1) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Notified Accounting Standards pursuant to Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
except in case of assets for which provision for impairment is made and
revaluation is carried out. The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
2) Use of Estimates
The presentation of financial statements in conformity with the
Generally Accepted Accounting Principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities on the date of the
financial statements and the results of operations during the reporting
period. Difference between the actual results and estimates are
recognized in the period in which the results are known/ materialized.
3) 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
Sale of Goods - Revenue is recognized when the significant risks and
rewards of ownership of the goods have passed to the buyer and is
stated net of trade discounts, returns and Sales Tax /VAT and Excise
Contract Manufacturing- Revenue is recognized on an accrual basis in
accordance with the terms of the relevant agreement.
4) Fixed Assets
i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses, if any. Cost comprises the purchase price and any
acountable cost of bringing the asset to its working condition for its
intended use. Borrowing costs relating to acquisition of fixed assets
which takes substantial period of time to get ready for its intended
use are also included to the extent they relate to the period till such
assets are ready to be put to use.
ii) The purchase cost of Fixed Assets is considered net of Cenvat,
Excise & Incentives as applicable.
iii) Subsidy is adjusted against the cost of respective asset.
iv) Depreciation is provided on straight line method at the rates and
in the manner specified in Schedule XIV of the Companies Act, 1956.
v) No write off is made in respect of rights in leasehold land.
5) Impairment of Fixed Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
as to whether 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 assets over its remaining useful life.
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution, if any, in value is made to
recognize a decline other than temporary in the value of the
Finished Goods, Work in Progress, Raw Materials, Packing Materials,
Stores & Spare parts are stated at lower of cost and net realizable
value. However, materials and other items held for use in the
production of inventories are not written down below cost if the
finished goods in which they will be incorporated are expected to be
sold at or above cost.
Cost of Work in Progress and Finished Goods is determined by
considering direct material cost and appropriate portion of
manufacturing overheads based on normal operating capacity. Cost of
Finished Goods includes Excise Duty. Goods-in-transit are valued at
cost. Stores and Packing materials are valued at cost.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
The purchase cost of Raw Materials is inclusive of direct expenses and
is net of Cenvat Credit available on input.
8) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash at
bank and in hand and shortterm investments with an original maturity of
three months or less.
9) Excise Duty
Excise duty is accounted on the basis of both payments made in respect
of goods cleared as also provision made for goods lying in bonded
10) Employees Benefits
i. Retirement benefits in the form of Provident Fund are defined
contribution schemes and the contributions are charged to the Profit
and Loss Account of the year when the contributions to the respective
funds are due. There are no other obligations other than the
contribution payable to the respective funds.
ii. The Companys Provident Fund Scheme and ESI Plans are defined
Contribution Plans and the Companys Contribution paid / payable is
recognized as expense in the Profit and Loss Account during the year in
which the employees render the related service.
iii. Un-availed leave is encashed at the end of the year.
11) Foreign Currency Transactions
Initial Recognition , Foreign currency transactions are recorded in the
reporting Currency, by applying to the foreign currency amount, the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
Foreign currency monetary items are reported using the closing rate.
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 the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous
financial statements, are recognized as income or as expenses in the
year in which they arise.
12) Income Taxes
Tax expense comprises of Current, Deferred and Fringe Benefit Tax.
Current Income Tax and Fringe Benefit Tax is measured at the amount
expected to be paid to the tax authorities in accordance with the
Indian Income Tax Act. Deferred Income taxes reflect the impact of
current year timing difference between taxable income and accounting
income for the year and reversal of timing difference of earlier years.
Deferred Income Tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the Balance Sheet date. Deferred
tax assets are recognized only to the extent that there is virtual
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. If the Company
unabsorbed depreciation or carry forward tax losses, deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that such deferred tax assets can be realized
against future taxable profits.
At each Balance Sheet date the Company re-assesses unrecognized
deferred tax assets, if any. It recognizes unrecognized deferred tax
assets 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.
13) Earnings per Share
Basic Earnings per Share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
is adjusted for events of bonus issue, bonus element in a rights issue
to existing shareholders, share split, and reverse share split
(consolidation of shares), if any.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of Shares outstanding during the period 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 and it is probable that an outflow of resources
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 managements best estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to reflect the current
Contingent losses arising from claims, litigation, assessments, fines,
penalties, etc. is provided for when it is probable that a liabilities
may be incurred and the amount can be reasonable estimated.