Accounting Policies of Kwality Ltd. Company

Mar 31, 2018

1. Summary of significant accounting policies

The financial statements have been prepared using significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.

1.1 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is classified as current when it is:

- Expected to be realised or intended to sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realised within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is classified as current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

« There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalent. The Company has identified twelve month as it’s operating cycle.

1.2 Foreign currency

Functional and presentation currency

The financial statements are presented in Indian Rupee (‘INR’), which is the Company’s functional and presentation currency. Transactions and balances

Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.

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

Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.

1.3 Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/receivable inclusive of excise duty net of rebate and other taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the sales transaction as set out below.

Sale of goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded inclusive of excise duty net of sales returns, Sales tax/Goods and Service Tax (GST), rebates, trade discounts and price differences.

Income from services

Revenue from milk processing and other services, are recognized as and when services are rendered and are accounted on an accrual basis.

Interest income

Interest income is recorded on accrual basis using the effective interest rate (EIR) method.

Export benefits

Exports benefits are recognized on accrual basis in the Statement of Profit and Loss when the reasonable right to receive the same is established.

1.4 Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred.

Borrowing cost also include exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest cost.

1.5 Property, plant and equipment (PPE)

Recognition and initial measurement

Freehold land is carried at historic cost. Other properties plant and equipment are stated at their cost of acquisition less depreciation. The cost of acquisition comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.

Subsequent measurement (depreciation and useful lives)

Depreciation on property, plant and equipment is provided to the extent of depreciable amount on the Written down value (WDV). The depreciation rates are based on useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets where based on the internal technical assessment of the estimated economic useful lives of the property, plant and equipment, the useful life is different than those prescribed in Schedule II are used as:

The assets residual value and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

De-recognition

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in statement of profit and loss when the asset is derecognised.

1.6 Intangible assets

Recognition and initial measurement

Acquired computer software are capitalized at cost of acquisition (Including License fees paid), net of accumulated amortization and accumulated impairment losses if any and are disclosed as intangible assets.

Other intangible assets (copyrights) are shown at cost of acquisition net of accumulated amortisation and accumulated impairment loss if any.

Subsequent measurement (amortisation)

Intangible assets are amortised on written down value over the useful life of the asset up to a maximum of five years commencing from the month when the asset is first put to use. The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.

1.7 Operating leases

Company as lessee

Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.

1.8 Impairment of non-financial assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired, based on internal or external factors. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.

1.9 Financial instruments

A financial Instrument is any contract which give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Recognition, initial measurement and de-recognition

Financial assets and financial liabilities are recognised and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:

- Amortised cost

- Financial assets at fair value through profit or loss (FVTPL)

- Financial assets at fair value through other comprehensive income (FVTOCI)

All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.

Amortised cost

A financial asset shall be measured at amortised cost using effective interest rates if both of the following conditions are met:

- the financial asset is held within a business model whose objective is to hold financial assets 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.

The Company’s cash and cash equivalents, trade and other receivables fall into this category of financial instruments.

Financial assets at fair value through other comprehensive income (FVTOCI)

FVTOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non- trading equity instruments that are designated to this category.

FVTOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in statement of profit or loss.

Financial assets at fair value through profit or loss (FVTPL)

Financial assets at FVTPL include financial assets that either do not meet the criteria for amortised cost classification or FVTOCI or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Classification and subsequent measurement of financial liabilities

Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in profit or loss. All derivative financial instruments are accounted for at FVTPL.

Financial guarantee contracts

Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified party fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.

Derivative contracts

A derivative forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward derivative contracts as at reporting date are fair valued restated using the mark to market information and resultant gain/(loss) is recognised accounted in statement of profit and loss.

Embedded Derivatives:

Derivative embedded in all other host (that is not an asset) are separated only if economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contracts are not separated.

Fair value hedges

The change in the fair value of a hedging instrument is recognised in the statement of profit and loss as finance costs.

The Group has an interest rate swap that is used as a hedge for the exposure of changes in the fair value of its 8.25% fixed rate secured loan. See Note 42 for more details.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Investment in subsidiary

I nvestment in subsidiary is carried at cost in the separate financial statement.

1.10 Impairment of financial assets

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for recognition and measurement of impairment loss for financial assets.

ECL is the difference between all contractual cash fiows that are due to the Company in accordance with the contract and all the cash fiows that the Company expects to receive discounted at original effective tax rate (EIR). When estimating the cash fiows, the Company is required to consider -

- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.

- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments (“Simplified Approach”), which requires expected lifetime losses to be recognised from initial recognition of receivables.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.

