average basis and comprises direct
material, Cost of conversion and other costs incurred in bringing these
inventories to their present location and condition. Cost of traded
goods is determined on a weighted average basis.Excise duty liability,
wherever applicable, is included in the valuation of closing inventory
of finished goods. Excise duty payable, if any, on finished goods is
accounted for upon manufacture and transfer of finished goods to the
stores. Payment of excise duty, if any, is deferred till the clearance
of goods from the factory premises. Provision of obsolescence on
inventories is considered on the basis of management's estimate based
on demand and market of the inventories. Net realizable value is the
estimated selling price in the ordinary course of business, less the
estimated cost of completion and the estimated costs necessary to make
the sale.
(g) Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefit will flow to the Company and revenue can be reliably
measured. Revenue on account of sale of goods is recognized on delivery
of the goods to the customer, when the property in the goods is
transferred for a price and significant risk and rewards have been
transferred and no effective ownership control is retained. Sales are
net off discounts and sales return, sales tax/ value added tax, if any.
Revenue from interest on time deposits is recognised on the time
proportion method taking into consideration the amount outstanding and
the applicable interest rates.
(h) Employee benefits Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, and bonus etc are recognised in the statement
of profit and loss in the period in which the employee renders the
related service.
Long term employee benefits
i) Defined contribution plan:
Provident Fund and employees' state insurance schemes:
a) All employees of the Company are entitled to receive benefits under
the Provident Fund, which is a defined contribution plan. Both the
employee and the employer make monthly contributions to the plan at a
predetermined rate of the employees' basic salary. These contributions
are made to the fund administered and managed by the Government of
India.
b) In addition, some employees of the Company are covered under the
employees' state insurance scheme, which is also a defined contribution
scheme recognised and administered by the Government of India.
The Company's contributions to both these schemes are expensed off in
the Statement of profit and loss. The Company has no further
obligations under these plans beyond its monthly contributions.
ii) Defined Benefit Plans: Gratuity
The Company provides for retirement benefits in the form of Gratuity.
Benefits payable to eligible employees of the company with respect to
gratuity, a defined benefit plan is accounted for on the basis of an
actuarial valuation as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the plan provides for lump sum
payments to vested employees on retirement, death while in service or
on termination of employment in an amount equivalent to 15 days basic
salary for each completed year of service. Vesting occurs upon
completion of five years of service. The present value of such
obligation is determined by the projected unit credit method and
adjusted for past service cost as at the balance sheet date through
which the obligations are to be settled. The resultant actuarial gain
or loss on change in present value of the defined benefit obligation is
recognised as an income or expense in the statement of profit and loss.
iii) Other long term employee benefits: Leave encashment
Benefits under the Company's leave encashment scheme constitute other
employee benefits. The liability in respect of leave encashment is
provided on the basis of an actuarial valuation done by an independent
actuary using Projected Unit Credit Method at the end of the year.
Actuarial gain and losses are recognized immediately in the statement
of profit and loss.
(i) Income Taxes
Tax expense for the year comprising current tax, deferred tax charge or
benefit and MAT credit entitlement is included in determining the net
profit for the year.
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961.
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the
period. The deferred tax charge or credit and the corresponding
deferred tax liabilities or assets are recognised using the tax rates
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future;
however, where there is unabsorbed depreciation or carry forward of
losses, deferred tax assets are recognised only if there is a virtual
certainty backed by convincing evidence of realisation of such assets.
Deferred tax assets are reviewed at each Balance Sheet date and are
written-down or written-up to reflect the amount that is reasonably /
virtually certain (as the case may be) to be realised. The break-up of
the major components of the deferred tax assets and liabilities as at
Balance Sheet date has been arrived at after setting off deferred tax
assets and liabilities where the entity has a legally enforceable right
to set-off assets against liabilities and where such assets and
liabilities relate to taxes on income levied by the same governing
taxation laws.
Minimum alternate tax (MAT) under the Income Tax Act, 1961, payable for
the year is charged to the Statement of Profit and Loss as current tax.
The company recognizes MAT credit available as an asset only to the
extent that there is convincing evidence that the Company will pay
normal income tax during the specified period, i.e., the period for
which MAT credit is allowed to be carried forward. In the year in which
the Company recognizes MAT credit as an asset in accordance with the
Guidance Note on accounting for credit available in respect of Minimum
Alternative Tax under the Income-tax Act, 1961, the said asset is
created by way of credit to the Statement of Profit and Loss and shown
as "MAT Credit Entitlement." The Company reviews the "MAT credit
entitlement" asset at each reporting date and writes down the asset to
the extent the Company does not have convincing evidence that it will
pay normal tax during the specified period.
