(a) Basis of Accounting
The financial statements have been prepared and presented under the
historical cost convention on an accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 and
accounting principles generally accepted in India and comply with the
accounting standards prescribed in the Companies (Accounting Standards)
Rules, 2006 issued by the Central Government, in consultation with the
National Advisory Committee on Accounting Standards, to the extent
This is the first year of application of the revised Schedule VI to the
Companies Act, 1956 for the preparation of the financial statements of
the company. The revised Schedule VI introduces some significant
conceptual changes as well as new disclosures. These include
classification of all assets and liabilities into current and
non-current. The previous year figures have also undergone a major
reclassification to comply with the requirements of the revised
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosures of
contingent liabilities on the date of financial statements. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized prospectively in current and future periods.
All assets and liabilities are classified into current and non-current.
An asset is classified as current when it satisfies any of the
(a) it is expected to be realised in, or is intended for sale or
consumption in, the company''s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realised within 12 months after the reporting
(d) it is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the
(a) it is expected to be settled in the company''s normal operating
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within 12 months after the reporting date;
(d) the company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
All other liabilities are classified as non-current.
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents.
(c) Fixed Assets
Fixed assets are stated at cost of acquisition, including any
attributable cost for bringing the asset to its working condition for
its intended use, less accumulated depreciation and impairment loss.
Depreciation is provided on Straight Line Method, pro-rata to the
period of use, at the rates specified in Schedule XIV of the Act or the
rates based on useful lives of the assets as estimated by the
management, whichever are higher. The annual depreciation rates are as
Leasehold Land and Leasehold Improvements are amortised over the period
of the lease. Fixed assets costing Rs 5,000 or less are fully
depreciated in the period/year of acquisition. Fixed assets costing
more than Rs 5,000 but up to USD 5,000 are fully depreciated in the
period/year of acquisition except for:
*multiple-like items the cost of which is over USD 10,000 in
*unlike items of capital nature within an asset category for large
scale projects the aggregate cost of which exceeds USD 10,000 are
considered as one asset and depreciated in accordance with the
accounting policy and depreciation rate specified above.
Computer Software are recorded at its acquisition cost and is amortised
on straight-line basis over 3 to 5 years, which in management''s
estimate represents the period during which economic benefits will be
derived from their use. Cost of computer software not exceeding Rs 50
lakhs is fully amortised in the period / year of acquisition.
(d) Impairment of Assets
In accordance with Accounting Standard 28 (AS 28) on Impairment of
Assets where there is an indication of impairment of the Company''s
assets, the carrying amounts of the Company''s assets are reviewed at
each Balance Sheet date to determine whether there is any impairment.
The recoverable amount of the assets (or where applicable that of the
cash generating unit to which the asset belongs) is estimated at the
higher of its net selling price and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from
the continuing use of the assets and from its disposal at the end of
its useful life. An impairment loss is recognised whenever the carrying
amount of an asset or a cash-generating unit exceeds its recoverable
amount. Impairment loss is recognized in the statement of profit and
Inventories are valued at lower of cost and net realisable value. Cost
is determined on First-in-First-out basis. Cost of work-in-progress and
finished goods includes cost of materials, direct labour and
manufacturing overheads, where applicable. Stores and Spares are valued
at cost. The net realisable value of work-in- process is determined
with reference to the selling price of related finished goods. Raw
materials and other supplies held for use in production of inventories
are not written down below cost except in cases where material prices
have declined, and it is estimated that the cost of the finished
products will exceed their net realisable value. Finished goods
expiring within 90 days (near-expiry inventory) as at the balance sheet
date have been fully provided for.
Physicians'' samples are valued at standard cost, which approximates
actual cost and are charged to the statement of profit and loss when
(g) Foreign Currency Transactions
Transactions in foreign exchange are accounted for at the standard
exchange rates as determined by the Company on a monthly basis. The
exchange differences arising on foreign exchange transactions settled
during the year are recognized in the of statement of profit and loss
of the year. Monetary assets and liabilities in foreign exchange, which
are outstanding as at the year end, are translated at year end at the
closing exchange rate and the resultant exchange differences are
recognized in the statement of profit and loss.
