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Accounting Policies of Photoquip (India) Ltd. Company
Mar 31, 2024
1. MATERIAL ACCOUNTING POLICIES:
1.1. Basis of preparation of financial statements
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards
(hereinafter referred to as the ''Ind AS'') as notified under Section 133 of the Companies Act, 2013 ("Act)
read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant
provisions of the Act.
These financial statements have been prepared and presented under the historical cost convention,
on the accrual basis of accounting except for certain financial assets and financial liabilities that are
measured at fair values and Defined benefit planned assets measured at fair value at the end of each
reporting period, as stated in the accounting policies set out below. The accounting policies have been
applied consistently over all the periods presented in these financial statements.
Application of New Accounting Pronouncements
The company has applied the following Ind AS Pronouncements pursuance to issuance of the Companies
(Indian Accounting Standards) Amendment Rules, 2023 with effect from 1st April 2023.
The effect is described below: -
Ind AS 1-Presentation of Financial Statements: - The amendment requires disclosure of material
accounting policies instead of significant accounting policies. This amendment aims to help entities
provide accounting policy disclosures that are more useful by replacing the requirement to disclose
''significant'' accounting policies with a requirement to disclose ''material'' accounting policies and adding
guidance on how entities apply the concept of materiality in making decisions about accounting policy
disclosures. In the Financial statements, the disclosure of accounting policies has been accordingly
modified. The impact of such modifications to the accounting policies is insignificant.
Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors -The amendment
has defined accounting estimate as well as clarified the distinction between changes in accounting
estimates, accounting policies and the correction of errors. There is no impact of the amendment on the
Financial Statements.
Ind AS 12-Income taxes -The amendment narrows the scope of initial recognition exception, so that it
no longer applies to transactions that give rise to equal taxable and deductible temporary differences
such as leases and decommissioning liabilities. There is no impact of the amendment on the financial
statements.
(ii) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously
evaluated by the Company and arebased on historical experience and various other assumptions and
factors (including expectations of future events) that the Companybelieves to be reasonable under the
existing circumstances. Differences between actual results and estimates are recognised in theperiod
in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that
occurred after that date but provideadditional evidence about conditions existing as at the reporting
date.
(iii) Current / Non- Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Company''s normal
operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lacs
as per the requirement of Schedule III, unless otherwise stated.
1.2. Property, Plant and Equipment:
Freehold land is carried at historical cost.All other items of property, plant and equipment are stated
at cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
The Company identifies and determines cost of each part of an item of property, plant and equipment
separately, if the part has a cost which is significant to the total cost of that item of property, plant and
equipment and has useful life that is materially different from that of the remaining item.
The cost of an item of property, plant and equipment comprises of its purchase price including import
duties and other nonrefundable purchase taxes or levies, directly attributable cost of bringing the asset
to its working condition for its intended use and the initial estimate of decommissioning, restoration
and similar liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase
price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are
met. Expenses directly attributable to new manufacturing facility during its construction period are
capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of
buildings or plant and machinery is capitalized under relevant heads of property, plant and equipment if
the recognition criteria are met.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in
progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date
are disclosed as Other Non-Current Assets.
Depreciation:
Depreciation on each part of an item of property, plant and equipment is provided using the Straight
Line Method based on the useful life of the asset as estimated by the management and is charged to
the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The
estimate of the useful life of the assets is determined as prescribed in Schedule II of Companies Act,
2013.
The residual values are not more than 5% of the original cost of the asset. The assets residual values and
useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when
no future economic benefits are expected from its use or disposal. The gain or loss arising from the
Derecognition of an item of property, plant and equipment is measured as the difference between the
net disposal proceeds and the carrying amount of the item and is recognized in the Statement of Profit
and Loss when the item is derecognized.
1.3. Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are
tested for impairment annually and whenever there is an indication that the asset may be impaired.
Assets that are subject to depreciation are reviewed for impairment, whenever events or changes in
circumstances indicate that carrying amount maynot be recoverable. Such circumstances include,
though are not limited to, significant or sustained decline in revenues orearnings and material adverse
changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating
unit (CGU) exceeds itsrecoverable amount. The recoverable amount of an asset is the greater of its fair
value less cost to sell and value in use. Tocalculate value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate thatreflects current market rates and
the risk specific to the asset. For an asset that does not generate largely independent cashinflows, the
recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell
is the bestestimate of the amount obtainable from the sale of an asset in an arm''s length transaction
between knowledgeable, willingparties, less the cost of disposal.
Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation
and amortizationexpense. Impairment losses are reversed in the Statement of Profit and Loss only to
the extent that the asset''s carryingamount does not exceed the carrying amount that would have been
determined if no impairment loss had previously beenrecognized.
1.4. Lease
The Company as lessee :
At inception of a contract, the Company assesses whether a contract is or contains a lease. A contract
is, or contains, a lease if a contract conveys the right to control the use of an identified asset for a period
of time in exchange for consideration. To assess whether a contract conveys the right to control the use
of an identified asset, the Company assesses whether:
- the contract conveys the right to use an identified asset;
- the Company has the right to obtain substantially all the economic benefits from use of the asset
throughout the period of use; and
- the Company has the right to direct the use of the identified asset.
At the date of commencement of a lease, the Company recognises a right-of-use asset ("ROU assets")
and a corresponding lease liability for all leases, except for leases with a term of twelve months or less
(short-term leases) and low value leases. For short-term and low value leases, the Company recognises
the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the
lease term. Lease payments to be made under such reasonably certain extension options are included
in the measurement of ROU assets and lease liabilities.
Lease liability is measured by discounting the lease payments using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the
leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset
if the Company changes its assessment of whether it will exercise an extension or a termination option.
Lease payments are allocated between principal and finance cost. The finance cost is charged to
statement of profit and loss over the lease period so as to produce a constant periodic rate of interest
on the remaining balance of the liability for each period.
The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial
direct costs less any lease incentives and restoration costs.
They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
ROU assets are depreciated on a straight-line basis over the asset''s useful life or the lease whichever is
shorter.
Impairment of ROU assets is in accordance with the Company''s accounting policy for impairment of
tangible and intangible assets.
Short-term leases and leases of low-value assets:
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the
lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The Company as lessor:
Lease income from operating leases wherethe Company is a lessor is recognised in thestatement of
profit and loss on a straight- linebasis over the lease term.
1.5. 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.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual
provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair
value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss,
transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI);
c. Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a. The Company''s business model for managing the financial assets;
b. The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
This category generally applies to trade and other receivables.
A financial asset is measured at amortised cost if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows;
b. The contractual terms of the financial assets give rise on specified dates to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding.
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.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following
conditions are met:
a. The financial asset is held within a business model whose objective is achieved by both collecting
the contractual cash flows and selling financial assets;
b. The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization
as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to
designate a financial asset, which otherwise meets amortized costor FVTOCI criteria, as at FVTPL. Such
financial assets are measured at fair value with all changes in fair value, including interest income and
dividend income if any, recognised as ''other income'' in the Statement of Profit and Loss.
Equity Instruments
All the equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading are classified as at FVTPL.
If the company decides to classify an equity instrument as at FVTOCI, then all the fair value changes on
the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from
OCI to statement of profit and loss, even on sale of investment. However, the company may transfer the
cumulative gain or loss within equity. Equity instruments included within FVTPL category are measured
at fair value with all the changes recognized in 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 derecognized (i.e. removed from the Company''s balance sheet) when:
a. The contractual rights to the cash flows from the financial 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
c. The Company has transferred substantially all the risks and rewards of the asset, or
d. The Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company assesses impairment based on expected credit loss (ECL)
model to the following:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a. The 12-months expected credit losses (expected credit losses that result from those default events
on the financial instrument that are possible within 12 months after the reporting date); or
b. Full time expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instrument).
The Company follows simplified approach for recognition of impairment loss allowance on trade
receivables,under the simplified approach; the Company uses a provision matrix to determine impairment
loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically
observed default rates over the expected life of the trade receivable which is adjusted for management''s
estimates. At every reporting date, the historical observed default rates are updated and changes in the
forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through
statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables and short term borrowings.
Subsequent measurement
a. Financial liabilities measured at amortised cost;
b. Financial liabilities subsequently measured at fair value through statement of profit and loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at 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. 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 statement of profit and loss
are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of
financial year which are unpaid. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period. They are recognised initially at fair value
and subsequently measured at amortised cost using the effective interest method.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. The fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their best economic
interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and
minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
⢠Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
⢠Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
⢠Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
1.6. Inventories
Raw materials, finished goods, stock-in-trade, and stores and spares are carried at the lower of cost and
net realizable value after providing for obsolescence, if any. The comparison of cost and net realizable
value is made on an item-by item basis.