(j) Leases Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership over the lease term are classified as
operating lease.
Operating lease payments are recognized as an expense in the statement
of profit and loss on a straight line basis over the lease term.
(k) Provisions, contingent liabilities and contingent assets Provisions
Provisions are recognized when the Company has a present obligation as
a result of past events and it is more likely that an outflow of
resources will be required to settle the obligations and the amount has
been reliably estimated. Such provisions are not discounted to their
present value and are determined based on the management's estimation
of the obligation required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect management's current estimates.
Contingent liabilities
A disclosure for a contingent liability is made where it is more likely
than not that a present obligation or possible obligation may result in
or involve an outflow of resources. When no present or possible
obligation exists and the possibility of an outflow of resources is
remote, no disclosure is made.
Contingent assets
Contingent assets are neither recorded nor disclosed in the financial
statements.
(l) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less.
(m) Borrowing cost
Borrowing costs relating to acquisition or construction or production
of assets which take substantial period of time to get ready for its
intended use are also included as cost of such assets to the extent
they relate to the period till such assets are ready to be put to use.
Other borrowing costs are recognised as an expense in the period in
which they are incurred.
(n) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the reporting period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares,
except where the result would be anti-dilutive. The dilutive potential
equity shares are deemed converted as of the beginning of the period,
unless they have been issued at a later date.
(o) Material Events
Material Events occurring after Balance Sheet date are taken into
cognizance.
Mar 31, 2014
(a) Basis of preparation
The Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on accrual basis. These financial
statements have been prepared to comply in all material respects with
the accounting standards notified under the Companies (Accounting
Standards) Rules, 2006 (as amended) and relevant provision of the
Companies Act, 1956. The accounting policies adopted in the
preparation of financial statements are consistent with those of
previous year.
(b) Use of estimates
The preparation of financial statements in confirmity with Generally
Accepted Accounting Principals require management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
contingent liabilities as at the reported date and the reported amounts
of revenue and expenses during the reporting period. Although these
estimates are based on management''s best knowledge of current events
and actions the Company may undertake in future, actual results
ultimately may differ from estimates. Any revision to accounting
estimates is recongnised prospectively in current and future period.
(c) Tangible fixed assets
Tangible fixed assets are stated at cost of acquisition net of CENVAT
(wherever applicable), less accumulated depreciation and impairment
losses if any. Cost comprises the purchase price and any cost
attributable to bringing the assets to its working condition for its
intended use. Subsequent expenditure related to an item of fixed asset
is added to its book value only if it increases the future benefits
from the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including day
to day repair and maintenance and cost of replacing parts, are charged
to the Statement of Profit and Loss for the period during which such
expenses are incurred. Losses arising from the retirement of, and gain
or losses arising from disposal of tangible asset are determined as the
difference between the net disposal proceeds and the carrying amount of
asset and recognised as income or expense in the Statement of Profit
and Loss.
(d) Depreciation
Depreciation on all tangible fixed assets is provided on the straight
line method at rates specified in Schedule
XIV to the Companies Act, 1956. In case of revalued assets the
difference between the depreciation on the revalued book value and on
the original cost is withdrawn from revaluation reserve and credited to
the Statement of Profit and Loss.
Depreciation on addition to tangible fixed assets is provided on
pro-rata basis from the date the asset is put to use. Depreciation on
sale/deduction from fixed assets is provided for up to the date of
sale, deduction, discardment as the case may be.
All tangible fixed assets costing Rs. 5,000 or below are depreciated in
full by way of a one-time depreciation charge.
