SENSEX NIFTY India | Accounting Policy > Pharmaceuticals > Accounting Policy followed by Plethico Pharmaceuticals - BSE: 532739, NSE: PLETHICO
Plethico Pharmaceuticals
BSE: 532739|NSE: PLETHICO|ISIN: INE491H01018|SECTOR: Pharmaceuticals
Dec 19, 16:30
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VOLUME 11,225
Dec 19, 16:30
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« Dec 11
Accounting Policy Year : Dec '12
A Basis for preparation of financial statement

The financial statements have been prepared and presented under the historical cost convention on accrual basis in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 1956.

B Use of Estimates

The preparation of financial statements is in conformity with generally accepted accounting principles if requires management to make assumptions and estimates, which it believes are reasonable under the circumstances that affect the reported amounts of assets, liabilities and contingent liabilities on the date of financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts / advances, deferred tax, export incentives, provision for retirement benefits, etc.

C Revenue recognition

Revenue is recognized to the extent that it can be reliably measured and is probable that the economic benefits will flow to the company.

The Company recognizes sales at the point of dispatch of goods to the customers. All other income are recognized as revenue, when earned or when the right to receive is established.

D Purchase

Purchases are accounted net of cash discounts, wherever applicable.

E Fixed Assets

(i) Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets includes non refundable taxes and levies, freight and other incidental expenses related to the acquisition and installation of the respective assets and reducing there from refundable levies received/receivable, if any. Borrowing cost attributable to acquisition or construction of fixed assets are capitalized to respective assets.

(ii) The computer software cost are capitalized and recognized as intangible assets in terms of the Accounting Standards 26 on Intangible Assets based on materiality, accounting prudence and significant economic benefit therefrom expected to flow for a period longer than one year. Capitalized costs include direct costs of implementation and expenses directly attributable to the development of software.

F Depreciation

(i) Depreciation on fixed assets (except lease hold land and information technology assets) is provided on straight-line method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956.

(ii) Computer Software cost capitalized is amortized over estimated useful life of 3 to 5 years as estimated at the time of capitalization.

G Impairment of Assets

If indications suggest that assets of the Company may be impaired, the recoverable amount of assets are determined on the Balance Sheet date and if it is less than its carrying amount, the carrying amount of assets are reduced to the said recoverable amount.

H Inventories

(i) Stock of Raw Materials and Finished Goods are valued at lower of cost or realizable value. The cost of Raw Materials is determined on FIFO basis. The cost of Finished Goods produced is determined on weighted average basis whereas cost of Finished Goods traded is determined on FIFO basis and including manufacturing overheads where applicable.

(ii) The stocks of Packing Materials, Consumables Stores, Promotional Materials & Stock-in-Process are valued at cost. The cost of Packing Materials, Consumable Stores & Promotional Material is determined on FIFO basis. The cost of Work In Progress produced is determined on weighted average basis.

I Retirement Benefits

(a) Short terms Benefits :

Short term employee benefits are recognised as an expense at the undiscounted amount in profit and loss account of the year in which the related service is rendered. Short term employee benefits are recognized as expense in the profit and loss account of the year in which service is rendered.

(b) Long term benefits :

(i) Defined Contribution Plan :

Provident and Family Pension Fund :

The eligible employees of the Company are entitled to receive post employment benefits in respect of provident and family pension fund, in which both employees and the Company make monthly contributions at a specified percentage of the employees eligible salary (currently 12% of employees eligible salary). The contributions are made to Employees' Provided Fund Organisation (EPFO) and the Central Provident Fund under the State Pension Scheme. Provident Fund and Family Pension Fund are classified as Defined Contributions Plans as the Company has no further obligation beyond making the contribution. The Company's contribution Plan are charged to profit and loss account as incurred.

(ii) Contribution to defined contribution schemes such as Provident Fund, Family Pension Fund and ESI Fund are charged to the profit and loss account.