In determining the cost of raw materials, stock-in-trade, stores and spares, First-in-First-Out (FIFO)
method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those
subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to
their present location and condition.
Cost of finished goods includes the cost of raw materials, an appropriate share of fixed and variable
production overheads and other costs incurred in bringing the inventories to their present location and
condition.
1.7. Revenue Recognition
(i) Revenue from Contracts with Customers
Revenue from contracts with customers is recognized on transfer of control of promised goods
or services to a customer atan amount that reflects the consideration to which the Company is
expected to be entitled to in exchange for those goodsor services.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction
price (net of variableconsideration) allocated to that performance obligation. The transaction
price of goods sold and services rendered is netof variable consideration on account of various
discounts and schemes offered by the Company as part of the contract.This variable consideration
is estimated based on the expected value of outflow. Revenue (net of variable consideration)
is recognized only to the extent that it is highly probable that the amount will not be subject to
significant reversal whenuncertainty relating to its recognition is resolved.
Sale of products:
Revenue from sale of products is recognized when the control on the goods have been transferred
to the customer. Theperformance obligation in case of sale of product is satisfied at a point in time
i.e., when the material is shipped to thecustomer or on delivery to the customer, as may be specified
in the contract.
Revenue from services:
Revenue from services is recognized over time by measuring progress towards satisfaction of
performance obligation for theservices rendered.
(ii) Other Income
Interest and dividends:
Interest income is recognized using effective interest method. Dividend income is recognized
when the right to receive dividend is established.
Other Operating Revenue -Export Incentive:
Export Incentives are recognized as income when right to receive credit as per the terms of the
scheme is established in respect of the exports made and when there is no significant uncertainty
regarding the ultimate collection of the relevant export proceeds.
1.8. Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and
borrowing costs are charged to Statement of Profit and Loss.
1.9. Earnings per Share
Basic earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the
Company by the weighted average number of Equity Shares outstanding during the year.
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit for the year attributable to the equity
holders of the Company by weighted average number of Equity shares outstanding during the year plus
the weighted average number of equity shares that would be issued on conversion of all the dilutive
potential Equity shares in to Equity shares.
1.10. Foreign Currency Translation
Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company''s functional and
presentation currency.
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the
functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange
rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the Statement of Profit and Loss.
Transactions and balances:
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction
dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the
Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange
rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured interms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions.Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date whenthe fair value is
determined.
1.11. Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in
respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable
profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items
of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the
amounts expected to be recovered from or paid to the taxation authorities.
Deferred tax:
Deferred tax is recognized 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 under Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of
temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect
neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for
temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are
not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is
probable that taxable profits will be available against which those deductible temporary difference can
be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in
a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not
recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow the
benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively
enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Minimum Alternate Tax credit is recognised as deferred tax 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.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss,
except when they relate to items that are recognized in Other Comprehensive Income, in which case, the
current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right
to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the
asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities,
the same are offset if the Company has a legally enforceable right to set off corresponding current tax
assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same tax authority on the Company.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
a) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under historical cost
convention on accrual basis. Pursuant to Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014,
till the standards of accounting or any addendum thereto are prescribed
by Central Government in consultation and recommendation of the
National Financial Reporting Authority, the existing Accounting
Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements have been prepared to
comply in all material aspects with the accounting standards notified
under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as
amended] of the Companies Act, 1956 and the other relevant provisions
of the Companies Act, 2013.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the
relevant facts and circumstances as on the date of the financial
statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.
Any revisions to accounting estimates are recognised prospectively in
current and future periods.
c) Current / Non-Current Classification
All assets and liabilities have been classified as current and
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and services and the time between acquisition
of assets for processing and their realization in cash and cash
equivalents, The Company has ascertained its operating cycle as 12
months for the purpose of current and non-current classification of
asset and liabilities.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates, less accumulated depreciation and impairment
loss, if any. The cost of Tangible Assets comprises its purchase price,
borrowing cost and any cost directly attributable to bringing the asset
to its working condition for its intended use.
Subsequent expenditures related to an item of Tangible 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.
Pursuant to the enactment of Companies Act 2013, the company has
applied the estimated useful lives as specified in Schedule II.
