Accounting Policies of IOL Chemicals and Pharmaceuticals Ltd. Company

Mar 31, 2025

Note 2 (i): Material accounting policies / critical
accounting estimates and judgements

I. Statement of compliance

The standalone financial statements of the company have been
prepared in accordance with the Indian Accounting Standards
(IND AS) specified under section 133 of the Companies Act,
2013 ("the Act") read with the Companies (Indian Accounting
Standard) Rules, 2015, as amended from time to time. The
standalone financial statements have been prepared on going
concern basis and all the applicable Ind AS effective as on the
reporting date have been complied with.

II. Basis of preparation of standalone financial statements

The standalone financial statements have been prepared
under the historical cost convention on accrual basis except for
certain financial instruments which are measured at fair value.

Accounting policies have been consistently applied except
where a newly issued accounting standard is initially adopted
or revision to an existing accounting standard requires a
change in the accounting policy hitherto in use.

III. Functional and presentation currency

The functional currency of the company is Indian rupee (INR).
The standalone financial statements are presented in Indian
rupees (INR) and all values are rounded to nearest crore up to
two decimals, unless otherwise stated.

IV. Use of estimates and judgements

The preparation of standalone financial statements, in
conformity with Ind AS requires management to make
estimates, judgements and assumptions. These estimates,
judgements and assumptions affect the application of
accounting policies and the reported amounts of assets and
liabilities, the disclosures of contingent assets and liabilities at
the date of the financial statements and reported amounts of

revenues and expenses during the period. The application of
accounting policies that require critical accounting estimates
involving complex and subjective judgements and use of
assumptions in these standalone financial statements have
been disclosed in notes. Accounting estimates could change
from period to period. Actual results could differ from those
estimates. Appropriate changes in estimates are made as
management become aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected
in the standalone financial statements in the period in which
changes are made, and if material, their effects are disclosed in
the notes to the standalone financial statements.

V. Revenue recognition from operations

i) Revenue from sale of goods and services

Revenue from contracts with customer is recognized
when control of goods or services are transferred to the
customer at an amount that reflects the consideration
entitled in exchange for those goods or services, and
excludes taxes and levies collected on behalf of the
Government. In accordance with Ind AS 115 on revenue
and schedule III of Companies Act 2013, duties levies like
GST are not part of revenue.

Generally, control is transfer upon shipment of goods
to the customer or when the goods are made available
to the customer, provided the transfer of the title to the
customer occurs and the company has not retained any
significant title of ownership or future obligations with
respect to the goods shipped.

Revenue from rendering of services is recognized
overtime by measuring the progress towards complete
satisfaction of performance obligations at the
reporting period.

Revenue is measured at the amount of consideration
which the company expects to be entitled to in exchange
for transferring distinct goods or services to a customer as
specified in the contract, excluding amounts collected on
behalf of third parties. Consideration is generally due upon
satisfaction of performance obligations and a receivable is
recognized when it becomes unconditional. Generally the
credit period varies between 0-90 days from the shipment
or delivery of goods or services as the case may be.

In case of discounts, rebates, credits, price incentives
or similar terms, considerations are determined based
on its most likely amount, which is assessed at each
reporting period.

ii) Export incentives

The revenue in respect of export benefits is recognised
on post export basis at the rate at which the
entitlements accrue.

VI. Other income

i) Dividend

Dividend income from investment is recognised when
the right to receive the payment is established.

ii) Interest

Interest from customer

Revenue from interest is recognised on a time proportion
basis taking into account the amount outstanding and
rate applicable.

Other interest

Interest income is recognised using effective
interest rate (EIR).

iii) Insurance and other claims

Insurance and other claims are recognized when there
exist no significant uncertainty with regard to the amount
to be realized and the ultimate collection thereof.

VII. Employee benefits

Short term Employee benefits

All employee benefits payable wholly within twelve months
of rendering the services are classified as short term employee
benefits, such as salaries, wages, bonus etc.

Defined contribution plans

(i) Provident fund:

Employees receive benefit in the form of Provident fund
which is a defined contribution plan. The company has
no obligation, other than the contribution payable to the
provident fund. The company recognises contribution
payable to the provident fund scheme as an expense,
when an employee renders the related service.

Defined benefit plans

(i) Gratuity:

The Company provides for gratuity a defined benefit
retirement plan "The gratuity plan" covering eligible
employees. The gratuity plan provides for lump sum
payment to vested employee at retirement, death,
incapacitation or termination of employee of an amount
based on the respective employees'' salary and the tenure
of employment with the company.

Liability with regard to Gratuity Plan is determined
by actuarial valuation, performed by an independent
actuary at each Balance sheet date using the project
unit credit method.

The company fully contributes all ascertained
liabilities to the IOL Chemicals and Pharmaceuticals
Ltd Group Gratuity Trust. Contributions are invested in

a scheme with Life Insurance Corporation of India as
permitted by Indian Law

The Company recognises the net obligation of
a defined benefit plan in its standalone Balance
sheet as an asset or liability. Gains and losses
through re-measurements of the net defined
benefit liability/ (asset) are recognized in other
comprehensive income and are not reclassified
to profit or loss in subsequent periods. The actual
return of the portfolio of plan assets, in excess of
the yields computed by applying the discount rate
used to measure the defined benefit obligations is
recognized in Other Comprehensive Income.

(ii) Compensated absences

The employees of the company are entitled to
compensated absences. The employee can carry
forward a portion of unutilised accumulated
compensated absences and utilise it in future
period or encash the leaves on retirement or on
termination. Compensated absences which are not
expected to occur within twelve months after the
end of the period in which the employee renders
the related services are recognised as a liability at
the Balance Sheet date, the cost of providing benefit
is determined based on actuarial valuation using
projected unit credit method. Actuarial gain /loss
are recognised in the statement of profit or loss in
the period in which they occur. Non accumulating
compensated absences are recognised in the
period, in which the absences occur.

VIII. Property, plant and equipment

All items of property, plant and equipment are stated at cost
less accumulated depreciation and impairment if any. Freehold
land is stated at cost and not depreciated. The Cost of an item
of Property, Plant and Equipment comprises:

a) Its purchase price net of recoverable taxes wherever
applicable and any attributable expenditure (directly or
indirectly) for bringing the asset to its working condition
for its intended use.

b) Subsequent expenditures relating to property, plant
and equipment is capitalized only when it is probable
that future economic benefits associated with these will
flow to the Company and the cost of the item can be
measured reliably.

c) Initial estimate of the costs of dismantling and removing
the item and restoring the site on which it is located,
if any, the obligation for which an entity incurs either
where the item is acquired or as a consequence of having
used the item during a particular period for purposes
other than to produce inventories during that period.

Depreciation on property, plant and equipment has been
provided on the straight line method as per the useful life
prescribed in Schedule II to the Companies Act, 2013 except in
respect of the following categories of asset, in whose case the
life ofthe assets has been assessed as under based on technical
advice, taking into account the nature ofthe asset, the estimated
usage of the asset, the operating conditions of the asset, past
history of replacement and maintenance support, etc.:

Depreciation is calculated on pro-rata basis from the date
of installation till the date the asset sold or discarded.

Advances paid towards the acquisition of property, plant
and equipment outstanding at each balance sheet date is
classified as capital advances under other non-current assets
and the cost of assets not put to use before such date are
disclosed under Capital work-in-progress. The depreciation
method, useful lives and residual value are reviewed
periodically and at the end of each reporting period.

IX. Intangible assets

Intangible assets are stated at cost less accumulated amount
of amortisation and impairment if any. Intangible assets are
amortised over their respective individual estimated useful lives
on a straight-line basis, from the date that they are available for
use. The estimated useful life of an identifiable intangible asset is
based on a number of factors including the effects of obsolescence
etc. The amortization method estimated useful lives are reviewed
periodically and at end of each reporting period.

The estimated useful life of intangible assets is as follows:

XI. Dividend to equity holders of the Company

The Company recognises a liability to make dividend
distributions to equity holders of the Company when the
distribution is authorised and the distribution is no longer
at the discretion of the Company. As per the corporate laws
in India a distribution is authorised when it is approved by
the shareholders, However, Board of Directors of a Company
may declare interim dividend during any financial year out
of the surplus in statement of profit and loss and out of the
profits of the financial year in which such interim dividend is
sought to be declared. A corresponding amount is recognised
directly in equity.

XII. Government grants

The government grants are recognised only when there is a
reasonable assurance of compliance that conditions attached
to such grants shall be complied with and it is reasonably
certain that the ultimate collection will be made.

Government grants related to revenue are recognised on a
systematic basis in the statement of profit and loss over the
periods necessary to match them with the related costs which
they are intended to compensate.

Government grant in relation to fixed asset is treated as
deferred income and is recognised in the statement of profit
and loss on a systematic basis over the useful life of the asset.

XIII. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or
construction of a qualifying asset are capitalised as a part of cost
of such asset. Qualifying asset is one that takes substantial period
of time to get ready for its intended use. All other borrowing
costs are recognised as expenditure in the period in which these
are incurred. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange difference, if any, to the
extent regarded as an adjustment to the borrowing cost.

XIV. Segment information

Segment information is prepared in conformity with Ind AS 108
"Operating Segments" and the accounting policies adopted for
preparing and presenting the standalone financial statements
of the enterprise as a whole.

XV. Leases

The Company as a lessee

The Company''s lease asset classes primarily consist of leases for
land and buildings. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits
from use of the asset through the period of the lease and (iii)
the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company
recognizes a right-of-use (ROU) asset and a corresponding lease
liability for all lease arrangements in which it is a lessee, except
for leases with a term of 12 months or less (short-term leases)
and low value leases. For these short term and low-value leases,
the Company recognizes the lease payments as an operating
expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or
terminate the lease before the end of the lease term. ROU assets
and lease liabilities include these options when it is reasonably
certain that they will be exercised. The ROU assets are initially
recognized at cost, which comprises the initial amount of the
lease liability adjusted for any lease payments made at or prior
to the commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently measured
at cost less accumulated depreciation and impairment losses.

ROU assets are depreciated from the commencement date
on a straight-line basis over the shorter of the lease term and
useful life of the underlying asset. ROU assets are evaluated for
recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable.

The lease liability is initially measured at amortized cost at the
present value of the future lease payments. The lease payments
are discounted using the interest rate implicit in the lease.

Lease liabilities are remeasured with a corresponding
adjustment to the related ROU asset if the Company changes
its assessment of whether it will exercise an extension or a
termination option.

