a) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
c) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing cost if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the intended use. Any trade discounts and
rebates are deducted in arriving at the purchase price.
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 expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the year during which
such expenses are incurred.
Assets individually costing less than Rs. 5,000 are fully depreciated
in the year of acquisition.
d) Depreciation on tangible fixed assets
Depreciation on fixed assets is calculated on a straight-line basis
using the rates arrived at based on the useful lives estimated by the
management, or those prescribed under the Schedule XIV to the Companies
Act, 1956, whichever is higher.
e) Intangible assets
Software acquired is measured at cost less accumulated amortisation and
is amortised using the straight line method over a period of six years.
f) Expenditure incurred during construction period
Expenditure directly relating to construction activity is capitalized.
Indirect expenditure incurred during construction period is capitalized
as part of the indirect construction cost to the extent to which the
expenditure is related to construction or is incidental thereto.
g) Impairment of tangible and intangible fixed assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. An asset''s recoverable amount
is the higher of an asset''s or cash-generating unit''s (CGU) net selling
price and its value in use. The recoverable amount is determined for an
individual asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets.
Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its
recoverable amount. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. In determining net
selling price, recent market transactions are taken into account, if
available. If no such transactions can be identified, an appropriate
valuation model is used.
The Company bases its impairment calculation on detailed budgets and
forecast calculations which are prepared separately for each of the
Company''s cash-generating units to which the individual assets are
allocated. These budgets and forecast calculations are generally
covering a period of five years. After impairment, depreciation is
provided on the revised carrying amount of the asset over its remaining
Long term investments are stated at cost and provision for diminution
is made if the decline in value is other than temporary in nature.
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. On initial recognition,
all investments are measured at cost. The cost comprises purchase price
and directly attributable acquisition charges such as brokerage, fees
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis. On
disposal of an investment, the difference between its carrying amount
and net disposal proceeds is charged or credited to the statement of
profit and loss.
a. Raw Materials, Packing Materials, Stores & Spares and Work in
process are stated at weighted average cost.
b. Stock in Transit is valued at lower of cost or net realizable
c. Finished goods are stated at lower of cost or net realizable value.
j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognized:
Revenue from sales
Revenue from sales is recognised on dispatch to customers and is
recorded net of trade discount and returns.
Other operating revenue
Other operating revenue includes income from export incentives
receivable in the form of VKGUY and Duty Draw Back. The income is
recognised only after dispatch of goods and receipt of bill of lading.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the applicable interest rate.
Interest income is included under the head other income in the
statement of profit and loss.
Dividend income is recognized when the unit holder''s right to receive
dividend is established by the reporting date.
k) Retirement and other employee benefits
Retirement benefit in the form of provident fund is a defined
contribution scheme. The contributions to the provident fund are
charged to the statement of profit and loss for the year when the
contributions are due. The Company has no obligation, other than the
contribution payable to the provident fund.
The Company operates defined benefit plan for its employees towards
gratuity and leave encashment. The cost of providing benefits under
these plan is determined on the basis of actuarial valuation at each
year-end. Actuarial valuation is carried out for the plans using the
projected unit credit method. Actuarial gains and losses for the
defined benefit plan is recognized in full in the period in which it
occurs in the statement of profit and loss.
Gratuity and Accumulated leave, which are expected to become payable as
a result of staff turnover within the next 12 months, is treated as
short-term employee benefit. The Company measures the expected
cost of such staff turnover on the basis of past experiences.
l) Foreign Currency Transactions / Exchange Fluctuations:
i) Transactions denominated in foreign currency are normally recorded
at the exchange rate prevailing at the time of the transaction.
ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Statement of Profit
iii) In case of monetary items, which are covered by forward exchange
contracts, the difference between the exchange rate on the date of such
contracts and the year-end rate is recognized in the Statement of
Profit and Loss. Any profit/loss arising on cancellation of forward
exchange contract is recognized as Income or Expense of the year.
Premium/Discount arising on such forward exchange contracts is
amortized as Income/Expense over the life of contract.
m) Income taxes
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that
are enacted or subsequently enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years.
Deferred tax is measured using the tax rates and the tax laws enacted
or subsequently enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. At each reporting date, the
Company re-assesses unrecognized deferred tax assets. It recognizes
unrecognized deferred tax asset to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes- down the carrying amount of
deferred tax asset to the extent that it is no longer reasonably
certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax
asset can be realized. Any such write-down is reversed to the extent
that it becomes reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available.
n) Earnings Per Share
Basic earnings per share are 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 year.
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.
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
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Provisions are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
reporting date. These estimates are reviewed at each reporting date and
adjusted to reflect the current best estimates.
p) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does
not recognize a contingent liability in financial statements but
discloses its existence in the financial statements as a notes to
q) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
The amalgamation has been accounted for under the Pooling Interest
Method as prescribed by Accounting Standard (AS-14) Accounting for
Amalgamation issued by the Institute of Chartered Accountants of
s) The previous year figures have been re-grouped/re-classified,
wherever necessary to confirm to the current year presentation.