Depreciation on tangible fixed assets of the company is provided on
Straight line method on pro-rata basis at rates and in manner specified
in Schedule II of the Companies Act, 2013.
b) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
Costs incurred on acquisition of intangible assets are capitalized and
amortized on a straight- line basis over their technically assessed
useful lives, as mentioned below:
Intangible Assets Estimated Useful Lives (Years)
Trade Mark 5
Website 5
c) Capital Work-in-Progress
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
d) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal / external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
statement of Profit and Loss in the year in which an asset is
identified as impaired. An impairment loss recognised in prior
accounting periods is reversed if there has been change in the estimate
of the recoverable amount.
1.3 Investments
Investments are classified into current and long-term investments.
Investments that are readily realizable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments.
Long-term investments are stated at cost. A provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is recognised in the Statement of
Profit and Loss.
1.4 Inventories
a) Raw materials, finished goods, stock-in-trade, and stores and spares
are carried at the lower of cost and net realizable value after
providing for obsolescence, if any. The comparison of cost and net
realizable value is made on an item-by item basis.
b) In determining the cost of raw materials, stock-in-trade, stores and
spares, First-in-First-Out (FIFO) method is used. Cost of inventory
comprises all costs of purchase, duties, taxes (other than those
subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventory to their present location and
condition.
c) Cost of finished goods includes the cost of raw materials, an
appropriate share of fixed and variable production overheads, excise
duty as applicable and other costs incurred in bringing the inventories
to their present location and condition.
1.5 Transactions in Foreign Currency:
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the on the transaction.
Exchange differences arising on foreign exchange transactions settled
during the year are recognized in the statement of profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the
exchange rate prevailing on the date of the transaction. Exchange
differences arising out of these translations are recognized in the
Statement of Profit and Loss.
c) Forward exchange contracts:
The Company enters into forward exchange contracts to hedge against its
foreign currency exposures relating to the underlying transactions and
firm commitments. The Company does not enter into any derivative
instruments for trading or speculative purposes.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Exchange differences on such contracts are recognized
in the Statement of Profit and Loss in the period in which the exchange
rates change. Any Profit or Loss arising on cancellation or renewal of
such forward exchange contract is also recognized as income or expense
for the period.
1.6 Revenue Recognition
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership in the goods are transferred to the buyer, the
Company retains no effective control of the goods transferred to a
degree usually associated with ownership and no significant uncertainty
exists regarding the amount of the consideration that will be derived
from the sale of goods. Sales are recognised net of trade discounts,
rebates, sales taxes and excise duties (on goods manufactured and
outsourced).
Export Incentives are recognised when the right to receive credit as
per the terms of Incentives is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
Dividend Income is recognised when the right to receive dividend is
established. Interest income is recognised on the time proportion basis.
Other incomes are accounted on accrual basis.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus, short term compensated
absences, ex-gratia, etc. The undiscounted amount of short-term
employee benefits to be paid in exchange for employee services is
recognised as an expense as the related service is rendered by
employees.
b) Post Employment Benefit
Defined Contribution Plans:
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund to
Government administered provident fund scheme and Employees' State
Insurance Corporation (ESIC) which are a defined contribution plan. The
Company's contribution is recognised as an expense in the Statement of
Profit and Loss during the period in which the employee renders the
related service.
Defined Benefit Plans:
The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. Any
unrecognized past service costs and the fair value of any plan assets
are deducted. The calculation of the Company's obligation under the
plan is performed annually by a qualified 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 discount
rates used for determining the present value of the obligation under
defined benefit plan, are based on the market yields on Government
securities as at the Balance sheet date.
The Company recognizes all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognized in
employee benefits expense in the Statement of Profit and Loss. The
Company recognizes gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company has funded its gratuity liability with Life Insurance
Corporation of India (LIC) under the Employees Group Gratuity and Ass.
Scheme.
Termination Benefits:
Termination Benefits are charged to the Statement of Profit and Loss in
the year of accrual.
Compensated Absences:
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
8 Borrowing Cost
Borrowing costs attributable to the acquisition, construction or
production of qualifying assets, are added to the cost of those assets,
upto the date when the assets are ready for their intended use. All
other borrowing costs are expensed in the period they occur.
9 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
A contingent liability exists when there is a possible but not probable
obligation or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
1.10 Taxes on Income
Income tax expenses comprise current and deferred taxes. Current tax is
determined on income for the year chargeable to tax in accordance with
the applicable tax rates and the provisions of the Income Tax Act, 1961
and other applicable tax laws and after considering credit for Minimum
Alternate Tax (MAT) available under the said Act. MAT paid in
accordance with the tax laws which gives future economic benefits in
the form of adjustments to future tax liability, is considered as an
asset if there is convincing evidence that the future economic benefit
associated with it will flow to the Company resulting in payment of
normal income tax.