1.11 Inventories

Inventory includes raw material, packing material, stores and spares, work in progress, traded and finished goods. Inventories are stated at the lower of cost and net realisable value. Cost comprises cost of purchases and other cost incurred in bringing the inventories to present location and condition. Cost of purchased inventory are determined after deducting rebates and discounts and excludes those taxes and duties subsequently recoverable from the revenue authorities. Cost of work-in-progress and finished goods comprises direct material, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of first-in, first-out basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. Inventory item held for use in production is not written down below cost, if the finished product in which they will be incorporated are expected to be sold at or above cost.

1.12 Income taxes

Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.

Calculation of current tax is based on tax rates and tax laws that have been enacted at the reporting date. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (‘MAT’) credit entitlement is recognised as an asset only when and to the extent there is convincing evidence that normal income tax will be paid during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. This is reviewed at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent it is not reasonably certain that normal income tax will be paid during the specified period.

Deferred income taxes are calculated using the liability method. Deferred tax liabilities are recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Company’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).

1.13 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments (original maturity less than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdraft. Bank overdraft are shown within borrowings in current liabilities in balance sheet.

1.14 Post-employment, long-term and short-term employee benefits

Short-term employee benefits:

Short-term employee benefits such as salaries, wages, bonus etc. are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which employee renders the related service.

Post-employment benefits

Defined contribution plans:

Company’s contribution to Employees’ Provident Fund Scheme, Employees’ State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans:

The Company’s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. Actuarial gains and losses arising on such valuation are recognized immediately in the Other Comprehensive Income. Any interest expense is accounted as finance cost in Statement of Profit and Loss.

Compensated absences:

Benefits under the Company’s leave encashment constitute other long-term employee benefits. The liability in respect of vacation pay is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the statement of profit and loss. Termination benefits are recognized as an expense in the year in which they are incurred.

1.15 Share based payments

The Employee Stock Option Plan (“the Scheme”) provides for grant of equity shares of the Company to the employees of the Company and its subsidiaries. The Scheme provides that employees are granted an option to acquire the equity shares of the Company that vests in a graded manner or as decided by Remuneration, Compensation and Nomination Committee. The options may be exercised within a specified period. The employee benefits expense is measured using the fair value of the employee stock options and is recognised over vesting period with a corresponding increase in equity. The vesting period is the period over which all the specified vesting conditions are to be satisfied. On the exercise of the employee stock options, the employees of the Company will be allotted equity shares.

1.16 Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors assesses the financial performance and position of the Company and make strategic decision. The Board of Directors, has been identified as being the chief operating decision maker. Refer Note 44 for segment information presented.

1.17 Provisions, contingent liabilities and contingent assets

Provisions and contingent liabilities:

A Provision is recognised when the Company has present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material.

When some or all of the economic benefits required to settle, a provision is expected to be recovered from a third party, the receivable is recognised as a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Contingent liability is a possible obligation arising from past events and the 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 Company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.

In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognised or disclosure is made

Contingent assets:

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognised though are disclosed, where an inflow of economic benefits is probable.

1.18 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

1.19 Earnings per share

(i) Basic earning per share

Basic earnings per share are calculated by dividing:

- The profit attributable to the shareholder

- By the weighted average number of equity shares outstanding during the financial year, adjusted for bonus element in equity shares issued during the year and excluding treasury shares

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

- The after income tax effect of interest and other financial costs associated with dilutive potential equity shares, and

- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

1.20 Government Grant

Import duty waivers for capital assets purchased under Export Promotion Credit Guarantee (EPCG) schemes are recorded as deferred revenue and recognized in Statment of Profit and Loss on a systematic basis over the periods in which the related performance obligations are fulfilled.

1.21 Significant judgement and estimates in applying accounting policies

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements:

Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.

Recoverability of advances/receivables - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.

Classification of Leases - The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.

Defined benefit obligation (DBO) - Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.

Fair value measurements - The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets (Share based payment). This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company’s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Inventories - The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

Provision and contingencies - The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.

Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.

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Mar 31, 2017

1. Summary of significant accounting policies

The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.

1.1 Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/non-current classification.

An asset is classified as current when it is:

Expected to be realised or intended to sold or consumed in normal operating cycle

- Held primarily for the purpose of trading

- Expected to be realised within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is classified as current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for the purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

1.2 Foreign currency

Functional and presentation currency

The financial statements are presented in Indian Rupee (‘INR’).

Transactions and balances

Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.

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

Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.

1.3 Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/receivable net of rebate and taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the sales transaction as set out below.

Sale of goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, sales tax, rebates, trade discounts and price differences.

Income from services

Revenue from milk processing and other services, if any, are recognized as and when services are rendered and are accounted on an accrual basis.

Interest income

Interest income is recorded on accrual basis using the effective interest rate (EIR) method.

Export benefits

Exports benefits are recognized on accrual basis in the statement of profit and loss when the reasonable right to receive the same is established.