(e) 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. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets'' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
(f) Inventories
Raw materials, packaging materials and stores and spare parts are
valued at lower of cost and net realizable value. Cost includes
purchase price, (excluding those subsequently recoverable by the
enterprise from the concerned revenue authorities), freight inwards and
other expenditure incurred in bringing such inventories to their
present location and condition. In determining the cost, weighted
average cost method is used. Work in progress, manufactured finished
goods and traded goods are valued at the lower of cost and net
realisable value. Cost of work in progress and manufactured finished
goods is determined on the weighted average basis and comprises direct
material, Cost of conversion and other costs incurred in bringing these
inventories to their present location and condition. Cost of traded
goods is determined on a weighted average basis.Excise duty liability,
wherever applicable, is included in the valuation of closing inventory
of finished goods. Excise duty payable, if any, on finished goods is
accounted for upon manufacture and transfer of finished goods to the
stores. Payment of excise duty, if any, is deferred till the clearance
of goods from the factory premises. Provision of obsolescence on
inventories is considered on the basis of management''s estimate based
on demand and market of the inventories. Net realizable value is the
estimated selling price in the ordinary course of business, less the
estimated cost of completion and the estimated costs necessary to make
the sale. The comparison of cost and net realizable value is made on
item by item basis.
(g) Revenue recognition
Revenue on account of sale of goods is recognized on delivery of the
goods to the customer, when the property in the goods is transferred
for a price and significant risk and rewards have been transferred and
no effective ownership control is retained. Sales are net off discounts
and sales return, sales tax/ value added tax, if any. Income from
interest on deposits is recognized on the time proportion method.
(h) Employee benefits
Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, and bonus etc are recognised in the statement
of profit and loss in the period in which the employee renders the
related service.
Long term employee benefits i) Defined contribution plan:
Provident Fund and employees'' state insurance schemes:
a) All employees of the Company are entitled to receive benefits under
the Provident Fund, which is a defined contribution plan. Both the
employee and the employer make monthly contributions to the plan at a
predetermined rate of the employees'' basic salary. These contributions
are made to the fund administered and managed by the Government of
India.
b) In addition, some employees of the Company are covered under the
employees'' state insurance scheme, which is also a defined contribution
scheme recognised and administered by the Government of India.
The Company''s contributions to both these schemes are expensed off in
the Statement of profit and loss. The Company has no further
obligations under these plans beyond its monthly contributions.
ii) Defined Benefit Plans: Gratuity
The Company provides for retirement benefits in the form of Gratuity.
Benefits payable to eligible employees of the company with respect to
gratuity, a defined benefit plan is accounted for on the basis of an
actuarial valuation as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the plan provides for lump sum
payments to vested employees on retirement, death while in service or
on termination of employment in an amount equivalent to 15 days basic
salary for each completed year of service. Vesting occurs upon
completion of five years of service. The present value of such
obligation is determined by the projected unit credit method and
adjusted for past service cost and fair value of plan assets as at the
balance sheet date through which the obligations are to be settled. The
resultant actuarial gain or loss on change in present value of the
defined benefit obligation or change in return of the plan assets is
recognised as an income or expense in the statement of profit and loss.
iii) Other long term employee benefits: Leave encashment
Benefits under the Company''s leave encashment scheme constitute other
employee benefits. The liability in respect of leave encashment is
provided on the basis of an actuarial valuation done by an independent
actuary using Projected Unit Credit Method at the end of the year.
Actuarial gain and losses are recognized immediately in the statement
of profit and loss.
(i) Income Taxes
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income-tax law) and deferred tax
charge or credit.
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the
period. The deferred tax charge or credit and the corresponding
deferred tax liabilities or assets are recognised using the tax rates
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward of
losses, deferred tax assets are recognised only if there is a virtual
certainty of realisation of such assets. Deferred tax assets are
reviewed at each balance sheet date and are written-down or written up
to reflect the amount that is reasonably / virtually certain (as the
case may be) to be realised.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961 issued by the Institute of Chartered Accountant of
India, the said asset is created by way of credit to the statement of
profit and loss and shown as "MAT Credit Entitlement." The company
reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
(j) Leases
Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership over the lease term are classified as
operating lease.
Operating lease payments are recognized as an expense in the statement
of profit and loss on a straight line basis over the lease term.
(k) Provision, contingent liabilities and contingent assets
Provision
Provisions are recognized when the Company has a present obligation as
a result of past events and it is more likely that an outflow of
resources will be required to settle the obligations and the amount has
been reliably estimated. Such provisions are not discounted to their
present value and are determined based on the management''s estimation
of the obligation required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect management''s current estimates.
Contingent liabilities
A disclosure for a contingent liability is made where it is more likely
than not that a present obligation or possible obligation may result in
or involve an outflow of resources. When no present or possible
obligation exists and the possibility of an outflow of resources is
remote, no disclosure is made.