(iii) Defined Benefit Plan :

1. Gratuity :

The Company has an obligation towards gratuity, a defined benefits retirement plan covering eligible employees. The plan provides a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company an employees' gratuity fund managed by the Life Insurance Corporation of India (LIC) based on an independent actuarial valuation made at the year end Actuarial gains and losses are recognised in the profit and loss account.

2. Compensated absences :

The Company provides for encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The liability is recognised based on number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation. Actuarial gains and losses are recognised in the profit and loss account.

(iv)The defined benefit obligations in respect of gratuity are recognized on the basis of valuation done by an independent actuary applying project unit credit method. The actuarial gain / loss arising during the year and recognized in the profit and loss account of the year. The company has an employees' gratuity fund managed by the Life Insurance Corporation of India (LIC).

(v) Leave encashment is charged to revenue on accrual basis.

J Investments

(i) Long Term Investments are stated at cost and provision is made to recognize any diminution in value other than that of a temporary nature.

(ii) Current investments are carried at lower of cost and market value. Diminution in value is charged as a loss in profit and loss account.

K Foreign Exchange Transactions

(i) The Transactions in Foreign Currency have been accounted at the exchange rate prevailing on the date of the transaction. Year-end Receivables / Payables have been translated at the year-end rate of exchange. The difference on account of fluctuation in the rate of exchange as prevailing on Sales / Purchase transaction date and on Realization / Payment / year- end date are recognized in Profit & Loss Account.

(ii) Investment in shares in Foreign Subsidiaries and other companies abroad are expressed in reporting currencies at the rate of exchange prevailing at the time when the original investments were made.

(iii) Foreign Exchange Gain or Foreign Exchange losses arising out of revaluation in respect of outstanding FCCB at the Balance Sheet date shall be recognized in the books of accounts and amount of such gains / losses shall be disclosed as extra- ordinary item in Profit & Loss account.

(iv) The premium payable on redemption of FCCB shall be provided in the books of accounts as per the terms of the Offering Circular. The Premium on Redemption of FCCB will first be adjusted from Share Premium available and after full utilization of Share Premium, the balance would be adjusted from Free Reserves or charged to Profit & Loss Account and premium so payable shall be disclosed separately

L Research and Development

Research and Development costs (other than cost of fixed assets acquired) are charged as an expense in the year in which they are incurred.

M Income/Expenditure during construction period

Revenue Expenditure during construction are capitalized to respective assets. Similarly revenue incomes during construction are reduced from respective assets.

N Provisions, Contingent Liabilities and Contingent Assets

(a) A provision is recognised, if as a result of past event, the Company has a present legal obligation that can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability.

(b) A disclosure for a Contingent Liability is made when there is possible obligation or a present obligation that may, but probably will not, required outflow of resources. Where there is a possible obligation or present obligation where likelihood of outflow of resources is remote, no provision or disclosure is made.

(c) Contingent Assets are neither recognised nor disclosed.

O Miscellaneous Expenditure (to the extent not written off)

Security Issue Expenses and other Deferred Revenue Expenses shall be amortized on the basis of 1/5th of the total expenses and the extent to which they are not written off shall be disclosed in the Balance Sheet.

P Provision for Current & Deferred tax

Provision for Tax for the year comprises Current Income Tax and Deferred Tax.Provision for Current Tax is determined after taking in to consideration the provision of the Income tax Act'1961 relevant for the fiscal year as applicable or substantively enacted as on the balance sheet date.

a) In accordance with Accounting Standard 22 Accounting for taxes on Income issued by the Institute of Chartered Accountants of India, the deferred tax for timing differences is accounted for, using the tax rates and laws that have been enacted or substantively enacted on the Balance Sheet date.

b) Deferred Tax Assets arising from timing differences are recognised only on the consideration of prudence.

Q Lease

Assets taken on lease, under which all the risks and rewards of ownership are effectively retained by the lessor, are classified as operating lease. Operating lease payments are recognized as expense in the Profit and Loss Account.

The previous year figures have been regrouped/reclassified, wherever necessary to conform to the current year presentation

Source : Dion Global Solutions Limited
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