Accounting Policies of Lime Chemicals Ltd. Company

Mar 31, 2024

Note 2: Significant Accounting Policies
Corporate Information

These statements comprise financial statements of Lime Chemicals Limited (CIN: L24100MH1970PLC014842)
(''the company'') for the year ended March 31, 2024. The company is a public listed company domiciled in India
and was incorporated on 17.10.1970 under the provisions of the erstwhile Companies Act 1956 applicable in
India. The Registered Office of the company is situated at 404 & 405, 4th Floor, Neco Chambers, Rajiv Gandhi
Road, Sector 11, CBD Belapur, Navi Mumbai, 400614.

The Company is engaged in the manufacturing Calcium Carbonate. t is used as input material in various industrial
sectors including Tooth Paste, Pharmaceuticals, PVC products, Rubber, Plastic, Polymer, Cable, Leather, Paper and
Paints.ThesefinancialstatementswereapprovedbytheBoardofDirectorsandauthorisedforissueonMay30,2024.

Summary of Significant Accounting Policies

a) Basis of Preparation of Financial Statements

The financial statements of the Company are prepared in accordance with the Indian Accounting Standards
(Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments
which are measured at fair values, and the provisions of the Companies Act , 2013 (''Act'') (to the extent
notified). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment
Rules, 2016.

Accordingly, the Company has prepared these Financial Statements which comprise the Balance Sheet
as at 31 March, 2024, the Statement of Profit and Loss, the Statement of Cash Flows and the Statement
of Changes in Equity for the year ended as on that date, and accounting policies and other explanatory
information (together hereinafter referred to as "financial statements") Accounting policies have been
consistently applied except where a newly issued accounting standard is initially adopted or a revision to
an existing accounting standard requires a change in the accounting policy hitherto in use.

Current versus Non Current Classification

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 the Schedule III to th Companies Act, 2013. Based on the
nature of transaction, the Company has ascertained its operating cycle as 12 months for the purpose of
current / non-current classification of assets and liabilities.

b) Use of Estimates

The preparation of the financial statements in conformity with Indian AS requires the Management to
make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent liabilities as at the date of the financial statements and the reported amounts of revenues and
expenses during the year. The Management believes that the estimates used in the preparation of the
financial statements are prudent and reasonable. Future results could differ from those estimates and the
difference between the actual results and the estimates are recognized in the periods in which the results
are known/materialize.

c) Revenue Recognition
A. Sale of Goods

The Company recognises revenue when control over the promised goods or services is transferred to the
customer at an amount that reflects the consideration to which the Company expects to be entitled in
exchange for those goods or services.

The Company recognises revenue generally at the point in time when the products are delivered to
customer or when it is delivered to a carrier for export sale, which is when the control over product is
transferred to the customer. In contracts where freight is arranged by the Company and recovered from
the customers, the same is treated as a separate performance obligation and revenue is recognised when
such freight services are rendered.

Contract balances

a) Trade receivables

A receivable is recognised when the goods are delivered and to the extent that it has an unconditional
contractual right to receive cash or other financial assets (i.e., only the passage of time is required before
payment of the consideration is due).

b) Contract Liabilites

A contract liability is the obligation to transfer goods or services to a customer for which the Company
has received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Company transfers goods or services to the customer, a contract liability is
recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are
recognised as revenue when the Company performs under the contract including Advance received from
Customer

c) Interest Income

Interest income from a financial asset is recognised when it is probable that the economic benefits will
flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a
time basis.

d) Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.

The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets.The Company recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.

Right-of-use assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and accumulated impairment losses.

e) Foreign currencies

The functional currency of the Company is determined on the basis of the primary economic environment
in which it operates. The functional currency of the Company is Indian National Rupee (INR).

The transactions in currencies other than the entity''s functional currency (foreign currencies) are
recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting
year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that

date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated
at the rates prevailing at the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognised in Statement of Profit and Loss in the year in
which they arise.

f) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or
sale, are added to the cost of those assets, until such time as the assets are substantially ready for their
intended use or sale.