1.4 Borrowing costs

Borrowing costs that are attributable to the acquisition, construction of qualifying assets till the time such assets are ready for the intended use, are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are expensed off in the period in which these are incurred.

1.5 Property, plant and equipment (PPE)

Recognition and initial measurement Properties plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit and loss as incurred Subsequent measurement (depreciation and useful lives) Depreciation on property, plant and equipment is provided to the extent of depreciable amount on the Written down value (WDV). Pursuant to the requirement of the Companies Act, 2013 (the Act), the company has revised the depreciation rates based on useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets where based on the internal technical assessment of the estimated economic useful lives of the property, plant and equipment, the useful life is different than those prescribed in Schedule II are used as:

De-recognition

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in statement of profit and loss when the asset is derecognised.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1st April, 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.

1.6 Intangible assets

Recognition and initial measurement Acquired computer software are capitalized at cost of acquisition (Including License fees paid), net of accumulated amortization and accumulated impairment losses if any and are disclosed as intangible assets.

Other intangible assets (copyrights) are shown at cost of acquisition net of accumulated amortisation and accumulated impairment loss if any.

Subsequent measurement (amortisation)

Intangible assets are amortised on written down value over the useful life of the asset up to a maximum of five years commencing from the month when the asset is first put to use. The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.

Transition to Ind AS

On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at 1 April 2015 measured as per the provisions of Previous GAAP and use that carrying value as the deemed cost of intangible assets

1.7 Government grant

Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge. Other government grants are recognized as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

1.8 Operating leases

Company is lessee

Assets acquired on leases where a significant portion of risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental are charged to statement of profit and loss on straight line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.

1.9 Impairment of non-financial assets

At each reporting date, the Company assesses whether there is any indication that an asset may be impaired, based on internal or external factors. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.

1.10 Financial instruments

Recognition, initial measurement and de recognition

Financial assets and financial liabilities are recognised and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss which are measured initially at fair value.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expired.

Classification and subsequent measurement of financial assets

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:

- Amortised cost

- Financial assets at fair value through profit or loss (FVTPL)

- Financial assets at fair value through other comprehensive income (FVOCI)

All financial assets except for those at FVTPL are subject to review for impairment at least at each reporting date.

Amortised cost

A financial asset shall be measured at amortised cost using effective interest rates if both of the following conditions are met:

- The financial asset is held within a business model whose objective is to hold financial assets 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.

The Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

Financial assets at FVTPL

Financial assets at FVTPL include financial assets that either do not meet the criteria for amortised cost classification or are equity instruments held for trading or that meet certain conditions and are designated at FVTPL upon initial recognition. All derivative financial instruments also fall into this category. Assets in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

Financial assets at FVOCI

FVOCI financial assets are either debt instruments that are managed under hold to collect and sell business model or are non-trading equity instruments that are designated to this category.

FVOCI financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognized in statement of profit or loss.

Classification and subsequent measurement of financial liabilities

Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at FVTPL, that are carried subsequently at fair value with gains or losses recognized in profit or loss. All derivative financial instruments are accounted for at FVTPL.

Financial guarantee contracts

Financial guarantee contracts are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified party fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of expected loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.

Derivative contracts

A derivative forward contract is recognised as an asset or a liability on the commitment date. Outstanding forward derivative contracts as at reporting date are fair valued restated using the mark to market information and resultant gain/(loss) is recognised accounted in statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

1.11 Impairment of financial assets

In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company is required to consider -

- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.

- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

Trade receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of receivables.

Other financial assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.

1.12 Inventories

Raw Material, components, stores and spares are valued at lower of cost and net realisable value.

Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads in the ordinary course of business. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

1.13 Income taxes

Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.

Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (‘MAT’) credit entitlement is recognised as an asset only when and to the extent there is convincing evidence that normal income tax will be paid during the specified period. In the year in which MAT credit becomes eligible to be recognised as an asset, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. This is reviewed at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent it is not reasonably certain that normal income tax will be paid during the specified period.

Deferred income taxes are calculated using the liability method. Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Company’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).

1.14 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments (original maturity less than 3 months) that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

1.15 Post-employment, long-term and short-term employee benefits

Short-term employee benefits:

Short-term employee benefits such as salaries, wages, bonus etc. are recognized as an expense at the undiscounted amount in the statement of profit and loss for the year in which employee renders the related service.

Post-employment benefits Defined contribution plans:

Company’s contribution to Employees’ Provident Fund Scheme, Employees’ State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans:

The Company’s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the Projected Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. Actuarial gains and losses arising on such valuation are recognized immediately in the statement of profit and loss.

Other defined plans:

Benefits under the Company’s leave encashment constitute other long-term employee benefits. The liability in respect of vacation pay is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the statement of profit and loss. Termination benefits are recognized as an expense in the year in which they are incurred.