(h) Revenue Recognition
Revenue from sale of goods in the course of ordinary activities is
recognised when property in the goods or all significant risks and
rewards of their ownership are transferred to the customer and no
significant uncertainty exists regarding the amount of the
consideration that will be derived from the sale of the goods and
regarding its collection. The amout recognised as revenue is exclusive
of sales tax, value added tax (VAT) and service tax, and is net of
returns, and discounts. Revenue from services is recognised as and when
services are rendered and related costs are incurred, in accordance
with the terms of the specific contracts. Interest income is recognised
on a time proportion basis taking into account the amount outstanding
and the interest rate applicable.
(i) Employee Benefits
(i) Long-term Employee Benefits
(a) Defined Contribution Plans
The Company has Defined Contribution Plans for post employment benefits
in the form of Provident Fund, Superannuation Fund and Employees''
Pension Scheme which are administered through Government of India
and/or Life Insurance Corporation of India (LIC). Provident Fund,
Superannuation Fund (which constitutes an insured benefit) and
Employees'' Pension Scheme are classified as Defined Contribution Plans
as the Company has no further obligation beyond making the
contributions. The Company''s contributions to Defined Contribution
Plans are charged to the statement of profit and loss as incurred.
(b) Defined Benefit Plans
The Company has Defined Benefit Plans for post employment benefits in
the form of Gratuity and Leave Encashment. Gratuity schemes of the
Company are administered through LIC. The employees of the Company are
entitled to Leave Encashment as per the policy of the Company.
Liability for Defined Benefit Plans is provided on the basis of
valuations, as at the balance sheet date, carried out by an independent
actuary. The actuarial valuation method used by an independent actuary
for measuring the liability is the Projected Unit Credit method.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under Defined Benefit Plan, are based on the market
yields on Government securities as at the balance sheet date.
(c) Other Long-term Employee Benefit
The employees of the Company are entitled to Compensated Absences as
per the policy of the Company. Liability for Compensated Absences is
provided on the basis of valuations, as at the balance sheet date,
carried out by an independent actuary. The actuarial valuation method
used by an independent actuary for measuring the liability is the
Projected Unit Credit method. The discount rates used for determining
the present value of the obligation under Defined Benefit Plan, are
based on the market yields on Government securities as at the balance
(ii) Actuarial gains and losses comprise experience adjustments and the
effects of changes in actuarial assumptions and are recognised
immediately in the statement of profit and loss as income or expense.
Lease rentals under an operating lease, are recognized as an expense in
the statement of profit and loss on a straight line basis over the
lease term. Lease income from operating leases are recognized in the
statement of profit and loss on a straight line basis over the lease
(k) Voluntary Retirement Scheme (VRS)
Liability under the VRS is accrued on the acceptance of the
applications of the employees under the VRS scheme issued by the
Company. Compensation paid during the current year and previous year
under the VRS is charged to the statement of profit and loss.
(l) Expenditure on Research and Development
Revenue expenditure is recognised as an expense in the period/year in
which it is incurred and the expenditure on capital assets is
depreciated over the useful lives of the assets.
(m) Taxes on Income
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is in accordance with the provisions
of the Income Tax Act, 1961.
The deferred tax charge or credit is recognized using substantively
enacted rates. In the case of unabsorbed depreciation or carried
forward losses, deferred tax assets are recognised only to the extent
there is virtual certainty of realisation of such assets. Other
deferred tax assets are recognized only to the extent there is
reasonable certainty of realization in future. Such assets are reviewed
as at each Balance Sheet date to reassess realization.
(n) Earnings per Share
Basic and diluted earnings per share are computed by dividing the net
profit after tax attributable to equity shareholders for the year, with
the weighted number of equity shares outstanding during the year.
(o) Provisions and Contingent Liabilities
The Company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are not recognized in financial statements.