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
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
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.
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.
(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
(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.
(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
(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
(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
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
(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.
(i) Long Term Investments are stated at cost and provision is made to
recognize any diminution in value other than that of a temporary
(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
(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
(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
M Income/Expenditure during construction period
Revenue Expenditure during construction are capitalized to respective
assets. Similarly revenue incomes during construction are reduced from
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
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.
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