1.16 Share based payments

The Employee Stock Option Plan (“the Scheme”) provides for grant of equity shares of the Company to the employees of the Company and its subsidiaries. The Scheme provides that employees are granted an option to acquire the equity shares of the Company that vests in a graded manner or as decided by Remuneration, Compensation and Nomination Committee. The options may be exercised within a specified period. The employee benefits expense is measured using the fair value of the employee stock options and is recognised over vesting period with a corresponding increase in equity. The vesting period is the period over which all the specified vesting conditions are to be satisfied. On the exercise of the employee stock options, the employees of the Company will be allotted equity shares.

Transition to Ind AS

On transition to Ind AS, the Company has elected to not consider the charge related to employee stock options for which the vesting period is already over.

1.17 Provisions, contingent liabilities and contingent assets

Provisions and contingent liabilities:

A Provision is recognised when the Company has present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are discounted to their present value, where the time value of money is material.

When some or all of the economic benefits required to settle, a provision is expected to be recovered from a third party, the receivable is recognised as a separate asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Contingent liability is a possible obligation arising from past events and the 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 Company or a present obligation that arises from past events but is not recognised because it is not possible that an outflow of resources embodying economic benefit will be required to settle the obligations or reliable estimate of the amount of the obligations cannot be made. The Company discloses the existence of contingent liabilities in Other Notes to Financial Statements.

In cases where the possible outflow of economic resources as a result of present obligation is considered improbable or remote, no Provision is recognised or disclosure is made

Contingent assets:

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognised though are disclosed, where an inflow of economic benefits is probable.

1.18 Significant judgement and estimates in applying accounting policies

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the related disclosures.

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements:

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or economic limits.

Recoverability of advances/receivables

At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.

Classification of Leases

The Company enters into leasing arrangements for various assets. The classification of the leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessee’s option to purchase and estimated certainty of exercise of such option, proportion of lease term to the asset’s economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.

Defined benefit obligation (DBO)

Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.

Fair value measurements

The Company applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with the market participants to price the instrument. The Company’s assumptions are based on observable data as far as possible, otherwise on the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Inventories

The Company estimates the cost of inventories taking into account the most reliable evidence, such as cost of materials and overheads considered attributable to the production of such inventories including actual cost of production, etc. Management also estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

Provision and contingencies

The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ‘Provisions, Contingent Liabilities and Contingent Assets’. The evaluation of the likelihood of the contingent events is applied best judgement by management regarding the probability of exposure to potential loss.

Useful lives of depreciable/amortisable assets

Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.

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Mar 31, 2016

1(i) General Information

Kwality Limited ("The Company") was incorporated on 21^st August 1992. The Company is engaged in manufacture/ processing and sale of milk, milk products and dairy products. The Company is listed both on Bombay Stock Exchange and National Stock Exchange. The Company is having manufacturing facility at Uttar Pradesh, Haryana and Rajasthan. The Company operates both in domestic and international markets.

1(ii) Significant Accounting Policies (a) Basis of Preparation of Accounts

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis and comply with mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Companies Act 2013 (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI) and as adopted consistently by the Company except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

All Assets and Liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III as per Companies Act 2013. Based on the nature of products and the time between the acquisition of the same of processing and their realization in cash or cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of its assets and liabilities.

(b) Use of Estimates

The preparation of financial statements are in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Accounting estimates could change from period to period. Actual results could differ from these estimates. Differences between the actual results and estimates are recognized in the financial statements in the year which results are known/ materialized. If material, their effects are disclosed in the notes to the financial statements. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c) Revenue recognition Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, sales tax, rebates, trade discounts and price differences.

Income from Services

Revenue from milk processing and other services, if any, are recognized as and when services are rendered and are accounted on an accrual basis.

Interest Income

Interest income is recognized on time proportion basis taken into account the amount outstanding and the rate applicable.

Exports Benefits

Exports benefits are recognized on accrual basis in the statement of profit and loss when the reasonable right to receive the same is established.

(d) Fixed Assets Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes freight, duties, taxes, other expenses incidental to acquisition and installation and also includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets up to the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Losses arising from the impairment and gains or losses arising from disposal of fixed assets are recognized in the Statement of Profit and Loss.

Intangible Assets

Acquired computer software are capitalized at cost of acquisition (Including License fees paid), net of accumulated amortization and accumulated impairment losses if any and are disclosed as intangible assets.

Other intangible assets are shown at cost of acquisition net of accumulated amortization and accumulated impairment loss if any.

(e) Depreciation:

Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Written down value (WDV). Pursuant to the requirement of the Companies Act 2013 (The Act), The company has revised the depreciation rates based on useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets where based on the internal technical assessment of the estimated economic useful lives of the fixed assets, the useful life is different than those prescribed in Schedule II are used:

Intangible asset are amortized on Written Down Value over the useful life of the asset up to a maximum of five years commencing from the month when the asset is first put to use.

