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Link Pharmachem
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« Mar 12
Accounting Policy Year : Mar '13
1) Accounting Conventions:
 
 These accounts are prepared under historical cost convention, with
 revenues recognized and expenses accounted on their accrual including
 provisions / adjustments for committed obligations and amounts
 determined as receivable or payable during the year as a going concern
 and in accordance with the accounting standards referred to in section
 211(3C) of the Companies Act, 1956.
 
 2) Fixed Assets:
 
 All fixed assets, except Land, are stated at cost net of Modvat less
 accumulated Depreciation. Land is valued at cost. Fixed Assets include
 all expenditure of capital nature, pre operation expenses including
 interest and financial cost of borrowing during the period of
 construction.
 
 3) Depreciation :
 
 Depreciation is provided on straight Line Method at the rate prescribed
 in Schedule XIV to the Companies Act, 1956 and rounded off to nearest
 15 days. For the purpose of charging deprecation on Plant & Machinery
 falling in the category of Continuous Process Plant the company has
 identified such plants on the basis of technical opinion obtained and
 depreciation has been provided at special rates prescribed in Schedule
 XIV to the Companies Act, 1956.
 
 4) Income Recognition:
 
 The company recognizes sales on the basis of actual delivery of goods.
 Sales are recorded at invoice values net of trade discounts. The
 purchases are recorded at the invoice value. All expenses and income to
 the extent considered payable and receivable respectively are accounted
 for on accrual basis except encashment of leave salary and interest on
 income tax refunds, which are accounted on cash basis.
 
 5) Inventories:
 
 Raw materials are stated at cost or net realisable value, whichever is
 lower. Cost includes expenses for procuring the same and is computed on
 first in first out basis.
 
 Stocks of finished goods have been valued at cost or net realisable
 value, whichever is lower. The cost includes manufacturing expenses and
 appropriate overheads.
 
 Stock of by-products and waste have been valued at net realisable
 value.
 
 Packing material, stores and spares are stated at cost or net
 realisable value, whichever is lower.  Cost is computed on first in
 first out basis.
 
 Work in process is valued at proportionate value of finished goods upto
 the stage of completion of the work in progress.
 
 6) Investments:
 
 Current investments are valued at cost or market value which ever is
 less. Long term investments are stated at cost, and where applicable
 provision is made for erosion in its valuation.
 
 7) Foreign Currency Transactions :
 
 Transactions in foreign currencies are recorded at the exchange rate
 prevailing at the time of the transaction. Foreign Currency Assets and
 Liabilities are stated at the exchange rates prevailing at the date of
 Balance Sheet and at forward contract rates, wherever so covered.
 Exchange difference relating to Fixed Assets is adjusted to the cost of
 Fixed Assets. Any other exchange difference is dealt in the Profit and
 Loss Account. Premium in respect of forward contract is recognized over
 the life of the contract. Any income or expense on account of exchange
 difference on settlement is recognized in the Profit and Loss Account.
 
 8) Borrowing Costs:
 
 The company capitalizes interest and foreign exchange rate difference
 on credit acquired for the construction of plant and installation of
 machinery as part of the cost of assets. The capitalization of interest
 and foreign exchange rate differences discontinued when the plant
 construction and machinery installation are completed and are ready for
 their intended use.
 
 9) Retirement Benefits :
 
 The gratuity liabilities is funded through a scheme administered by the
 Life Insurance Corporation of India, on the basis of LIC''s demand (on
 the basis of actuarial valuation of liabilities) which specifies the
 contribution to be made by the company, the same is charged to Profit
 and Loss account.  However, the actuarial valuation is for the period
 from 1st June to 31 May of each year and consistently accounted for
 same period on payment basis. The liabilities in respect of unutilized
 leave due to employees is accounted for as and when become payable.
 
 10) Research and Development Expenditure :
 
 All revenue expenditure on research and development are charged to the
 Profit and Loss Account.  Fixed Assets used for research and
 development are capitalized.
 
 11) Taxes on Income;
 
 The company provides for income tax on estimated taxable income and
 based on expected outcome of assessments appeals, in accordance with
 the provisions of the Income Tax Act, 1961 and rules framed there
 under.
 
 Consequent to the issuance of the Accounting Standard 22 -'' Accounting
 for Taxes on Income'' by the Institute of Chartered Accountants of India
 which states that deferred tax should be recognized based on timing
 differences between the account-ting income and the estimated taxable
 income for the year and quantify the same using the tax rates and laws
 enacted or substantively enacted as at the balance sheet date. Deferred
 tax assets are recognized and carried forward to the extent there is
 virtual certainty that sufficient future taxable income will be
 available against which deferred tax assets can be realized.
Source : Dion Global Solutions Limited
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