Lease liability and ROU assets have been separately presented
in the standalone Balance Sheet and lease payments have
been classified as financing cash flows.

The company as a lessor

Leases for which the Company is a lessor is classified as finance
or operating leases. Whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other
leases are classified as operating leases.

For operating leases, rental income is recognized on a straight¬
line basis over the term of the relevant lease.

XVI. Foreign currency transactions

Transactions in foreign currency are recorded, on initial
recognition in the functional currency, by applying to the
foreign currency amount the exchange rate between the
functional currency and the foreign currency at the date of
the transaction.

Monetary items denominated in foreign currency are restated
using the prevailing exchange rate as on balance sheet date.

Exchange differences arising on the settlement of monetary
items or on reinstatement of monetary items at rates different
from rates at which these were translated on initial recognition
during the period or reported in previous standalone financial
statements as recognised in the standalone statement of profit
or loss in the period in which they arise.

Foreign exchange differences regarded as an adjustment to
borrowing costs are presented in the standalone statements of
profit and loss, within finance cost. All other foreign exchange
gains and losses are presented in the standalone statement of
profit and loss on net basis.

Non-monetary items are measured in terms of historical cost in
a foreign currency is translated using the exchange rate at the
date of the transaction.

In case of an asset, expenses or income where a non-monetary
advance is paid/ received, the date of transaction is the date
on which the advance was initially recognized. If there were
multiple payments or receipts in advance, multiple dates of
transactions are determined for each payment or receipt of
advance consideration.

XVII. Accounting for taxes on income

Income tax expense comprises current income tax
and deferred tax.

Current tax expense for the period is ascertained on the
basis of assessable profits computed in accordance with
the provisions of the Income-tax Act, 1961. The tax rates
and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.
Deferred tax is recognised using the balance sheet approach
on temporary differences between the carrying amounts of
assets and liabilities in the standalone financial statements
and the corresponding tax bases used in the computation of
taxable profit. Deferred tax assets are generally recognised
for all deductible temporary differences, the carry forward of
unused tax credits and unused tax losses to the extent that
it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if
the temporary difference arises from the initial recognition

(other than in a business combination) of assets and liabilities
in a transaction that affects neither the taxable profit nor the
accounting profit.

The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that
it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates
that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws)
that have been enacted or substantively enacted by the end of
the reporting period.

Current and deferred tax are recognised in statement of profit
and loss, except when they relate to items that are recognised
in other comprehensive income or directly in equity, in which
case, the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively.
Deferred tax assets and deferred tax liabilities are off-set if
a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relates to
the same taxable entity and the same taxation authority.

XVIII. Earnings per share

Basic earnings per share are computed by dividing the net
profit or loss after tax for the period attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the period.

For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholder and the weighted average number of shares
outstanding during the period are adjusted for the effects of
all dilutive potential equity shares, if any.

Diluted earnings per equity share is computed by dividing the
net profit attributable to the equity holders of the Company by
the weighted average number of equity shares considered for
deriving basic earnings per equity share and also the weighted
average number of equity shares that could have been issued
upon conversion of all dilutive potential equity shares. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the equity shares been actually issued at fair
value (i.e. the average market value of the outstanding equity
shares). Dilutive potential equity shares are deemed converted
as at the beginning of the period, unless issued at a later date.
Dilutive potential equity shares are determined independently
for each period presented.

XIX. Financial instruments

A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.

i. Initial recognition and measurement

All financial assets and liabilities are recognized at fair
value on initial recognition.

Transaction cost in relation to financial assets and
financial liabilities other than those carried at fair value
through profit or loss (FVTPL) are added to the fair value
on initial recognition. However, the trade receivables that
doesn''t contain a significant financing component are
measured at transaction price.

Transaction cost that are directly attributable to the
acquisition or issue of financial assets and financial
liabilities that are carried at fair value through profit or
loss are immediately recognized in the statement of
profit or loss.

ii. Subsequent measurement

* Non-derivative financial instruments

1. Financial assets carried at amortised
cost

A financial asset is subsequently measured at
amortised cost if it is held within a business
model whose objective is to hold the asset
in order to collect contractual cash flows and
the contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.

2. Financial assets at fair value through
other comprehensive income

A financial asset is subsequently measured
at fair value through other comprehensive
income if it is held within a business model
whose objective is achieved by both
collecting contractual cash flows and selling
financial assets and the contractual terms
of the financial asset give rise on specified
dates to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.

The company has made an irrevocable
election for its investment which are
classified as equity instruments to present
the subsequent changes in fair value in other
comprehensive income based on its business
model. Further, in cases where the company
has made an irrevocable election based
on its business model, for its investment
which are classified as equity instruments,
the subsequent changes in fair value are
recognized in other comprehensive income.

3. Financial assets at fair value through
profit or loss

A financial asset which is not classified in
any of the above categories is subsequently
measured at fair value through profit or loss.

4. Financial liabilities

The financial liabilities are subsequently
carried at amortized cost using the effective
interest method. For trade and other
payables maturing within one year from the
balance sheet date, the carrying amounts
approximate fair value due to the short
maturity of these instruments.

* Financial assets or financial liability at fair
value through profit or loss

This category has financial assets or liabilities
which are not designated as hedges.

Although the Company believes that these
derivatives constitute hedges from an
economic perspective, they may not qualify
for hedge accounting under Ind AS 109,
Financial Instruments. Any derivative that
is either not designated a hedge or is so
designated but is ineffective as per Ind AS 109,
is categorized as a financial asset or financial
liability, at fair value through profit or loss.

Derivatives not designated as hedges
are recognized initially at fair value and
attributable transaction costs are recognized
in net profit in the statement of profit and
loss when incurred. Subsequent to initial
recognition, these derivatives are measured
at fair value through profit or loss and the
resulting exchange gains or losses are
included in other income. Assets/ liabilities in
this category are presented as current assets/
current liabilities if they are either held for
trading or are expected to be realized within
12 months after the balance sheet date.

* Derivative financial instruments and
hedge accounting

In the ordinary course of business, the
Company uses certain derivative financial
instruments to reduce business risks which
arise from its exposure to foreign. The
instruments are confined principally to
forward foreign exchange contracts. The
instruments are employed as hedges of
transactions included in the standalone

financial statements or for highly probable
forecast transactions/firm contractual
commitments. These derivatives contracts do
not generally extend beyond six months.

Derivatives are initially accounted for and
measured at fair value on the date the
derivative contract is entered into and are
subsequently remeasured to their fair value
at the end of each reporting period.

The Company adopts hedge accounting for
forward foreign exchange contracts wherever
possible. At inception of each hedge, there
is a formal, documented designation of the
hedging relationship. This documentation
includes, inter alia, items such as identification
of the hedged item and transaction and
nature of the risk being hedged. At inception,
each hedge is expected to be highly effective
in achieving an offset of changes in fair value
or cash flows attributable to the hedged risk.
The effectiveness of hedge instruments to
reduce the risk associated with the exposure
being hedged is assessed and measured at
the inception and on an ongoing basis. The
ineffective portion of designated hedges is
recognised immediately in the statement of
profit and loss.

When hedge accounting is applied:

* for fair value hedges of recognised assets and
liabilities, changes in fair value of the hedged
assets and liabilities attributable to the risk
being hedged, are recognised in the statement
of profit and loss and compensate for the
effective portion of symmetrical changes in
the fair value of the derivatives.

* For cash flow hedges, the effective portion of
the change in the fair value of the derivative
is recognised directly in other comprehensive
income and the ineffective portion is recognised
in the statement of profit and loss. If the cash
flow hedge of a firm commitment or forecasted
transaction results in the recognition of a non¬
financial asset or liability, then, at the time the asset
or liability is recognised, the associated gains or
losses on the derivative that had previously been
recognised in equity are included in the initial
measurement of the asset or liability. For hedges
that do not result in the recognition of a non¬
financial asset or a liability, amounts deferred in
equity are recognised in the statement of profit
and loss in the same period in which the hedged
item affects the statement of profit and loss.

In cases where hedge accounting is not
applied, changes in the fair value of
derivatives are recognised in the statement of
profit and loss as and when they arise.

Hedge accounting is discontinued when
the hedging instrument expires or is sold,
terminated, or exercised, or no longer
qualifies for hedge accounting. At that time,
any cumulative gain or loss on the hedging
instrument recognised in equity is retained
in equity until the forecasted transaction
occurs. If a hedged transaction is no longer
expected to occur, the net cumulative gain or
loss recognised in equity is transferred to the
statement of profit and loss for the period.

* Equity share capital

Equity shares

Equity shares issued by the company are
classified as equity. Incremental costs directly
attributable to the issuance of new ordinary
shares and share options are recognized as a
deduction from equity, net of any tax effects.

De-recognition of financial instruments

A financial asset is derecognized when the
contractual rights to the cash flows from
the financial asset expire or it transfers the
financial asset and the transfer qualifies for
De-recognition under Ind AS 109.

A financial liability is derecognized when
the obligation specified in the contract is
discharged or cancelled or expires.

Fair value of financial instruments

The fair value of financial instruments is
determined using the valuation techniques
that are appropriate in the circumstances
and for which sufficient data are available
to measure fair value, maximizing the use of
relevant observable inputs and minimizing
the use of unobservable inputs.

Based on the three-level fair value hierarchy,
the methods used to determine the fair value
of financial assets and liabilities include quoted
market price, discounted cash flow analysis
and valuation certified by the external valuer.

In case of financial instruments where the
carrying amount approximates fair value due
to the short maturity of those instruments,
carrying amount is considered as fair value.

XX. Impairment of assets

i) Financial assets

The company recognizes loss allowances using the
expected credit loss (ECL) model for the financial assets
which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant
financing component is measured at an amount equal to
lifetime ECL. For all other financial assets, expected credit
losses are measured at an amount equal to the 12-month
ECL, unless there has been a significant increase in
credit risk from initial recognition in which case those
are measured at lifetime ECL. The amount of expected
credit losses (or reversal) that is required to adjust the
loss allowance at the reporting date to the amount that is
required to be recognised is recognized as an impairment
gain or loss in statement of profit or loss.

ii) Impairment of property, plant and equipment and
intangible assets

Property, plant and equipment and intangible assets are
evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not
be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the higher of the fair value less cost
to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows
that are largely independent of those from other assets. In
such cases, the recoverable amount is determined for the
CGU (Cash Generating unit) to which the asset belongs.

