Accounting Policies of Phaarmasia Ltd. Company

Mar 31, 2024

1.3 Summary of material accounting policies

On 31 March 2023, the Ministry of Corporate Affairs notified Companies (Indian Accounting Standards) Amendment Rules, 2023 amending the Companies (Indian Accounting Standards) Rules, 2015. The amendments come into force with effect from 1 April 2023, i.e., Financial Year 2023-24. One of the major changes is in Ind AS 1 ‘Preparation of Financial Statements, which requires companies to disclose in their financial statements ‘material accounting policies’ as

against the erstwhile requirement to disclose ‘significant accounting policies’. The word ‘significant’ is substituted by ‘material’.

Accounting policy information is expected to be material if users of an entity’s financial statements would need it to understand other material information in the financial statements.

The Company applied the guidance available under paragraph 117B of Ind AS 1, Presentation of Financial Statements in evaluating the material nature of the accounting policies.

The following are the material accounting policies for the Company:

1.4 Property Plant & Equipment Recognition and measurement

Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset i.e., freight, duties and taxes applicable and other expenses related to acquisition and installation. The Cost of self-constructed assets includes the cost of materials and other costs directly attributable to bringing the asset to a working condition for its intended use. Borrowing costs that are directly attributable to the construction or production of a qualifying asset are capitalized as part of the cost of that asset.

Directly attributable costs include:

a. Cost of Employee Benefits arising directly from Construction or acquisition of PPE.

b. Cost of Site Preparation.

c. Initial Delivery & Handling costs.

d. Professional Fees and

e. Costs of testing whether the asset is functioning properly, after deducting the net proceeds from selling any item produced while bringing the asset to that location and condition (such as samples producedwhen testing equipment).

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses upon disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within the statement of profit and loss.

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part will be derecognized. The costs of repairs and maintenance are recognized in the statement of profit and loss as incurred.

Items of property, plant and equipment acquired through exchange of non-monetary assets are measured at fair value, unless the exchange transaction lacks commercial substance or the fair value of either the asset received or asset given up is not reliably measurable, in which case the asset exchanged is recorded at the carrying amount of the asset given up.

Depreciation

Depreciation is recognized in the statement of profit and loss on Written Down Value Method based on the Companies Act, 2013 (“Schedule II”), which prescribes the useful lives for various classes of tangible assets. For assets acquired or disposed off during the year, depreciation is provided on pro rata basis. Land is not depreciated.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted prospectively, if appropriate.

The estimated useful lives are as follows:

Type of Asset	Estimated useful life in years
Buildings
i) Main Plant Building	24
ii) Other Building	19
Plant & Machinery	19
Vehicles	7
Computers	2
Office Equipment	4
Furniture & Fixtures	9

Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is disclosed as capital advances under other noncurrent assets. The cost of property, plant and equipment not ready to use before such date are disclosed under capital work-in-progress. Assets not ready for use are notdepreciated.

The Company assesses at each balance sheet date, whether there is objective evidence that an asset or a group of assets is impaired. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Recoverable amount is higher of the value in use or fair value less cost to sell.

1.5 Intangible assets

The Intangible assets that are acquired by the Company and that have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses.

Amortization

Amortization is recognized in the statement of profit and loss on a straight-line basis over the estimated useful lives of intangible assets or on any other basis that reflects the pattern in which the asset’s future economic benefit are expected to be consumed by the entity. Intangible assets that are not available for use are amortized from the date they are available for use. The estimated useful lives are as follows:

The amortization period and the amortization method for intangible assets with a finite useful life are reviewed at each reporting date.

1.6 Financial Instruments

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

a. Financial assets

Initial recognition and measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Debt instruments at amortised cost;

• Debt instruments at fair value through other comprehensive income (FVTOCI);

• Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL);

• Equity instruments measured at fair value through other comprehensive income (FVTOCI).

Debt instruments at amortised cost

A ‘debt instrument’ is measured at the amortised cost, if both of the following conditions are met: (i) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and (ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.

