I. Current and Non-Current Classification

All assets and liabilities have been classified as current and non-current as per the Company's
normal operating cycle and other criteria set out in the Schedule III of the Act and Ind AS 1 -
Presentation of Financial Statements.

Assets:

An asset is classified as current when it satisfies any of the following criteria:

a. it is expected to be realized in, or is intended for sale or consumption in, the Company's normal
operating cycle;

b. it is held primarily for the purpose of being traded;

c. it is expected to be realized within twelve months after the reporting date; or

d. It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting date.

Liabilities:

A liability is classified as current when it satisfies any of the following criteria:

a. it is expected to be settled in the Company's normal operating cycle;

b. it is held primarily for the purpose of being traded;

c. it is due to be settled within twelve months after the reporting date; or

d. The Company does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity instruments do not affect its
classification.

Current assets and liabilities include the current portion of assets and liabilities, respectively. All other
assets and liabilities are classified as non-current. Deferred tax assets and liabilities are always
disclosed as non-current.

II. Property, Plant And Equipment

1. Recognition and Measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses, if any. The cost of an item of property, plant and equipment comprises: -

- Its purchase price, including import duties and non-refundable purchase taxes, after deducting
trade discounts and rebates.

- Any costs directly attributable to bringing the asset to the location and condition necessary for it
to be capable of operating in the manner intended by management.

- The initial estimate of the costs of dismantling and removing the item and restoring the site on
which it is located, the obligation for which the Company incurs either when the item is acquired
or as a consequence of having used the item during a particular period for purposes other than to
produce inventories during that period.

- Income and expenses related to the incidental operations, not necessary to bring the item to the
location and condition necessary for it to be capable of operating in the manner intended by
management, are recognized in Statement of Profit and Loss. If significant parts of an item of
property, plant and equipment have different useful lives, then they are accounted for as
separate items (major components) of property, plant and equipment.

The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if, it is
probable that future economic benefits associated with the expenditure/item will flow to the
company, and the cost of the item can be measured reliably.

Freehold land is carried at historical cost less any accumulated impairment losses.

2. Subsequent Expenditure

Subsequent expenditure related to an item of tangible asset are added to its gross value only if it
increases the future benefits of the existing asset, if it is probable that future economic benefit will
flow to the Company from that expenditure and cost can be measured reliably. Other repairs and
maintenance costs are expensed off as and when incurred.

3. Depreciation

Depreciation on Property, Plant and Equipment is calculated using written down value method
(WDV) to write down the cost of property and equipment to their residual values over their estimated
useful lives which is in line with the estimated useful life as specified in Schedule II of the
Companies Act, 2013.

The residual values, useful lives and methods of depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted prospectively, if appropriate.

Property, plant and equipment is derecognized on disposal or when no future economic benefits are
expected from its use. Any gain or loss arising on derecognized of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is recognized in
other income/ expense in the Statement of Profit and Loss in the year the asset is derecognized.
Depreciation on assets acquired/ sold during the year is recognized on a pro-rata basis to the
Statement of Profit and Loss from/ upto the date of acquisition/ sale.

The date of disposal of an item of property, plant and equipment is the date the recipient obtains
control of that item in accordance with the requirements for determining when a performance
obligation is satisfied in Ind AS 115.

III. Intangible assets

Intangible assets that are acquired by the Company and that have finite useful lives are measured at
cost less accumulated amortization and accumulated impairment losses, if any.

Subsequent expenditure is capitalized only if it is probable that the future economic benefits
associated with the expenditure will flow to the Company.

Amortizations calculated using written down value method (WDV) to write down the cost of property
and equipment to their residual values over their estimated useful lives which is in line with the
estimated useful life.

IV. Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not
occupied by the Company, is classified as investment properties. Investment property is measured
initially at its cost, including related transaction costs and borrowing costs where applicable.
Subsequent expenditure is capitalized to the asset's carrying amount only when it is probable that
future economic benefits associated with the expenditure will flow to the Company and the cost of the
item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
When part of an investment property is replaced, the carrying amount of the replaced part is de¬
recognized.