Deferred tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted as at the reporting date. Deferred tax
liabilities are recognized for all timing differences. Deferred tax
assets are recognized for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that there is a reasonable certainty that there will be sufficient
future taxable income will be available against which these can be
realized. However if there are unabsorbed depreciation and carry
forward of losses and items relating to capital losses, deferred tax
assets are recognized only if there is virtual certainty supported by
convincing evidence that there will be sufficient future taxable income
available to realize the assets. Deferred tax assets and liabilities
are offset if such items relate to taxes on income levied by the same
governing tax laws and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each balance sheet
date for their realizability.
1.11 Segment Accounting
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
a) Segment revenue includes sales and other income directly
identifiable with/allocable to the segment.
b) Expenses that are directly identifiable with/ allocable to segments
are considered for determining the segment result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under "Un-allocable Corporate Expenditure".
c) Income which relates to the Company as a whole and not allocable to
segments is included in "Un-allocable Corporate Income".
d) Segment assets and liabilities include those directly identifiable
with the respective segments. Un-allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
1.12 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
any.
1.13 Research and Development Expenditure
Expenditure on Research and Development of revenue nature incurred by
the Company are charged to Profit and Loss Account, while those of
capital nature are treated as Fixed Assets.
1.14 Deferred Revenue Expenditure
Expenditure Incurred on Promotion of new Products are shown as Deferred
Revenue Expenditure. Deferred Revenue Expenditure has been amortized
over a period of Five year.
1.15 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
equivalents.
1.16 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statements
a) Basis of Accounting
The financial statements of the Company are prepared under the
historical cost convention as a going concern on accrual basis and to
comply in all material aspects with the Accounting Standards prescribed
in the Companies (Accounting Standards) Rules, 2006 issued by the
Central Government, the relevant provisions of the Companies Act, 1956
("the Act") which as per clarification issued by the Ministry of
Corporate Affairs continue to apply under Section 133 of the Companies
Act, 2013 (which has superseded Section 211(3C) of the Act w.e.f 12th
September 2013) and other accounting principles generally accepted in
India, to the extent applicable.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the
relevant facts and circumstances as on the date of the financial
statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.
Any revisions to accounting estimates are recognised prospectively in
current and future periods.
c) Current / Non Current Classification
All assets and liabilities have been classified as current and
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI of the Companies Act, 1956. Based
on the nature of products and services and their realization in cash
and cash equivalents, the Company has ascertained its operating cycle
as 12 months for the purpose of current and non-current classification
of asset and liabilities.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Fixed Assets are stated at cost of acquisition/construction (net of
recoverable taxes)less Accumulated Depreciation and impairment loss if
any. Cost of acquisition includes non refundable taxes, duties, freight
and other costs that are directly attributable to bringing assets to
their working condition for their intended use. All costs, including
financing costs till the asset is put to use and adjustments arising
from exchange rate variations attributable to the fixed assets are
capitalized.
Depreciation on fixed assets is provided on straight line method on
pro-rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956.
b) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
Costs incurred on acquisition of intangible assets are capitalized and
amortized on a straight-line basis over their technically assessed
useful lives, as mentioned below :
Intangible Assets Estimated Useful Lives (Years)
Trade Mark 5
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c) Impairment of Assets
At each balance sheet date, the management reviews the carrying amounts
of its assets included in each cash generating unit to determine
whether there is any indication that those assets were impaired. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of impairment. Recoverable
amount is the higher of an asset''s net selling price and value in
use. In assessing value in use, the estimated future cash flows
expected from the continuing use of the asset and from its disposal are
discounted to their present value using a pre-tax discount rate that
reflects the current market assessments of time value of money and the
risks specific to the asset.
Reversal of impairment loss is recognised as income in the statement of
profit and loss.
1.3 Investments
Investments are classified into current and long-term investments.
Investments that are readily realizable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments. However, that part of long term investments which are
expected to be realized within twelve months from Balance Sheet date is
also presented under "Current Assets" under "Current portion of
long term investments" in consonance with the current / non-current
classification of revised Schedule VI to the Companies Act, 1956.
