Accounting Policies of Ameya Laboratories Ltd. Company

Mar 31, 2012

1.1 Basis of preparation of financial statements

Financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

2.2 Revenue recognition

i. Sales are recognized on dispatch of products. Sales are inclusive of insurance, freight and sales tax.

ii. The export incentives are accrued and accounted on the basis of the actual exports made during the year.

iii. Income from job work services are recognized when services are rendered or related costs are incurred in accordance with the terms of specific contracts.

2.3 Excise duty

Excise duty recovered is reduced from sale of products. Excise in respect of finished goods is accounted for; as and when goods are cleared from the factory.

2.4 Fixed assets

a. Tangible assets

i. Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties (net of CENVAT & VAT), taxes, incidental expenses relating to acquisition and the cost of installation/ erection as applicable.

ii. Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed by Schedule XIV of the Companies Act, 1956. Depreciation is charged on pro rata basis for assets purchased/sold during the year.

iii. Borrowing costs that are attributable to the acquisition or construction of fixed assets are capitalized as part of such assets for the period up to the date of commencement of production. All other borrowing costs are charged to revenue.

b. Intangible assets

Intangible assets are stated at cost of acquisation net of recoverable taxes less accumulated amortisation/depletion. All costs, including financing costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets are capitalised.

2.5 Impairment of assets

An asset is treated as impaired when the carrying cost of asset exceeds its estimated recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed, if there has been a change in the estimate of recoverable amount.

2.6 Foreign currency transactions

a. Transactions in foreign exchange are accounted for at the exchange rate prevailing on the date of transaction, gains and losses arising thereon are recognized in the Statement of Profit and Loss.

b. Foreign currency monetary items are reported using the closing rate, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate on the date of the transaction.

2.7 Inventories

Inventories are valued at lower of cost and net realizable value, after providing for cost of obsolescence and other anticipated loss whenever considered necessary. Work-in-progress is valued on the basis of stage wise completion of the production. Valuation of finished goods and work-in-process include cost of conversion and other costs incurred in bringing the inventories to their present level of location and condition. Cost is determined by using the weighted average method; By products are valued at net realizable value.

2.8 Taxation

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from 'timing differences' between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognized and carried forward only to the extent that there is a reasonable certainty that asset will be realized in future.

2.9 Employee benefits

a. Defined contribution plan: The Company's employees' provident fund administered through government provident fund, employees state Insurance scheme and labor welfare fund are considered as defined contribution plans. The Company's contributions paid/payable towards these defined contributions plan are recognized as expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

b. Defined benefit plan: Company's liabilities towards gratuity, long term compensated absences are considered as defined benefit plans. The present value of the obligations under such defined benefit plans are determined based on actuarial valuation using the projected unit credit method, which recognizes each period of service as giving rise to an additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. The obligation is measured at the present value of estimated future cash flows using a discount rate that is determined by reference to market yields at the balance sheet date on government securities.

2.10 Disclosure required by Micro, Small and Medium Enterprises (Development) Act, 2006

In the absence of necessary information relating to the suppliers registered as micro or small enterprises under the Micro, Small and Medium Enterprises (Development) Act, 2006 the Company has not been able to identify such suppliers and the information required under the said Act could not be compiled and disclosed.

2.11 Contingent liabilities

Contingent liabilities are disclosed after careful examination of the facts and legal aspects of the matter involved.

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Mar 31, 2011

A. Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

B. Revenue recognition

i. Sales are recognized on dispatch of products. Sales are inclusive of insurance, freight and sales tax.

ii. The export incentives are accrued and accounted on the basis of the actual exports made during the year.

iii. Income from job work services are recognized when services are rendered or related costs are incurred in accordance with the terms of specific contracts.

C. Excise duty

Excise duty recovered is reduced from sale of products. Excise in respect of finished goods is accounted for; as and when goods are cleared from the factory and stock of finished goods are valued inclusive of excise duty where applicable.

D. Fixed assets

I. Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties (net of CENVAT & VAT), taxes, incidental expenses relating to acquisition and the cost of installation/ erection as applicable.

ii. Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed by Schedule XIV of the Companies Act, 1956. Depreciation is charged on pro rata basis for assets purchased/sold during the year.

iii. Borrowing costs that are attributable to the acquisition or construction of fixed assets are capitalized as part of such assets for the period up to the date of commencement of production. All other borrowing' costs are charged to revenue.

E. Investments

Long term investments are carried at cost. However, provision for diminution in valve, if any, is made to recognize a decline other than temporary in the value of investments.

F. Foreign currency transactions

a. Transactions in foreign exchange are accounted for at the exchange rate prevailing on the date of transaction, Gains and losses arising thereon are recognized in the Profit and Loss Account;

b. Foreign currency monetary items are reported using the closing rate, Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate .at the date of the transaction.