If such assets are considered to be impaired, the impairment
to be recognized in the statement of profit and loss is
measured by the amount by which the carrying value of
the assets exceeds the estimated recoverable amount of
the asset. An impairment loss is reversed in the statement
of profit and loss if there has been a change in the estimates
used to determine the recoverable amount. The carrying
amount of the asset is increased to its revised recoverable
amount, provided that this amount does not exceed the
carrying amount that would have been determined (net
of any accumulated depreciation) had no impairment loss
been recognized for the asset in prior years.

XXI. Cash flow statement

The cash flow statement is prepared in accordance with the
Indian Accounting Standard (Ind AS) - 7 "Statement of Cash
flows" using the indirect method for operating activities.

XXII. Cash and cash equivalent

Cash and cash equivalent for the purpose of statement of cash
flows include bank balances, where the original maturity is
three months or less. Other short term highly liquid investments
that are readily convertible into cash and which are subject to

an insignificant risk of changes in value. Bank overdrafts are
included as a component of cash and cash equivalent for the
purpose of statement of cash flow.

XXIII. Provisions and contingent liabilities

A provision is recognized if, as a result of past event, the
company has a present obligation (legal or constructive) and
on management judgement that is reasonably estimable and
it is probable that an outflow of economic benefits will be
required to settle the obligation.

If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, when
appropriate, the risks specific to the liability. When discounting
is used, the increase in the provision due to the passage of time
is recognized as finance cost.

Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is
not probable that an outflow of resources will be required
to settle the obligation.

• A present obligation arising from past events, when no
reliable estimate is possible.

• A possible obligation arising from past events unless the
probability of outflow of resources is remote.

Commitments include the amount of purchase order (net of
advances) issued to parties for completion of assets.

Provisions, contingent liabilities, contingent assets and
commitments are reviewed at each balance sheet date.

XXIV. Current and non-current classification

The company has ascertained its operating cycle as twelve
months for the purpose of current / non-current classification

of assets and liabilities. This is based on the nature of products
and the time between acquisition of assets for processing and
their realisation in cash and cash equivalents. Current Assets
and current liabilities include current portion of non-current
financial assets and non-current financial liabilities respectively.

Note 2 (ii): Critical accounting estimates

Useful lives of property, plant and equipment

The estimated useful lives of property, plant and equipment are
based on a number of factors including the effects of obsolescence,
internal assessment of user experience and other economic factors
(such as the stability of the industry and known technological
advances) and the level of maintenance expenditure required to
obtain the expected future cash flows from the asset.

The Company reviews the useful life of property, plant and
equipment at the end of each reporting date.

Recoverable amount of property, plant and equipment

The recoverable amount of property plant and equipment is based
on estimates and assumptions regarding the expected market
outlook and expected future cash flows. Any changes in these
assumptions may have a material impact on the measurement of the
recoverable amount and could result in impairment.

Post-retirement benefit plans

Employee benefit obligations are measured on the basis of actuarial
assumptions including any changes in these assumptions that may
have a material impact on the resulting calculations.

Recognition of deferred tax assets

Recognition of deferred tax assets depends upon the availability of
future profits against which tax losses carried forward can be used.

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Mar 31, 2024

Note 1: Corporate information

IOL Chemicals and Pharmaceuticals Limited (“the Company”) (CIN: L24116PB1986PLC007030) is a public company domiciled in India and incorporated on 29^th September, 1986 under the provisions of the Companies Act, 1956. The shares of the company are listed on two stock exchanges in India i.e. at National Stock Exchange of India Limited (NSE) and at BSE Limited (BSE). The company is engaged in the manufacturing and selling of Pharmaceutical and Chemical products. The company caters to both domestic and international market.

The registered office of the company is situated at Village & Post Office Handiaya, Fatehgarh Chhanna Road, Barnala-148107, Punjab.

The standalone financial statements are approved for issuance by the Company''s Board of Directors on 14^th May, 2024.

Note 2 (i): Material accounting policies / critical accounting estimates and judgements

I. Statement of compliance

The standalone financial statements of the company have been prepared in accordance with the Indian Accounting Standards (IND AS) specified under section 133 of the Companies Act, 2013 (“the Act") read with the Companies (Indian Accounting Standard) Rules, 2015, as amended from time to time. The standalone financial statements have been prepared on going concern basis and all the applicable Ind AS effective as on the reporting date have been complied with.

II. Basis of preparation of standalone financial statements

The standalone financial statements have been prepared under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair value.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

III. Functional and presentation currency

The functional currency of the company is Indian rupee (INR). The standalone financial statements are presented in Indian rupees (INR) and all values are rounded to nearest crore up to two decimals, unless otherwise stated.

IV. Use of estimates and judgements

The preparation of standalone financial statements, in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of

accounting policies that require critical accounting estimates involving complex and subjective judgements and use of assumptions in these standalone financial statements have been disclosed in notes. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management become aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the standalone financial statements in the period in which changes are made, and if material, their effects are disclosed in the notes to the standalone financial statements.

V. Revenue recognition from operations

i) Revenue from sale of goods and services

Revenue from contracts with customer is recognized when control of goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services, and excludes taxes and levies collected on behalf of the Government. In accordance with Ind AS 115 on revenue and schedule III of Companies Act 2013, duties levies like GST are not part of revenue.

Generally, control is transfer upon shipment of goods to the customer or when the goods are made available to the customer, provided the transfer of the title to the customer occurs and the company has not retained any significant title of ownership or future obligations with respect to the goods shipped.

Revenue from rendering of services is recognized overtime by measuring the progress towards complete satisfaction of performance obligations at the reporting period.

Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties. Consideration is generally due upon satisfaction of performance obligations and a receivable is recognized when it becomes unconditional. Generally the credit period varies between 0-90 days from the shipment or delivery of goods or services as the case may be.

In case of discounts, rebates, credits, price incentives or similar terms, considerations are determined based on its most likely amount, which is assessed at each reporting period.

ii) Export incentives

The revenue in respect of export benefits is recognised on post export basis at the rate at which the entitlements accrue.

VI. Other income

i) Dividend

Dividend income from investment is recognised when the right to receive the payment is established.

ii) Interest

Interest from customer

Revenue from interest is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Other interest

Interest income is recognised using effective interest rate (EIR).

iii) Insurance and other claims

Insurance and other claims are recognized when there exist no significant uncertainty with regard to the amount to be realized and the ultimate collection thereof.

VII. Employee benefits

• Short term Employee benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short term employee benefits, such as salaries, wages, bonus etc.

• Defined contribution plans (i) Provident fund:

Employees receive benefit in the form of Provident fund which is a defined contribution plan. The company has no obligation, other than the contribution payable to the provident fund. The company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

• Defined benefit plans (i) Gratuity:

The Company provides for gratuity a defined benefit retirement plan “The gratuity plan'''' covering eligible employees. The gratuity plan provides for lump sum payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the respective employees'' salary and the tenure of employment with the company.

Liability with regard to Gratuity Plan is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.

The company fully contributes all ascertained liabilities to the IOL Chemicals and Pharmaceuticals Ltd Group Gratuity Trust. Contributions are invested in a scheme with Life Insurance Corporation of India as permitted by Indian Law

The Company recognises the net obligation of a defined benefit plan in its standalone Balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations is recognized in Other Comprehensive Income.

(ii) Compensated absences

The employees of the company are entitled to compensated absences. The employee can carry forward a portion of unutilised accumulated compensated absences and utilise it in future period or encash the leaves on retirement or on termination. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the Balance Sheet date, the cost of providing benefit is determined based on actuarial valuation using projected unit credit method. Actuarial gain /loss are recognised in the statement of profit or loss in the period in which they occur. Non accumulating compensated absences are recognised in the period, in which the absences occur.

VIII. Property, plant and equipment

All items of property, plant and equipment are stated at cost less accumulated depreciation and impairment if any. Freehold land is stated at cost and not depreciated. The Cost of an item of Property, Plant and Equipment comprises:

a) Its purchase price net of recoverable taxes wherever applicable and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

b) Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

c) Initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, if any, the obligation for which an entity incurs either

where the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Depreciation on property, plant and equipment has been provided on the straight line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of asset, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement and maintenance support, etc.:

As per management estimate
General plant & equipment on	15 Years
triple shift basis
General plant & equipment on	15 Years
continuous process
Co-Generation plant & equipment	4-15 Years

Depreciation is calculated on pro-rata basis from the date of installation till the date the asset sold or discarded.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under Capital work-in-progress. The depreciation method, useful lives and residual value are reviewed periodically and at the end of each reporting period.

IX. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation and impairment if any. Intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence etc. The amortization method estimated useful lives are reviewed periodically and at end of each reporting period.

The estimated useful life of intangible assets is as follows:

Intangible assets	Estimated useful life
Software	6 years
Technical know	5 years
Patents	20 years

X. Inventories

Inventories are valued at cost or net realisable value whichever is lower. The cost in respect of various items of inventories is computed as under:

a)	Raw Material and	Moving weighted average method
	Components	plus direct expenses
b)	Stores and Spares	Moving weighted average method plus direct expenses
c)	Work-in-progress	Cost of material plus appropriate share of overheads thereon at different stage of completion.
d)	Finished Goods	Cost of material plus conversion cost, packing cost, and other overheads incurred to bring the goods to their present conditions and location.
e)	Material in Transit	Actual cost plus direct expenses to the extent incurred.

XI. Dividend to equity holders of the Company

The Company recognises a liability to make dividend distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India a distribution is authorised when it is approved by the shareholders, However, Board of Directors of a Company may declare interim dividend during any financial year out of the surplus in statement of profit and loss and out of the profits of the financial year in which such interim dividend is sought to be declared. A corresponding amount is recognised directly in equity.

XII. Government grants

The government grants are recognised only when there is a reasonable assurance of compliance that conditions attached to such grants shall be complied with and it is reasonably certain that the ultimate collection will be made.

Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

Government grant in relation to fixed asset is treated as deferred income and is recognised in the statement of profit and loss on a systematic basis over the useful life of the asset.

XIII. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other

borrowing costs are recognised as expenditure in the period in which these are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange difference, if any, to the extent regarded as an adjustment to the borrowing cost.

XIV. Segment information

Segment information is prepared in conformity with Ind AS 108 “Operating Segments” and the accounting policies adopted for preparing and presenting the standalone financial statements of the enterprise as a whole.

XV. Leases

• The Company as a lessee

The Company''s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease.

Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.

Lease liability and ROU assets have been separately presented in the standalone Balance Sheet and lease payments have been classified as financing cash flows.

• The company as a lessor

Leases for which the Company is a lessor is classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.

