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SENSEX NIFTY India | Accounting Policy > Pharmaceuticals > Accounting Policy followed by Shasun Pharmaceuticals - BSE: 524552, NSE: SHASUNPHAR

Shasun Pharmaceuticals

BSE: 524552|NSE: SHASUNPHAR|ISIN: INE317A01028|SECTOR: Pharmaceuticals
Shasun Pharmaceuticals is not traded in the last 30 days
Shasun Pharmaceuticals is not traded in the last 30 days
Mar 14
Accounting Policy Year : Mar '15
2.1 Basis of preparation of financial statements
 The financial statements have been prepared and presented in accordance
 with Indian Generally Accepted Accounting Principles (GAAP) under the
 historical cost convention using the accrual basis except for certain
 financial instruments which are measured at fair values. GAAP comprises
 accounting standards as prescribed under Section 133 of the Companies
 Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules,
 2014, other pronouncements of the Institute of Chartered Accountants of
 India, the provisions of the Act (to the extent notified) and
 guidelines issued by the Securities and Exchange Board of India (SEBI).
 Accounting policies have been consistently applied except where a newly
 issued accounting standard is initially adopted or a revision to an
 existing accounting standard requires a change in the accounting policy
 hitherto in use.
 2.2 Use of estimates
 The preparation of the financial statements in conformity with
 generally accepted accounting principles in India requires management
 to make estimates and assumptions that affect the reported amount of
 assets and liabilities and disclosure of contingent liabilities on the
 date of the financial statements. Management believes that the
 estimates made in the preparation of financial statements are prudent
 and reasonable. Actual results could differ from those estimates. Any
 revision to accounting estimates is recognized prospectively in current
 and future periods.
 2.3 Tangible assets, intangible assets, depreciation and amortization
 Tangible assets are stated at cost of acquisition or construction, less
 accumulated depreciation. Cost includes inward freight, duties, taxes
 and incidental expenses related to acquisition and installation of the
 asset. Borrowing costs directly attributable to acquisition or
 construction of tangible assets, which necessarily take a substantial
 period of time to be ready for their intended use, are capitalized.
 Depreciation on tangible assets is provided on a straight line method
 over the useful lives of the assets. With effect from April 1, 2014,
 pursuant to the requirements of Companies Act, 2013, the Company
 carried out a detailed technical evaluation and determined the useful
 lives of the assets as under:
 Asset category                      Estimated useful lives (in years)
 Factory buildings                               30.00
 Non factory buildings                           60.00
 Plant and machinery                              7.50
 Plant and machinery 
 (Pharma specific assets)                        20.00
 Electrical installations                        10.00
 Office equipments                                5.00
 Computers and accessories                        3.00
 Servers and networks                             6.00
 Furniture, fixtures and fittings                10.00
 Vehicles                                         5.00
 Leasehold land is being amortized on a straight line basis over the
 period of the lease.
 Intangible assets are recorded at the consideration paid for
 acquisition and are amortized over their estimated useful life of 5
 years on a straight-line basis, commencing from the date the asset is
 available to the Company for its use.
 The cost of assets not ready to be put to use before the year-end is
 disclosed under capital work in progress.
 Advances paid towards acquisition of tangible fixed assets, outstanding
 at each balance sheet date are shown under long term loans and
 2.4 Impairment of assets
 The Company assesses at each balance sheet date whether there is any
 indication that an asset may be impaired. If any such indication
 exists, the Company estimates the recoverable amount (higher of net
 selling price and value in use) of the asset.  If such recoverable
 amount of the asset or the recoverable amount of the cash generating
 unit to which the asset belongs is less than the carrying amount, the
 carrying amount is reduced to its recoverable amount. The reduction is
 treated as an impairment loss and is recognized in the Statement of
 profit and loss. If at the balance sheet date there is an indication
 that a previously assessed impairment loss no longer exists, the
 recoverable amount is reassessed and the asset is reflected at the
 recoverable amount subject to a maximum of depreciable historical cost.
 2.5 Revenue recognition
 Revenue from sale of goods is recognised when significant risks and
 rewards in respect of ownership of products are transferred to
 customers. Revenue from sale of goods is recognised in case of exports
 on the date of the bill of lading or airway bill which coincides with
 transfer of significant risks and rewards to customer and is net of
 trade discounts, sales returns and sales tax, where applicable. Revenue
 from domestic sales is primarily recognized on dispatch basis.
 Service income is recognised as per the terms of contracts with
 customers when the related services are performed, or when the agreed
 milestones are achieved. Upfront non-refundable payments received under
 these arrangements are deferred and recognized as revenue over the
 expected period over which the related services are expected to be
 Dividend income is recognised when the unconditional right to receive
 the income is established.
 Income from interest on deposits and loans are recognised on the time
 proportionate basis.
 Export entitlements are recognised as income when the right to receive
 credit as per the terms of the scheme is established in respect of the
 exports made and where there is no significant uncertainty regarding
 the ultimate collection of the relevant export proceeds.