All other borrowing costs are recognised in the Statement of Profit and Loss in the year in which they are
incurred.

g) Employee benefits

a) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are
recognised in respect of employees'' services up to the end of the reporting period and are measured at
the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.

b) Other long-term employee benefit obligations

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months
from the end of the period are treated as other long term employee benefits for measurement purpose.
The Company''s liability is actuarially determined by an independent actuary using the Projected Unit Credit
method at the end of each period. Remeasurements as a result of experience adjustments and changes in
actuarial assumptions are recognised in statement of profit and loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting period, regardless of
when the actual settlement is expected to occur.

c) Post employee obligations

The Company operates the following post-employment schemes:

- defined benefit plans such as gratuity

- defined contribution plans such as provident fund and superannuation fund

d) Gratuity obligations

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the
present value of the defined benefit obligation at the end of the reporting period less the fair value of plan
assets. The defined benefit obligation is determined at the year end by independent actuary using the
projected unit credit method.

The present value of the defined benefit obligation denominated in Indian Rupees is determined by discounting
the estimated future cash outflows by reference to market yields at the end of the reporting period on
government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement
of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions
are recognised in the period in which they occur, directly in other comprehensive income. They are included
in retained earnings in the statement of changes in equity. Remeasurements are not reclassified to profit and
loss in the subsequent periods.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments
are recognised immediately in statement of profit and loss as past service cost.

ii) Defined contribution plans

Provident fund

The Company pays contributions toward provident fund to the regulatory authorities as per local regulations
where the Company has no further payment obligations. The contributions are recognised as employee benefit
expense when they are due.

Superannuation Fund

Contribution towards superannuation fund for qualifying employees as per the company''s policy is made to Life
Insurance Corporation of India where the Company has no further obligations. Such benefits are classified as
Defined Contribution Schemes as the Company does not carry any further obligations, apart from contribution
made on monthly basis.

d) Bonus plans

The Company recognise a liability and an expense for bonuses. The Company recognise a provision where
contractually obliged or where there is a past practice that has created a constructive obligation.

e) Termination Benefits:

A liability for a termination benefit is recognised at the earlier of

- when the entity can no longer withdraw the offer of the termination benefit and

- when the entity recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the
payment of terminations benefits.

h) Taxes

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

Current tax is the amount of expected tax payable based on the taxable profit for the year as determined in
accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.

Deferred tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit.Deferred
tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised.

Current and deferred tax for the year

Current and deferred tax are recognised in profit and loss, except when they are relating to items that are
recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax
are also recognised in other comprehensive income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business combination, the tax effect is included in the
accounting for the business combination.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

i) Property, plant and equipment

The cost of property, plant and equipment comprises its purchase price net of any trade discounts
and rebates, any import duties and other taxes (other than those subsequently recoverable from the
tax authorities), any directly attributable expenditure on making the asset ready for its intended use,
including relevant borrowing costs for qualifying assets and any expected costs of decommissioning.
Expenditure incurred after the property, plant and equipment have been put into operation, such as
repairs and 194 maintenance, are charged to the Statement of Profit and Loss in the year in which the
costs are incurred. Major shut-down and overhaul expenditure is capitalised as the activities undertaken
improves the economic benefits expected to arise from the asset.

An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
or retirement of an item of property,plant and equipment is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognised in Statement of Profit and Loss.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than
freehold land and properties under construction) less their residual values over their useful lives, using
straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in
respect of following categories of assets, in whose case the life of the assets has been assessed as under
based on technical advice, taking into account the nature of the asset, the estimated usage of the asset,
the operating conditions of the asset, past history of replacement, anticipated technological changes,
manufacturers warranties and maintenance support etc.

The Company reviews the residual value, useful lives and depreciation method annually and, if expectations
differ from previous estimates, the change is accounted for as a change in accounting estimate on a
prospective basis.

j) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost.Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated
impairment losses.