The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.

(f) Employee Benefits

Short Term Employee Benefits:

Short term employee benefits such as salaries, wages, bonus etc. are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post-Employment Benefits Defined Contribution Plans:

Company''s contribution to Employees Provident Fund Scheme, Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due

Defined benefit plans:

The Company''s gratuity scheme is a defined benefit plan. The present value of the obligation under such defined plan is determined based on actuarial valuation carried out at the end of the year by an independent actuary, using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. Actuarial gains and losses arising on such valuation are recognized immediately in the Statement of Profit and Loss.

Other Defined Plans:

Benefits under the Company''s leave encashment constitute other long-term employee benefits. The liability in respect of vacation pay is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Termination Benefits are recognized as an expense in the year in which they are incurred.

Employee Stock Option Plan (ESOP):

The Employee Stock Option Plan ("The Scheme") provides for grant of equity shares of the Company to the employees of the Company and its subsidiaries. The Scheme provides that employees are granted an option to acquire the equity shares of the Company that vests in a graded manner or as decided by Remuneration, Compensation and Nomination Committee. The options may be exercised within a specified period. The Company follows the intrinsic value method to account for its stock based employee compensation plans. Compensation cost is measured as the excess, if any, of the fair market price of the underlying stock over the exercise price on the grant date and is amortized over the vesting period of the option on a straight line basis.

The fair market price is the latest closing price on the date of the Board/ Committee meeting in which the options are granted, on the stock exchange on which the shares of the Company are listed. If the shares are listed on more than one stock exchange, than the stock exchange where there is highest trading volume on the said date is considered.

(g) Inventories

Raw Material, components, stores and spares are valued at lower of cost and net realizable value.

Working-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials, labor and related production overheads in the ordinary course of business. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) Investments

Investments if any which are readily realizable and intended to be held for not more than a year from the date on which the investment is made are classified as current investment. All other investments are classified as long term investment.

Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognize a decline, other than temporary value of the investment.

Investments in subsidiaries, joint ventures and associates if any are held for long term and valued at cost reduced by diminution of permanent nature therein, if any. No profit and losses of the subsidiaries are accounted for.

(i) Provision for Current and Deferred Tax

Income Tax expenses comprise current tax and deferred tax charge or credit. Current tax provision is made based on the tax liability computed after considering tax allowances and exemptions under the Income tax Act, 1961. The deferred tax charge or credit resulting from the timing difference between taxable and accounting income and the corresponding deferred tax liability and assets are recognized using the tax rates that have been enacted or substantively enacted on the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Minimum Alternative tax credit is recognized 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. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that The Company will pay normal income tax during the specified period.

(j) Impairment of Assets

The carrying amounts of The Company''s assets are reviewed at each balance sheet date in accordance with Accounting Standard 28 ''Impairment of Assets'' to determine whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the statement of profit and loss. Where there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.

(k) Foreign Exchange Transactions Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Subsequent Recognition

All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date. As at the reporting date, nonmonetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at date of the transaction.

Exchange Differences

The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "long-term foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.

All other exchange differences are recognized as income or expenses in the period in which they arise.

(l) Government Grants

Government grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received. Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognized as income over the life of a depreciable asset by way of a reduced depreciation charge. Other government grants are recognized as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets till the time such assets are ready for the intended use, are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments

The Company is engaged mainly in processing, manufacturing and trading of milk, milk products & dairy products. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

(0) Provisions, Contingent Liabilities and Contingent Assets Provisions: Provisions are recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

Contingent Assets: Contingent assets are neither recognized nor disclosed.

(p) Leases (1) Finance Lease

Assets acquired under finance lease are recognized at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment is apportioned between the finance charge and the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operating and leased assets are not recognized in the company Balance sheet. Payment under operating leases is recognized in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per share

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

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.

(r) Cash and Cash Equivalents

Cash and cash equivalents consist of cash, bank balances in current and short term highly liquid investments that are readily convertible to cash with original maturities of three months or less at the time of purchase.

(ii) Rights, preferences and restrictions attached to the equity shares :

- The Company has only one class of equity shares having a par value of ''1/-per share. Each shareholder is eligible for one vote per share held.

- The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in ensuing Annual General Meeting.

- The dividend distributable to the shareholders for the year ended on 31^st March 2016, at the rate of ''0.10 per equity share (previous year '' 0.10) has been recognized on 23,42,74,516 nos. of equity shares existing on the date of board meeting (including 1,03,62,694 nos. of equity shares allotted on conversion of warrants on 09 April 2016)."

- In the event of liquidation of the company, the equity share holders will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts, in proportion of their shareholding.

