a) Basis of preparation
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956. Based
on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current and non-current classification of
assets and liabilities.
b) Fixed assets Tangible Assets
Tangible Assets are stated at acquisition cost, net of accumulated
depreciation and accumulated impairment losses, if any.
Subsequent expenditures related to an item of fixed asset are added to
its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Items of fixed assets that have been retired from active use and are
held for disposal are stated at the lower of their net book value and
net realisable value and are shown separately in the financial
statements. Any expected loss is recognised immediately in the
Statement of Profit and Loss.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in
the Statement of Profit and Loss.
Assets individually costing less than Rs.5,000 are fully depreciated in
the year of addition.
Leasehold improvements are amortized over the period of lease as
estimated by the management.
Cost of Leasehold land (including stamp duty) is amortised over the
period of lease.
Assets taken on finance leases are depreciated over the estimated
useful life or the lease term, whichever is lower.
Intangible Assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortized on a straight line basis over their estimated
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss.
At the Balance Sheet date, the Company assesses whether there is any
indication that an asset may be materially impaired. If such an
indication exists, the Company estimates the recoverable amount. If the
carrying amount of the asset exceeds its recoverable amount, an
impairment loss is recognised in the Statement of Profit and Loss to
the extent carrying amount exceeds the recoverable amount.
Inventories are valued at the lower of cost and estimated net
realizable value, after providing for cost of obsolescence and other
anticipated losses, wherever considered necessary. The costs of raw
materials and traded goods are ascertained on FIFO basis, whereas
manufactured work-in-progress and finished goods are ascertained on
weighted average method.
Finished goods and work-in-progress include costs of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the
estimated costs necessary to make the sale.
e) Foreign Currency Transactions
Foreign currency transactions are recorded at the rates of exchange
prevailing on the dates of the transactions. At the period end all
monetary foreign assets and liabilities are restated at the rates
ruling at the period end and all exchange gains / losses arising there
from are adjusted to the Statement of Profit and Loss.
f) Revenue Recognition
Sales are recognised when goods are despatched in accordance with the
terms of sale when significant risks and rewards are transferred and
are recorded net of sales returns, trade discount, rebates and sales
tax collected but includes excise duty, where applicable.
Income from services rendered is booked based on agreements/
arrangements with concerned parties.
Income from duty drawback, contract research and management support
services is recognised on an accrual basis.
g) Other Income
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable. Income from
sub-lease is recognised on an accrual basis.
h) Employee Benefits
Contribution towards provident fund for certain employees is made to
the regulatory authorities, where the Company has no further
obligations. Such benefits are classified as Defined Contribution
Schemes as the Company does not carry any further obligations, apart
from the contributions made on a monthly basis (refer note 32).
The Company has an obligation towards Gratuity, a defined benefit
retirement plan covering eligible employees. The Company has an
Employees Gratuity Fund where the investments are administered by a
Fund Manager. The Company accounts for the liability of Gratuity
Benefits payable in future based on an independent actuarial valuation.
The Company makes contribution to the Superannuation Scheme, a defined
contribution scheme, administered by fund manager, based on a specified
percentage of eligible employee''s salary. The Company''s obligation to
the scheme is restricted to the contributions to the scheme.
Leave Encashment/ Compensated Absences
The Company provides for the encashment of leave with pay subject to
certain rules. The employees are entitled to accumulate leave subject
to certain limits, for future encashment/ availment. The liability is
provided based on the number of days of unutilized leave at each
Balance Sheet date on the basis of an independent actuarial valuation.
i) Current tax and Deferred tax
Taxes on income for the current year are determined on the basis of
provisions of Income Tax Act, 1961.
Tax expense for the period, comprising current tax and deferred tax,
are included in the determination of the net profit or loss for the
period. Current tax is measured at the amount expected to be paid to
the tax authorities in accordance with the taxation laws prevailing in
the respective jurisdictions.
Deferred tax is recognised for all the timing differences, subject to
the consideration of prudence in respect of deferred tax assets.
Deferred tax assets are recognised and carried forward only to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets and liabilities are measured using
the tax rates and tax laws that have been enacted or substantively
enacted by the Balance Sheet date. At each Balance Sheet date, the
Company reassesses unrecognised deferred tax assets, if any.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognised amounts and there
is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there
is a legally enforceable right to set off assets against liabilities
representing current tax and where the deferred tax assets and the
deferred tax liabilities relate to taxes on income levied by the same
governing taxation laws.
j) Provisions and Contingent Liabilities
Provisions are recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation.
Provisions are measured at the best estimate of the expenditure
required to settle the present obligation at the Balance Sheet date and
are not discounted to its present value.
Where the Company expects a provision to be reimbursed, the
reimbursement is recognised as a separate asset but only when
reimbursement is virtually certain.
Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be
confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the Company or
a present obligation that arises from past events where it is either
not probable that an outflow of resources will be required to settle or
a reliable estimate of the amount cannot be made, is termed as a
The Company leases certain tangible assets and such leases where the
Company has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the
inception of the lease at the lower of the fair value of the leased
asset and the present value of the minimum lease payments.
Each lease payment is apportioned between the finance charge and the
reduction of the outstanding liability. The out- standing liability is
included in long-term borrowings and other current liabilities as
appropriate. The finance charge is charged to the Statement of Profit
and Loss over the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the liability for each
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the
Statement of Profit and Loss on a straight-line basis over the period
of the lease.
l) Segment Reporting
The accounting policies adopted for segment reporting are in conformity
with the accounting policies adopted for the Company. Revenue and
expenses have been identified to segments on the basis of their
relationship to the operating activities of the segment. Revenue and
expenses, which relate to the Company as a whole and are not allocable
to segments on a reasonable basis, have been included under
Unallocated income/ expenses.
m) Cash and Cash Equivalents
In the cash flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks with original maturities of three
months or less.
n) Earnings per share
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Expenses are accounted for, on accrual basis and provision is made for
all known losses and liabilities.
Excise duty and customs duty are accrued on the goods lying at the
factory premises and at the bonded warehouse as at the period end,
Revenue expenditure on Research and Development is charged against the
profit for the period in which it is incurred. Capital expenditure on
research and development is shown as an addition to fixed assets.
p) 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, the disclosure of contingent assets and liabilities at
the date of financial statements and the reported amounts of revenues
and expenses during the period reported. Actual results could differ
from those estimates; a revision to accounting estimates is recog-
nized prospectively in the current and future periods.