Current investments are stated at the lower of cost and fair value. The
comparison of cost and fair value is done separately in respect of each
category of investments.
Long-term investments are stated at cost. A provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is recognised in the Statement of
Profit and Loss.
1.4 Inventories
Finished goods (including for trade), work-in-process, semi-finished
goods for trade, Raw materials, Stores are valued at cost or net
realizable value whichever is lower. Cost comprises all cost of
purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Due allowance is
estimated and made for defective and obsolete items, wherever
necessary, based on the past experience of the Company. The cost
formula used for determination of cost is ''First in First Out''.
1.5 Transactions in Foreign Currency:
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the statement of
profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these translations are recognized in the Statement of
Profit and Loss.
1.6 Revenue Recognition
a) Sales
Revenue from sale of goods is recognised on transfer of all significant
risks and rewards of ownership to the buyer. The amount recognised as
sale is exclusive of sales tax/VAT and is net of returns & discounts.
Sales are stated gross of excise duty as well as net of excise duty;
excise duty being the amount included in the amount of gross turnover.
b) Other Income
Dividend Income is recognised when the right to receive the dividend is
established.
Interest income is recognised on the time proportion basis.
Other incomes are accounted on accrual basis.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus, short term compensated
absences, ex-gratia, etc. The undiscounted amount of short- term
employee benefits to be paid in exchange for employee services is
recognised as an expense as the related service is rendered by
employees.
b) Post Employment Benefit
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund to
Government administered provident fund scheme and Employees'' State
Insurance Corporation (ESIC) which are a defined contribution plan. The
Company''s contribution is recognised as an expense in the Statement
of Profit and Loss during the period in which the employee renders the
related service.
Defined Benefit Plans
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. Any
unrecognized past service costs and the fair value of any plan assets
are deducted. The calculation of the Company''s obligation under the
plan is performed annually by a qualified 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 discount
rates used for determining the present value of the obligation under
defined benefit plan, are based on the market yields on Government
securities as at the Balance sheet date.
The Company recognizes all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognised in
employee benefits expense in the Statement of Profit and Loss. The
Company recognizes gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company has funded its gratuity liability with Life Insurance
Corporation of India (LIC) under the Employees Group Gratuity and ASS.
Scheme.
c) Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
1.8 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
1.9 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
A contingent liability exists when there is a possible but not probable
obligation or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
1.10 Taxes on Income
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income-tax law) and deferred tax
charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the year).
Provision for current tax is based on the results for the year ended
31st March, in accordance with the provisions of the Income Tax Act,
1961.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates and tax laws
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future, however
when there is unabsorbed depreciation or carry forward loss under
taxation laws, deferred tax assets are recognised only if there is a
virtual certainty supported by convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
Deferred tax assets are reviewed as at each balance sheet date and
written down or written-up to reflect the amount that is reasonably /
virtually certain (as the case may be) to be realized.
Minimum Alternative Tax (MAT) under the provisions of the Income Tax
Act, 1961 is recognized as current tax. The credit available under the
said act in respect of MAT is recognized as an asset only when there is
certainty that the company will pay income tax in future periods and
MAT credit can be carried forward to set-off against the normal tax
liability. MAT credit recognized as an asset is reviewed at each
Balance sheet date and written down to the extent the aforesaid
certainty no longer exists.
1.11 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
any.
1.12 Segment Accounting
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
(i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
(ii) Expenses that are directly identifiable with/ allocable to
segments are considered for determining the segment result. Expenses
which relate to the Company as a whole and not allocable to segments
are included under "Un-allocable Corporate Expenditure".
(iii) Income which relates to the Company as a whole and not allocable
to segments is included in "Un-allocable Corporate Income".
(iv) Segment assets and liabilities include those directly identifiable
with the respective segments. Un-allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
1.13 Research and Development Expenditure
Expenditure on Research and Development of revenue nature incurred by
the Company are charged to Profit and Loss Account, while those of
capital nature are treated as Fixed Assets.
1.14 Deferred Revenue Expenditure
Expenditure Incurred on Promotion of new Products are shown as Deferred
Revenue Expenditure. Deferred Revenue Expenditure has been amortized
over a period of Five year.
1.15 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
equivalents.
1.16 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
Mar 31, 2012
A) Accounting Conventions
I) Basis of Preparation of Financial Statements
The financial statements of the Company are prepared under the
historical cost convention 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 during the year.