Investment properties are depreciated using the WDV method over their estimated useful lives.

V. Government grants and subsidies

The Government grants in the form of subsidy are presented in the balance sheet by deducting it
from carrying amount of the eligible assets on a pro rata basis. The grant is recognized in the
Statement of Profit and Loss over the life of a depreciable asset as a reduced depreciation expenses.
During the year, the Company has received a government grant amounting to Rs. 22.61 Lakhs
(sanctioned amount Rs. 90.44 Lakhs) under MSME Scheme 2021 for the investment in plant and
machinery and Factory Building. The grant is receivable in four equal annual installments over a
period of four years.

As per the Company's accounting policy, the government grant related to a specific asset is
deducted from the cost of the asset. Accordingly, the sanctioned grant of Rs. 90.44 Lakhs has been
deducted from the gross carrying amount of the respective plant and machinery.

The balance amount of Rs. 67.83 Lakhs is receivable in the next three years and is classified under:

• Other Current Assets - Rs. 22.61 Lakhs

• Other Non-Current Assets - Rs. 45.22 Lakhs

VI. Leases

1. As Lessee:

The Company evaluates all lease contracts in accordance with Ind AS 116 Leases to determine
whether a contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.

a) Lease of Industrial Land: The Company has leasehold rights over certain industrial land under
long-term lease agreements, which are renewable. Although these leases are recognized in the
financial statements, the annual lease payments under such arrangements are not material.
Accordingly, the Company has elected to apply the recognition exemption provided under paragraph
5(b) of Ind As 116 for leases where the underlying asset is of low value. Lease payments under these
arrangements are recognized as an expense on a straight-line basis over the lease term.

b) Short-Term Lease: The Company has entered into lease agreements for certain properties with
terms less than 12 months. These leases are cancellable and generally renewable based on mutual
agreement. The Company applies the short-term lease exemption under Ind AS 116 and does not
recognize right-of-use assets or lease liabilities for such arrangements. Lease payments are
recognized as an expense on a straight-line basis over the lease term.

2. As lessor:

The Company earns rental income from leasing out properties under operating leases. Lease
agreements are typically short-term in nature, with a term of 11 months, and do not transfer

substantially all the risks and rewards incidental to ownership of the assets to the lessee. These
leases are classified as operating leases under Ind AS 116 Leases.

Rental income arising from operating leases is recognised as income on a straight-line basis over
the lease term unless another systematic basis is more representative of the time pattern in which
benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased asset and recognised
as an expense over the lease term on the same basis as the lease income.

Lease income is presented in the statement of profit and loss as “Other Income” unless otherwise
specified.

VII. Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.

1. Financial Assets:

a) Initial Recognition and Measurement: All financial assets are recognized initially at fair value
when the parties become party to the contractual provisions of the financial asset. In case of
financial assets which are not recorded at fair value through profit or loss, transaction costs that
are directly attributable to the acquisition or issue of the financial assets, are adjusted to the fair
value on initial recognition.

b) Subsequent Measurement: The Company classifies its financial assets into various
measurement categories. The classification depends on the contractual terms of the financial
assets' cash flows and the Company's business model for managing financial assets.

Financial Assets Measured At Amortized Cost:

A financial asset is measured at Amortized Cost if it is held within a business model whose
objective is to hold the asset in order to collect contractual cash flows and the contractual terms
of the Financial Asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

Financial Assets Measured At Fair Value Through Other Comprehensive Income (FVOCI):

A financial asset is measured at FVOCI if it is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets and contractual
terms of financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.

Financial Assets Measured At Fair Value Through Profit Or Loss (FVTPL):

A financial asset which is not classified in any of the above categories are measured at FVTPL.

c) Other Equity Investments: All other equity investments are measured at fair value, with value
changes recognized in Statement of Profit and Loss, except for those equity investments for
which the Company has elected to present the changes in fair value through other
comprehensive income (FVOCI).