 2.6 Leases
 Leases under which the Company assumes substantially all the risks and
 rewards of ownership are classified as finance leases. Such assets are
 capitalized at fair value of the assets or present value of the minimum
 lease payments at the inception of the lease, whichever is lower.
 Lease payments are apportioned between finance charges and reduction of
 the lease liability at the implicit rate of return.  Finance charges
 are charged to the Statement of profit and loss.
 Leases where the lessor effectively retains substantially all the risks
 and benefits of ownership of the leased items are classified as
 operating leases. Operating lease payments are recognised as an expense
 in the Statement of profit and loss on a straight line basis over the
 period of the lease or as and when the payments are made over the lease
 2.7 Investments
 Investments that are readily realizable and intended to be held for not
 more than a year are classified as current investments.  All other
 investments are classified as long-term investments.
 Current investments are carried at the lower of cost and fair value.
 Long-term investments are carried at cost and provisions are recorded
 to recognize any decline, other than temporary, in the carrying value
 of each investment.
 2.8 Inventories
 Raw and packaging materials, stores and spare parts and lab chemicals
 are carried at cost. Cost includes purchase price (excluding those
 subsequently recoverable by the enterprise from the concerned revenue
 authorities), freight inwards and other expenditure incurred in
 bringing such inventories to their present location and condition. In
 determining the cost, weighted average cost method is used.
 The carrying cost of raw and packing materials, stores and spare parts
 and lab chemicals are appropriately written down when there is a
 decline in replacement cost of such materials and finished products in
 which they will be incorporated are expected to be sold below cost.
 Work in progress, manufactured finished goods and traded goods are
 valued at the lower of cost and net realizable value. The comparison of
 cost and net realizable value is made on an item by item basis. Cost of
 work in progress and manufactured finished goods is determined on a
 weighted average basis and comprises direct material, cost of
 conversion and other costs incurred in bringing these inventories to
 their present location and condition. Cost of traded goods is
 determined on weighted average basis.
 The excise duty in respect of closing inventory of finished goods is
 included as part of inventory.
 2.9 Employee benefits
 The Company''s contribution in respect to Provident fund, Employees''
 state insurance scheme, Pension fund and other defined contribution
 plans are charged to the Statement of profit and loss when incurred.
 The Company has no further obligation other than the monthly
 contributions to these funds.
 Gratuity costs with respect to defined benefit schemes are accrued
 based on actuarial valuation, carried out by an independent actuary as
 at the balance sheet date. The contributions are made to approved
 ''Shasun Chemicals Employees Gratuity Trust Fund''. Liabilities are
 determined by actuarial valuation using projected unit credit method
 carried out by an independent actuary as at the balance sheet date.
 Provision for compensated absences is made on the basis of actuarial
 valuation as at the balance sheet date by an independent actuary using
 projected unit credit method.
 Under the superannuation scheme, a defined contribution plan, the
 Company pays fixed contributions to approved superannuation trust and
 has no obligation to pay further amounts. Such fixed contributions are
 charged to the Statement of profit and loss on accrual basis.
 All actuarial gains and losses arising during the year are recognized
 immediately in the Statement of profit and loss.
 2.10 Foreign currency transactions and derivative instruments
 Foreign currency transactions are recorded using the exchange rates
 prevailing on the dates of the respective transactions.  Exchange
 differences arising on foreign currency transactions settled during the
 year are recognised in the Statement of profit and loss.
 Monetary assets and liabilities denominated in foreign currencies as at
 the balance sheet date, are translated at year-end rates. The resultant
 exchange differences are recognised in the Statement of profit and
 loss. Non-monetary assets are recorded at the rates prevailing on the
 date of the transaction.
 Income and expenditure items at representative offices are translated
 at the respective monthly average rates. Monetary assets at
 representative offices at the balance sheet date are translated using
 the year-end rates. Non-monetary assets are recorded at the rates
 prevailing on the date of the transaction.
 Forward contracts are entered into, to hedge the foreign currency risk
 of the underlying outstanding at the balance sheet date.  The premium
 or discount on all such contracts is amortized as income or expense
 over the life of the contract. Any profit or loss arising on the
 cancellation or renewal of forward contracts is recognised as income or
 expense for the period.
 In relation to the forward contracts entered into, to hedge the foreign
 currency risk of the underlying outstanding at the balance sheet date,
 the exchange difference is calculated and recorded in accordance with
 AS-11 (revised). The exchange difference on such a forward exchange
 contract is calculated as the difference of the foreign currency amount
 of the contract translated at the exchange rate at the reporting date,
 or the settlement date where the transaction is settled during the
 reporting period and the corresponding foreign currency amount
 translated at the later of the date of inception of the forward
 exchange contract and the last reporting date. Such exchange
 differences are recognized in the Statement of profit and loss in the
 reporting period in which the exchange rates change.
 of the asset and are depreciated over the balance life of such assets.
 In cases other than those falling under above exchange fluctuations are
 accumulated in ''Foreign Currency Monetary Item Translation Difference
 Account'' (FCMITDA) , grouped under Reserves and Surplus, and amortized
 over the balance period of long-term monetary asset/liability but not
 beyond March 31, 2020.