Contingent assets
Contingent assets are neither recorded nor disclosed in the financial
statements.
(l) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less.
(m) Borrowing cost
Borrowing costs relating to acquisition or construction or production
of assets which take substantial period of time to get ready for its
intended use are also included as cost of such assets to the extent
they relate to the period till such assets are ready to be put to use.
Other borrowing costs are recognised as an expense in the period in
which they are incurred.
(n) Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or
loss for the reporting period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year is
adjusted for the effects of all dilutive potential equity shares,
except where the result would be anti-dilutive. The dilutive potential
equity shares are deemed converted as of the beginning of the period,
unless they have been issued at a later date.
(o) Material Events
Material Events occurring after Balance Sheet date are taken into
cognizance.
*During the financial year 2008-09 as per terms of Shareholders''
Subscription Agreement executed with SIDBI Venture Capital Limited on
July 22, 2008, the Company had allotted 2,500,000 16% optionally
cumulative convertible preference shares to SIDBI Venture Capital
Limited amounting Rs. 25,000,000. The dividend on these preference shares
are payable from the date of allotment @16% p.a., however in view of
brought forward losses, the Company has not provided/paid any dividend
on such shares. The corresponding entries in respect of the dividend
and taxes thereon will be done in the year of payment of such dividend
or in the year in which the shares are converted/ redeemed.
b) Terms/rights attached to equity share Equity shares Voting Each
holder of equity share is entitled to one vote per share held.
Dividends
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the
shareholders in ensuing Annual General Meeting, except in the case
where interim dividend is distributed.
Liquidation
In the event of liquidation of the Company, the holders of equity
shares shall be entitled to receive all of the remaining assets of the
Company, after distribution of all preferential amounts, if any. Such
distribution amounts will be in proportion to the number of equity
shares held by the shareholders.
Preference shares Dividend
The Company shall pay preferential dividend @ 16% per annum on the
optionally convertible cumulative preference shares subscribed by the
investor from the date of allotment. The investor shall have the option
to convert (either fully, partly or none) the accumulated unpaid
dividend into equity shares at par in the ratio of 1:1.
i) Secured against Â
a) First charge on land situated at A-3, Sector-22, Jagdishpur
Industrial Area, Jagdishpur, Distt. Amethi-227 817 (UP).
b) Entire fixed assets situated at A-3, Sector-22, Jagdishpur
Industrial Area, Jagdishpur, Distt. Amethi-227 817 (UP).
c) Personal Guarantee of Mr. Pradeep Jain (Managing Director) and Mrs.
Usha Jain (Director).
d) Collateral security: Equitable mortgage of house property in the
name of Mr. Pradeep Jain (Manging Director) valued around Rs. 30.2
million and second pari-passu charge over the entire current assets of
the Company including raw material, WIP, FG, Chemicals, stores/ spares
not relating to plant both present and future.
ii) Term loan from bank carries interest rate of AB base rate 0.25%.
The loan is repayable in pre-scheduled 28 quarterly instalments
commencing from quarter ending December 31, 2013.
i) Secured against charge over entire current assets of the Company
including stock of raw material, work in process, finished goods,
stores and spares, book debts, receivables and other current assets of
the Company, both present and future.Collateral security: Equitable
mortgage of house property in the name of Mr. Pradeep Jain (Manging
Director) valued around Rs. 30.2 million and Second Pari-passu charge on
the entire factory land/ Building (33673 sq meter), other fixed assets
of the Company, both present and future.
ii) Working capital loan from bank carries interest rate of AB base
rate 0.25% p.a. and Funded Interest Term Loan carrying interest rate of
AB base rate p.a.
iii) The unsecured loans taken from various parties including related
parties are interest free. The said loans are payable on demand.
Mar 31, 2013
(a) Basis of preparation
The Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on accrual basis. These financial
statements have been prepared to comply in all material respects with
the accounting standards notified under the Companies (Accounting
Standards) Rules, 2006 (as amended) and relevant provision of the
Companies Act, 1956.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
(b) Use of estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principals require management to make estimates and
assumptions that affect the reported amounts of assets, liabilities and
contingent liabilities as at the reported date and the reported amounts
of revenue and expenses during the reporting period. Although these
estimates are based on management''s best knowledge of current events
and actions the Company may undertake in future, actual results
ultimately may differ from estimates. Any revision to accounting
estimates is recognised prospectively in current and future period.
