NOTE "1" SIGNIFICANT ACCOUNTING POLICIES: a) Basis of Preparation of Financial Statements The Financial statements have been brpared under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India ("GAAP") including the Accounting Standards ("AS") notified under the relevant provisions of the Companies Act,2013. b) Inflation The financial statements are based on historical costs. These costs are not adjusted to reflect the impact of the changing value of the purchasing power of money. c) Use of Estimates The brparation of Financial Statements in conformity with GAAP requires Management to make estimate and assumption that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amount of revenue and expenses for the year. Actual result could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized. Any revision to an accounting estimate is recognized prospectively in the year of revision. d) Inventories Raw Material, Packing Material, Stores and spare parts, Work-in-progress and Finished Goods are valued at cost or net realizable value whichever is lower. Cost of Raw Materials, Packing Materials and Stores & spare parts are determined on last purchase price. Work-in-progress and Finished Goods inventories include production overheads, to the extent applicable. e) Revenue Recognition i. Sales are recognized net of returns, trade discounts, rebates and include excise duty on manufactured products. ii. Revenue in respect of export sales is recognized on shipment of products. iii. Service Income (Processing Charges) is recognized pro-rata over the period of the contract as and when services are rendered. iv. Export incentive benefits consist of duty drawback, high value added licenses and DEPB entitlements. These are recognized on the basis of receipt of proof of export. v. Interest is recognised on time proportion basis. vi. Dividend Income is recognised when the right to receive the same is established. f) Fixed Assets Fixed Assets are stated at cost net of cenvat credit less accumulated debrciation and impairment loss, if any. Cost comprises the purchase price and any attributable costs of bringing the assets to their working condition for intended use. g) Debrciation Debrciation on the Fixed Assets is provided to the extent of debrciable amount on the Written Down Value Method [both Tangible & Intangible]. Debrciation is provided based on useful life of the assets as brscribed in Schedule II to the Companies Act, 2013. h) Impairment of Assets In accordance with AS-28 on "Impairment of Assets" notified under the relevant provisions of the Companies Act, 2013, where there is any indication of impairment of the company's assets related to cash generating units, the carrying amounts of such assets are reviewed at each balance sheet date to determine whether there is any impairment. The recoverable amount of such assets is estimated as the higher of its net selling price and its value in use. An impairment loss is recognized whenever the carrying amount of such assets exceeds its recoverable amount. Impairment loss, if any, is recognized in the Statement of Profit and Loss. i) Investments 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 carried at cost. Provision for diminution in their values is made only if the diminution is other than temporary in nature. Current investments are carried at the lower of cost and quoted/fair value, computed category wise. j) Foreign Currency Transactions i. Transactions denominated in foreign currencies are recorded at exchange rate brvailing at the time of the transaction. Monetary items denominated in foreign currencies at Balance sheet date are restated at the year-end rates. Non Monetary foreign currency items are carried at cost. ii. Exchange differences arising as a result of the subsequent settlements or on transactions are recognized as income or expenses in the Statement of Profit & Loss except the exchange differences arising on long term foreign currency monetary items relating to the acquisition of the fixed assets, which are adjusted to the carrying cost of the assets. k) Employee Benefits i. Short term employee benefits are recognized as expenses at the undiscounted amounts in the Statement of profit & loss of the year in which the related service is rendered. ii. Post employment & other Long Term Employee Benefits are recognized as an expense in the Statement of Profit & Loss for the year in which it is incurred. Post employment and other long term employee benefits are recognised as an expense in the Statement of Profit & Loss for the year in which the employee has rendered services. The expenses are recognised at the brsent value of the amounts payable determined using actuarial valuation techniques, with effect from April 2014. Actuarial gains and losses in respect of post employment and other long term benefits (net of expected return on plan assets) are charged to the Statement of Profit & Loss. l) Taxes on Income i. Provision for income tax (current tax) is determined on the basis of the taxable income of the current year in accordance with the Income Tax Act, 1961. ii. Deferred tax, if any, is recognized in respect of deferred tax assets (subject to the consideration of prudence) and deferred tax liabilities on timing differences, being the difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years. iii. Minimum Alternate Tax ('MAT') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Company recognises MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement". The Company reviews the "MAT Credit Entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will be able to utilise the MAT Credit Entitlement within the period specified under the Income-tax Act, 1961. m) Borrowing Costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets/stock in trade are capitalized as a part of the cost of such assets or added to stock in trade. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or Sale. All other borrowing costs are recognized as an expense in the period in which they are incurred. n) Employee Stock Option Plan Employee Stock Options are evaluated and accounted on intrinsic value method as per the accounting treatment brscribed by Guidance Note on 'Accounting for Employee Share-based payments' issued by Institute of Chartered Accountants of India (ICAI) read with Securities and Exchange Board of India (SEBI) (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 issued by SEBI. The excess of market value if any, of the stock options as on the date of grant over the exercise price of the options is recognized as deferred employee compensation and is charged to the Statement of Profit and Loss on vesting basis over the vesting period of the options. The un-amortized portion of the deferred employee compensation is reduced from Employee Stock Option Outstanding, which is shown under Reserves and Surplus. o) Provisions, Contingent Liabilities And Contingent Assets Provisions involving substantial degree of estimation in measurement are recognized when there is a brsent 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. 2. The company is mainly engaged in the development and operations of Pharmaceutical business. All the activities of the company revolve around this main business. Considering the nature of the company's business and operations, there are no separate reportable segments (business and/or geographical) in accordance with the requirements of Accounting Standard 17; "Segment Reporting", issued by the Institute of Chartered Accountants of India. 3. Contingent Liabilities:- a. Estimated amount of guarantees & Letter of Credit given not provided for in the accounts is Rs. 63.08 Lakhs (Previous Year Rs. 63.08/- Lakhs). b. The disputed statutory dues in respect of Income Tax aggregating to Rs. 50,305,650/- pertaining to A.Y. 2008-09 have not been deposited as the matter is pending before the CIT (Appeals). 4. Employee Stock Option Plan As per Employee stock options Scheme (Kilitch ESOS 2007), each option is convertible into one equity shares Rs. 10/- each at exercise price of Rs. 47.50/- per share. During the year, fresh options were not granted and the employees did not exercise any options. 5. The Balances of the Sundry Debtors, Sundry Creditors, Loans & Advances and Inter Corporate Deposits, whether Debit or Credit, are subject to confirmations from the respective parties and the reconciliations/ adjustments arising there from, if any. However, in the opinion of the Management, the Current Assets, Loans and advances are approximately of the value stated in the balance sheet if realized in the ordinary course of the business and the provision for all known liabilities is adequate and not in excess of amounts considered reasonably necessary. 6. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at March 31, 2015. The above information, regarding Micro and Small Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors. Figures of the brvious year have been regrouped and/or recast wherever necessary so as to conform to the current year's classification. As per our report of even date For A. M. Ghelani & Company Chartered Accountants FRN:103173W Chintan A. Ghelani Partner M. No. 104391 For and on behalf of the Board of Directors Mukund P. Mehta (Managing Director) DIN: 00147876 Bhavin Mehta Executive Director DIN: 00147895 C.S.Krishnan Chief Financial Officer Nirmal Kumar Company Secretary Mumbai, Dated: 28th May, 2015 |