1.1 Accounting convention
 
 The financial statements have been prepared under the historical cost
 convention on accrual basis and in accordance with the accounting
 principles generally accepted in India and comply with mandatory
 Accounting Standards notified by the Central Government of India under
 the Companies (Accounting Standards) Rules, 2006 and with the relevant
 provisions of the Companies Act, 1956, except for certain fixed assets
 which are revalued.
 
 1.2 Use of Estimates
 
 The preparation of financial statements requires the management to make
 estimates and assumptions that affect the reported amount of assets and
 liabilities on the date of the financial statements, disclosure of
 contingent liabilities as at the date of the financial statements and
 the reported amount of revenues and expenses during the reporting
 period.  Management believes that the estimates used in the preparation
 of financial statements are prudent and reasonable. Actual results
 could differ from these estimates. Any revision to accounting estimates
 is recognised prospectively in the current and future periods.
 
 1.3 Fixed Assets
 
 Fixed Assets (other than those which have been revalued) are stated at
 historical cost less accumulated depreciation. Cost includes related
 taxes, duties, freight, insurance and other incidental expenses related
 to the acquisition and installation of assets and borrowing cost
 incurred up to the date when the assets are ready for its intended use,
 but excludes duties and taxes that are recoverable subsequently from
 taxing authorities. The revalued fixed assets are restated at their
 estimated current replacement values as on 30th June, 1987 as
 determined by the valuers.
 
 Intangible Assets are stated at cost of acquisition less accumulated
 amortisation.
 
 Leasehold land and leasehold improvements are amortised over the
 primary period of lease.
 
 1.4 borrowing costs
 
 Borrowing Costs that are attributable to the acquisition or
 construction of assets that necessarily take a substantial period of
 time to get ready for its intended use are capitalised as part of the
 cost of qualifying asset when it is possible that they will
 
 result in future economic benefits and the cost can be measured
 reliably. Other borrowing costs are recognised as an expense in the
 period in which they are incurred.
 
 1.5 Depreciation
 
 (i) Depreciation on fixed assets (other than revalued land and
 buildings and leased assets) is calculated on Straight line method on
 following basis:
 
 Assets acquired upto June 30, 1987 on the basis of specified period
 under section 205(2) (b) of the Companies Act, 1956.
 
 In respect of assets acquired after June 30, 1987 except assets
 relating to Nutraceutical Division, depreciation is charged based on
 estimated useful life of the assets at rates which are higher than the
 rates specified in Schedule XIV of the Companies Act. The depreciation
 rates followed are specified below : -
 
 Buildings            1.67% to 3.65%
 
 Plant and Machinery  4.75% to 25.89%
 
 Vehicles             23.75%
 
 Computers            31.67%
 
 Furniture            6.67 % to 33.33 %
 
 Office Equipments    4.75 % to 23.75 %
 
 In respect of Assets relating to Nutraceuticals Division, Assets are
 depreciated at rates specified in Schedule XIV of the Companies Act,
 1956.
 
 (ii) In respect of additions and deletions during the year,
 depreciation charge is provided on pro-rata basis.
 
 (iii) Leased assets are fully depreciated over the primary lease
 period.
 
 (iv) Assets costing individually Rs. 5,000 or less are fully
 depreciated in the year of addition.
 
 (v) The difference between the depreciation for the year on revalued
 buildings and depreciation calculated on the original cost is recouped
 from the fixed assets revaluation reserve.
 
 (vi) Cost of patent is amortised over a period of 3 years.
 
 1.6 Investments
 
 Long term investments are stated at cost. Provision for diminution in
 value is made if the decline is other than temporary in nature. Current
 Investments are carried at lower of cost and fair value.
 
 1.7 Inventories
 
 (i) Inventories other than by-products are valued at the lower of cost
 and net realisable value.
 
 (ii) In respect of work-in-process and finished goods, cost includes
 all applicable production overheads incurred in bringing such
 inventories to their present location and condition. Cost also includes
 all taxes and duties, but excludes duties and taxes that are
 subsequently recoverable from taxing authorities.
 
 (iii) In respect of Raw materials, boughtout items, consumables and
 stores and spares, cost is determined based on weighted average cost
 basis.
 
 1.8 Revenue Recognition
 
 i) Revenue from sale is recognised when risks and rewards of ownership
 are transferred to the buyer under the terms of the contract.
 
 ii) Sales include excise duty recovered and are stated net of trade
 discounts and sales returns.
 
 iii) Income from services rendered is booked based on
 agreements/arrangements with the concerned parties.
 
 iv) Export Incentive under Duty Entitlement Pass Book Scheme are
 treated as income in the year of export at the estimated realisable
 value.
 
 v) Interest on investments is booked on a time proportion basis taking
 into account the amounts invested and the rate of interest.
 
 vi) Dividend income is accounted for in the year in which the right to
 receive the payment is established.
 
 1.9 Foreign currency Transactions
 
 Foreign Currency Transactions are recorded at rates of exchange
 prevailing on the date of transaction.  Monetary assets and liabilities
 denominated in foreign currencies as at the balance sheet date are
 translated at the rate of exchange prevailing at the year-end. Exchange
 differences arising on actual payments/realisations and year-end
 restatements are dealt with in the Profit & Loss Account.
 
 The company enters into forward exchange contracts and other
 instruments that are in substance a forward exchange contract to hedge
 its risks associated with foreign currency fluctuations.  The premium
 or discount arising at the inception of
 
 the foreign exchange contract or similar instrument is amortised as
 expense or income over the life of the contract. Exchange difference on
 such contracts is recognised in the Profit & Loss Account in the year
 in which the exchange rates change.
 