G. Inventories

Inventories are valued at lower of cost and net realizable value, after providing for cost of obsolescence and other anticipated loss whenever considered necessary. Work-in-progress is valued at the lower of cost and net realizable value on the basis of stage wise completion of the production. Valuation of finished goods and work in process include cost of conversion and other costs incurred in bringing the inventories to their present level of location and condition. Cost is determined by using the weighted average method.

H. Taxation

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from 'timing differences' between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. The deferred tax assets is recognized and carried forward only to the extent that there is a reasonable certainty that asset will be realized in future.

1. Contingent liabilities

Contingent liabilities are disclosed after careful examination of the facts and legal aspects of the matter involved.

J. Scheme of arrangement for amalgamation

Pursuant to the Scheme of Arrangement for Amalgamation (the Scheme) of the erstwhile Nitya Laboratories Ltd (NLL) with the Company under Sections 391 to 394 of the Companies Act, 1956 approved by the Hon'ble High Court of Andhra Pradesh vide its Order dated December 21, 2010 which became effective on January 17, 2011 on filing of the certified copy of the Order of the High Court in the Office of Registrar of Companies, Hyderabad, Andhra Pradesh. All the properties, assets, both movable and immovable, liabilities including contingent liabilities and reserves of erstwhile NLL have without further act or deed, been transferred to and vested in the Company at their book values, as a going concern with effect from the appointed date i.e. April 1, 2009.

For giving effect to the amalgamation in the nature of merger the pooling of interests method as prescribed by the Accounting Standard-14 Accounting for Amalgamations notified in the Companies (Accounting Standards) Rules, 2006, was followed in the previous period wherein, the assets and liabilities including contingent liabilities as at April 1, 2009 and the transactions including income and expenses for the period April 1, 2009 to January 17, 2011 of erstwhile NLL (being the period when pending effectuation of the Scheme, the business and activities of erstwhile NLL were being run and managed in trust for the Company) were incorporated in the accounts of the previous period.

Consequent to the effectuation of the said Scheme:

The shareholders of NLL were entitled to ten equity shares of Rs.1 each in the Company as fully paid up (exchange shares) for every fourteen equity shares of Rs.10 each fully paid up held by them in NLL; accordingly, for 41,15,975 equity shares will get 29,39,983 equity shares of the Company.

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Mar 31, 2010

A. Basis of Accounting

Financial statements are prepared under the historical cost convention, in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956.

B. Revenue Recognition

i. Sales are recognized on dispatch of products. Sales are inclusive of insurance, freight and sales tax.

ii. The export incentives are accrued and accounted on the basis of the actual exports made during the year.

iii. Income from job work services are recognized when services are rendered or related costs are incurred in accordance with the terms of specific contracts.

C. Excise Duty

Excise Duty recovered is reduced from sale of products. Excise in respect of finished goods is accounted for as and when goods are cleared from the factory and stock of finished goods are valued inclusive of excise duty where applicable.

D. Fixed Assets

I. Fixed assets are stated at cost less accumulated depreciation. Cost of acquisition of fixed assets is inclusive of freight, duties {net of CENVAT & VAT), taxes, incidental expenses relating to acquisition and the cost of installation/ erection as applicable.

ii. Depreciation on fixed assets is provided on Straight Line Method at the rates prescribed by Schedule XIV of the Companies Act, 1956. Depreciation is charged on pro rata basis for assets purchased/sold during the year.

iii. Borrowing costs that are attributable to the acquisition or construction of fixed assets are capitalized as part of s.uch assets for the period up to the date of commencement of production. All other borrowing costs are charged to revenue.

E. Investments

Long term investments are carried at cost. However, provision for diminution in valve, if any, is made to recognize a decline other than temporary in the value of investments.

F. Foreign Currency Transactions

a. Transactions in foreign exchange are accounted for at the exchange rate prevailing on the date of transaction. Gains and losses arising thereon are recognized in the Profit and Loss Account;

b. Foreign currency monetary items are reported using the closing rate, Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate .at the date of the transaction.

G. Inventories

Inventories are valued at lower of cost and estimated net realizable value, after providing for cost of obsolescence and other anticipated loss whenever considered necessary, Work-in-progress is valued at estimated cost on the basis of stage wise completion of the production. Finished goods and work in process include cost of conversion and other costs incurred in bringing the inventories to their present level of location and condition. Cost is determined by using the weighted average method.

H. Taxation

Provision for current tax is made after taking into consideration benefits admissible under the provisions of Income Tax Act, 1961. Deferred tax resulting from timing differences between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax assets is recognized and carried forward only to the extent that there is a reasonable certainty that asset will be realized in future. The provision for the current year has been made taking into consideration of merger with Nitya Laboratories Limited.