(c) Tangible fixed assets
Fixed are stated at cost of acquisition or at revalued amounts wherever
such assets have been revalued less accumulated depreciation and
accumulated impairment loss, if any. Cost includes original cost of
acquisition and incidental expenses related to such acquisition and
installation. In respect of revalued assets, the appreciation in value
of assets over its book value is credited to the Revaluation Reserve.
(d) Depreciation
Depreciation on all tangible fixed assets is provided on the straight
line method at rates specified in Schedule XIV to the Companies Act,
1956. In case of revalued assets the difference between the
depreciation on the revalued book value and on the original cost is
withdrawn from revaluation reserve and credited to the Statement of
Profit and Loss.
Depreciation on addition to tangible fixed assets is provided on
pro-rata basis from the date the asset is put to use. Depreciation on
sale/deduction from fixed assets is provided for up to the date of
sale, deduction, discardment as the case may be.
All tangible fixed assets costing Rs. 5,000 or below are depreciated in
full by way of a one-time depreciation charge.
(e) 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. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets'' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
(f) Inventories
Raw material, packaging material and stores and spares parts are
carried at cost. Cost includes purchase price and other expenses
incurred to bring such inventory to their present location and
condition. In determining the cost, weighted average method is used.
The carrying cost of raw material is appropriately written down when
the finished goods in which such raw material is incorporated are
expected to sell below cost.
Work in progress, manufactured finished goods and traded goods are
valued at the lower of cost and net realisable value. Cost of work in
progress and manufactured finished goods is determined on weighted
average cost basis and comprises direct material, cost of conversion
and other costs incurred in bringing such inventory to their present
location and condition. Cost of traded goods is determined on a
weighted average cost basis.
(g) Revenue recognition
Revenue on account of sale of goods is recognized on delivery of the
goods to the customer, when the property in the goods is transferred
for a price and significant risk and rewards have been transferred and
no effective ownership control is retained. Sales are net off discounts
and sales return, sales tax/ value added tax, if any.
Interest and other income is recognized on accrual basis.
(h) Employee benefits
Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits. Benefits
such as salaries, wages, and bonus etc are recognised in the statement
of profit and loss in the period in which the employee renders the
related service.
Long term employee benefits
i) Defined contribution plan:
Provident Fund and employees'' state insurance schemes:
a) All employees of the Company are entitled to receive benefits under
the Provident Fund, which is a defined contribution plan. Both the
employee and the employer make monthly contributions to the plan at a
predetermined rate [presently 12% restricted to Maximum salary limit of
Rs. 6500 p.m.] of the employees'' basic salary. These contributions are
made to the fund administered and managed by the Government of India.
b) In addition, some employees of the Company are covered under the
employees'' state insurance scheme, which is also a defined contribution
scheme recognised and administered by the Government of India.
The Company''s contributions to both these schemes are expensed off in
the Statement of profit and loss. The Company has no further
obligations under these plans beyond its monthly contributions.
ii) Defined Benefit Plans: Gratuity
The Company provides for retirement benefits in the form of Gratuity.
Benefits payable to eligible employees of the company with respect to
gratuity, a defined benefit plan is accounted for on the basis of an
actuarial valuation as at the balance sheet date. In accordance with
the Payment of Gratuity Act, 1972, the plan provides for lump sum
payments to vested employees on retirement, death while in service or
on termination of employment in an amount equivalent to 15 days basic
salary for each completed year of service. Vesting occurs upon
completion of five years of service. The present value of such
obligation is determined by the projected unit credit method and
adjusted for past service cost and fair value of plan assets as at the
balance sheet date through which the obligations are to be settled. The
resultant actuarial gain or loss on change in present value of the
defined benefit obligation or change in return of the plan assets is
recognised as an income or expense in the statement of profit and loss.
iii) Other long term employee benefits: Leave encashment
Benefits under the Company''s leave encashment scheme constitute other
employee benefits. The liability in respect of leave encashment is
provided on the basis of an actuarial valuation done by an independent
actuary using Projected Unit Credit Method at the end of the year.
Actuarial gain and losses are recognized immediately in the statement
of profit and loss.
(i) Income Taxes
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the Income-tax law) and deferred tax
charge or credit.