 Effective April 1, 2013, the Company adopted Accounting Standard-30,
 Financial Instruments: Recognition and Measurement issued by The
 Institute of Chartered Accountants of India to the extent the adoption
 did not conflict with the existing accounting standards and other
 authoritative pronouncements of the Company Law and other regulatory
 requirements. All derivative forward contracts (except for forward
 foreign exchange contracts where underlying assets or liabilities
 exist) are fair valued at each reporting date. For such forward
 contracts designated in a hedging relationship, the Company records the
 gain or loss on effective hedges, if any, in a hedge reserve, until the
 transaction is complete. On completion, the gain or loss is transferred
 to the statement of profit and loss of that period. Changes in fair
 value relating to the ineffective portion of the hedges and derivative
 forward contracts not qualifying or not designated as hedges are
 recognised in the statement of profit and loss in the accounting period
 in which they arise.
 Effective April 1, 2013, based on the recognition and measurement
 principles set out in the Accounting Standard (AS-30) on Financial
 Instruments: Recognition and Measurement, the changes in the derivative
 fair values relating to forward contracts that are designated as
 effective cash flow hedges, has been recognized directly in
 shareholders'' funds until the hedged transactions occur.
 2.11 Research and development
 Research costs are expensed as and when incurred. Development
 expenditure is capitalized based on technical feasibility for each
 project and where future recoverability can reasonably be assured
 through probable future economic benefits.
 The carrying value of development costs is reviewed for impairment
 annually when the asset is not yet in use, and otherwise when events or
 changes in circumstances indicate that the carrying value may not be
 Materials identified for use in research and development process are
 carried as inventories and charged to Statement of profit and loss on
 issuance of such materials for research activities.
 2.12 Taxation
 Income tax expense comprises current tax (i.e. amount of tax for the
 year determined in accordance with the income tax law) and deferred tax
 charge or credit (reflecting the tax effects of the timing differences
 between accounting income and taxable income for the year). The
 deferred tax charge or credit and the corresponding deferred tax
 liabilities or assets are recognized using the tax rates that have been
 enacted or substantially enacted by the balance sheet date. Deferred
 tax assets are recognized only to the extent there is reasonable
 certainty that the assets can be realized in future; however, where
 there is unabsorbed depreciation or carry forward of losses under
 taxation laws, deferred tax assets are recognized only if there is
 virtual certainty of realization of such assets. Deferred tax assets
 are reviewed at each balance sheet date and written down or written up
 to reflect the amount that is reasonably and virtually certain
 respectively to be realized.
 Minimum Alternate Tax (MAT) paid in accordance with tax laws, which
 gives rise to future economic benefits in the form of adjustment of
 future income tax liability, is considered as an asset if there is
 convincing evidence that the company would pay normal income tax after
 tax holiday period and accordingly, MAT is recognized as an asset in
 the balance sheet when it is probable that the future economic benefit
 associated with it will flow to the company and the asset can be
 measured reliably.  MAT credit entitlement is reviewed at each balance
 sheet date and written down to the extent there is no convincing
 evidence to the effect that the Company will pay normal income tax
 during the specified period.
 2.13 Earnings per share
 Basic earnings per share is computed by dividing net profit or loss for
 the period attributable to equity shareholders by the weighted average
 number of shares outstanding during the year. Diluted earnings per
 share amounts are computed after adjusting the effects of all dilutive
 potential equity shares. The number of shares used in computing diluted
 earnings per share comprises the weighted average number of shares
 considered for deriving basic earnings per share, and also the weighted
 average number of equity shares, which could have been issued on the
 conversion of all dilutive potential shares.  In computing dilutive
 earnings per share, only potential equity shares that are dilutive and
 that decrease profit per share are included.
 2.14 Employee stock share based payments
 The Company follows accounting treatment prescribed by Securities and
 Exchange Board of India (share based employee benefits) Regulations,
 2014 and the Guidance Note on Employee Share-based Payments issued by
 the Institute of Chartered Accountants of India. The Company calculates
 the compensation cost based on the intrinsic value method wherein the
 excess of value of underlying equity shares as of the date of the grant
 of options over the exercise price of the options given to employees
 under the employee stock option schemes of the Company is amortised
 over the vesting period on a straight line basis.
 2.15 Cash flow statement
 Cash flows are reported using the indirect method, whereby profit
 before tax is adjusted for the effects of transactions of a non- cash
 nature and any deferrals or accruals of past or future cash receipts or
 payments. The cash flows from operating, financing and investing
 activities of the Company are segregated.
 2.16 Provisions, Contingent liabilities and Contingent assets
 The Company creates a provision when there is present obligation as a
 result of past events 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. Where 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 neither recognised nor disclosed in the financial
 Provisions for onerous contracts are recognized when the expected
 benefits to be derived by the Company from a contract are lower than
 the unavoidable costs of meeting the future obligations under the
 contract. The provision is measured at lower of the expected cost of
 terminating the contract and the expected net cost of fulfilling the
Source : Dion Global Solutions Limited
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