Accounting Policies of Surya Pharmaceuticals Ltd. Company

Mar 31, 2013

1. Basis for preparation of financial statements

a) The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material aspects with the accounting standard notified under the Companies (Accounting Standard) Rules, 2006 as amended and the relevant provision of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention and on accrual basis.

b) Figures have been taken to nearest rupee.

c) Previous year figures have been re-grouped and re-arranged wherever considered necessary.

2. Fixed Assets and Depreciation

a) Fixed Assets have been stated at original cost less depreciation.

b) Depreciation has been provided during the year on straight line method at revised rates, vide Notification GSR No. 756 E Dated: 16.12.93, as non-continuous process pro-rata on triple shift basis as per schedule XIV to the Companies Act, 1956.

3. Valuation of Inventories

Raw materials have been valued at cost or market price, whichever is less, Work in progress and other miscellaneous stocks have been valued on estimated basis. In respect of finished goods and work in Progress, applicable manufacturing overheads and other cost incurred in bringing the items of inventory to their present location and condition are also included. Finished goods have been valued at cost inclusive of the provision of excise duty thereon, in accordance with the guidance note on accounting treatment for excise duty issued by the Institute of Chartered Accountants of India & other professional pronouncements. However, the same has no effect on the profits for the year.

4. Investments

Trade investments are the investments made to enhance the Company''s business interests. Investment in subsidiaries and others are stated at cost. Investments that are intended to be held for more than a year from the date of acquisition are classified as long term investments and are stated at cost. Provision is made to recognize other than temporary decline in the value of investments ascertained on impairment analysis of an investment. In cases where impairment analysis reflects complete erosion of value of investment, the same is carried at nominal / face value of investment. Investments other than long term investments, being current investments, are valued at lower at cost and fair value.

On disposal of an investment the difference between its carrying amount and net disposal proceeds is accounted in the statement of Profit and Loss Account.

5. Revenue Recognition

a) Sales are stated net of returns, inclusive of excise duty, job work charges, export incentives and mercantile sales.

b) Dividend income has been accounted for on receipt basis.

c) Export benefits are accounted for on accrual basis.

6. Foreign Exchange Transactions

Monetary liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The resultant gain/loss, if any, is recognized in the Statement of Profit and Loss, except exchange differences on liabilities incurred for acquisition of fixed assets, which are adjusted to the carrying amounts of respective liabilities and assets. Non-monetary assets and related to foreign currency transactions are reported at the rate on the date of the transaction.

7. Employees Benefits

a) The Contribution to the Provident Fund, under the defined contribution plans are charged to revenue.

b) The accrued liability towards gratuity has been calculated at Rs. 25.01 lacs on accrual basis (Rs.136.27 lacs) and has been provided upto 31st March 2013.

c) The leave encashment has been provided amounting to Rs 22.05 lacs (Rs.77.64 lacs) upto 31st March 2013

8. Taxes on Income

Current tax provision is measured by the amount of tax expected to be paid on the taxable profits after considering tax allowances and exemptions and using applicable tax rates and laws.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences between the financial statements, carrying amounts of existing assets and liabilities and their respective tax bases and carry forwards of operating loss. Deferred tax assets and liabilities are measured on the timing differences applying the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Changes in deferred tax assets and liabilities between one Balance Sheet date and the next, are recognized in the Statement of Profit and Loss in the year of change. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statement of Profit and Loss in the year of change.

Deferred tax assets are recognized only if there is reasonable certainty that they will be realized by way of future taxable income. Deferred tax assets related to unabsorbed depreciation, carry forward losses and provisions are recognized only to the extent that there is virtual certainty of realization. Deferred tax assets are reviewed for appropriateness of their carrying amounts at each Balance Sheet date.

Changes in provision for taxes arising in subsequent years are accounted as ''Adjustment of taxes of earlier years'' in Profit and Loss Account of the year in which the adjustment is effected in books of account.