Deferred tax charge or credit reflects the tax effects of timing
differences between accounting income and taxable income for the
period. The deferred tax charge or credit and the corresponding
deferred tax liabilities or assets are recognised using the tax rates
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward of
losses, deferred tax assets are recognised only if there is a virtual
certainty of realisation of such assets. Deferred tax assets are
reviewed at each balance sheet date and are written-down or written up
to reflect the amount that is reasonably / virtually certain (as the
case may be) to be realised.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The company recognizes MAT credit
available as an asset only to the extent that there is convincing
evidence that the company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. In the year in which the company recognizes MAT
credit as an asset in accordance with the Guidance Note on Accounting
for Credit Available in respect of Minimum Alternative Tax under the
Income-tax Act, 1961 issued by the Institute of Chartered Accountant of
India, the said asset is created by way of credit to the statement of
profit and loss and shown as "MAT Credit Entitlement." The company
reviews the "MAT credit entitlement" asset at each reporting date and
writes down the asset to the extent the company does not have
convincing evidence that it will pay normal tax during the specified
period.
(j) Leases
Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership over the lease term are classified as
operating lease.
Operating lease payments are recognized as an expense in the statement
of profit and loss on a straight line basis over the lease term.
(k) Provision, contingent liabilities and contingent assets
Provision
Provisions are recognized when the Company has a present obligation as
a result of past events and it is more likely that an outflow of
resources will be required to settle the obligations and the amount has
been reliably estimated. Such provisions are not discounted to their
present value and are determined based on the management''s estimation
of the obligation required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect management''s current estimates.
Contingent liabilities
A disclosure for a contingent liability is made where it is more likely
than not that a present obligation or possible obligation may result in
or involve an outflow of resources. When no present or possible
obligation exists and the possibility of an outflow of resources is
remote, no disclosure is made.
Contingent assets
Contingent assets are neither recorded nor disclosed in the financial
statements.
(l) Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short term highly liquid investments with original
maturity of three months or less.
(m) Borrowing Cost
Borrowing Costs relating to acquisition or construction or production
of assets which take substantial period of time to get ready for its
intended use are also included as cost of such assets to the extent
they relate to the period till such assets are ready to be put to use.
Other borrowing costs are recognised as an expense in the period in
which they are incurred.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the reporting period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares,
except where the result would be anti-dilutive. The dilutive potential
equity shares are deemed converted as of the beginning of the period,
unless they have been issued at a later date.
(o) Material Events
Material Events occurring after Balance Sheet date are taken into
cognizance.
Mar 31, 2012
(a) Basis of preparation
The Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India (Indian GAAP) under
the historical cost convention on accrual basis. These financial
statements have been prepared to comply in all material respects with
the accounting standards notified under the Companies (Accounting
Standards) Rules, 2006 (as amended) and relevant provision of the
Companies Act, 1956.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses for the years presented. Actual results could differ from
those estimates.
(c) Tangible fixed assets
Fixed are stated at cost of acquisition or at revalued amounts wherever
such assets have been revalued less accumulated depreciation and
accumulated impairment loss, if any. Cost includes original cost of
acquisition and incidental expenses related to such acquisition and
installation. In respect of revalued assets, the appreciation in value
of assets over its book value is credited to the Revaluation Reserve.
(d) Depreciation
Depreciation on all tangible fixed assets is provided on the straight
line method at minimum rates specified in Schedule XIV to the Companies
Act, 1956.
Depreciation on addition to tangible fixed assets is provided on
pro-rata basis from the date the asset is put to use. Depreciation on
sale/deduction from fixed assets is provided for up to the date of
sale, deduction, discardment as the case may be.
All tangible fixed assets costing Rs. 5,000 or below are depreciated in
full by way of a one-time depreciation charge.
Depreciation on revalued building has been provided on straight line
method at the rates prescribed by Schedule XIV to the Companies Act,
1956. However, the difference between the depreciation on the revalued
book value and on the original cost is withdrawn from revaluation
reserve and credited to the Statement of Profit and Loss.
Depreciation methods, useful lives and residual values are reviewed at
each balance sheet date.
(e) 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. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
(f) Inventories
Raw material, packaging material and stores and spares parts are
carried at cost. Cost includes purchase price and other expenses
incurred to bring such inventory to their present location and
condition. In determining the cost, weighted average method is used.
The carrying cost of raw material is appropriately written down when
the finished goods in which such raw material is incorporated are
expected to sell below cost.