(iv) Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash, by way of bonus shares and shares bought back for the period of 5 years immediately preceding the Balance Sheet date:

(a) The Company has not issued any shares pursuant to contract(s) without payment being received in cash.

(b) The Bonus issue is made by capitalization of profit. However no bonus issues have been done in preceding 5 years

(c) The Company has not undertaken any buy back of shares.

(v) Shares reserved for issue under options and contracts/ commitments for sale/ disinvestment

There are no shares reserved for issue under contracts/ commitments for sale/ disinvestment. However the Company has reserved issuance of 1,00,00,000 (Previous Year Nil) Equity Shares of ''1 each for offering to the eligible employees of the Company and its subsidiaries under Employees Stock Option Plan 2014 (ESOP 2014). During the year the Company has granted 19,87,000 (Previous Year Nil) Options at a price of ''38 per option plus all applicable taxes. The options would vest over a period of 1 years. The other disclosure in respect of the ESOP Scheme are as under:"

Money received against Convertible Warrants represents amount received towards Convertible Warrants which entitles the warrant holder, the option to apply for and be allotted equivalent number of equity shares of the face value of ''1 each. The Company on preferential basis has allotted the following Convertible Warrants at issue price of Rs 48.25 in accordance with the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (SEBI ICDR Regulations 2009) in 2014-15

The allotters at Sr. no. 1 to 2 above are entitled to apply for and be allotted one equity share for each Warrant held by them on payment of balance 75% of the issue price within 18 months from the date of allotment of Convertible Warrants. The allottee at Sr. no. 3 exercised its right to convert the Convertible Warrants into equity shares after paying the balance amount and accordingly 51,81,347 equity shares were issued to Mrs Sonika Gupta for an aggregate consideration of Rs, 2500.00 lacs.

Utilization of proceed of Convertible Warrants issued: The amount of Rs, 1,875 lacs received against Convertible Warrants has been utilized towards capital expenditure requirement.

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Mar 31, 2014

(a) Basis of Preparation of Accounts

The financial statements are prepared under historical cost convention on an accrual basis of accounting and in accordance with the generally accepted accounting principles (GAAP) in India and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and in accordance with the provisions of the Companies Act, 1956, ("the Act”) as adopted consistently by the Company.

(b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.

(c)Revenue recognition Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sales are recorded net of sales returns, rebates, trade discounts and price differences.

Income from Services

Revenue from Milk Processing services are recognized as and when services are rendered, and are accounted on an accrual basis.

Interest Income

Interest income is recognised on time proportion basis taken into account the amount outstanding and the rate applicable. Exports benefits are recognised in the statement of profit and loss when the reasonable right to receive and the same is established.

Other Income & Expenditure

Other Income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Fixed Assets Tangible Assets

Tangible Assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes financing cost relating to borrowed funds attributable to the construction or acquisition of qualifying fixed assets upto the date the assets are ready for use. Where the acquisition of fixed assets are financed through long term foreign currency loans (having a term of 12 months or more at the time of their origination) the exchange differences on such loans are added to or subtracted from the cost of such fixed assets. In respect of new projects, all cost including borrowing cost incurred upto the date of commencement of commercial production or when related asset is put to use are capitalised.

Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.

Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss.

Intangible Assets

Acquired computer software are capitalised at cost of acquisition and disclosed as intangible assets

(e) Depreciation:

Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(f) EMPLOYEE BENEFITS

Short Term Employee Benefits :

Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits

Defined Contribution Plans:

Company''s contribution to state governed Provident Fund Scheme, Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans:

The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method . Actuarial gains and losses arising on such valuation are recognized immediately.

Other Defined Plans:

Other long term benefits (leave entitlement) are recognized in a manner similar to defined benefit plans:

Termination Benefits are recognized as an expense in the year in which they are incurred.

(g) Inventories :

Raw Material, components, stores and spares are valued at lower of cost and net realisable value.

Work-in-progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials, labour and related production overheads in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

(h) Investments

Investments which are readily realizable and intended to be held for not more than a year from the date on which the investment made are classified as current investment. All other investment are classified as long term investment.

Current investments are stated at lower of cost or fair value. Long-term investments are stated at cost however provision for diminution in their value is made to recognise a decline, other than temporary value of the investment.

(i) Provision for Current and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timing difference " between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extent that there is a virtual certainty that the asset will be realised in the future.

(j) Impairment of Assets

"The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. Where there is any indication that an impairment loss recognised for an asset in prior accounting periods may no longer exist or may have decreased, the Company books a reversal of the impairment loss not exceeding the carryingamount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior accounting periods."

(k) Foreign Exchange Transactions

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Subsequent Recognition

All monetary assets and liabilities in foreign currency are restated using the exchange rate prevailing at reporting date.