9. Earnings per Share

In determining earnings per share, the Company considers the net profit after tax for the year attributable to equity shareholders. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds available, had the shares been actually issued at fair value (i.e. the average market value of the outstanding shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares issues.

10. Cash Flow Statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the Company are segregated.

11. Provisions, Contingent liabilities and Contingent Assets

A provision is recognized for a present obligation as a result of past events if it is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. Provisions are determined based on best estimate of the amount required to settle the obligation at the Balance Sheet date. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

12. Apportionment of Indirect Expenses

Indirect expenses incurred by the company have been apportioned amongst all the units, on the following basis:

Fixed administrative expenses - on the basis of sales value; Export expenses - on the basis of exports value; Other expenses - on the basis of sales value.

13. Miscellaneous Expenditure

Deferred Revenue expenses are written off over a period of 5 years.

14. Cash and Cash Equivalents

In the Cash Flow Statement, 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.

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Mar 31, 2012

1 BASIS FOR PREPARATION OF FINANCIAL STATEMENTS

(i) The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles (GAAP), accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 and on the basis of a going concern.

(ii) All the Income & expenditure are recognized on accrual basis.

(iii) Figures have been taken to nearest rupee.

(iv) Previous year figures have been re-grouped and re-arranged wherever considered necessary.

2 FIXED ASSETS

(i) Fixed Assets have been stated at original cost less depreciation.

(ii) Depreciation has been provided during the year on straight line method at revised rates, vide Notification GSR No. 756 E Dated: 16.12.93, as non continuous process pro-rata on triple shift basis as per schedule XIV to the Companies Act, 1956.

3 VALUATION OF INVENTORIES

Raw materials have been valued at cost or market price, whichever is less, Work in progress and other misc. Stocks have been valued on estimated basis, In respect of Finished Goods and Work in Progress, applicable manufacturing overheads and other cost incurred in bringing the items of inventory to their present location and condition are also include. Finished Goods have been valued at cost inclusive of the provision ofexcisedutythereon,inaccordancewiththeguidancenoteon accounting treatment for excise duty issued by the Institute of Chartered Accountants of India & other professional pronouncements. However, the same has no effect on the profits forthe year.

4 FOREIGN EXCHANGE TRANSACTIONS

Monetary liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The resultant gain/loss, if any, is recognized in the Profit and Loss Account, except exchange differences on liabilities incurred for acquisition of fixed assets, which are adjusted to the carrying amounts of respective amounts of the respective assets. Non-monetary assets and liabilities related to foreign currency transactions are reported at the rate on the date of the transaction.

5 REVENUE RECOGNITION

(i) Sales are stated net of returns, inclusive of excise duty, job work charges , export incentives and Mercantile sales.

(ii) Dividend income has been accounted for on receipt basis.

(iii) Export benefits are accounted for on accrual basis.

6 EMPLOYEES BENEFITS

(i) The Contribution to the Provident Fund, under the defined contribution plans are charged to revenue.

(ii) The accrued liability towards gratuity has been calculated at Rs. 136.27 lacs as per actuarial valuation (Rs. 150.75 lacs) and has been provided upto 31st March 2012

(iii)The leave encashment has been provided amounting to Rs 77.64 lacs (Rs. 96.19 lacs) upto 31st March 2012.

7 APPORTIONMENT OF INDIRECT EXPENSES

(i) Indirect expenses incurred by the company have been apportioned amongst all the units, on the following basis:-

Fixed Administrative Expenses - on the basis of sales value, Export expenses - on the basis of exports in value Other Expenses - on the basis of sales value

8 MISCELLANEOUS EXPENDITURE

Deferred Revenue expenses are written off over a period of 5 years.