Debt instrument at FVTOCI

A ‘debt instrument’ is classified as FVTOCI, if both of the following criteria are met: (i) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets; and (ii) The asset’s contractual cash flows represent SPPI.

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in OCI. However, the Company recognizes interest income, impairment losses and foreign exchange gain or loss in the statement of profit and loss. On de-recognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

Debt instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company’s balance sheet) when:

a) The rights to receive cash flows from the asset have expired, or

b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass- through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company’s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

b. Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value i.e., loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts.

Subsequent measurement

The measurement of financial liabilities depends on their classification.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading, unless they are designated as effective hedging instruments. Gains or losses on liabilities held for

trading are recognised in the statement of profit and loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/losses attributable to changes in own credit risk are recognized in OCI. These gains/loss are not subsequently transferred to the statement of profit and loss.

However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss.

Loans and borrowings

After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

De-recognition

A financial liability is derecognised when the obligation under the liability is discharged or 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 de-recognition 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 and loss.

Reclassification of financial assets and liabilities

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no re-classification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the re-classification prospectively from the re-classification date, which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

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.

1.7 Inventories

Inventories are valued at the lower of cost and net realisable value. Inventories consist of Raw materials, Stores and Spares, Work-in-progress and Finished Goods are measured at the lower of cost and net realizable value.

The cost of all categories of inventories is based on the weighted average method. Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition.

In the case of finished goods and work-in-progress, cost includes an appropriate share of overheads based on normal operating capacity. Stores and spares, that do not qualify to be recognized as property, plant and equipment, consists of packing materials, engineering spares (such as machinery spare parts) and consumables which are used in operating machines or consumed as indirect materials in the manufacturing process.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

1.8 Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that haveindefinite lives or that are not yet available for use, an impairment test is performed each year at March 31.

The recoverable amount of an asset or cash-generating unit (as defined below) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the cashgenerating unit. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflow of other assets or groups of assets (the “cash-generating unit”).

An impairment loss is recognized in the statement of profit and loss if the estimated recoverable amount of an asset or its cash-generating unit is lower than its carrying amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

1.9 Cash & Cash Equivalents

Cash and bank balances comprise of cash balance in hand, in current accounts with banks, demand deposit, short-term deposits, Margin Money deposits and unclaimed dividend accounts. For this purpose, “short-term” means investments having maturity of three months or less from the date of investment. Bank overdrafts that are repayable on demand and form an integral part of our cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. The Margin money deposits, balance in dividend accounts which are not due and unclaimed dividend balances shall be disclosed as restricted cash balances.

1.10 Employee Benefits

a. Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

b. Defined Contribution Plan

The Company’s contributions to defined contribution plans are charged to the statement of profit and loss asand when the services are received from the employees.

c. Defined Benefit Plans

The liability in respect of defined benefit plans and other post-employment benefits is calculated using the projected unit credit method consistent with the advice of qualified actuaries. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates based on prevailing market yields of Indian Government Bonds and that have terms to maturity approximating to the terms of the related defined benefit obligation. The current service cost of the defined benefit plan, recognized in the statement of profit and loss in employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in income. 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. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

d. Termination benefits

Termination benefits are recognized as an expense when the Company is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Company has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

e. Other long-term employee benefits

The Company’s net obligation in respect of other long term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and previous periods. That benefit is discounted to determine its present value. Re-measurements are recognized in the statement of profit and loss in the period in which they arise.

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Mar 31, 2015

1 The financial statements have been prepared in accordance with the Revised Schedule VI of the Companies Act 2013 to the extent applicable and the necessary details have been disclosed in the said statement as per Part I & II of the Schedule.

Fixed Assets: Fixed Assets up to 31st March 2006 are stated at Revalued cost and Fixed Assets purchased after 1st April 2006 are stated at Historical Cost inclusive of duties, Sales Tax, freight and installation Cost. During the Current Financial year Land and Buildings are again revalued.

Depreciation: Depreciation is provided as per Written Down Value method at the rates specified in the Schedule - II of the Companies Act, 2013.

"Current Assets.