Amortisation is recognised on a straight-line basis over their estimated useful lives.The estimated useful
life and amortisation method are reviewed at the end of each reporting year.

k) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost of raw materials include cost of purchase and other costs incurred in bringing the inventories to their
present location and condition. Cost of semifinished /finished goods and work in progress include cost of
direct materials and labor and a proportion of manufacturing overheads based on the normal operating
capacity but excluding borrowing costs.

Costs of inventories are determined on weighted average basis. Net realisable value represents the
estimated selling price for inventories less all estimated costs of completion and costs necessary to make
the sale.

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Mar 31, 2014

A Basis of Preparation of Financial Statements

The accounts have been prepared on the accrual basis of accounting, under historical cost convention and in accordance with the generally accepted accounting principles, Companies Accounting Standards notified by the Central Government of India under the Companies (Accounting Standards) Rules, 2006 and the provisions of Companies Act, 1956, except where otherwise stated. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

B Use of Estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

C Fixed Assets (Tangible) and Depreciation

Fixed Assets are carried on at cost of acquisition less accumulated depreciation and impairment loss, if any. Cost comprise purchase price, all direct expenses relating to the acquisition and installation and any attributable cost (net of Modvat/Cenvat) of bringing the asset to its working condition for the intended use. Depreciation has been provided on straight line method of depreciation at the rates prescribed under Schedule XIV to the Companies Act, 1956. Assets costing less than Rs. 5,000/- each are fully depreciated in the year of capitalisation. Depreciation in respect of assets acquired / purchased during the year has been provided on pro rata basis according to the period such asset was put to use.

D Fixed Assets (Intangible) and Amortization

Intangible Assets are stated at cost of acquisition less accumulated amortization. Intangible Assets are amortized over a period of 5 years on straight line basis.

E Impairment of Assets

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

F Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction or that approximates the actual rate at the date of the transaction. Monetary items denominated in foreign currencies at the year end are restated at year end rates. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

G Investments

Investments intended to be held for more than one year are classified as non-current investments and are carried at cost of acquisition inclusive of other attributable expenses. Diminution in the value of such investments is written off / provided for, as the case may be if such diminution is of other than temporary nature. Current Investments are carried at lower of cost or net realizable value.

H Inventories

Inventories are valued at cost (FIFO) or net realizable value whichever is less. Cost comprises all cost of purchase, cost of conversion, and cost incurred to bring inventories to present location and condition. Finished goods valuation include appropriate proportion of overheads and, where applicable, excise duty.

I Revenue Recognisition

Revenue is recognised to the extent that it can be reliable, measured and is appropriate to the economic benefits that will flow to the company. Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Export benefits are accounted when realized / received. Dividend income is recognized when right to receive is established.

J Employee Benefits

The Company''s contribution to Provident fund is charged to the Statement of Profit and Loss. The Gratuity and Leave Encashment liability, which are defined benefit plans, are provided on the basis of actuarial valuation as on balance sheet date and same are unfunded.

K Borrowing Cost

Borrowing costs that are attributable to the acquisition or 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 recognized as an expense in the period in which they are incurred.

L Leases

Where the Company as a lessor leases assets under finance leases, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is recognised based on a constant rate of return on the outstanding net investment. Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year. Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis.

M Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

N Earnings Per Share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

O Provision for Taxation

Provision for taxation is made for the income tax liability as per the provisions of the Income Tax Act, 1961. Deferred Tax is recognized on timing differences being the differences between the taxable incomes and accounting incomes that originate in one period and are capable of reversal in one or more subsequent period, at the current rate of tax. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

P Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognized nor disclosed in the financial statements.