During the year 10,000,00 warrants were converted into 100,00,000 equity shares on 07.04.2011. Meanwhile an appeal was filled before the SEBI to convert equity shares more than 5% of the total share capital without making open offer under Regulation 3(2) of SEBI Regulation 3(2) ofSEBI (SubstantialAcquisitionofsharesandtakeover) Regulations - 2011.SEBI vide its order dated 09.01.2012 refused to allow any exemption. As on 31.03.2012 appeal was still pending before the SATfor exemption under Regulation 3(2) ofSEBI (SubstantialAcquisition of shares and Takeover) Regulations -2011 and forextension of exercisable date

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Mar 31, 2011

1. Basis for preparation of financial statements

i) The financial statements have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles (GAAP), accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 and on the basis of a going concern.

ii) All the Income & expenditure are recognised on accrual basis.

iii) Figures have been taken to nearest rupee.

iv) Previous year figures have been re-grouped and re-arranged wherever considered necessary.

2. Fixed Assets

i. Fixed Assets have been stated at original cost less depreciation.

ii. Depreciation has been provided during the year on straight line method at revised rates, vide Notification GSR No. 756 E Dated: 16.12.93, as non continuous process on triple shift basis as per schedule XIV to the Companies Act, 1956.

3. Valuation of Inventories

Raw materials have been valued at cost or market price, whichever is less, Work in progress and other misc. Stocks have been valued on estimated basis, In respect of Finished Goods and Work in Progress, applicable manufacturing overheads and other cost incurred in bringing the items of inventory to their present location and condition are also include. Finished Goods have been valued at cost inclusive of the provision of excise duty thereon, in accordance with the guidance note on accounting treatment for excise duty issued by the Institute of Chartered Accountants of India & other professional pronouncements. However, the same has no effect on the profits for the year.

4. Foreign Exchange Transactions

Monetary liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The resultant gain/loss, if any, is recognised in the Profit and Loss Account, except exchange differences on liabilities incurred for acquisition of fixed assets, which are adjusted to the carrying amounts of respective amounts of the respective assets. Non-monetary assets and liabilities related to foreign currency transactions are reported at the rate on the date of the transaction.

5. Revenue Recognition

i. Sales are stated net of returns, inclusive of excise duty, job work charges received, export incentives and Mercantile sales.

ii. Dividend income has been accounted for on receipt basis. iii. Export benefits are accounted for on accrual basis.

6. Employees Benefits

i. The Contribution to the Provident Fund, under the defined contribution plans are charged to revenue.

ii. The accrued liability towards gratuity has been calculated by SBI Life insurance Co Ltd amounting to Rs.150.75 lacs (Rs.148.90 lacs) and has been provided upto 31st March 2011.

iii. The leave encashment has been provided amounting to Rs.96.19 lacs (Rs.64.56 lacs) upto 31st March 2011.

7. Apportionment of Indirect Expenses

Indirect expenses incurred by the company have been apportioned amongst all the units, on the following basis:- Fixed Administrative Expenses - on the basis of sales value, Export expenses - on the basis of exports in value Other Expenses - on the basis of sales value.

8. Miscellaneous Expenditure

Deferred Revenue expenses are written off over a period of 5 years.

B. BALANCE SHEET

1. Secured Loans Term loans

All Term Loans are secured by first pari passu Charge on all the fixed assets of the company and second pari-passu charge on the current assets of the Company.

Working Capital Limits

All Working Capital Limits both fund based & non fund based are secured by way of first pari passu charge on all the current assets of the Company and second pari passu charge on all the fixed assets of the Company.

2. Unsecured Loans

All Short Term Loans are secured by way of subservient charge on the fixed assets & current assets of the Company and personal guarantee of the Managing Director and Executive Director of the Company.

3. Fixed Assets

A sum of Rs.1,580.15 lacs (Rs.897.47 Lacs) (includes revenue and capital expenditure has been capitalized under the head Research & Development Assets. The company has been regularly working on modernization and development of its existing technological system and development of new products & processes. In the opinion of management, the process will yield benefits in the coming years in the shape of improved yields, more demand in the international market as well as better price.

4. Investments

Investments considered long term are stated at cost.