INVENTORIES:

1. Raw Materials are valued at cost on first in first out method.

2. Packing Materials are valued at cost on first in first out method.

3. Stock in process is valued at cost, including manufacturing expenses.

4. Finished Goods are valued at cost of materials and process ."

Sundry Debtors: Sundry Debtors are taken at book value after Providing for un-realisable.

Income & Expenditure: Accounted on accrual concept Revenue Recognition : Sales includes Sales Tax and Excise Duty.

Segment Reporting:

The Company operates in a solitary business segment i.e., pharmaceuticals and Bulk Drugs, comprising mainly manufacture of formulations and creams which as per Accounting Standard - AS17 is considered as the only one reportable business segment. The company also manufactures skin/face Creams and tooth paste both covered under Drugs & Cosmetics Act, with valid Drug Licenses obtained and they are also treated as same business segment. Accordingly, no further financial information for business segment is required to be given.

2.5 The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company the holders of equity shares will be entiled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

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Mar 31, 2014

1 The financial statements have been prepared in accordance with the Revised Schedule VI of the Companies Act 1956 to the extent applicable and the necessary details have been disclosed in the said statement as per Part I & II of the Schedule.

Fixed Assets: Fixed Assets up to 31st March 2006 are stated at Revalued cost and Fixed Assets purchased after 1st April 2006 are stated at Historical Cost inclusive of duties, Sales Tax, freight and installation Cost.

Depreciation: Depreciation is provided as per Written Down Value method at the rates specified in the Schedule - XIV of the Companies Act, 1956 on Single Shift Basis on the values excluding Revaluation amount Current Assets INVENTORIES:

1. Raw Materials are valued at cost on first in first out method.

2. Packing Materials are valued at cost on first in first out method.

3. Stock in process is valued at cost, including manufacturing expenses.

4. Finished Goods are valued at cost of materials and process

Sundry Debtors:Sundry Debtors are taken at book value after Providing for un-realisable.

Income & Expenditure: Accounted on accrual concept

Revenue Recognition : Sales includes Sales Tax and Excise Duty.

Segment Reporting:

The Company operates in a solitary business segment i.e., pharmaceuticals and Bulk Drugs, comprising mainly manufacture of formulations and creams which as per Accounting Standard - AS17 is considered as the only one reportable business segment. The company also manufactures skin/face Creams and tooth paste both covered under Drugs & Cosmetics Act, with valid Drug Licenses obtained and they are also treated as same business segment. Accordingly, no further financial information for business segment is required to be given.ses.

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Mar 31, 2013

1 The financial statements have been prepared in accordance with the Revised Schedule VI of the Companies Act 1956 to the extent applicable and the necessary details have been disclosed in the said statement as per Part I & II of the Schedule.

Fixed Assets:Fixed Assets up to 31st March 2006 are stated at Revalued cost and Fixed Assets purchased after 1 st April 2006 are stated at Historical Cost inclusive of duties, Sales Tax, freight and installation Cost.

Depreciation:Depreciation is provided as per Written Down Value method at the rates specified in the Schedule - XIV of the Companies Act, 1956 on Single Shift Basis on the values excluding Revaluation amount

Current Asset. INVENTORIES:

1. Raw Materials are valued at cost on first in first out method.

2. Packing Materials are valued at cost on first in first out method.

3. Stock in process is valued at cost, including manufacturing expenses.

4. Finished Goods are valued at cost of materials and process .

Sundry Debtors.Sundry Debtors are taken at book value after Providing for un-realisable.

Income & ExpenditurerAccounted on accrual concept

Revenue Recognition : Sales includes Sales Tax and Excise Duty.

The Company operates in a solitary business segment i.e., pharmaceuticals and Bulk Drugs, comprising mainly manufacture of formulations and creams which as per Accounting Standard - AS17 is considered as the only one reportable business segment. The company also manufactures skin/face Creams and tooth paste both covered under Drugs & Cosmetics Act, with valid Drug Licenses obtained and there are also treated as same business segment. Accordingly, no further financial information for business segment is required to be given.The geographical Segmentation is not relevant, as there are no exports for this year.