Exchange Differences

The Company has opted to avail the choice provided under paragraph 46A of AS-11 "The Effect of Changes in Foreign Exchange Rates" inserted vide Notification dated December 29, 2011. Consequently, Exchange differences arising on long-term foreign currency monetary items related to acquisition of depreciable capital asset added to or deducted from the cost of the asset and depreciated over the remaining useful life of the asset. For this purpose, the company treats a foreign monetary item as "longterm foreign currency monetary item", if it has a term of 12 months or more at the date of its origination.

All other exchange differences are recognised as income or expenses in the period in which they arise.

(l) Government Grants

Government grants are recognized when there is reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.

Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Other government grants are recognised as income over the periods necessary to match them with the costs for which are intended to compensate on a systematic basis.

(m) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(n) Business Segments

The Company is engaged mainly in trading, processing, manufacturing of milk and dairy poducts. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (Accounting Standards) Rules 2006, are considered to constitute one single primary segment. Hence Segment reporting is not required.

(O) Provisions, Contingent Liabilities and Contingent Assets

Provisions: Provisions are recognised when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.

Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the 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 company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

Contingent Assets : Contingent assets are neither recognised nor disclosed.

(p) Leases

(1) Finance Lease

Assets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operating and leased assets are not recognised in the company Balance sheet. Payment under operating leases are recognised in the Statement of Profit and Loss on a straight line over the lease term.

(q) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equityshareholders by theweighted average number of equity shares outstanding during the year

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity sharholders and theweighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares, except where results would be anti-dilutive.

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Mar 31, 2012

(a) Basis of Preparation of Accounts

The financial statements are prepared under historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles, AccountingStandards notified under Section 211 (3C) of the Companies Act, 1956 and the relevant provisions thereof. The accounting policies have been consistently applied by the Company and are consistent with those used inpreviousyear.

(b) Use of Estimates

The preparation of financials statements requires management to make judgements, estimates and assumptions, that affect the application of accounting policies and reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of these financial statements and the reported amount of revenues and expenses for the years presented . Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates is revised and future periods affected.

(c) Revenue Recognition

Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer.Sale comprise amounts invoiced for goods sold and does not include sales tax/vat or any other tax levied on sales, and are net of sales returns, trade discounts and rebates.

Income from Services

Revenue from Milk Processing services are recognized as and when services are rendered, and are accounted for an accrual basis.

Interest Income

Interest income is recognised on time proportion basis taken into accountthe amount outstandingand the rate applicable.

Other Income & Expenditure

Other income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

(d) Depreciation

Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in Schedule xiv of the Companies Act, 1956. Assets individually costing Rs. 5000/- or less are depreciated fully in the year when the assets are ready to use.

(e) Employee Benefits

Short Term Employee Benefits:

Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

Post Employment Benefits Defined Contribution Plans:

Company's contribution to state governed Provident Fund Scheme , Employees State Insurance Contribution Scheme and Staff welfare fund are charged to the revenue of the year when the contribution to the respective fund is due.

Defined benefit plans

The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognized immediately.

Other Defined Plans:

Other longterm benefits (leave entitlement) are recognized in a mannersimilarto defined benefit plans: Termination Benefits a re recognized as an expense in the year in which they are incurred.

(f) Inventories

Inventories are valued at the lower of cost and estimated net realizable value. Cost of work-in process and finished goods includes manufacturing overheads. Net realizable value is estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make thesale. ^^^^A

(g) Provision forCurrent and Deferred Tax

Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred Tax resulting from "timingdifference" between taxable andaccounting income is accounted for usingthe tax rates and laws that are enacted or substantively enacted as on the balance sheet date. Deferred Tax asset is recognised and carried forward only to the extentthat there is a virtual certainity that the asset will be realized in thefuture.

(h) Impairment of Assets

An asset is treated as impared when the carrying cost of asset exceeds its recoverable value. An impairment loss is charged to the profit and loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting period is reversed ifthere has been a change in estimate ofrecoverableamount.

As per assesment conducted by the Company at March 31, 2012 there were no indications that the fixed assets have suffered an impairment loss.

(i) Foreign Exchange Transactions

Foreign currency transactions duringtheyearare recorded at the rates of exchange prevailingon the date of the transaction. Foreign currency monetary assets and liabilities are translated into rupees at the rates of exchange prevailing on the date of the Balance Sheet. All exchange differences are dealt with in the statement of Profit and Loss account.

(j) Government Grants

Government grants are recognized when there reasonable assurance that the company will comply with the conditions attached to them and the grants will be received.

Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carryingvalueof the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Other government grants are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate on a systematic basis.

(k) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for the intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

(I) Business segments

The Company is engaged mainly in trading, processing, manufacturing of milk and dairy poducts. These, in the context of Accounting Standard 17 on Segment reporting, as specified in the Companies (AccountingStandards) Rules 2006, are considered to constitue one single primary segment. Hence Segment reporting is not required.