XVI. Foreign currency transactions

Transactions in foreign currency are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

Monetary items denominated in foreign currency are restated using the prevailing exchange rate as on balance sheet date.

Exchange differences arising on the settlement of monetary items or on reinstatement of monetary items at rates different from rates at which these were translated on initial recognition during the period or reported in previous standalone financial statements as recognised in the standalone statement of profit or loss in the period in which they arise.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the standalone statements of profit and loss, within finance cost. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on net basis.

Non-monetary items are measured in terms of historical cost in a foreign currency is translated using the exchange rate at the date of the transaction.

In case of an asset, expenses or income where a non-monetary advance is paid/ received, the date of transaction is the date on which the advance was initially recognized. If there were multiple payments or receipts in advance, multiple dates of transactions are determined for each payment or receipt of advance consideration.

XVII. Accounting for taxes on income

Income tax expense comprises current income tax and deferred tax.

Current tax expense for the period is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred tax is recognised using the balance sheet approach on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Deferred tax assets and deferred tax liabilities are off-set if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relates to the same taxable entity and the same taxation authority.

XVIII. Earnings per share

Basic earnings per share are computed by dividing the net profit or loss after tax for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholder and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.

Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

XIX. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Initial recognition and measurement

All financial assets and liabilities are recognized at fair value on initial recognition.

Transaction cost in relation to financial assets and financial liabilities other than those carried at fair value through profit or loss (FVTPL) are added to the fair value on initial recognition. However, the trade receivables that doesn''t contain a significant financing component are measured at transaction price.

Transaction cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are carried at fair value through profit or loss are immediately recognized in the statement of profit or loss.

ii. Subsequent measurement

• Non-derivative financial instruments

1. Financial assets carried at amortised cost

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2. Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling

financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The company has made an irrevocable election for its investment which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the company has made an irrevocable election based on its business model, for its investment which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

3. Financial assets at fair value through profit or loss

A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.

4. Financial liabilities

The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

• Financial assets or financial liability at fair value through profit or loss

This category has financial assets or liabilities which are not designated as hedges.

Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current

liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.

• Derivative financial instruments and hedge accounting

In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign. The instruments are confined principally to forward foreign exchange contracts. The instruments are employed as hedges of transactions included in the standalone financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months.

Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.

The Company adopts hedge accounting for forward foreign exchange contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.

When hedge accounting is applied:

• for fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.

• For cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results

in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.

In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.

• Equity share capital

Equity shares

Equity shares issued by the company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

De-recognition of financial instruments

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for De-recognition under Ind AS 109.

A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expires.

Fair value of financial instruments

The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Based on the three-level fair value hierarchy, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.

In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.

XX. Impairment of assets

i) Financial assets

The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.

ii) Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU (Cash Generating unit) to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.

XXI. Cash flow statement

The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 “Statement of Cash flows” using the indirect method for operating activities.

XXII. Cash and cash equivalent

Cash and cash equivalent for the purpose of statement of cash flows include bank balances, where the original maturity is three months or less. Other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included as a component of cash and cash equivalent for the purpose of statement of cash flow.

XXIII. Provisions and contingent liabilities

A provision is recognized if, as a result of past event, the company has a present obligation (legal or constructive) and on management judgement that is reasonably estimable and it is probable that an outflow of economic benefits will be required to settle the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.

Contingent liability is disclosed in the case of:

• A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.

• A present obligation arising from past events, when no reliable estimate is possible.

• A possible obligation arising from past events unless the probability of outflow of resources is remote.

Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.

Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.

XXIV. Current and non-current classification

The company has ascertained its operating cycle as twelve months for the purpose of current / non-current classification of assets and liabilities. This is based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents. Current Assets and current liabilities include current portion of non-current financial assets and non-current financial liabilities respectively.

Note 2 (ii): Critical accounting estimates

Useful lives of property, plant and equipment

The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, internal assessment of user experience and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset.

The Company reviews the useful life of property, plant and equipment at the end of each reporting date.

Recoverable amount of property, plant and equipment

The recoverable amount of property plant and equipment is based on estimates and assumptions regarding the expected market outlook and expected future cash flows. Any changes in these assumptions may have a material impact on the measurement of the recoverable amount and could result in impairment.

Post-retirement benefit plans

Employee benefit obligations are measured on the basis of actuarial assumptions including any changes in these assumptions that may have a material impact on the resulting calculations.

Recognition of deferred tax assets

Recognition of deferred tax assets depends upon the availability of future profits against which tax losses carried forward can be used.

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Mar 31, 2023

Note 2 (i): Significant accounting policies/critical accounting estimates and judgements

I. Statement of compliance

The standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (IND AS) specified under Section 133 of the Companies Act, 2013 ("the Act") read with the Companies (Indian Accounting Standard) Rules, 2015, as amended from time to time. The standalone financial statements have been prepared on going concern basis and all the applicable Ind AS effective as on the reporting date have been complied with.

II. Basis of preparation of standalone financial statements

The standalone financial statements have been prepared under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair value.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

III. Functional and presentation currency

The functional currency of the Company is Indian rupee (INR). The standalone financial statements are presented in Indian rupees (INR) and all values are rounded to nearest Crore up to two decimals, unless otherwise stated.

IV. Use of estimates and judgements

The preparation of standalone financial statements, in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of

accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgements and use of assumptions in these standalone financial statements have been disclosed in notes. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management become aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the standalone financial statements in the period in which changes are made, and if material, their effects are disclosed in the notes to the standalone financial statements.

V. Revenue recognition from operations

i) Revenue from sale of goods and services

Revenue from contracts with customer is recognised when control of goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services, and excludes taxes and levies collected on behalf of the Government. In accordance with Ind AS 115 on revenue and schedule III of Companies Act, 2013, duties levies like GST are not part of revenue.

Generally, control is transfer upon shipment of goods to the customer or when the goods are made available to the customer, provided the transfer of the title to the customer occurs and the Company has not retained any significant title of ownership or future obligations with respect to the goods shipped.

Revenue from rendering of services is recognised overtime by measuring the progress towards complete satisfaction of performance obligations at the reporting period.

Revenue is measured at the amount of consideration which the Company expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties. Consideration is generally due upon satisfaction of performance obligations and a receivable is recognised when it becomes unconditional. Generally the credit period varies between 0-90 days from the shipment or delivery of goods or services as the case may be.

I n case of discounts, rebates, credits, price incentives or similar terms, considerations are determined based

on its most likely amount, which is assessed at each reporting period.

ii) Export incentives

The revenue in respect of export benefits is recognised on post export basis at the rate at which the entitlements accrue.

VI. Other income

i) Dividend

Dividend income from investment is recognised when the right to receive the payment is established.

ii) Interest

Interest from customer

Revenue from interest is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Other interest

I nterest income is recognised using effective interest rate (EIR).

iii) Insurance and other claims

Insurance and other claims are recognised when there exist no significant uncertainty with regard to the amount to be realised and the ultimate collection thereof.

VII. Employee benefits

- Short-term Employee benefits

All employee benefits payable wholly within twelve months of rendering the services are classified as short-term employee benefits, such as salaries, wages, bonus etc.

- Defined contribution plans (i) Provident fund:

Employees receive benefit in the form of Provident fund which is a defined contribution plan. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

- Defined benefit plans (i) Gratuity:

The Company provides for gratuity a defined benefit retirement plan "The gratuity plan" covering eligible employees. The gratuity plan provides for lump sum

payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the respective employees'' salary and the tenure of employment with the Company.

Liability with regard to Gratuity Plan is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.

The Company fully contributes all ascertained liabilities to the IOL Chemicals and Pharmaceuticals Ltd., Group Gratuity Trust. Contributions are invested in a scheme with Life Insurance Corporation of India as permitted by Indian Law.

The Company recognises the net obligation of a defined benefit plan in its standalone Balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognised in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations is recognised in Other Comprehensive Income.

(ii) Compensated absences

The employees of the Company are entitled to compensated absences. The employee can carry forward a portion of unutilised accumulated compensated absences and utilise it in future period or encash the leaves on retirement or on termination. Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the Balance Sheet date, the cost of providing benefit is determined based on actuarial valuation using projected unit credit method. Actuarial gain /loss are recognised in the statement of profit or loss in the period in which they occur. Non accumulating compensated absences are recognised in the period, in which the absences occur.

VIII. Property, plant and equipment

All items of property, plant and equipment are stated at cost less accumulated depreciation and impairment if any. Freehold land is stated at cost and not depreciated. The Cost of an item of Property, Plant and Equipment comprises:

a) I ts purchase price net of recoverable taxes wherever

applicable and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

Depreciation is calculated on pro-rata basis from the date of installation till the date the asset sold or discarded.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under Capital work-in-progress. The depreciation method, useful lives and residual value are reviewed periodically and at the end of each reporting period.

X. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation and impairment if any. Intangible assets are amortised over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence etc. The amortisation method, estimated useful lives are reviewed periodically and at end of each reporting period.

b) Subsequent expenditures relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

c) Initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, if any, the obligation for which an entity incurs either where the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Depreciation on property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of asset, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement and maintenance support, etc.:

X. Inventories

Inventories are valued at cost or net realisable value whichever is lower. The cost in respect of various items of inventories is computed as under:

XI. Dividend to equity holders of the Company

The Company recognises a liability to make dividend distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India a distribution is authorised when it is approved by the shareholders, However, Board of Directors of a Company may declare interim dividend during any financial year out of the surplus in statement of profit and loss and out of the profits of the financial year in which such interim dividend is sought to be declared. A corresponding amount is recognised directly in equity.

XII. Government grants

The government grants are recognised only when there is a reasonable assurance of compliance that conditions attached to such grants shall be complied with and it is reasonably certain that the ultimate collection will be made.

Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.

Government grant in relation to fixed asset is treated as deferred income and is recognised in the statement of profit and loss on a systematic basis over the useful life of the asset.

XIII. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred. Borrowing costs consist of interest and other costs that an

entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange difference, if any, to the extent regarded as an adjustment to the borrowing cost.

XIV. Segment information

Segment information is prepared in conformity with Ind AS 108 "Operating Segments" and the accounting policies adopted for preparing and presenting the standalone financial statements of the enterprise as a whole.

XV. Leases

- The Company as a lessee

The Company''s lease asset classes primarily consist of leases for land and buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease. Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised. The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease.

Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.

Lease liability and ROU assets have been separately presented in the standalone Balance Sheet and lease payments have been classified as financing cash flows.

- The Company as a lessor

Leases for which the Company is a lessor is classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

For operating leases, rental income is recognised on a straight-line basis over the term of the relevant lease.