 Any profit or loss arising on cancellation of a forward exchange
 contract is recognised as income or expense for the year.
 
 1.10 Derivative Instruments and Hedge Accounting
 
 The company uses forward contracts to hedge its risks associated with
 foreign currency fluctuations relating certain firm commitments and
 forecasted transactions. The Company designates these as cash flow
 hedges.
 
 The use of forward contracts is governed by the companys policies on
 the use of such financial derivatives consistent with the companys
 risk management strategy. The company does not use derivative financial
 instruments for speculative purposes.
 
 Forward contract derivative instruments are initially measured at fair
 value, and are re-measured at subsequent reporting dates. Changes in
 the fair value of these derivatives that are designated and effective
 as hedges of future cash flows are recognised directly in “Hedging
 Reserve Account” under Shareholders Funds and the ineffective portion
 is recognised immediately in the profit and loss account.
 
 Changes in the fair value of derivative financial instruments that do
 not qualify for hedge accounting are recognised in the Profit and Loss
 Account as they arise.
 
 Hedge accounting is discontinued when the hedging instrument expires or
 is sold, terminated, or exercised, or no longer qualifies for hedge
 accounting. If any of these events occur or if a hedged transaction is
 no longer expected to occur, the net cumulative gain or loss recognised
 in “Hedging Reserve Account” under Shareholders fund is transferred to
 the Profit and Loss account for the year.
 
 1.11 Employee Benefits
 
 a.  (i) Short Term Employee Benefits
 
 All employee benefits payable wholly within twelve months of rendering
 the service are classified as short term employee benefits.  Short term
 employee benefits, including accumulated compensated absences, at the
 balance sheet date, are recognised as an expense as per the Companys
 
 scheme based on expected obligations on undiscounted basis.
 
 b.  Long Term Employee Benefits
 
 The obligation for long term employee benefits such as long term
 compensated absence is provided for based on actuarial valuation as at
 the balance sheet date, using the Projected Unit Credit Method.
 
 (i) Defined Contribution Plans
 
 The companys superannuation scheme, state governed provident fund
 scheme and employee state insurance scheme are defined contribution
 plans. Fixed contributions to the Superannuation Fund, which is
 administered by trustees and managed by LIC are charged to the Profit
 and Loss Account. The Company has no liability for future
 Superannuation Fund benefits other than its annual contribution and
 recognises such contributions as an expense in the year incurred. The
 contribution paid/payable under the schemes is recognised during the
 period in which the employee renders the related service.
 
 (ii) Defined Benefit Plans
 
 Employees pension scheme and provident fund scheme managed by Trust are
 the companys defined benefit plans. The company also makes annual
 contribution to a Gratuity fund administered by LIC.  The present value
 of obligation under such defined benefit plans is determined based on
 actuarial valuation as at the balance sheet date, using the Projected
 Unit Credit Method. Actuarial gains/losses are absorbed in the
 financial statements.
 
 (iii) Deferred compensation cost
 
 Stock options granted to the employees under the stock option scheme
 established are evaluated as per the accounting treatment prescribed by
 the Employee Stock Option Scheme and Employee Stock Purchase Scheme
 Guidelines, 1999 issued by Securities and Exchange Board of India. The
 Company follows the intrinsic value method of accounting for the
 options and accordingly, the excess of market value of the stock
 options as on date of
 
 grant over the exercise price of the options, if any, is recognised as
 deferred employee compensation cost and is charged to the Profit and
 Loss Account on graded vesting basis over the vesting period of the
 options.
 
 1.12 Taxes on Income
 
 Current Tax is determined based on the liability computed in accordance
 with the relevant tax rates and tax laws.
 
 Deferred tax is recognised for timing differences arising between the
 taxable income and accounting income computed using the tax rates and
 the laws that have been enacted or substantively enacted as of the
 balance sheet date. Deferred Tax assets in respect of unabsorbed
 depreciation and carry forward of losses under tax laws, are recognised
 if there is virtual certainty that there will be sufficient future
 taxable income available to realise such Deferred Tax assets. Other
 Deferred Tax assets are recognised if there is a reasonable certainty
 that there will be sufficient future taxable income available to
 realise such Deferred Tax assets.
 
 1.13 Provision, contingent Liabilities and contingent Assets
 
 Provisions are recognised only when there is a present obligation as a
 result of past events and when a reasonable estimate of the amount of
 obligation can be made. Contingent liability is disclosed for (i)
 possible obligation which will be confirmed only by future events not
 wholly within the control of the company or (ii) present obligations
 arising from past events where it is not probable that an outflow of
 resources will be required to settle the obligation or a reliable
 estimate of the amount of the obligation cannot be made. Contingent
 assets are neither recognised nor disclosed in the financial
 statements.
 
 1.14 segment reporting
 
 a.  The generally accepted accounting principles used in the
 preparation of the financial statements are applied to record revenue
 and expenditure in individual segments.
 
 b.  Segment revenue and segment results include transfers between
 business segments.  Such transfers are accounted for at the agreed
 transaction value and such transfers are eliminated in the
 consolidation of the segments.
 
 c.  Expenses that are directly identifiable to segments are considered
 for determining the segment result. Expenses which relate to the
 company as a whole and are not allocable to segments are included under
 unallocated corporate expenses.
 
 d.  Segment assets and liabilities include those directly identifiable
 with the respective segments.  Unallocated corporate assets and
 liabilities represent the assets and liabilities that relate to the
 company as a whole and not allocable to any segment.
 
 1.15 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 recognised 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.