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Mar 31, 2013

A) Basis of preparation of fnancial statements:

The fnancial statements have been prepared on the basis of historical cost convention in accordance with generally accepted accounting principles and comply with the accounting standard issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956, adopted consistently by the Company. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except for insignifcant value.

b) Use of Estimates:

The presentation of fnancial statements is in conformity with the generally accepted accounting principles requiring estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the fnancial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known /materialized.

c) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction including attributable interest and fnancial cost till the date of acquisition /installation of the Assets and improvement thereon (net of Modvat / Cenvat.) less accumulated depreciation.

d) Intangible Assets:

Intangible Assets are stated at cost of acquisition less accumulated amortization. Computer Software is amortized over a period of 5 years on straight line basis.

e) Investments:

Investments intended to be held for more than one year are classifed as long term investments and are carried at cost of acquisition inclusive of other attributable expenses. Diminution in the value of such investments is written off / provided for, as the case may be if such diminution is of other than temporary nature. Current Investments are carried at lower of cost or net realizable value.

f) Inventories:

Inventories are valued at cost or net realizable value whichever is less. Cost is determined by using the FIFO formula. By-products are valued at net realizable value. Cost comprises all cost of purchase, cost of conversion, and cost incurred to bring inventories to present location and condition. Finished goods are valued based on work certifed.

g) Provisions, Contingent Liabilities and Contingent Assets:

Provision are recognized for liabilities that can be measured only by using substantial degree of estimation, if

a. The Company has a present obligation as a result of past event.

b. A probable outfow of resources is expected to settle the obligation, and

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

Reimbursement expected in respect of the expenditure required to settle a provision is recognized only when it is virtually certain that reimbursement will be received.

Contingent Liability is disclosed in the case of:

a) A present obligation arises from past events, when it is not probable that an outfow of resources will be required to settle the obligation,

b) A present obligation when no reliable estimate is possible, and

c) A possible obligation arising from past events where the probability of outfow of resources is not remote.

Contingent Assets are neither recognized, nor disclosed. Provision, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

h) Sales / Turnover:

Sales / Turnover (Gross) includes Central excise duty but excludes transport, octroi and sales tax etc. Inter divisional transfers and branch transfers are treated as sales when actual sales take place on delivery of goods to customers. Excise Duty on sales is shown as a deduction from sales.

i) Revenue Recognition:

In appropriate circumstances, revenue (income) is recognized when no signifcant uncertainty as to measurability or collectability exists.

Export benefts are accounted when realized / received.

Dividend income is recognized when right to receive is established.

j) Retirement Benefts:

a. The Company''s contribution to Provident fund is charged to the Proft and Loss Account

b. Leave encashment beneft at the time of retirement/cessation of service as calculated which is a defned beneft plan, is provided on the basis of actuarial valuation as on balance sheet date and same is unfunded is charged to the Proft and Loss Account. Till Financial year 2010-11, the Leave encashment provision was made in the books of Accounts and it was the practice of the company to account for the same on Cash basis.

c. The Gratuity liability, which is a defned beneft plan, is provided on the basis of actuarial valuation as on balance sheet date and same is unfunded.

k) Depreciation:

1. At Roha factory:- (a) Depreciation in respect of fxed assets installed on or before 30.6.1982 has beenprovided on written down value

basis as per the provisions of Section 205(2) (a)of the Companies Act, 1956 at the rates specifed in schedule XIV of the Companies Act,1956.

(b) Depreciation in respect of assets acquired after 30.6.1982 has been provided asunder:

(i) On plant and machinery on straight line basis as per provisions of Section 205(2)(b) of the Companies Act, 1956 at the rates specifed in Schedule XIV of the Companies Act,1956.

(ii) On other assets acquired during 1.7.1982 to 30.6.1986 on written down value basis as per the provisions of Section 205(2)(a) of the Companies Act, 1956 at the rates specifed in schedule XIV of the Companies Act,1956.

(iii) On other assets acquired since 1.7.1986 on straight line basis as per note (i) above.

(c) Depreciation in respect of assets acquired / purchased during the year has been provided on pro rata basis according to the period such asset was put to use.

2. At Paonta factory:- Depreciation has been provided under ‘Straight Line Method'' as per rates specifed in schedule XIV to the Companies Act, 1956.

