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Schedules annexed to and forming part of the Financial Statements
(All amounts in millions of Indian Rupees, unless otherwise stated)
SCHEDULE 21 - NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
i) Basis of Accounting
The Financial Statements are prepared to comply in all material aspects with the accounting principles
generally accepted in India, including the applicable Accounting Standards notified under section 211(3C) of the
Companies Act,1956 and the relevant provisions of the Companies Act,1956.
ii) Fixed Assets (including Intangibles), Depreciation and Amortisation
Fixed assets are stated at cost less accumulated depreciation and amortisation. The Company capitalises all
costs relating to the acquisition and installation of fixed assets. Expenditure directly related to the setting up of
new projects, is capitalised as an indirect cost towards construction of the fixed assets.
Depreciation is provided using the straight line method, pro-rata to the period of use of assets, based on the
useful lives of fixed assets as estimated by management, or at the rates specified in Schedule XIV of the
Companies Act, 1956, whichever is higher. Brands/Intellectual property rights are amortised from the month of
products launch/commercial production, over the estimated economic life not exceeding 10 years.
Fixed assets having aggregate cost of ` 5,000 or less are depreciated fully in the year of acquisition.
The Company has estimated the useful life of its assets as follows:
Category
Estimated useful life (in years)
Factory and Other Building 30 - 55
Plant and Machinery 8 - 20
Vehicles 5 - 6
Equipments and Air conditioners 4 - 20
Furniture and Fixtures 10
Computer Software 5
Brands 5 - 10
Leasehold land and improvement is amortised over the period of lease.
iii) Borrowing Costs
Borrowing costs that are attributable to the acquisition and construction of a qualifying asset are capitalised as a
part of the cost of the asset. Other borrowing costs are recognised as an expense in the year in which they are
incurred.
iv) 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 exist, 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 than 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 a previously assessed impairment loss no longer exist, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
v) Foreign Currency Transactions
a) Foreign currency transactions are recorded at the exchange rates prevailing on the date of such
transactions. Monetary assets and liabilities as at the Balance Sheet date are translated at the rates
of exchange prevailing at the date of the Balance Sheet. Gain/Loss arising on account of differences in
foreign exchange rates on settlement/translation of monetary assets and liabilities are recognised in the
Profit and Loss Account, unless they are considered as an adjustment to borrowing costs.
b) Gain/Loss on account of foreign exchange fluctuation in respect of liabilities in foreign currencies specific
to acquisition of fixed assets are recognised in the Profit and Loss Account.
vi) Investments
Long-term investments are stated at cost. Provision, where necessary, is made to recognise a decline, other
than temporary, in the value of the investments.
vii) Inventories
Inventories of finished goods, consumable store and spares are valued at cost or net realisable value, whichever is
lower. Cost of raw materials and packing materials is ascertained on a weighted average cost basis. Cost of work-inprocess
and finished goods include the cost of materials consumed, labour and manufacturing overheads. Excise
and customs duty accrued on production or import of goods, as applicable, is included in the valuation of inventories.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
The Company considers several factors in determining the allowance for slow moving, obsolete and other
non-saleable inventory including estimated shelf life, planned product discontinuances, price changes, ageing
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