SIGNIFICANT ACCOUNTING POLICIES A. Basis of Preparation The financial statements have been brpared and brsented under the historical cost convention on an accrual basis of accounting and in accordance with Generally Accepted Accounting Principles (GAAP) in India. GAAP comprises mandatory Accounting Standards as brscribed under section 133 of the Companies Act, 2013 ("Act"), read with Rule 7 ofthe Companies (Accounts) Rules, 2014 and guidelines issued by Securities and Exchange Board of India (SEBI). B. Use of Estimates The brparation of financial statements requires the Management of the Company to make estimates and assumptions that affect the reported balance of assets and liabilities, revenue and expenses and disclosures relating to contingent liabilities. The Management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Any revision of accounting estimates is recognised prospectively in the current and future periods. C. Operating Cycle All assets and liabilities have been classified as current or non-current as per Company's normal operating cycle and other criteria set out in Schedule III of the Act. D. Fixed Assets Tangible assets are stated at the cost of acquisition and includes amount added on revaluation, less accumulated debrciation. Government grants, other subsidies and impairment losses, if any. Cost of tangible assets comprises purchase price, non-refundable taxes, levies and any directly attributable cost of bringing the asset to its working condition for the intended use. Where several fixed assets are acquired for a consolidated price, the consideration is apportioned to fixed assets on fair value basis. Capital work-in-progress includes cost of fixed assets that are not ready for their intended use. Intangible assets are stated at the cost of acquisition, less accumulated amortisation and impairment losses, if any. Cost of intangible assets comprises purchase price, non-refundable taxes, levies and any directly attributable cost of making the asset ready for its intended use. E. Borrowing Costs Borrowing costs consists of interest, ancillary costs and other costs in connection with the borrowing of funds and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to interest costs. Borrowing costs attributable to acquisition and/or construction of qualifying assets are capitalised as a part of the cost of such assets, up to the date such assets are ready for their intended use. Other borrowing costs are charged to the Statement of Profit and Loss. F. Debrciation and Amortisation Debrciation on tangible fixed assets is provided on the Straight Line Method over the useful life of assets as brscribed under part C of Schedule II of the Act. In case of assets whose useful life is already exhausted as on 1st April 2014, the carrying value, net of residual value and deferred tax has been adjusted in retained earnings in accordance with the requirements of Schedule II of the Act. Debrciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed. Cost of leasehold land including brmium is amortised over the primary period of lease. Intangible assets are amortised on a systematic basis over the best estimate of their useful lives, commencing from the date the asset is available to the Company for its use. Raw materials and packing materials are valued at lower of cost and net realisable value after providing for obsolescence, if any. However, these items are considered to be realisable at cost if the finished products, in which they will be used, are expected to be sold at or above cost. Work-in-process, stock-in-trade and finished goods are valued at lower of cost and net realisable value. Finished goods and work-in-process include costs of raw material, labour, conversion costs and other costs incurred in bringing the inventories to their brsent location and condition. Cost of finished goods includes excise duty, wherever applicable. Cost of inventories is computed on weighted average basis. During the year, the Company has implemented Enterprise Resource Planning software enabling inventorisation of stores, spares and consumables. This has now enabled the Company to include in the inventory, in the Balance Sheet from thisyear, sub-category of stores, spares and consumables amounting to Rs.27.22 crore. The amount of profit before tax for the year, stands increased commensurately. H. Investments Long term investments are carried at cost, less provision for diminution (other than temporary) in value. Current investments are carried at lower of cost and fair value. Investment property is carried at cost, less debrciation computed in a manner brscribed for Fixed Assets. I. Foreign Exchange Transactions Transactions in foreign currencies are recorded at the exchange rates brvailing on the date of the transaction. Foreign currency monetary assets and liabilities and forward contracts are restated at year end exchange rates. Exchange differences arising on the settlement of foreign currency monetary items or on reporting Company's foreign currency monetary items at rates different from those at which they were initially recorded during the year or reported in the brvious financial statements, are recognised as income or expense in the year in which they arise. Non-monetary foreign currency items are carried at the rates brvailing on the date of the transaction. In respect of forward contracts, the brmium or discount on these contracts is recognised as income or expenditure over the period of the contract. Any profit or loss arising on cancellation or renewal of such contracts is recognised as income or expense of the year. Foreign branches are identified as integral foreign operations. All transactions are translated at rates brvailing on the date of transaction. Monetary assets and liabilities of the branch are restated at the year end rates. J. Provisions, Contingent Liabilities and Contingent