3. Leasehold land taken over on amalgamation is amortized over the balance periodof lease.

l) Foreign Currency Transactions:

Foreign currency transactions are recorded at original rate of exchange in force at the time of occurrence of transactions. Exchange difference on settlement / translation of monetary assets and liabilities at closing rates are recognized in Proft and Loss account, except in case where they relate to acquisition of non-monetary assets in which case they are adjusted in carrying cost of such assets.

m) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or 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 recognized as an expense in the period in which they are incurred.

n) Leases:

The assets taken on lease prior to April 1, 2001 have been accounted as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, in1995.Assets taken as fnance lease on or after 1st April''2001, is capitalized as fxed assets at lower of fair value of the assets and present value of minimum lease rentals. The principal components in the lease rental are adjusted against the lease liability and the interest components are charged to proft and loss account.

o) Earnings per share:

The Company reports basic earnings per share in accordance with the Accounting Standard 20 ‘Earnings per share'' issued by the Institute of Chartered Accountants of India. Basic earnings per share is computed by dividing the net proft or loss attributable to the equity shareholders for the year, by the weighted average number of equity shares outstanding during the year.

p) Taxes on Income:

Current tax is determined as the tax payable in respect of taxable income of the year, in accordance with the provisions of The Income Tax Act, 1961.

Deferred Tax for the year is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward only if there is a reasonable / virtual certainty of its realization.

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Mar 31, 2011

A) Basis of preparation of financial statements:

The financial statements have been prepared on the basis of historical cost convention in accordance with generally accepted accounting principles and comply with the accounting standard issued by the Institute of Chartered Accountants of India and relevant provisions of the Companies Act, 1956, adopted consistently by the Company.The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except for insignificant value.

b) Use of Estimates :

The presentation of financial statements is in conformity with the generally accepted accounting principles requiring estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference

between the actual result and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

Fixed Assets are stated at cost of acquisition or construction including attributable interest and financial cost till the date of acquisition /installation of the Assets and improvement thereon (net of Modvat / Cenvat.) less accumulated depreciation.

d) Intangible Assets:

Intangible Assets are stated at cost of acquisition less accumulated amortization. Computer Software is amortized over a period of 5 years on straight line basis.

e) Investments:

Investments intended to be held for more than one year are classified as long term investments and are carried at cost of acquisition inclusive of other attributable expenses. Diminution in the value of such investments is written off / provided for, as the case may be if such diminution is of other than temporary nature. Current Investments are carried at lower of cost or net realizable value.

f) Inventories:

Inventories are valued at cost or net realizable value whichever is less. Cost is determined by using the FIFO formula. By-products are valued at net realizable value. Cost comprises all cost of purchase, cost of conversion, and cost incurred to bring inventories to present location and condition. Finished goods are valued based on work certified.

g) Provisions, Contingent Liabilities and Contingent Assets:

Provision are recognized for liabilities that can be measured only by using substantial degree of estimation, if

a. The Company has a present obligation as a result of past event.

b. A probable outflow of resources is expected to settle the obligation, and

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

Reimbursement expected in respect of the expenditure required to settle a provision is recognized only when it is virtually certain that reimbursement will be received.

Contingent Liability is disclosed in the case of:

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

b. A present obligation when no reliable estimate is possible, and

c. A possible obligation arising from past events where the probability of outflow of resources is not remote.

Contingent Assets are neither recognized, nor disclosed. Provision, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

h) Sales / Turnover: Sales / Turnover (Gross) includes Central excise duty but excludes transport, octroi and sales tax etc. Inter divisional transfers and branch transfers are treated as sales when actual sales take place on delivery of goods to customers. Excise Duty on sales is shown as a deduction from sales.

i)Revenue Recognition:

In appropriate circumstances, revenue (income) is recognized when no significant uncertainty as to measurability or collectability exists.

Export benefits are accounted when realized / received.