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Mar 31, 2012

1. The Financial statements have been prepared in accordance with the Revised Schedule VI of the Companies Act 1956 to the extent applicable and the necessary details have been disclosed in the said statement as per part I & II of the Schedule.

Fixed Assets: Fixed Assets up to 31st March 2006 are stated at Revalued cost and Fixed Assets purchased after 1st April 2006 are stated at Historical Cost Inclusive of duties, Sales Tax, freight and installation Cost.

Depreciation: Depreciation is provided as per Written Down Value method at the rates specified in the Schedule -XIV of the Companies Act, 1956 on Single Shift Basis on the values excluding Revaluation amount.

Current Assets INVENTORIES:

1. Raw Materials are valued at cost on first in first out method.

2. Packing Materials are valued at cost on first in first out method.

3. Stock in process is valued at cost, including manufacturing expenses.

4. Finished Goods are valued at cost of materials and process.

5. Sundry Debtors are taken at book value after providing for un-realisable.

Income & Expenditure Accounted on accrual concent

Revenue Recognition: Sales includes sales Tax and Excise Duty.

The Company operates in a Solitary business segment i.e., pharmaceuticals and Bulk Drugs, corrprising mainly manufacture of formulations and creams which as per Accounting Standard - AS 17 is considered as the only one reportable business segment. The company also manufactures skirt / Taco Creams and tooth paste both covered under Drugs & Cosmetics Act, with valid Drug Licenses obtained and there are also treated as same business segment. Accordingly no further financial information for business segment as required to be given. The geographical segmentation is not relevant, as there are no exports for this year.

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Mar 31, 2011

1 Basis of Accounting : Accounts are prepared under historical cost Convention and on the assumption of going concern and on accrual basis.

2. Fixed Assets : Fixed Assets up to 31st March 2006 are stated at Revalued cost and Fixed Assets purchased after 1st April 2006 are stated at Historical Cost inclusive of duties, Sales Tax, freight and installation Cost.

3. Depreciation : Depreciation is provided as per Written Down Value method at the rates specified in the Schedule - XIV of the Companies Act, 1956 on Single Shift Basis on the values excluding Revaluation amount.

4. Current Assets : INVENTORIES:

1. Raw Materials are valued at cost on first in first out method.

2. Packing Materials are valued at cost on first in first out method.

3. Stock in process is valued at cost, including manufacturing expenses.

4. Finished Goods are valued at cost of materials and process.

5. Sundry Debtors : Sundry Debtors are taken at book value after Providing for un-realisable.

6. Retiring Benefits : Gratuity has been provided as per the payment Of Gratuity Act for all the eligible employees upto 31st March,11.

No provision has been made for leave encashment as company's H.R.Policy does not allow encashment

7. Income & Expenditure: Accounted on accrual concept.

8. Revenue Recognition: Sales and procesing fee include Excise Duty and Sales Tax.

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Mar 31, 2010

1 Basis of Accounting

Accounts are prepared under historical cost Convention and on the assumption of going concern and on accrual basis.

2.Fixed Assets

Fixed Assets up to 31 st March 2006 are stated at Revalued cost and Fixed Assets purchased after 15th April 2006 are stated at Historical Cost inclusive of duties,Sales Tax,freight and installation Cost.

3.Depreciation

Depreciation is provided as per Written Down Value method at the rates specified in the Schedule -XIV of the Companies Act,1956 on Single Shift Basis on the value excluding Revaluation amount.

4.Current Assets

INVENTORIES:

1.Raw Materials are valued at cost on first in first out method.

2.Packing Materials are valued at cost on first in first out method.

3.Stock in process is valued at cost, including manufacturing expenses.

4.Finished Goods are valued at cost of material and process.

5.Sundry Debtors

Sundry Debtors are taken at book value after Providing for un-realisable.

6.Retiring Benefits

Gratuity has been provided as per the payment of Gratuity Act for all the eligible employees upto 31 st March,10. No provision has been made for leave encashment as companys H.R.Policy does not allow encashment

7.Income &Expenditure

Accounted on accrual concept.

8.Revenue Recognition

Sales include Excise Duty and Sales Tax.