2. Financial Liabilities:

a) Initial recognition and measurement: All financial liabilities are recognized initially at fair value
and, in the case of borrowings and payables, net of directly attributable transaction costs. The
company's financial liabilities include trade and other payables.

b) Subsequent Measurement: Financial liabilities other than derivative financial instruments are
subsequently carried at amortized cost using the effective interest method or at FVTPL.
Financial liabilities at fair value through profit or loss:

A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative
or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at
fair value and net gains and losses including any interest expense, are recognized in profit or
loss.

Financial liabilities subsequently measured at amortized cost

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are
measured at amortized cost in subsequent accounting periods. The carrying amounts of
financial liabilities that are subsequently measured at amortized cost are determined based on
the effective interest rate (EIR) method. Interest expense that is not capitalized as part of costs
of an asset is included in the ‘Finance costs' line item in the profit or loss.

After initial recognition, such financial liabilities are subsequently measured at amortized cost
using the EIR method. Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR
amortization is included as finance costs in the profit or loss.

3. De-recognition of Financial Assets And Liabilities:

a) Financial Asset:

The Company derecognizes a financial asset when the contractual cash flows from the asset
expire or it transfers its rights to receive contractual cash flows from the financial asset in a
transaction in which substantially all the risks and rewards of ownership are transferred. Any
interest in transferred financial assets that is created or retained by the Company is recognized
as a separate asset or liability.

b) Financial Liability:

A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or expires. Where an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as de-recognition of the original liability
and the recognition of a new liability. The difference between the carrying value of the original
financial liability and the consideration paid is recognized in the Statement of profit and loss.

4. Offsetting

Financial assets and financial liabilities are generally reported gross in the balance sheet.
Financial assets and liabilities are offset and the net amount is presented in the balance sheet
when the Company has a legal right to offset the amounts and intends to settle on a net basis or
to realize the asset and settle the liability simultaneously in all the following circumstances:

a. The normal course of business

b. The event of default

c. The event of insolvency or bankruptcy of the Company and/or its counterparties.

5. Impairment of Financial Assets:

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for
measurement and recognition of impairment loss on the Trade receivables or any contractual
right to receive cash or another financial asset that result from transactions that are within the
scope of Ind AS 115.

The Company follows ‘simplified approach' for recognition of impairment loss allowance on
trade receivables or any contractual right to receive cash or another financial asset.

VIII. Inventories

Inventories consists of raw materials, packing materials and finished goods. Inventories are valued
at lower of cost and net realizable value. Cost is determined on First-In-First-Out basis.

Cost of raw materials and packing materials includes cost of purchase and other costs incurred in
bringing the inventories to their present location and condition.

Cost of finished goods includes direct materials, labour and proportion of manufacturing overheads
based on the normal operating capacity, wherever applicable. Cost of finished goods further
includes other costs incurred in bringing the inventories to their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated
costs of completion and estimated costs necessary to make the sale.

IX. Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short¬
term deposits with a maturity of three months or less, which are subject to an insignificant risk of
changes in value.

For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding bank overdrafts, if any, as they are
considered an integral part of the Company's cash management

X. Revenue from operations

A contract with a customer exists only when: the parties to the contract have approved it and are
committed to perform their respective obligations, the Company can identify each party's rights
regarding the distinct goods or services to be transferred (“performance obligations”), the Company
can determine the transaction price for the goods or services to be transferred, the contract has
commercial substance and it is probable that the Company will collect the consideration to which it
will be entitled in exchange for the goods or services that will be transferred to the customer.
Revenues are recorded in the amount of consideration to which the Company expects to be entitled
in exchange for performance obligations upon transfer of control to the customer and is measured at
the fair value of the consideration received or receivable, net of returns, sales tax and applicable
trade discounts, allowances, Goods and Services Tax (GST) and amounts collected on behalf of
third parties.