Dividend income is recognized when right to receive is established.

j) Retirement Benefits:

a. The Company's contribution to Provident fund is charged to the Profit and Loss Account

b. Leave encashment benefit at the time of retirement/cessation of service as calculated on the estimated basis, is charged to the Profit and Loss Account. Till Financial year 2009-10, the Leave encashment provision was not made in the books of Accounts and it was the practice of the company to account for the same on Cash basis, however from the Current Financial year 2010-11, as a change in accounting policy, the same has been accounted on the estimated basis in the Books of accounts taking into consideration the accumulated leave balance of the eligible employees as on 31st March, 2011, and the same is taken as a base for working out the requisite liability along with the basic salary as on that date.

c. The Gratuity liability, which is a defined benefit plan, is provided on the basis of actuarial valuation as on balance sheet date and same is unfunded. No Actuarial valuation was carried out by the company till financial year 2009-10 and till that Financial Year the Gratuity was accounted for on Cash Basis. However, as a change in the accounting policy, from the Current financial year i.e. 2010- 11, the same is accounted on the basis of Actuarial valuation.

k) Depreciation:

1. At Roha factory:- (a) Depreciation in respect of fixed assets installed on or before 30.6.1982 has been provided on written

down value basis as per the provisions of Section 205(2) (a) of the Companies Act, 1956 at the rates specified in schedule XIV of the Companies Act,1956.

(b) Depreciation in respect of assets acquired after 30.6.1982 has been provided as under:

(i) On plant and machinery on straight line basis as per provisions of Section 205(2)(b) of the Companies Act, 1956 at the rates specified in Schedule XIV of the Companies Act,1956.

(ii) On other assets acquired during 1.7.1982 to 30.6.1986 on written down value basis as per the provisions of Section 205(2) (a) of the Companies Act, 1956 at the rates specified in schedule XIV of the Companies Act,1956.

(iii) On other assets acquired since 1.7.1986 on straight line basis as per note (i) above.

(c) Depreciation in respect of assets acquired / purchased during the year has been provided on pro-rata basis according to the period such asset was put to use.

2. At Paonta factory:-

Depreciation has been provided under 'Straight Line Method' as per rates specified in schedule XIV to the Companies Act, 1956.

3. Leasehold land taken over on amalgamation is amortized over the balance period of lease.

l) Foreign Currency Transactions:

Foreign currency transactions are recorded at original rate of exchange in force at the time of occurrence of transactions. Exchange difference on settlement / translation of monetary assets and liabilities at closing rates are recognized in Profit and Loss account, except in case where they relate to acquisition of non monetary assets in which case they are adjusted in carrying cost of such assets.

m) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or 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 recognized as an expense in the period in which they are incurred.

n) Leases:

The assets taken on lease prior to April 1, 2001 have been accounted as per the 'Guidance Note on Accounting for Leases' issued by the Institute of Chartered Accountants of India, in 1995.

Assets taken as finance lease on or after 1st April'2001, is capitalized as fixed assets at lower of fair value of the assets and present value of minimum lease rentals. The principal components in the lease rental are adjusted against the lease liability and the interest components are charged to profit and loss account. o) Earnings per share :

The Company reports basic earnings per share in accordance with the Accounting Standard 20 'Earnings per share' issued by the Institute of Chartered Accountants of India. Basic earnings per share is computed by dividing the net profit or loss attributable to the equity shareholders for the year, by the weighted average number of equity shares outstanding during the year.

p) Taxes on Income:

Current tax is determined as the tax payable in respect of taxable income of the year, in accordance with the provisions of The Income Tax Act, 1961.

Deferred Tax for the year is recognized on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forward only if there is a reasonable / virtual certainty of its realization.

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Mar 31, 2010

A) Use of Estimates:

The presentation of financial statements is in conformity with the generally accepted accounting principles requiring estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognised in the period in which the results are known / materialised.

b) FixedAssets:Fixed Assets are stated at cost of acquisition or construction including attributable interest and financial cost till the date of acquisition /installation of the Assets and improvement thereon (net of Modvat / Cenvat.) less accumulated depreciation.

c) Intangible Assets:

Intangible Assets are stated at cost of acquisition less accumulated amortization. Computer Software is amortised over a period of 5 years on straight line basis.

d) Long Term Investments:

Long Term Investments are stated at cost. Provision for diminution is made only if such a decline is other than temporary in the opinion of the management.

e) Inventories:

Inventories are valued at cost or net realisable value whichever is less. Cost is determined by using the FIFO formula. By products are valued at net realisable value. Cost comprises all cost of purchase, cost of conversion, and cost incurred to bring inventories to present location and condition.

f) Contingent Liabilities:

Contingent liabilities are disclosed by way of note on the balance sheet. Provision is made in the accounts in respect of those liabilities which are likely to materialise after the year end till the finalisation of accounts, and have material effect on the position stated in balance sheet at the year end.

g) Sales/Turnover

Sales / Turnover (Gross) includes Central excise duty but excludes transport, octroi and sales tax etc. Inter divisional transfers and branch transfers are treated as safes when actual sales take place on delivery of goods to customers Excise Duty on sales is shown as a deduction from sales.

h) Timing of Revenue Recognition:

In appropriate circumstances, revenue (income) is recognised when no significant uncertainty as to measurability or collectability exists.

i) Export benefits are accounted when realised /received.

j) Retirement Benefits:

Provident fund and Family Pension fund contribution is accounted on accrual basis and charged to Profit and Loss account. The company has not ascertained and provided for the liability in respect of gratuity payable

k) Deferred Revenue Expenses: (Miscellaneous Expenses)

1) Share issue expenses are regarded as deferred revenue expenses and written off over a period of 10 years.

2) Voluntary retirement scheme expenses are deferred over a period of 5 years.

l) Method of Depreciation:

1. At Roha factory

a) Depreciation in respect of fixed assets installed on or before 30.6.1982 has been provided on written down value basis as per the provisions of Section 205(2) (a) of the Companies Act, 1956 at the rates specified in schedule XIV of the said Act.

b) Depreciation in respect of assets acquired after 30.6.1982 has been provided as under

(i) On plant and machinery on straight line basis as per provisions of Section 205(2)(b) of the Companies Act, 1956 at the rates specified in Schedule XIV of the said Act.

(ii) On other assets acquired during 1.7.1982 to 30.6.1986 on written down value basis as per the provisions of Section 205(2) (a) of the Companies Act, 1956 at the rates specified in schedule XIV of the said Act.

(iii) On other assets acquired since 1.7.1986 on straight line basis as per note (i) above.

c) Depreciation in respect of assets acquired / purchased during the year has been provided on pro-rata basis according to the period such asset was put to use.

2. At Paonta factory

Depreciation has been provided under Straight Line Method as per rates specified in schedule XIV to the Companies Act, 1956.

3. Leasehold land taken over on amalgamation is amortised over the balance period of lease.

m) Foreign Currency Transactions:

Foreign currency transactions are recorded at original rate of exchange in force at the time of occurrence of transactions. Exchange difference on settlement / translation of monetary assets and liabilities at closing rates are recognised in Profit and Loss account, except incase where they relate to acquisition of fixed assets in which case they are adjusted in carrying cost of such assets.

n) Excise duty has been accounted on the basis of both payments made in respect of goods dispatched and also provision made for goods lying in bonded warehouse.

o) Modvat / Cenvat Credit:

Modvat / Cenvat Credit is accounted on the basis of material purchased and appropriated against payment of excise duty on clearance of finished goods.

p) Borrowing Cost:

Borrowing costs that are attributable to the acquisition or 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 intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

q) Leave Encashment:

Provision for leave encashment has been made taking into consideration the accumulated leave of the employees and the companys rules in this regard.

r) Leases:

The assets taken on lease prior to April 1, 2001 have been accounted as per the Guidance Note on Accounting for Leases issued by the Institute of Chartered Accountants of India, in 1995.

Assets taken as finance lease on or after 1st April 2001, is capitalised as fixed assets at lower of fair value of the assets and present value of minimum lease rentals. The principal components in the lease rental is adjusted against the lease liability and the interest components is charged to profit and loss account.

s) Taxes on Income:

Current tax is determined as the tax payable in respect of taxable income of the year.

Deferred tax for the year is recognised on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognised and carried forward only if there is a reasonable / virtual certainty of its realisation.