5. Current Assets, Loans & Advances

i. The company has sent letters of balance confirmation to all the parties but only a few have responded so far. So the balance in the party accounts whether in debit or in credit are subject to reconciliation.

ii. Sundry debtors, Loans & Advances, Sundry creditor and Advances from customers are subject to confirmation, reconciliation and adjustments. Thus the impact of the same on the accounts of the company could not be ascertained.

iii. In the opinion of the directors of the Company, the current assets, loans and advances are approximately of the value as stated, if realized in the ordinary course of business.

iv. In the opinion of the directors of the Company, the Advance licenses/DEPB licenses are approximately of the value as stated, if realized/utilized in the ordinary course of business.

v. Fixed Deposits of Rs.586.84 lacs (Rs.307.44 lacs) as on 31.03.2011 are pledged as margin money against the bank guarantees, inland letter of credit and foreign letter of credit.

vi. The inventory of stocks, stores & spares has been taken, valued and certified by the management.

vii. Sundry Debtors are stated after making adequate provisions for doubtful debts.

6. Current Liabilities

i. As regards compliance of provisions relating to dues to the Small Scale Industries in terms of the Companies (Amendment) Act, 1999, the Company has sent letters to the creditors to intimate whether they are Small Scale Industrial Units. The Company is yet to receive the required information from them. Hence, it is not possible to quantify the dues, if any, towards the Small Scale Units.

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Mar 31, 2010

1. Basis for preparation of financial statements

i. The financial statement have been prepared under the historical cost convention in accordance with the Indian Generally Accepted Accounting Principles (GAAP}, accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 and on the basis of a going concern.

ii. All the Income & expenditure are recognized on accrual basis,

iii. Figures have been taken to nearest rupee.

iv. Previous year figures have been re-grouped and re- arranged wherever considered necessary.

2. Fixed Assets

i. Fixed Assets have been stated at original cost less depreciation.

ii. Depreciation has been provided during the year on straight line method at revised rates, vide Notification GSR No. 756 E Dated: 16.12.93, as non continuous process on triple shift basis as per schedule XIV to the Companies Act, 1956.

3. Valuation of Inventories

Raw materials have been valued at cost or market

price, whichever is less, Work in process and other misc. Stocks have been valued on estimated basis, In respect of Finished Goods and Work in Process, applicable manufacturing overheads and other cost incurred in bringing the items of inventory to their present location and condition are also included. Finished Goods have been valued at cost inclusive of the provision of excise duty thereon, in accordance with the guidance note on accounting treatment for excise duty issued by the Institute of Chartered Accountants of India & other professional pronouncements. However, the same has no effect on the profits for the year.

4. Foreign Exchange Transactions

Monetary liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year end rates. The resultant gain/loss, if any, is recognized in the Profit and Loss Account, except exchange differences on liabilities incurred for acquisition of fixed assets, which are adjusted to the carrying amounts of respective amounts of the respective assets. Non-monelary assets and liabilities related to foreign currency transactions are reported at the rate on the date of the transaction.

5. Revenue Recognition

i. Sales are slated net of returns, inclusive of excise duty, job work charges received, export incentives and Mercantile sales.

ii. Dividend income has been accounted for on receipt basis.

ill. Export benefits are accounted for on accrual basis,

6. Employees Benefits

i. The Contribution to the Provident Fund, under the defined contribution plans are charged lo revenue.

ii. The accrued liability towards gratuity has been calculated by SBI Life insurance Co Ltd amounting to Rs. 148.90 lacs (Rs. 57.17 lacs) and has been provided upto 31st March 2010.

iii. The leave encashment has been provided amounting toRs.64.56ldCSfRs.34.27lacs) upto 31st March 2010.

7. Apportionment of Indirect Expenses

Indirect expenses incurred by the company have been apportioned amongst all the units, on the following basis: -

Fixed Administrative Expenses - on the basis of sales value, Export expenses - on the basis of exports in value Other Expenses-on the basis of sales value

8. Miscellaneous Expenditure

Deferred Revenue expenses are written off over a period of 5 years.