XVI. Foreign currency transactions

Transactions in foreign currency are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

Monetary items denominated in foreign currency are restated using the prevailing exchange rate as on balance sheet date.

Exchange differences arising on the settlement of monetary items or on reinstatement of monetary items at rates different from rates at which these were translated on initial recognition during the period or reported in previous standalone financial statements as recognised in the standalone statement of profit or loss in the period in which they arise.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the standalone statements of profit and loss, within finance cost. All other foreign exchange gains and losses are presented in the standalone statement of profit and loss on net basis.

Non-monetary items are measured in terms of historical cost in a foreign currency is translated using the exchange rate at the date of the transaction.

In case of an asset, expenses or income where a nonmonetary advance is paid/received, the date of transaction is the date on which the advance was initially recognised. If there were multiple payments or receipts in advance, multiple dates of transactions are determined for each payment or receipt of advance consideration.

XVII.Accounting for taxes on income

Income tax expense comprises current income tax and deferred tax.

Current tax expense for the period is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred tax is recognised using the balance sheet approach on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Current and deferred tax are recognised in statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Deferred tax assets and deferred tax liabilities are off-set if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relates to the same taxable entity and the same taxation authority.

XVIII. Earnings per share

Basic earnings per share are computed by dividing the net profit or loss after tax for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholder and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.

Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

XIX. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Initial recognition and measurement

All financial assets and liabilities are recognised at fair value on initial recognition.

Transaction cost in relation to financial assets and financial liabilities other than those carried at fair value through profit or loss (FVTPL) are added to the fair value on initial recognition. However, the trade receivables that doesn''t contain a significant financing component are measured at transaction price.

Transaction cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are carried at fair value through profit or loss are immediately recognised in the statement of profit or loss.

ii. Subsequent measurement

- Non-derivative financial instruments

1. Financial assets carried at amortised cost

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2. Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The Company has made an irrevocable election for its investment which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the Company has made an irrevocable election based on its business model, for its investment which are classified as equity instruments, the subsequent changes in fair value are recognised in other comprehensive income.

3. Financial assets at fair value through profit or loss

A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.

4. Financial liabilities

The financial liabilities are subsequently carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

- Financial assets or financial liability at fair

value through profit or loss

This category has financial assets or liabilities

which are not designated as hedges.

Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorised as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognised initially at fair value and attributable transaction costs are recognised in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.

- Derivative financial instruments and hedge accounting

In the ordinary course of business, the Company uses certain derivative financial instruments to reduce business risks which arise from its exposure to foreign. The instruments are confined principally to forward foreign exchange contracts. The instruments are employed as hedges of transactions included in the standalone financial statements or for highly probable forecast transactions/firm contractual commitments. These derivatives contracts do not generally extend beyond six months.

Derivatives are initially accounted for and measured at fair value on the date the derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period.

The Company adopts hedge accounting for forward foreign exchange contracts wherever possible. At inception of each hedge, there is a formal, documented designation of the hedging relationship. This documentation includes, inter alia, items such as identification of the hedged item and transaction and nature of the risk being hedged. At inception, each hedge is expected to be highly effective in achieving an offset of changes in fair value or cash flows attributable to the hedged risk. The effectiveness of hedge instruments to reduce the

risk associated with the exposure being hedged is assessed and measured at the inception and on an ongoing basis. The ineffective portion of designated hedges is recognised immediately in the statement of profit and loss.

When hedge accounting is applied:

- For fair value hedges of recognised assets and liabilities, changes in fair value of the hedged assets and liabilities attributable to the risk being hedged, are recognised in the statement of profit and loss and compensate for the effective portion of symmetrical changes in the fair value of the derivatives.

- For cash flow hedges, the effective portion of the change in the fair value of the derivative is recognised directly in other comprehensive income and the ineffective portion is recognised in the statement of profit and loss. If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability. For hedges that do not result in the recognition of a non-financial asset or a liability, amounts deferred in equity are recognised in the statement of profit and loss in the same period in which the hedged item affects the statement of profit and loss.

In cases where hedge accounting is not applied, changes in the fair value of derivatives are recognised in the statement of profit and loss as and when they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the statement of profit and loss for the period.

- Equity share capital

Equity shares

Equity shares issued by the Company are classified as

equity. Incremental costs directly attributable to the

issuance of new ordinary shares and share options

are recognised as a deduction from equity, net of any tax effects.

De-recognition of financial instruments

A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for De-recognition under Ind AS 109.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires.

Fair value of financial instruments

The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Based on the three level fair value hierarchy, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.

In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.

XX. Impairment of assets i) Financial assets

The Company recognises loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognised as an impairment gain or loss in statement of profit or loss.

ii) Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU (Cash Generating unit) to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognised in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognised for the asset in prior years.

XXI. Cash flow statement

The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 "Statement of Cash flows" using the indirect method for operating activities.

XXII. Cash and cash equivalent

Cash and cash equivalent for the purpose of statement of cash flows include bank balances, where the original maturity is three months or less. Other short-term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included as a component of cash and cash equivalent for the purpose of statement of cash flow.

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Mar 31, 2018

1 (i) Significant accounting policies

a. Statement of Compliance

The financial statements of the company have been prepared in accordance with the Indian Accounting Standards(Ind AS) specified under section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standard) Rules, 2015.

The company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting standards. Up to the year ended 31 March, 2017, the company prepared its financial statements in accordance with the requirements of Previous GAAP which includes accounting standards notified under the Companies (Accounting Standard) Rules, 2006. These are company’s first Ind AS financial statement. The date of transition to Ind AS is April 1, 2016. The detail of optional exemption and certain exemption availed on first time adoption are mentioned in Note 39.

b. Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention on accrual basis except for certain financial instruments which are measured at fair value, the provisions of the Companies Act, 2013( ‘the Act’) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

c. Functional and presentation currency

The functional currency of the company is Indian rupee (INR). These financial statements are presented in Indian rupee.

d. Use of estimates and judgements

The preparation of financial statements, in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgement and use of assumption in these financial statements have been disclosed in notes. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management become aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made, and if material their effects are disclosed in the notes to the financial statements.

e. Revenue Recognition

i) Sale of goods:

Revenue from sale of goods is recognised at the time of transfer of all significant risks and rewards of ownership to the buyer and when the company does not retain effective control on the goods transferred to a degree usually associated with ownership; and cost has been incurred and it is probable that the economic benefit will flow to the company and the amount of revenue can be measured reliably.

In accordance with Ind AS 18 on “Revenue” and Schedule III to the Companies Act, 2013, sales for the previous year ended 31 March 2017 and for the period 1 April to 30 June 2017 were reported gross of Excise Duty and net of VAT/ CST. Excise Duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/CST, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sale of goods.

ii) Export incentives

The revenue in respect of export benefits is recognised on post export basis at the rate at which the entitlements accrue.

iii) Dividend

Dividend income from investment is recognised when the right to receive the payment is established.

iv) Interest

Interest from customer

Revenue from interest is recognised on a time proportion basis taking into account the amount outstanding and rate applicable.

Other Interest

Interest income is recognised using effective interest rate (EIR).

v) Insurance and other claims

Insurance and other claims are recognized when there exist no significant uncertainty with regard to the amount to be realized and the ultimate collection thereof.

f. Employee benefits

i) Provident Fund:

Employees receive benefit in the form of provident fund which is a defined contribution plan. The company has no obligation, other than the contribution payable to the provident fund. The company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service.

ii) Gratuity:

The Company provides for gratuity a defined benefit retirement plan “The gratuity plan” covering eligible employees. The gratuity plan provides for lump sum payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the respective employees’ salary and the tenure of employment with the company.

Liability with regard to gratuity plan is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.

The company fully contributes all ascertained liabilities to the IOL Chemicals and Pharmaceuticals Limited Group Gratuity Trust. Contributions are invested in a scheme with Life Corporation of India as permitted by Indian Law.

The company recognises the net obligation of a defined plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations is recognized in other comprehensive income.

iii) Compensated absences

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the balance sheet date, the cost of providing benefit is determined based on actuarial valuation using projected unit credit method. Actuarial gain /loss are recognised in the statement of profit or loss in the period in which they occur.

g. Property, plant and equipment

As transition to Ind AS, the company has elected to continue with the carrying value of all items of its property, plant and equipment measured as per previous GAAP as at 1 April, 2016 as the deemed cost on the date of transition.

Freehold land is stated at cost and not depreciated. All other items of property, plant and equipment are stated at cost less accumulated depreciation and impairment if any. The cost of an item of property, plant and equipment comprises:

a) its purchase price net of recoverable taxes where applicable and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

b) Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the cost of the item can be measured reliably.

c) Initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, if any, the obligation for which an entity incurs either where the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

Depreciation on property plant and equipment is provided on straight line method on the basis of useful lives of such assets specified in Part C of Schedule II to the Companies Act, 2013.

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not put to use before such date are disclosed under ‘capital work-in-progress’. The depreciation method, useful lives and residual value are reviewed periodically and at the end of each reporting period.

h. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation and impairment if any. Intangible assets are amortised over their respective individual estimated useful lives on a straight line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors including the effects of obsolescence etc. The amortization method, estimated useful lives are reviewed periodically and at end of each reporting period.

i. Inventories

Inventories are valued at cost or net realisable value whichever is lower. The cost in respect of various items of inventories is computed as under:

j. Government Grants

The government grants are recognised only when there is a reasonable assurance of compliance that conditions attached to such grants shall be complied with and it is reasonably certain that the ultimate collection will be made.

Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Government grant in relation to fixed asset is treated as deferred income and is recognised in the statement of profit and loss on a systematic basis over the useful life of the asset.

k. Borrowing costs

Borrowing costs that are directly attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange difference to the extent regarded as an adjustment to the borrowing cost.

l. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

m. Leases

Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating lease.

Lease payments under operating leases are recognized as an expense on a straight line basis in the statement of profit and loss over the term of lease. n. Foreign currency transactions

Transactions in foreign currency are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

Monetary items denominated in foreign currency are reported using the closing exchange rate as on balance sheet date.

Exchange differences arising on the settlement of monetary items or on reporting of monetary items at rates different from rates at which these were translated on initial recognition during the period or reported in previous financial statements as recognised in the statement of profit or loss in the period in which they arise.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statements of profit and loss, within finance cost. All other foreign exchange gains and losses are presented in the statement of profit and loss on net basis. Non-monetary items are measured in terms of historical cost in a foreign currency is translated using the exchange rate at the date of the transaction.

o. Accounting for taxes on income

Income tax expense comprises of current and deferred income tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognised directly in equity, or items is recognized in other comprehensive income. In such cases, the income tax expense is also recognised in the other comprehensive income or directly in the equity as applicable.

Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date.

A deferred income tax asset is recognized only to the extent that it is probable that future taxable profit will be available against which such assets can be realised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period for which the MAT credit can be carried forward for set off against the normal tax liability. The said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT credit entitlement grouped with deferred tax assets (net) in the financial statement.

p. Earnings per share

Basic earnings per share are computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholder and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any. q. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Initial recognition and measurement

All financial assets and liabilities are recognized at fair value on initial recognition.

Transaction cost in relation to financial assets and financial liabilities other than those carried at fair value through profit or loss (FVTPL) are added to the fair value on initial recognition.

Transaction cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are carried at fair value through profit or loss are immediately recognized in the statement of profit or loss.

ii. Subsequent measurement

- Non-derivative financial instruments

1. Financial assets carried at amortised cost

A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

2. Financial assets at fair value through other comprehensive income

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

The company has made an irrevocable election for its investment which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the company has made an irrevocable election based on its business model, for its investment which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

3. Financial assets at fair value through profit or loss

A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.

4. Financial liabilities

The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

- Financial assets or financial liability at fair value through profit or loss

This category has financial assets or liabilities which are not designated as hedges.

Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, “Financial Instruments”. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS-109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.

- Cash flow hedge

The Company has not designated derivative financial instruments as cash flow hedges.

- Equity share capital Equity Shares

Equity shares issued by the company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

De-recognition of financial instruments A financial asset is derecognized when the contractual rights to the cash flows from

the financial asset expire or it transfers the financial asset and the transfer qualifies for De-recognition under Ind AS 109.

A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expires.

Fair value of financial instruments

The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Based on the three level fair value hierarchy, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.

In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value. r. Impairment of assets

i) Financial assets

The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.

ii) Impairment of property, plant and equipment and intangible assets

Property, plant and equipment and intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU (Cash Generating unit) to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.

s. Cash flow statement

The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 “Statement of Cash flows” using the indirect method for operating activities.

t. Cash and cash equivalent

Cash and cash equivalent for the purpose of statement of cash flows include bank balances, where the original maturity is three months or less. Other short term highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are included as a component of cash and cash equivalent for the purpose of statement of cash flow.

u. Provisions and contingent liabilities

A provision is recognized if, as a result of past event, the company has a present obligation (legal or constructive) and on management judgement that is reasonably estimable and it is probable that an outflow of economic benefits will be required to settle the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost.

Contingent liability is disclosed in the case of:

- A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

- A present obligation arising from past events, when no reliable estimate is possible;

- A possible obligation arising from past events, unless the probability of outflow of resources is remote.

Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.

v. Current and non -current classification

The company has ascertained its operating cycle as twelve months for the purpose of current / non-current classification of assets and liabilities. This is based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents.

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Mar 31, 2016

1. Corporate information

IOL Chemicals and Pharmaceuticals Limited (The Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 on 29^th September 1986. Its shares are listed on two stock exchanges in India. The Company is engaged in the manufacturing and selling of Organic Chemicals and Bulk Drugs. The Company caters to both domestic and international market.

2. Significant accounting policies and notes on accounts

a. Basis of preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention in accordance with the accounting standards referred to in Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule 2014.

b. Use of estimates

The preparation of financial statements, in conformity with the generally accepted accounting principles, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results known materialize.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognized:

a) when all significant risks and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

Revenue in respect of export incentives is recognized on post export basis.

iii) Dividend

Dividend income from investment is recognized when the right to receive the payment is established.

iv) Interest

Revenue from interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefits

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss for the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund:

The Employer’s Contributions to provident fund are made in accordance with the provisions of the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 and is recognized as an expense in the statement of profit and loss.

ii) Defined Benefit Plans:

Gratuity:

The Group Gratuity Cash Accumulation Scheme, managed by Life Insurance Corporation of India is a defined benefit plan. The liability for gratuity is provided on basis of actuarial valuation carried out by an independent actuary as at the Balance Sheet date. The Present Value of the Company’s obligation is determined on the basis of actuarial valuation at the yearend using the projected unit credit method and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

c) Leave encashment:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using 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 Sheet date.

d) The actuarial gain or loss:

The actuarial gain or loss is recognized in statement of profit and loss in the period in which they occur.

e. Tangible fixed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

d) Expenditure incurred on renovation/modernization of the existing fixed assets is added to the book value of these assets where such renovation/modernization increases the future benefit from them beyond their previously assessed standard of performance.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortization.

g. Depreciation on tangible fixed assets

i) Depreciation on tangible fixed assets is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to the Companies Act, 2013.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortized over the lease period, i.e. 99 years.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

v) The Intangible fixed assets acquired prior to 01 April 2014 are amortized over the revised useful life of the assets based on the indicative useful life of the assets mandated by Schedule II to the Companies Act, 2013.

h. Amortization

Intangible assets are amortized on straight line method. These assets are amortized over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in the value of such investments, which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realizable value whichever is lower. The cost in respect of various items of inventories is computed as under:

k. Cenvat Credit

Cenvat credit on excise duty/service tax paid on inputs, capital assets and input services is recognized in accordance with the Cenvat Credit Rules, 2004. l. Government Grants and Subsidies

Government grants available to the Company are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and when benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter’s contribution is credited to capital reserve. Government subsidy related to specific fixed assets is deducted from the gross value of the assets concerned. m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expenditure in the period in which these are incurred. n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognized as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognized as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such fixed assets.

c. The premium or discount arising at the inception of a forward exchange contracts is amortized as an expense or income over the life of the contract. Exchange difference on such contract is recognized in the statement of profit and loss in the reported period in which the exchange rate changes profit or loss arising on cancellation or renewal of such contracts is recognized as income or expense in the period in which they arise. q. Accounting for taxes on income

Provision for taxation for the year comprises of current tax and deferred tax. Current tax is amount of Income-tax determined to be payable in accordance with the provisions of Income tax Act 1961. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earnings Per Share

Basic Earnings per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account. t. Cash flow statement

The cash flow statement has been in accordance with the Accounting Standard (AS) - 3 “Cash flow statements” issued by the Companies (Accounting Standard) Rules, 2006.

u. Provisions and Contingent Liabilities

i. Provisions are recognized (for liabilities that can be measured by using substantial degree of estimate) when;

a) the Company has a present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) (i) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b) a present obligation arising from a past event but is not recognized

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b. Terms/rights attached to equity shares

The Company presently has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has not declared dividend during the year ended 31 March 2016.

c. Terms/rights attached to preference shares 7% non-cumulative Preference shares 50,00,000 of Rs. 10 each

During the previous year Company had converted 50,00,000 7% non-cumulative redeemable Preference Shares of Rs. 10/- each into 17,85,714 equity shares of face value of Rs. 10/- each at a premium of Rs. 18/- per share aggregating to Rs. 5 Crore on 21 June 2014 in accordance with the terms and conditions of the preference shares. The earliest date of redemption of these preference shares was 30 June 2015.

1% non-cumulative Preference shares 1,50,10,000 of Rs. 10 each

During the previous year Company had converted 1,50,10,000 1% non-cumulative redeemable Preference Shares of Rs. 10/- each into 53,60,713 equity shares of face value of Rs. 10/- each at a premium of Rs. 18/- per share aggregating to Rs. 15.01 crore on 21 June 2014 in accordance with the terms and conditions of the preference shares. These preference shares were redeemable at par on expiry of 10 years from the date of allotment i.e. 05 November 2013

d. Terms/rights attached to Share warrants

On 04 July 2014, the Company had allotted 1,10,00,000 Share warrants to non-promoter Company with an option to subscribe to an equity share of face value of Rs. 10/- at a premium of Rs. 18/- per share within the period of 18 months from the date of allotment of warrants.

Out of above the Company had allotted 24,50,000 equity shares of Rs. 10/- each at premium of Rs. 18/- per share during the previous year on exercising of its option by the warrant holders.

Whereas the balance 85,50,000 share warrants have been converted into 85,50,000 equity share of Rs. 10/- each during the year on exercise of option by its warrant holders.

e. Details of shares held by holding company or the ultimate holding company or their subsidiaries and associates

There is no holding Company of the Company and therefore no subsidiary/ associate of holding /ultimate holding Company.

a. Details of security for term loans

1. Term loans from banks and financial institutions are secured by way of equitable mortgage of all present and future immovable properties of the Company ranking pari-passu charge by way of hypothecation of all the Company’s movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created / to be created in favour of the Company’s Bankers on specified movable properties for securing borrowings for working capital requirements.

2. Further, the term loans from banks and financial institutions are secured by second pari-passu charge on all current assets present and future and the personal guarantee of the Managing Director of the Company and corporate guarantee by a promoter Company.

3. Term loan from others are secured by hypothecation of vehicles purchased against these loans.

c. Unsecured Loan granted by Bank on the security provided by Related party under the head Other Loans & Advances (Unsecured).

d. Interest has been accounted for based upon terms of restructuring of facilities sanctioned by the respective lenders. The Funded Interest Term Loans (FITLs) has been created on certain credit facilities.

