Turnover - Companies Law Ready Reckoner - Companies Law

As per section 2(91) of the Companies Act, 2013 , unless the context otherwise requires. Turnover means- the gross amount of revenue recognised in the profit and loss account from the sale, supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year; Secretary, Ministry Of Chemicals And Fertilizers, Govt. Of India Versus M/S. Cipla Ltd. And Others - 2003 (8) TMI 541 - Supreme Court 'Turnover' in its ordinary sense connotes amount of business usually expressed in terms of gross revenue transacted during a specified period (vide Collins Dictionary) . Broadly speaking, it represents the value of the goods or services sold or supplied during a period of time. The amount of money turned over or drawn in a business during certain period, is another shade of meaning . We need not refer to the definition of ' turnover ' in Sales Tax and other fiscal enactments reliance on which was placed by some of the learned counsel as they are not quite relevant for the purpose of understanding the expression ' turnover ' occurring in a policy document. Nor should we seek any assistance from the definition of 'sale turnover ' occurring in DPCO in a different context and for a different purpose. Going by its ordinary meaning and the way in which it is commonly understood in trade and commerce, it is difficult to equate turnover to the value of stock acquired either by means of imports or production. For instance, the entire stock in trade, say, lying in a godown and not calculated in business, cannot be regarded as turnover , even giving broadest meaning to the expression ' turnover .' The reasoning which could be spelt out from the order passed by NPPA (referred to supra) and in the counter-affidavits filed by the appellants that indigenous production plus imports furnishes an indicia of the total business in the country in relation to a particular bulk drug, cannot be accepted. It is only what is sold out and marketed that could be legitimately regarded as turnover of the specified drug. It may be that in the absence of availability of reliable data regarding sales, the import value and production value could be the basis to estimate the sale value after giving due allowance to various factors such as wastage, unsold stocks etc. But, treating the turnover as nothing but the value of stock produced or imported during a given period will be doing violence to the ordinarily accepted meaning of the expression ' turnover '. There can be no presumption that the entire stock of bulk drug produced or imported during the year had been sold out during that year either in the form of formulations or otherwise. However, we would like to make it clear that the production and import statistics are not altogether irrelevant. They are relevant in the sense that they furnish some basis for estimating the sales when there is no other reliable and comprehensive data of sales available.