II) Presentation And Disclosure Of Financial Statements
During the year ended 31st March, 2012, the revised Schedule-VI
notified under Companies Act 1956, has become applicable to the
company, for preparation and presentation of its financial statements.
The adoption of revised Schedule-VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosure made in financial statements. The company has also restated
the previous year figures in accordance with the requirements
applicable for the current year.
III) Use of Estimates
The preparation of the financial statements in conformity with Indian
Generally Accepted Accounting Practices requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates. Any revision to accounting estimates is
recognized prospectively in current and future periods.
b) Fixed Assets
I) Tangible
Fixed Assets are stated at cost of acquisition/construction (net of
recoverable taxes) less Accumulated Depreciation and impairment loss if
any. Cost of acquisition includes non refundable taxes, duties, freight
and other costs that are directly attributable to bringing assets to
their working condition for their intended use. All costs, including
financing costs till the asset is put to use and adjustments arising
from exchange rate variations attributable to the fixed assets are
capitalized.
II) Intangible
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
c) Depreciation / Amortization
I) Tangible
Depreciation on fixed assets is provided on straight line method on
pro-rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956.
II) Intangible
Intangible Assets are amortized over a period of five years or
according to the life cycle of Intangible Assets.
d) Capital Work-in-Progress
Projects under which assets are not ready for their intended use and
other capital work-in- progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
e) Intangible Assets under Development
Intangible assets for which Development is in process are carried at
cost ,comprising direct cost ,related incidental expenses.
f) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at Cost or Net realizable value whichever is
lower. All other investments are classified as long term Investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
g) Inventories
Finished goods (including for trade), work-in-process, semi-finished
goods for trade, Raw materials, Stores are valued at cost or net
realizable value whichever is lower. Cost comprises all cost of
purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Due allowance is
estimated and made
for defective and obsolete items, wherever necessary, based on the past
experience of the Company. The cost formula used for determination of
cost is ÃFirst in First OutÃ.
h) Foreign Currency Translations :
(i) All Transactions in foreign currency, are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account 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.
i) Revenue Recognition
I) Sales
The Company recognises sale of goods when the significant risks and
rewards of ownership are transferred to the buyer, which is usually
when the goods are dispatched to customers. Sales represents the
invoice value of goods and services provided to third parties net of
discounts, excise duty, sales tax / value added tax .
II) Other Income
Other incomes except dividend income are accounted on accrual basis.
Dividend Income is recognised when the right to receive the dividend is
established.
j) Employee Benefits
1) Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit and Loss Account of the year in which the related
services are rendered.
2) Post Employment Benefit
a. Defined Contribution Plans - Monthly contributions to the Provident
Fund and E.S.I.C which are defined contribution schemes are charged to
Profit and Loss Account and deposited with the Provident Fund and
E.S.I. Authorities on monthly basis.
b. Defined Benefit Plans - Gratuity to Employees are covered under the
Employees Group Gratuity Scheme and the premium is paid on the basis of
their actuarial valuation using the Projected Unit Credit Method.
Actuarial gain and losses arising on such valuation are recognized
immediately in the Profit and Loss Account. Any shortfall in case of
premature termination / resignation to the extent not reimbursed by LIC
is being absorbed in the year of payment. The amount funded by the
trust administrated by the Company under the aforesaid policy is
reduced from the gross obligation under the defined benefit plan, to
recognize the obligation on net basis.
3) Termination Benefit Termination Benefits are charged to Profit and
Loss Account in the year of accrual.
k) 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 charged to revenue.
l) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
m) Taxes on Income
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference 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 recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961.
n) Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired. An impairment loss recognized in prior accounting periods is
reversed if there has been change in the estimate of the recoverable
amount.
o) Earnings Per Share
Basic earnings per share is 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. The
weighted average number of equity shares outstanding during the year
are adjusted for events such as bonus shares, other than the conversion
of potential equity shares, that have changed the number of equity
shares outstanding without a corresponding change in resources
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short- term highly liquid investments with original
maturities of three months or less.
q) Operating Cycle
Based on the nature of products and the time between the acquisition of
assets for processing and their realization in cash and cash
equivalent, the Company has ascertained its operating cycle to be less
than 12 months.
r) Research and Development Expenditure :
Expenditure on Research and Development of revenue nature incurred by
the Company are charged to Profit and Loss Account, while those of
capital nature are treated as Fixed Assets.