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Mar 31, 2015

A. Basis of preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention in accordance with the accounting standards referred to in section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule 2014.

b. Use of estimates

The preparation of financial statements, in conformity with the generally accepted accounting principles, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results known materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

Revenue in respect of export incentives is recognised on post export basis.

iii) Dividend

Dividend income from investment is recognised when the right to receive the payment is established.

iv) Interest

Revenue from interest is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefits

a) Short Term employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the statement of profit and loss for the year in which the related service is rendered.

b) Post employment Benefits:

i) Defined contribution Plans:

Provident Fund:

The Employer's Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and is recognised as an expense in the statement of profit and loss.

ii) Defined Benefit Plans:

Gratuity:

The Group Gratuity Cash Accumulation Scheme, managed by Life Insurance Corporation of India is a defined benefit plan. The liability for gratuity is provided on basis of actuarial valuation carried out by an independent actuary as at the Balance Sheet date. The Present Value of the company's obligation is determined on the basis of actuarial valuation at the year end using the projected unit credit method and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

c) Leave encashment:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defined benefit obligation at the Balance Sheet date, determined based on actuarial valuation using 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 Sheet date.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss in the period in which they occur.

e. tangible fixed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

d) Expenditure incurred on renovation/modernisation of the existing fixed assets is added to the book value of these assets where such renovation/modernisation increases the future benefit from them beyond their previously assessed standard of performance.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fixed assets

i) Depreciation on tangible fixed assets is provided on Straight Line Method on the basis of useful lives of such assets specified in Schedule II to the Companies Act, 2013.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

v) The Intangible fixed assets acquired prior to 1st April 2014 are amortised over the revised useful life of the assets based on the indicative useful life of the assets mandated by Schedule II to the Companies Act, 2013.

h. Amortisation

Intangible assets are amortised on straight line method. These assets are amortised over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in the value of such investments, which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material

First in First out method plus direct expenses

b) Stores and Spares

Weighted Average method plus direct expenses

c) Work-in- progress

Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods

Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit

Actual cost plus direct expenses to the extent incurred.

k. Cenvat Credit

Cenvat credit on excise duty/service tax paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and when benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy related to specific fixed assets is deducted from the gross value of the assets concerned.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial

recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such fixed assets.

c. The premium or discount arising at the inception of a forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of profit and loss in the reported period in which the exchange rate changes profit or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

Provision for taxation for the year comprises of current tax and deferred tax. Current tax is amount of Income-tax determined to be payable in accordance with the provisions of Income tax Act 1961. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. cash flow statement

The cash flow statement has been in accordance with the Accounting Standard (AS) - 3 "Cash flow statements" issued by the Companies (Accounting Standard) Rules, 2006.

u. Provisions and contingent Liabilities

i. Provisions are recognised (for liabilities that can be measured by using substantial degree of estimate) when;

a) the company has a present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) (i) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

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Mar 31, 2014

A. Basis of preparation of financial statements:

The financial statements are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of fi nancial statements, in conformity with the generally accepted accounting principles, require estimates and assumptions to be made that affect the reported amount of assets and liabilities as on the date of fi nancial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results known/materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all signifi cant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of the goods transferred to a degree usually associated with ownership; and

b) no signifi cant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

Dividend income is recognised when the right to receive the payment is established.

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no signifi cant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefi ts

a) Short Term Employee Benefi ts:

Short Term Employee Benefi ts are recognised as an expense on an undiscounted basis in the statement of profi t and loss for the year in which the related service is rendered.

b) Post Employment Benefi ts:

i) Defi ned Contribution Plans:

Provident Fund: Contributions to provident fund are made in accordance with the provisions of the Employee''s Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of profi t and loss in the period in which such contributions fall due.

ii) Defi ned Benefi t Plans:

Gratuity: The Group Gratuity Cash Accumulation Scheme, managed by Life Insurance Corporation of India is a defi ned benefi t plan. The liability for gratuity is provided on actuarial basis. The Present Value of the company''s obligation is determined on the basis of actuarial valuation at the year end using the projected unit credit method and the fair value of plan assets is reduced from the gross obligations under the gratuity scheme to recognize the obligation on a net basis.

c) Leave encashment:

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the defi ned benefi t obligation at the Balance Sheet date, determined based on actuarial valuation using Projected Unit Credit Method. The discount rates used for determining the present value of the obligation under defi ned benefi t plan, are based on the market yields on Government Securities as at the Balance Sheet date.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profi t and loss in the period in which they occur.

e. Tangible fi xed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fi xed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fi xed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fi xed assets

i) Depreciation on all fi xed assets is provided on the straight line method in accordance with and in the manner specifi ed in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fi xed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

h. Amortisation

Intangible assets are amortised on straight line method. These assets are amortised over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in the value of such investments, which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

k. Cenvat Credit

Cenvat credit on excise duty/service tax paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and when benefi ts in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to capital reserve. Government subsidy related to specifi c fi xed assets is deducted from the gross value of the assets concerned.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as a part of cost of such asset. Qualifying asset is one that takes substantial period of time to get ready for its intended use. All other borrowing costs are recognised as expenditure in the period in which these are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the fi nancial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous fi nancial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fi xed assets, these exchange differences are adjusted to the carrying cost of such fi xed assets.

c. The premium or discount arising at the inception of a forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of profi t and loss in the reported period in which the exchange rate changes profi t or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

Provision for taxation for the year comprises of current tax and deferred tax. Current tax is amount of Income-tax determined to be payable in accordance with the provisions of Income tax Act 1961. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning Per Share

Basic Earning per share is computed by dividing the net profi t or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Cash flow statement

The cash flow statement has been in accordance with the Accounting Standard (AS) – 3 "Cash fl ow statements" issued by the Companies (Accounting Standard) Rules, 2006.

u. Provisions and Contingent Liabilities

i. Provisions are recognised when;

a) the Company has a present obligation as a result of a past event:

b) a probable outfl ow of resources embodying economic benefi ts is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) Possible obligation that arises from past events and existence of which will be confi rmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

b. Terms/rights attached to equity shares

The Company presently has one class of equity shares having a par value of Rs. 10/- each. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has not declared dividend during the period ended 31 March 2014.

Increase in equity share capital

The Company has issued 26,64,000 equity shares of face value of Rs. 10/- each at a premium of Rs. 68/- per share aggregating to Rs. 20,77,92,000 on 5 November 2013 to Promoter Group entities on conversion of unsecured loan, brought in by them.

Consequent upon the issue of the above 26,64,000 equity shares, the total paid-up capital of the Company stands increased to 2,88,15,164 fully paid equity shares of Rs. 10/- each.

c. Terms/rights attached to preference shares

7% Non-Cumulative Preference Shares 50,00,000 of Rs. 10/- each

The Company has extended the redemption of 50,00,000, 7% non-cumulative redeemable preference shares of Rs. 10/- each from 20 March 2014 to 30 June 2015 with an option to convert these preference shares into equity shares at the price calculated under SEBI formula. The earlier date of redemption is 30 June 2015 (Previous year 20 March 2014)

The preference shares shall carry a right to a non-cumulative preference dividend of 7% per annum, in case the dividend not declared for any year, it will cease to accrue and lapse and will not be cumulated and carry forward. The preference shareholder shall have preferential right of repayment of amount of capital.

1% Non-Cumulative Preference Shares 1,50,10,000 of Rs. 10/- each

The Company has allotted 1,50,10,000, 1% non cumulative redeemable preference shares of Rs. 10/- each to the promoter/promoter group companies. These preference shares shall be redeemable at par on expiry of 10 years from the date of allotment i.e. 5 November 2013.

The preference shares shall carry a right to a non-cumulative preference dividend of 1% per annum, in case the dividend not declared for any year, it will cease to accrue and lapse and will not be cumulated and carry forward. The preference shareholders shall have preferential right of repayment of amount of capital.

d. Details of shares held by holding company or the ultimate holding company or their subsidiaries and associates There is no holding company of the Company and therefore no subsidiary/ associate of holding /ultimate holding Company.

The Company has issued zero coupon unsecured foreign currency convertible bonds (FCCB) aggregating to US $ 7 Million.

The Company has option to convert all outstanding bonds into equity shares at the prevailing conversion price i.e. Rs. 78 per share at any time on or after 28 November 2014 but on or before 28 May 2015.

The bond holders have also option to convert into equity shares of the Company at price of Rs. 78 per share (subject to adjustment, if any) with a fi xed exchange rate of Rs. 47.57 per US $ at any time on or after 28 May 2010 but on or before 28 May 2015 subject to satisfaction of certain conditions.

a. Details of security for term loans

1 Term loans from banks and fi nancial institutions are secured by way of equitable mortgage of all present and future immovable properties of the Company ranking pari-passu charge by way of hypothecation of all the Company''s movable properties, save and except Book Debts but including movable machinery, spares, tools and accessories both present and future subject to prior charges created / to be created in favour of the Company''s Bankers on specifi ed movable properties for securing borrowings for working capital requirements.

2 Further, the term loans from banks and fi nancial institutions are secured by second pari-passu charge on all current assets present and future and the personal guarantee of the Managing Director of the Company.

3 Term loan from others are secured by hypothecation of vehicles purchased against these loans.

c. Varinder Foundation a related party alongwith Company as co-applicant borrowed a sum of Rs. 10 Crore from Corporation Bank on behalf of the Company, to meet the additional working capital requirements of the Company. The said loan is shown under the head unsecured loan, from related party.

Security of such loan to bank is provided by the said party.

d. Foreign Currency Convertible Bonds at the beginning and at the end of the reporting period

e. Terms of repayment of Foreign Currency Convertible Bonds

Foreign Currency Convertible Bonds are redeemable on 5 June 2015 at a premium of 41.25% of their principal amount unless previously redeemed, repurchased and cancelled or converted.

Details of security

Loans repayable on demand from banks are secured by way of fi rst pari-passu charge on all present and future fi nished goods, work-in-progress, raw materials, stores and spares, book debts and second pari-passu charge on fi xed assets and further secured by personal guarantee of the Managing Director.

Security of unsecured loan from bank is provided by a third party.

---

Mar 31, 2013

A. Basis of preparation of fnancial statements:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of fnancial statements, in conformity with the generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of fnancial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

c. Revenue recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all signifcant risks and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and

b) no signifcant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

Dividend income is recognised when the right to receive the payment is established.