Assets Provisions are recognised when the Company has a brsent obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. Disclosure of contingent liabilities is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a brsent obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent Assets are neither recognised nor disclosed in the financial statements. K. Revenue Recognition Revenue is recognised to the extent that is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue from sale of goods is recognised when significant risks and rewards of ownership of the goods have been passed to the buyer, which ordinarily coincides with despatch of goods to customers. Revenues are recorded at invoice value net of excise duty, sales tax, returns and trade discounts. Revenue from rendering of services are recognised on completion of services. Benefits on account of entitlement of export incentives are recognised as and when the right to receive is established. Technical Know-how and Licensing Fees are recognised as and when the right to receive such income is established as per terms and conditions of relevant agreement. Interest income is recognised using the time proportionate method, based on rates implicit in the transaction. Dividend income is recognised when the right to receive is established. L. Employee Benefits Liability on account of short term employee benefits is recognised on an undiscounted and accrual basis during the period when the employee renders service/vesting period of the benefit. Post retirement contribution plans such as Employees' Pension Scheme are charged to the Statement of Profit and Loss for the year when the contributions to the respective funds accrue. Post retirement benefit plans such as gratuity, leave encashment and provident fund are determined on the basis of actuarial valuation made by an independent actuary as at the Balance Sheet date. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss. Periodic contributions towards post retirement defined benefit plan such as provident fund administered through an Employees' Provident Fund Trust are charged to the Statement of Profit and Loss. M. Employee Stock Option Schemes In accordance with the SEBI regulations, the compensation cost of stock options granted to employees is calculated based on intrinsic value method, i.e. the excess of the market price of shares immediately prior to dates of grant over the exercise price to be paid by the option holders. The compensation cost is amortised to the Statement of Profit and Loss over the vesting period of the stock option. N. Income Tax Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of local Income Tax Laws as applicable to the financial year. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income of the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted as at the Balance Sheet date. The Company offsets, on a year-on-year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis. O. Impairment of Assets At each Balance Sheet date, the Company assesses whether there is any indication that any asset may be impaired. If any such indication exists, the carrying value of such assets is reduced to its estimated recoverable amount and the amount of such impairment loss is charged to the Statement of Profit and Loss. If, at the Balance Sheet date, there is an indication that a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of debrciated historical cost. P. Research and Development Revenue expenditure on Research and Development is recognised as expense in the year in which it is incurred. Capital expenditure on Research and Development is shown as addition to Fixed Assets. Q. Expenditure on Regulatory Approvals Expenditure incurred for obtaining regulatory approvals and registration of products for overseas markets is charged to the Statement of Profit and Loss. R. Government Grants and Subsidies Capital subsidy/Government grants are recognised when there is a reasonable assurance that all relevant conditions will be complied with and it is reasonably certain that the ultimate collection will be made. Capital subsidy/Government grants related to specific fixed assets are shown as deduction from the gross value ofthe asset concerned in arriving at its book value. The grant/subsidy is thus recognised in the Statement of Profit and Loss over the useful life of such fixed assets byway of a reduced debrciation charge. S. Leases Where the Company is a Lessee Lease rentals on assets taken on operating lease are recognised as expense in the Statement of Profit and Loss on straight line basis over the lease term in accordance with the lease agreement. Where the Company is a Lessor Lease rentals on assets given on operating lease are recognised as income in the Statement of Profit and Loss on straight line basis in accordance with the lease agreement. T. Earnings Per Share Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit attributable to equity shareholders and the weighted average number of shares outstanding are adjusted for the effect of all dilutive potential equity shares from the exercise of options on unissued share capital. The number of equity shares is the aggregate of the weighted average number of equity shares and the weighted average number of equity shares are to be issued on the conversion of all the dilutive potential equity shares into equity shares. [2] Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure For R.G.N. Price & Co., Chartered Accountants Firm Reg. No. 002785S R. Rangarajan Partner Membership No. 41883 As per our report of even date For V. Sankar Aiyar & Co., Chartered Accountants Firm Reg. No. 109208W V. Mohan Partner Membership No. 17748 Subhanu Saxena Managing Director and Global Chief Executive Officer Rajesh Garg Executive Director and Global Chief Financial Officer Mital Sanghvi Company Secretary Place : Mumbai, Date : 29th May 2015 |