(a) Basis of preparation of financial statements
The financial statements have been prepared on historical cost
convention. The company follows the accrual basis of accounting. The
financial statements are prepared in accordance with the accounting
standards specified in the Companies (Accounting Standards) Rules, 2006
notified by the Central Government in terms of Section 211(3C) of the
Companies Act, 1956.
Assets and liabilities are classified as current if it is expected to
realise or settle within 12 months after Balance Sheet date.
(b) Revenue recognition
The Company recognises sale of goods on transfer of significant risks
and rewards of ownership of the goods to the buyer. Sales are net of
excise duty, sales tax and trade discounts, wherever applicable.
Dividend income on investments is accounted for when the right to
receive the payment is established.
(c) Excise duty
Excise duty payable on products is accounted for at the time of
despatch of goods from the factories and is accrued for stocks held at
the year end.
Excise Duty related to the difference between the closing stock and
opening stock of finished goods has been recognised separately in Note
27 Other expenses to the Statement of Profit and Loss.
(d) Employee benefits
(i) Short term employee benefit obligations are estimated and provided
(ii) Post employment benefits and other long term employee benefits :
Defined contribution plans:
Company''s contribution to provident fund, superannuation fund, employee
state insurance and other funds are determined under the relevant
schemes and/or statute and charged to the Statement of Profit and Loss.
Defined benefit plans and compensated absences :
Company''s liability towards gratuity, ex-gratia gratuity and
compensated absences are actuarially determined at each balance sheet
date using the projected unit credit method. Actuarial gains and losses
are recognised in the Statement of Profit and Loss.
(e) Voluntary retirement scheme
Expenditure incurred on voluntary retirement scheme is charged to the
Statement of Profit and Loss in the year in which it is incurred.
(f) Fixed assets and Depreciation/Amortisation
(i) All fixed assets are stated at cost less depreciation, wherever
applicable. Cost comprises the purchase price and any other
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing cost relating to funds borrowed for
acquisition of qualifying assets up to the date the assets are put to
use is included in cost.
(ii) The cost of leasehold land is amortised over the period of the
(iii) Depreciation on tangible assets is calculated on the straight
line method at the rates and in the manner specified in Schedule XIV of
the Companies Act, 1956 except for : certain items of office equipment,
air conditioners, plant and equipment on which a depreciation rate of
20% on straight line method is applied, electronic data processing
(EDP) hardware such as servers on which a depreciation rate of 20% and
for other EDP equipment including personal computers and printers on
which depreciation rate of 25% on straight line method is applied,
Motor cars on which depreciation rate of 25% on straight line method is
(iv) Fixed assets held for disposal are stated at lower of net book
value and net realisable value.
(g) Impairment of assets
The carrying amounts of assets are reviewed at each Balance Sheet date
to assess whether there is any indication of impairment based on
internal / external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its estimated recoverable
amount. The recoverable amount is greater of the asset''s net selling
price and value in use. In assessing the value in use, the estimated
future cash flows are discounted to the present value using the
weighted average cost of capital. Previously recognised impairment loss
is further provided or reversed depending on changes in circumstances.
Inventories are valued at the lower of cost and estimated net
realisable value after providing for obsolescence. The cost of
inventories is arrived at on the following basis :
Raw materials, packing materials, trading items and stores and spares -
Weighted average cost.
Finished goods and work-in-progress - Absorption costing at works cost,
(i) Trade receivables/Loans and advances
Trade receivables and loans and advances are stated after making
adequate provision for doubtful debts/advances.
Long term investments are stated at cost less provision for diminution
in value, other than temporary. Current investments are stated at the
lower of cost and fair value.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased assets are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
(l) Foreign currency translations
(i) Foreign currency transactions are accounted at the rate prevailing
on the date of transaction. Monetary items denominated in foreign
currency outstanding as at year end are translated at the exchange rate
prevailing on the last day of the accounting year. In respect of items
covered by forward contracts, the premium or discount arising at the
inception of such a forward exchange contract is amortised as expense
or income over the life of the contract. Any profit or loss arising on
cancellation of such a forward exchange contract is recognised as
income or expense for the period.
(ii) Non monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of transaction.
(iii) Gain or loss arising out of translation/conversion is taken
credit for or charged to the Statement of Profit and Loss.
(m) Income Tax
Income tax expense comprises current tax and deferred tax charge or
credit. The current tax is determined as the amount of tax payable in
respect of the estimated taxable income for the year. The deferred tax
charge or credit is recognised using prevailing enacted or
substantively enacted tax rates at the Balance Sheet date. Where there
is unabsorbed depreciation or carry forward losses, deferred tax assets
are recognised only if there is virtual certainty of realization. Other
deferred tax assets are recognised only to the extent there is
reasonable certainty of realisation in future. The carrying amount of
deferred tax assets/liabilities are reviewed at each Balance Sheet
Provision is recognised when the Company has a present obligation as a
result of past event; it is probable that an outflow of resources
embodying economic benefit 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 of the expenditure 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 estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(o) Use of estimates
The presentation of the financial statements requires certain estimates
and assumptions. These estimates and assumptions affect the reported
amount of assets and liabilities on the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Difference between the actual results and estimates
if any is recognised in the period in which the results are