Work in progress, manufactured finished goods and traded goods are
valued at the lower of cost and net realisable value. Cost of work in
progress and manufactured finished goods is determined on weighted
average cost basis and comprises direct material, cost of conversion
and other costs incurred in bringing such inventory to their present
location and condition. Cost of traded goods is determined on a
weighted average cost basis.
(g) Revenue recognition
Revenue on account of sale of goods is recognized on delivery of the
goods to the customer, when the property in the goods is transferred
for a price and significant risk and rewards have been transferred and
no effective ownership control is retained. Sales are net off discounts
and sales return, sales tax/ value added tax, if any, are reduced from
turnover.
Interest and other income is recognized on accrual basis.
(h) Employee benefits
Short term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as Short term employee benefits. Benefits
such as salaries, wages, and bonus etc are recognized in the Statement
of Profit and Loss in the period in which the employee renders the
related service.
Long term employee benefits
i) Defined contribution plan:
The Contributions for Provident Funds and E.S.I.C are deposited with
the appropriate government authorities and are recognized in the
Statement of Profit and Loss in the financial year to which they relate
and there is no further obligation in this regard.
ii) Defined benefit plan:
The Company provides for retirement benefits in the form of Gratuity.
The Company's gratuity plan is a defined benefit plan. The present
value of gratuity obligation under such defined plan is determined
based on an actuarial valuation carried out by an independent actuary
using the Projected Unit Credit Method, which recognizes each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rate used for determining the
present value of the obligation under the defined benefit plans, is
based on the market yields on Government securities as at the valuation
date having maturity periods approximating to the terms of the related
obligations. Actuarial gains and losses are recognized immediately in
the Statement of Profit and Loss.
iii) Other long term employee benefits:
Benefits under the Company's leave encashment scheme constitute other
employee benefits. The liability in respect of leave encashment is
provided on the basis of an actuarial valuation done by an independent
actuary at the year end using the Projected Unit Credit Method.
Actuarial gain and losses are recognized immediately in the Statement
of Profit and Loss.
(i) Tax Expense
Tax expense comprises of current tax and deferred tax considered in
determining the net profit or loss for the year. Current Tax
Current income tax is measured at the amount expected to be paid to the
tax authorities in accordance with the Indian Income Tax Act, 1961.
Deferred Tax
Deferred income tax reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax law enacted or
substantially enacted at the balance sheet date. Deferred tax assets
are recognised only to the extent there is reasonable certainty that
sufficient future taxable income will be available against which these
assets can be realized in future where as in cases of existence of
carry forward of losses or unabsorbed depreciation, deferred tax assets
are recognised only if there is virtual certainty of realization backed
by convincing evidence. Deferred tax assets are reviewed at each
balance sheet date.
MAT Credit
Minimum alternative tax payable under the provisions of the Income-tax
Act 1961 is recognized as an asset in the year in which credit become
eligible and is set off to the extent allowed in the year in which the
Indian entity becomes liable to pay income tax at the enacted tax
rates.
(j) Leases
Operating Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership over the lease term are classified as
operating lease.
Operating lease payments are recognized as an expense in the statement
of profit and loss on a straight line basis over the lease term.
(k) Provision, contingent liabilities and contingent assets
Provision
Provisions are recognized when the Company has a present obligation as
a result of past events and it is more likely that an outflow of
resources will be required to settle the obligations and the amount has
been reliably estimated. Such provisions are not discounted to their
present value and are determined based on the management's estimation
of the obligation required to settle the obligation at the balance
sheet date. These are reviewed at each balance sheet date and adjusted
to reflect management's current estimates.
Contingent liabilities
A disclosure for a contingent liability is made where it is more likely
than not that a present obligation or possible obligation may result in
or involve an outflow of resources. When no present or possible
obligation exists and the possibility of an outflow of resources is
remote, no disclosure is made.
Contingent assets
Contingent assets are neither recorded nor disclosed in the financial
statements.
(l) Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances and
margin money if due to be matured within 3 months deposited with bank.
(m) Borrowing cost
Borrowing costs are determined in accordance with the provisions of
Accounting Standard 16 "Borrowing Costs" Borrowing costs that are
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 intended use. All other borrowing costs are charged to revenue.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the reporting period attributable to equity shareholders by
the weighted average number of equity shares outstanding during the
period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the year are
adjusted for the effects of all dilutive potential equity shares.
(o) Material Events
Material Events occurring after Balance Sheet date are taken into
cognizance.