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no signifcant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee benefts

a) Short term employee benefts:

Short term employee benefts are recognised as an expense on an undiscounted basis in the statement of proft and loss for the year in which the related service is rendered.

b) Post employment benefts:

i) Defned contribution plans:

Provident fund: Contributions to provident fund are made in accordance with the provisions of the Employee''s Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of proft and loss in the period in which such contributions fall due.

ii) Defned beneft plans:

Gratuity: Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

c) Leave encashment:

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of proft and loss account.

e. Tangible fxed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fxed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange differences arising on reinstatement/ settlement of long term foreign currency borrowings related to acquisition of depreciable fxed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of these assets.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fxed assets

i) Depreciation on all fxed assets is provided on the straight line method in accordance with and in the manner specifed in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fxed assets arising from exchange rate variation is depreciated over the residual life of the respective fxed assets.

h. Amortisation

Intangible assets are amortised on straight line method over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-progress Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

k. Cenvat credit

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government grants and subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefts in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter''s contribution is credited to capital reserve. Government subsidy received for a specifc asset is reduced from the cost of the said asset.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the fnancial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a signifcant portion of the risks and rewards of ownership are retained by the lessor are classifed as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous fnancial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fxed assets, these exchange differences are adjusted to the carrying cost of such fxed assets.

c. The premium or discount arising at inception of forward exchange contracts is amortised as an expense or income over the life of the contract. Exchange difference on such contract is recognised in the statement of proft and loss in the reported period in which the exchange rate changes proft or loss arising on cancellation or renewal of such contracts is recognised as income or expense in the period in which they arise.

q. Accounting for taxes on income

The accounting treatment followed for taxes on income is to provide for current tax and deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

r. Earning per share

Basic earning per share is computed by dividing the net proft or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fxed assets

At each balance sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Provisions and contingent liabilities

i. Provisions are recognised when;

a) the Company has a present obligation as a result of a past event:

b) a probable outfow of resources embodying economic benefts is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) Possible obligation that arises from past events and existence of which will be confrmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outfow of resources embodying economic benefts will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

---

Mar 31, 2012

A. Basis of preparation of financial statements:

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of Section 211 and other relevant provisions of the Companies Act, 1956.

b. Use of estimates

The preparation of financial statements, in conformity with the generally accepted accounting principles require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

c. Revenue Recognition

i) Sale:

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii) Export Incentives

The revenue in respect of the export incentives is recognised on post export basis.

iii) Dividend

Dividend income is recognised when the right to receive the payment is established.

iv) Interest

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v) Insurance and other claims

Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

d. Employee Benefits

a) Short Term Employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the statement of profit and loss for the year in which the related service is rendered.

b) Post Employment Benefits:

i) Defined Contribution Plans:

Provident Fund: Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to the statement of profit and loss in the period in which such contributions fall due.

ii) Defined Benefit Plans:

Gratuity: Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

c) Leave encashment:

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

d) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss account.

e. Tangible fixed assets

a) Fixed assets are stated at historical cost less accumulated depreciation.

b) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

c) The exchange difference arising on reporting of long term foreign currency monetary items at rate different from those at which they were initially recorded during the period or reported in previous financial statements attributable to the acquisition of fixed assets are capitalised.

f. Intangible assets

Intangible assets are stated at cost less accumulated amount of amortisation.

g. Depreciation on tangible fixed assets

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period, i.e. 99 years.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

h. Amortisation

Intangible assets are amortised on straight line method over their estimated useful life.

i. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current Investments are carried at lower of cost and fair value.

j. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-progress Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

k. Cenvat Credit

Cenvat credit of excise duty paid on inputs, capital assets and input services is recognised in accordance with the Cenvat Credit Rules, 2004.

l. Government Grants and Subsidies

Government grants available to the Company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy received for a specific asset is reduced from the cost of the said asset.

m. Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

n. Segment information

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial of the enterprise as a whole.

o. Operating lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

p. Foreign currency transactions

a. Foreign currency transactions are recorded on initial recognition in reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency, at the date of transaction.

b. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such assets.

q. Accounting for taxes on income

The accounting treatment followed for taxes on income is to provide for Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods. r. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

s. Impairment of fixed assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

t. Provisions and Contingent Liabilities

i. Provisions are recognised (for liabilities that can be measured by using a substantial degree of estimation) when;

a) the Company has a present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in case there is:

a) possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

---

Mar 31, 2011

A. Basis for preparation of Financial Statements

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable accounting standards referred to in sub section (3C) of section 211 and other relevant provisions of the Companies Act, 1956.

B. Use of Estimates

The preparation of financial statement conforming to generally accepted accounting principals require estimates and assumptions to be made that affect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

C. Revenue Recognition

i. Sales

Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) when all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of goods transferred to a degree usually associated with ownership and

b) no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

ii. Export Incentives

The revenue in respect of export incentives is recognised on post export basis.

iii. Dividend

Dividend income is recognised when the right to receive the payment is established.

iv. Interest:

Interest Income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

v. Insurance and other claims

Revenue in respect of the claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D. Employee Benefits

i. Short Term Employee Benefits:

Short Term Employee Benefits are recognised as an expense on an undiscounted basis in the profit and loss account of the year in which the related service is rendered.

ii. Post Employment Benefits: a) Defined Contribution Plans: Provident Fund:

Contributions to provident fund are made in accordance with the provisions of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to profit and loss account in the period in which such contributions fall due.

b) Defined Benefit Plans:

Gratuity:

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

Leave encashment

Provision for leave encashment with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year.

c) The actuarial gain or loss:

The actuarial gain or loss is recognised in statement of profit and loss account.

E. Fixed Assets

i) Fixed assets are stated at historical cost less accumulated depreciation.

ii) The cost of fixed asset comprises of its purchase price and any attributable expenditure (directly or indirectly) for bringing the asset to its working condition for its intended use.

iii) The exchange difference arising on reporting of long term foreign currency monetary items at rate different from those at which they were initially recorded during the period or reported in previous financial statements attributable to the acquisition of fixed assets are capitalised.

F. Depreciation

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs. 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period.

iv) Addition or deduction to the fixed assets arising from exchange rate variation is depreciated over the residual life of the respective fixed assets.

G. Investments

Long term investments are carried at cost less provisions, if any, for diminution in value which is other than temporary. Current Investments are carried at lower of cost and fair value.

H. Inventories:

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

a) Raw Material First in First out method plus direct expenses

b) Stores and Spares Weighted Average method plus direct expenses

c) Work-in-process Cost of material plus appropriate share of overheads thereon at different stage of completion.

d) Finished Goods Cost of material plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present conditions and location.

e) Material in Transit Actual cost plus direct expenses to the extent incurred.

I. Cenvat Credit:

Cenvat credit on excise duty paid on inputs, capital assets and input services is taken in accordance with the Cenvat Credit Rules, 2004.

J. Borrowing Costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

K. Subsidy:

Government grants available to the company are recognised when there is a reasonable assurance of compliance with the conditions attached to such grants and it is reasonably certain that the ultimate collection will be made. Government subsidy in the nature of promoter's contribution is credited to capital reserve. Government subsidy received for a specific asset is reduced from the cost of the said asset.

L. Foreign Exchange Transactions

i. Foreign currency transactions are recorded on initial recognition in reporting currency by applying foreign currency amount, the exchange rate, between the reporting currency and the foreign currency, at the date of transaction.

ii. Foreign currency monetary items are reported using the closing rate. Exchange differences arising on the settlement of monetary items or on reporting the same at rate different from those at which these were initially recorded during the period or reported in previous financial statement are recognised as income or expense in the period in which they arise except in case of long term liabilities which relate to acquisition of fixed assets, these exchange differences are adjusted to the carrying cost of such assets.

M. Accounting for Taxes on Income

Tax expense comprises of Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

N. Impairment of Assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

O. Earning Per Share

Basic Earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

P. Operating Lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

Q. Provisions and Contingent Liabilities

i. Provisions are recognised for liabilities that can be measured by using a substantial degree of estimation, if:

a) the company has present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in the case of:

a) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event but is not recognised

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot be made.

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Mar 31, 2010

A. Accounting Convention

The accounts are prepared on accrual basis under the historical cost convention in accordance with the applicable Accounting Standards referred to in sub section (3C) of Section 211 and other relevant provisions of the Companies Act, 1956.

B. Use of estimates

The preparation of financial statement conforming to generally accepted accounting principals require estimates and assumptions to be made that effect the reported amount of asset and liabilities as on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognised in the period in which the results materialise.

C. Revenue Recognition

i. Sales Sales comprise sale of goods and export incentives. Revenue from sale of goods is recognised:

a) When all significant risks and rewards of ownership is transferred to the buyer and the company retains no effective control of goods transferred to a degree usually associated with ownership and;

b) No significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods.

c) The revenue in respect of export incentives is recognised a post export basis.

ii. Interest

Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

iii. Insurance and other claims

Revenue in respect of the claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.

D. Employee Benefits

i. Short Term Employee Benefits

Short term employee benefits are recognised as an expense on an undiscounted basis in the Profit and Loss Account of the year in which the related service is rendered.

ii. Post Employment Benefits

a) Defined Contribution Plans Provident Fund

Contributions to provident fund are made in accordance with the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and are charged to Profit and Loss Account in the period in which such contributions fall due.

b) Defined Benefit Plans Gratuity

Provision for gratuity liability to employees is made on the basis of actuarial valuation as at close of the year.

Leave encashment

Provision for leave with wages and long term compensated absences is made on the basis of actuarial valuation as at close of the year. c) The actuarial gain/loss

The actuarial gain/loss is recognised in statement of Profit and Loss Account.

E. Fixed Assets

Fixed assets are stated at historical cost less accumulated depreciation.

F. Expenditure incurred during construction period

In respect of new/major expansion cost incurred which are directly attributable to bringing the assets to their working condition are capitalized on various categories of fixed assets on proportionate basis.

G. Depreciation

i) Depreciation on all fixed assets is provided on the straight line method in accordance with and in the manner specified in Schedule XIV to the Companies Act, 1956.

ii) Depreciation on assets costing Rs 5,000/- or below is charged @ 100% per annum.

iii) The lease hold land is amortised over the lease period.

H. Inventories

Inventories are valued at cost or net realisable value which ever is lower. The cost in respect of various items of inventories is computed as under:

I. Cenvat Credit

Cenvat credit on excise duty paid on inputs, capital assets and input services is taken in accordance with the Cenvat Credit Rules, 2004. J. Borrowing Costs

Borrowing costs that are directly attributable to the acquisition,, construction or production of a qualifying asset are capitalised as part of cost of such asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

L. Accounting for Taxes on Income

Tax expense comprises of Current tax and Deferred tax. Current tax is the aggregate amount of income tax determined to be payable in respect of taxable income for the period. Deferred Tax is the tax effect of timing differences between taxable income and accounting income for the period that originate in one period and are capable of reversal in one or more subsequent periods.

M. Impairment of Assets

At each Balance Sheet date an assessment is made whether any indication exists that an asset has been impaired, if any such indication exists, an impairment loss i.e. the amount by which the carrying amount of an asset exceeds its recoverable amount is provided in the books of account.

N. Earning Per Share

Basic earning per share is computed by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted earning per share is computed by taking into account weighted average number of equity shares outstanding during the period and the weighted average number of equity shares which would be issued on conversion of all dilutive potential equity shares into equity shares.

O. Operating Lease

Assets acquired on leases wherein a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals paid for such leases are recognised as an expense on systematic basis over the term of lease.

P. Provisions and Contingent Liabilities

i. Provisions are recognised for liabilities that can be measured by using a substantial degree of estimation, if:

a) the Company has present obligation as a result of a past event:

b) a probable outflow of resources embodying economic benefits is expected to settle the obligation; and

c) the amount of the obligation can be reliably estimated.

ii. Contingent liability is disclosed in the case of:

a) Possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation arising from a past event

(i) when it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

(ii) a reliable estimate of the amount of the obligation cannot made.