1. Basis for preparation of financial statements
a) Basis for presentation of Financial Statements
The financial statements have been prepared and presented under the
historical cost convention on an accrual basis of accounting and comply
with the Accounting Standards as specified in the Companies (Accounting
Standards) Rules, 2006, other pronouncements of the Institute of
Chartered Accountants of India, the relevant provisions of the
Companies Act, 1956 and guidelines issued by the Securities and
Exchange Board of India, to the extent applicable and as consistently
applied by the company.
b) Use of Estimates
The presentation of financial statements requires the management of the
company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of financial statements and the
reported amount of income and expenses during the year. Examples of
such estimates include provisions for doubtful debts, employee
benefits, provisions for income taxes, useful life of depreciable
assets and provisions for impairments.
2. Fixed assets
a) Fixed assets are stated at cost less depreciation. Capital work in
progress includes pre-operative expenses.
b) Expenditure incurred on projects / expansion during implementation
is capitalized and apportioned to various assets on commissioning /
completion of the same.
a) Depreciation on fixed assets is provided on straight-line method at
the rates not lower than the rates prescribed by the schedule XIV of
the Companies Act, 1956 and in the manner as prescribed by it.
b) Cost of leasehold land is not amortized over the period of lease.
Investments are stated at cost. Provision is made, where, there is a
permanent fall in the value of investment.
5. Foreign exchange transactions
Foreign currency liabilities covered by forward contracts/swap
agreements are stated at the forward contracts/swap agreements rates,
while those not covered by forward contracts/swap agreements are
restated at rates ruling at the year-end. Other exchange differences
are dealt with in the profit and loss account.
6. Valuation of inventories
Stocks of raw materials and other ingredients have been valued on First
in First Out (FIFO) basis, at cost or net realizable value whichever is
less, finished goods and stock-in-trade have been valued at lower of
cost and net realizable value, work-in-progress is valued at raw
material cost up to the stage of completion, as certified by the
management on technical basis. Goods in transit are carried at cost.
7. Revenue Recognition
a) Sales are stated net of returns, excise duty and sales tax.
b) Dividend income is accounted for when the right to receive the same
c) Interest on calls-in-arrears on share capital is accounted for as
and when received.
8. Excise duty on finished goods
Excise duty is accounted for at the point of manufacture of goods and
accordingly considered for valuation of finished goods stock lying in
the factory premises as on the balance sheet date.
9. Researches and Development
a) Capital expenditure on research and development is included in the
cost of fixed assets.
b) Revenue expenditure on research and development is charged to the
profit & loss account.
The provision for taxation is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income Tax
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
11. Impairment of Assets
The company determines whether there is any indication of impairment of
carrying amount of company''s assets. The recoverable amounts of such
assets are estimated, and if any indication exists, impairment loss is
recognised wherever the carrying amount of assets exceeds its
A provision is recognised when an enterprise 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 management 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
13. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the year attributable to the equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the year.
For the purpose of calculating the 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. The
dilutive potential equity shares are deemed converted as at beginning
of the period, unless they have been issued at a later date.
14. Employee Retirement benefits
Short term employee benefits
All employee benefits payable/available within twelve months of
rendering the service are classified as short term employee benefits.
Benefits such as salaries, wages and bonus etc., are recognised in the
profit and loss account in the period in which the employee renders the
Defined benefit plans
Defined benefit plans of the company consist of gratuity and leave
The company has an obligation towards gratuity, a defined benefit
retirement plan covering eligible employees. The plan provides for a
lump sum payment to the vested employees at retirement, death while in
employment or on termination of employment of an amount based on the
respective employee''s salary and tenure of employment. Vesting occurs
upon completion of five years of service.
- Leave Encashment
As per company''s policy, eligible leaves can be accumulated by the
employees and carried forward to future periods either to be utilised
during the service, or encashed. Encashment can be made during the
service, on early retirement, on withdrawal of scheme, at resignation
and upon death of the employee. The value of benefit is determined
based on the seniority and the employee''s salary.
The liability in respect of defined benefit plans is accrued in the
books of accounts on the basis of actuarial valuation carried out by an
Defined contribution plans
Defined contribution plans of the company consist of Provident fund and
Employees State Insurance.
- Provident Fund & Employees State Insurance (ESI)
The company makes specified monthly contribution towards the employees''
provident fund & ESI for the eligible employees.
The contribution made to provident fund and ESI are charged to profit
and loss account as and when these become payable.