1. Sale of products

The majority of customer contracts that the Company enters into consist of a single performance
obligation for the delivery of pharmaceutical products. The Company recognizes revenue from
product sales when control of the product transfers, generally upon shipment or delivery, to the
customer, or in certain cases, upon the corresponding sales by customer to a third party. The
Company records product sales net of estimated incentives/discounts, returns, and other
related charges. These are generally accounted for as variable consideration estimated in the
same period the related sales occur. The methodology and assumptions used to estimate
rebates and returns are monitored and adjusted regularly in the light of contractual and legal
obligations, historical trends, past experience and projected market conditions. The revenue for
such variable consideration is included in the Company's estimate of the transaction price only if
it is highly probable that a significant reversal of revenue will not occur once any uncertainty is
resolved. In making this assessment the Company considers its historical record of
performance on similar contracts.

2. Rendering of services:

Service income is recognized as per the terms of the contracts/arrangements when related
services are performed and is stated net of GST.

XI. Employee Benefits

1. Short Term Employee Benefit:

All employee benefits payable wholly within twelve months of rendering the service are
classified as short-term employee benefits. These benefits include short term compensated
absences such as paid annual leave. The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the services rendered by employees is recognized
as an expense during the period. Benefits such as salaries and wages, etc. and the expected
cost of the bonus/ex-gratia are recognized in the period in which the employee renders the
related service.

2. Post-employment employee benefits

a) Defined contribution plans:

Post-retirement contribution plans such as Employees' Pension Scheme, Labour Welfare Fund,
Employee State Insurance Corporation (ESIC) are charged to the profit or loss for the year when the
contributions to the respective funds accrue. The Company does not have any obligation other than
the contribution made.

b) Defined Benefits Plans:

Employees’ provident fund:

Provident Fund contributions are made to a trust administered by the Trustees. Trust makes
investments and settles member's claims. Interest Payable to the members shall not be at a rate
lower than the statutory rate. Liability is recognized for any shortfall in the plan assets vis-a-vis
actuarially determined liability of the fund obligation.

Gratuity Plan:

The company has a defined gratuity plan. Every employee who has rendered continuous service of 5
years or more is entitled to gratuity amount of 15 days salary (15/26 last drawn basic salary plus
dearness allowance) for each completed year for five year or more subject to maximum of Rs. 20
lakhs on superannuation, resignation, termination, disablement or death.

The liability in respect of gratuity and other post-employment benefits is calculated using the
Projected Unit Credit Method and spread over the period during which the benefit is expected to be
derived from employees' services.

Re-measurement of defined benefit plans in respect of post- employment are charged to the Other
Comprehensive Income.

c) Termination benefits:

Termination benefits are recognized as an expense when the Company is committed without any
possibility of withdrawal of an offer made to either terminate employment before the normal
retirement date or as a result of an offer made to encourage voluntary retirement.

XII. Borrowing costs

Borrowing costs are interest and other costs incurred by the Company in connection with the
borrowing of funds.

Borrowing costs directly attributable to acquisition or construction of those tangible fixed assets
which necessarily take a substantial period of time to get ready for their intended use are capitalized.
Other borrowing costs are recognized as an expense in the Statement of Profit and Loss of the
period in which they are incurred.

XIII. Other income and expenses

All other income and expense are recognized in the period they occur.

XIV. Taxes
Current Tax

Current tax assets and liabilities for the current and prior years are measured at the amount expected
to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute
the amount are those that are enacted, or substantively enacted, by the reporting date in the
countries where the Company operates and generates taxable income. Current income tax relating
to items recognized outside the statement of profit and loss is recognized outside the statement of
profit and loss (either in other comprehensive income or in equity). Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.

Deferred Tax

Deferred tax assets and liabilities are recognized for temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are
expected to apply when the related deferred income tax asset is realized or the deferred income tax
liability is settled.

Deferred tax assets are only recognized for temporary differences, if it is probable that future taxable
amounts will arise to utilize those temporary differences and losses. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the
related tax benefit will be realized.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current
tax assets and liabilities and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities are realized simultaneously.

XV. Segment reporting

The Company's main business is pharmaceutical manufacturing. Hence, there is no separate
reportable segment as per IND AS 108.