Mar 31, 2010
I) Basis of Preparation of Financial Statements
The financial statements of the Company are prepared under the
historical cost convention 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 during the year.
ii) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
FIXED ASSETS: i) Tangible:
Fixed Assets are stated at cost of acquisition / construction (less
Accumulated Depreciations). Cost comprises the purchase price and other
attributable costs.
ii) Intangible:
Intangible Assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
DEPRECIATION/ AMORTIZATION i) Tangible:
Depreciation on Fixed Assets is provided on straight-line method on pro
rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956
ii) Intangible:
Intangible Assets are amortised over their estimated useful life on a
straight-line basis.
INVESTMENTS:
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investment. Long term
investments are stated at cost of acquisition. Provision for diminution
in the value of long term investments is made, only if such decline is
other than temporary.
INVENTORIES:
Finished goods (including for trade), work-in-process, semi-finished
goods for trade, Raw materials and Stores are valued at cost or net
realizable value whichever is lower. Cost comprises all cost of
purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Due allowance is
estimated and made for defective and obsolete items, wherever necessary,
based on the past experience of the Company. The cost formulae used for
determination of cost is First in First Out.
FOREIGN CURRENCY TRANSACTIONS:
(i) All Transactions in foreign currency, are recorded at the rates of
exchange prevailing as at the date of the transaction. ,
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. The
resultant gain or loss is accounted for during the year.
PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
REVENUE RECOGNITION:
i) Sales The Company recognizes sale of goods when the significant
risks and rewards of ownership are transferred to the buyer, which
is usually when the goods are dispatched to customers.
ii) Other Income Other Income are accounted on accrual basis.
EMPLOYEE BENEFITS:
1. Short Term Employees Benefit:
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit and Loss Account of the year in which the related
services are rendered.
2. Post Employment Benefit:
a. Defined Contribution Plans: Monthly contributions to the Provident
Fund and E.S.I, which are defined contribution schemes are charged to
Profit and Loss Account and deposited with the Provident Fund and
E.S.I. Authorities on monthly basis.
b. Defined Benefit Plans: Gratuity to Employees are covered under the
Employees Group Gratuity Policy of Life Insurance Corporation of India
(LIC) and the premium is paid on the basis of their actuarial valuation
using the Projected Unit Credit Method. Actuarial gain and losses
arising on such valuation are recognized immediately in the Profit and
Loss Account. Any shortfall in case of premature termination /
resignation to the extent not reimbursed by LIC is being absorbed in
the year of payment. The amount funded by the trust administrated by
the Company under the aforesaid policy is reduced from the gross
obligation under the defined benefit plan, to recognize the obligation
on net basis.
3. Termination Benefit:
Termination Benefits are charged to Profit & Loss Account in the year
of accrual.
TAXES ON INCOME:
Tax expense comprises of current tax and deferred taxes. Provision for
current income taxes is made on the taxable income at the tax rate
applicable to the relevant assessment year. Deferred income taxes are
recognised for the future tax consequences attributable to timing
differences between the financial statement determinations of income
and their recognition for tax purposes. The effect on deferred tax
assets and liabilities of a change in tax rates is recognised in income
using the tax laws that have been enacted or substantively enacted by
the balance sheet date. Deferred tax assets are recognised and carried
forward only to the extent that there is a reasonable certainty
supported by convincing evidence that sufficient future taxable income
will be available against which such deferred tax assets can be
realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961 (specified period). In the year, in which the MAT credit becomes
eligible to be recognized as an asset in accordance with the
recommendations contained in the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), the said asset is created by
way of a credit to the profit and loss account and shown as MAT credit
entitlement. The Company reviews the same at each balance sheet date
and writes down the carrying amount of MAT credit entitlement to the
extent there is no longer convincing evidence to the effect that the
Company will pay income tax higher than MAT during the specified
period.
RESEARCH AND DEVELOPMENT EXPENDITURE:
Expenditure on Research and Development of revenue nature incurred by
the Company are charged to Profit and Loss Account, while those of
capital nature are treated as Fixed Assets.
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 then 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 Profit and Loss account. If at the Balance Sheet date
there is an indication that if previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
BORROWING COSTS:
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of 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.
MISCELLANEOUS EXPENDITURE:
Deferred Revenue Expenditures are written off over a period of 5 years.
Deferred Development Expenditure is expenditure incurred for the
development of new products, and is written off over a period of 5
years from the year in which it is commercially developed.
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