(m) Provisions, Contingent Liabilities and Contingent Assets

Provisions involvingsubstantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable thatthere will be an outflow of resources. Contingent Liabilities are not recognised butare disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

(n) Leases

(i) Finance Lease

Assets acquired under finance lease are recognised at lower of the fair value of the leased assets at inceptions and the present value of minimum lease payment. Lease payment are apportioned between the finance charge and the outstanding liability.The finance charge is allocated to periods duringthe lease term at a constant periodic rate of interest on the remaining balance of the liability.

(ii) Operating Lease

Leases other than finance lease are operatingand leased assets are not recognised on the companies Balance Sheet. Payment under operating leases are recognised in the Statement of Profitand Loss on a straight line over the lease term.

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Mar 31, 2010

I) Basis of Preparation of Accounts

The financial statements of the Company are prepared under the historical cost on accrual basis of accounting in all material respects in accordance with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The accounting policies have been consistently applied by the company and are consistent with those used in previous year.

ii) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumption that effect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of financial statements and the results of operations during the reporting period end. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates.

iii) Fixed Assets

Fixed Assets (except freehold land which is carried at cost) are stated at cost less accumulated depreciation and impairment losses where applicable. Cost includes purchase price and all direct / indirect costs incurred to bring the assets to its working condition for its intended use. Assessment of indication of impairment of an asset is made at the year end and impairment loss, if any, recognized.

iv) Borrowing Costs

Borrowing Costs that are attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are charged to revenue in the period in which these are incurred.

v) Revenue recognition

Sale of Goods

Sale is recognized when the significant risks and rewards of ownership of the goods have passed to the customer. Sale comprise amounts invoiced for goods sold and does not include sales tax/vat or any other tax levied on sales, and are net of sales returns, trade discounts and rebates.

Income from Services

Revenue from Milk Processing services are recognized as and when services are rendered, and are accounted for an accrual basis.

Dividend Income

Dividend income from investments is recognised when the Company’s, right to receive dividend is established.

Interest Income

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

Other Income & Expenditure

Other Income & expenditure are accounted for an accrual basis except where the receipt of income is uncertain in which case it is accounted for on receipt basis.

vi) Depreciation

Depreciation on fixed assets have been provided on written down value method at the rates and in the manner prescribed in schedule XIV to the Companies Act, 1956. Assets individually costing Rs.5000/- or less are depreciated fully in the year when the assets are put to use.

vii) EMPLOYEE BENEFITS

A. SHORT TERM EMPLOYEE BENEFITS

Short term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account for the year in which employee renders the related service.

B. Post Employment Benefits

(I) Defined Contribution Plans:

Companys contribution to state governed Provident Fund Scheme & Employees State Insurance Contribution Scheme are charged to the revenue of the year when the contribution to the respective fund is due.

(ii) Defined benefit plans:

The present value of gratuity obligation is determined based on an actuarial valuation using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognized immediately.

(iii) Other Defined Plans:

Other long term benefits (leave entitlement) are recognized in a manner similar to defined benefit plans:

Termination Benefits are recognized as an expense in the year in which they are incurred.

(viii) Inventories

Inventories are valued at the lower of cost, computed on weighted average basis and estimated net realizable value. Cost of work-in-process and finished goods includes manufacturing overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.

ix) Income and Deferred Taxes

Income Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act. Deferred income taxes reflects the impact of current timing differences between taxable and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient taxable income will be available against such deferred tax assets can be realised. In situations where the company has unabsorbed depreciation or carry forward losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the company reassesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realised.

x) Impairment

The Carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. Where the carrying value exceeds the estimated recoverable amount, provision for impairment is made to adjust the carrying value to the recoverable amount. The recoverable amount is the greater of the assets estimated net realizable value and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an appropriate discounting rate.

xi) Foreign Exchange Transactions

Foreign currency transactions during the year are recorded at the rates of exchange prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated into rupees at the rates of exchange prevailing on the date of the Balance Sheet. All exchange differences are dealt with in the statement of Profit and Loss account.

xii) Government Grants

Government grants are recognized in profit and loss account and/or to fixed assets in accordance with the related scheme and in the period in which these are accrued.

xiii) Contingencies / Provisions

a) In terms of the requirement of the Accounting Standard-29 (AS-29) on "Provisions, Contingent Liabilities and Contingent Assets"

A provision is recognized when the Company has a present obligation as a results of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provision are not discounted to its present value and are determined based on management estimate require to settle the obligation at the balance sheet date. Contingent liability is disclosed unless the possibility of an outflow of resource embodying the economic benefit is remote. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates.

b) Where as a result of past events, there is a possible obiligation that may, but probably will not require an outflow of resources, no provision is recognized but appropiate disclousure made as contingent liability unless the possibility of outflow is remote.