B. Material Accounting Policies

a) Statement of Compliance

The standalone financial statements of the Company have
been prepared in accordance with Indian Accounting
Standards (“Ind AS”) notified under the Companies (Indian
Accounting Standards) Rules, 2015 and relevant provisions
of the Companies Act, 2013 (“the Act”) (as amended from
time to time).

b) Basis of preparation

The standalone financial statements have been prepared
on a historical cost basis, except for the following:

• certain financial assets and liabilities that are measured
at fair value;

• defined benefit plans - plan assets measured at fair
value; and

• share-based payments.

The financial statements are presented in Indian INR which
is the functional currency and presentation currency of the
Company and all values are rounded to the nearest lakhs
(INR 00,000), except where otherwise indicated.

c) Operating Cycle

The operating cycle of the Company is the time between
the acquisition of assets for processing and their realisation
in cash or cash equivalents. When the Company's normal
operating cycle is not clearly identifiable, it is assumed to
be twelve months.

d) Revenue recognition

The Company receives revenue for supply of goods to
external customers against orders received. The majority
of contracts that the Company enters into relate to sales
orders containing single performance obligations for the
delivery of pharmaceutical and vaccine products. The
average duration of a sales order is less than 12 months.
Product revenue is recognised when control of the goods
is passed to the customer. Control is usually transferred
upon shipment, delivery to, upon receipt of goods by
the customer, in accordance with the individual delivery

and acceptance terms agreed with the customers.
Product revenue represents net invoice value including
fixed and variable consideration. Variable consideration
arises on the sale of goods as a result of discounts and
allowances given and accruals for estimated future
returns and rebates. Revenue is not recognised in full
until it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur.
The methodology and assumptions used to estimate
returns are monitored and adjusted regularly in the light of
contractual and legal obligations, historical trends, past
experience and projected market conditions.

Rendering of services

Income from clinical research and data management
services, common cost allocation to group companies
and manufacturing charges recovery is recognised in
the accounting period in which the services are rendered
based on terms of the agreement.

Rights of return

Certain contracts provide a customer with a right to
return the goods within a specified period. GSK uses the
expected value method to estimate the goods that will not
be returned because this method best predicts the amount
of variable consideration to which the Company will be
entitled. The requirements in Ind AS 115 on constraining
estimates of variable consideration are also applied in
order to determine the amount of variable consideration
that can be included in the transaction price. For goods
that are expected to be returned, instead of revenue, the
Company recognises a sales return liability.

Interest Income

Interest income is accrued on a time basis, by reference to
the principal outstanding and at the effective interest rate
applicable (provided that it is probable that the economic
benefits will flow to the Company and the amount of
income can be measured reliably)

e) Property, plant and equipment

Freehold land is carried at historical cost. All other items
of property, plant and equipment are stated at historical
cost, net of accumulated depreciation and accumulated
impairment losses, if any. Historical cost includes
expenditure that is directly attributable to the acquisition
of the items and the cost of bringing the asset to working
condition for its intended use.

Subsequent costs are included in the asset's carrying
amount or recognised as a separate asset, as appropriate,
only when it meets the recognition criteria. All other
repairs and maintenance are charged to the statement of
profit and loss during the reporting period in which they
are incurred.

Depreciation is provided on the straight-line method over
the estimated useful lives of the assets (other than freehold
land) as per the rates prescribed under Schedule II to the
Companies Act, 2013 or re-assessed useful life based on
technical evaluation as under:

Depreciation is provided pro-rata for the number of
months available for use. Depreciation on sale / disposal
of assets is provided pro-rata up to the end of the month
of sale / disposal.

Leasehold building, leasehold land and leasehold
improvements are amortised over the period of the lease.

Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
recognised as income or expense in the statement of profit
and loss.

Cost of items of property, plant and equipment not ready
for intended use as on the balance sheet date is disclosed
as capital work in progress. Advances given towards
acquisition of property, plant and equipment outstanding
at each balance sheet date are disclosed as capital
advance under other non-current assets.

An item of property, plant and equipment and any
significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on disposal
of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset)
is included in the statement of profit and loss.

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.

f) Intangible assets

Intangible assets are stated at cost of acquisition less
accumulated amortisation / depletion and impairment
loss, if any. The cost comprises of purchase price and
any cost directly attributable to bringing the asset to its
working condition for the intended use. Gains and losses
on disposals are determined by comparing proceeds

with carrying amount. These are recognised as income or
expense in the statement of profit and loss.

Derecognition of Intangible assets

An intangible asset is derecognised on disposal, or when
no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of
an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of
the asset, are recognised in profit or loss when the asset
is derecognized.

Amortisation method and periods

Amortisation is charged on a straight-line basis over
the estimated useful lives. The estimated useful life and
amortisation method are reviewed at the end of each
annual reporting period and adjusted prospectively,
if appropriate.

Software expenditure have been amortised on a straight
line basis over a period from 8 to 10 years.

g) Impairment of non-financial assets

The carrying values of all non-current assets are reviewed
for impairment, either on a stand-alone basis or as part of
a larger cash generating unit, when there is an indication
that the assets might be impaired. An impairment loss is
recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less cost of
disposal and value in use. Any provision for impairment is
charged to the income statement in the year concerned.
Non-financial assets that suffered an impairment are
reviewed for possible reversal of the impairment at the
end of each reporting period.

h) Leases

The Company recognises right of use assets under lease
arrangements in which it is the lessee. Rights to use assets
owned by third parties under lease agreements are
capitalised at the inception of the lease and recognised
on the balance sheet. The corresponding liability to the
lessor is recognised as a lease obligation. The carrying
amount is subsequently increased to reflect interest on
the lease liability and reduced by lease payments made.
For calculating the discounted lease liability, the lessee's
incremental borrowing rate is used. The incremental
borrowing rate is calculated at the rate of interest at which
the Company would have been able to borrow for a similar
term and with a similar security the funds necessary to
obtain a similar asset in a similar market.

Finance costs are charged to the income statement
so as to produce a constant periodic rate of charge
on the remaining balance of the obligations for each
accounting period.

Lease payments included in the measurement of the
lease liability comprise:

• Fixed lease payments (including in substance fixed
payments), less any lease incentives receivable;

If modifications or reassessments occur, the lease liability
and right of use asset are re-measured. Right of use assets
where title is expected to pass to the Company at a point
in the future are depreciated on a basis consistent with
similar owned assets. In other cases, right of use assets are
depreciated over the shorter of the useful life of the asset
or the lease term.

i) 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.

Initial measurement

Financial assets and financial liabilities are recognised in
the Company's balance sheet when the Company becomes
a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially
measured at fair value, except for trade receivables that
do not have a significant financing component which are
measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial
assets and financial liabilities at FVTPL) are added to
or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at FVTPL are
recognised immediately in profit or loss.

Financial assets

The Company classifies its financial assets in the following
measurement categories:

- those to be measured subsequently at fair value (either
through other comprehensive income, or through profit
or loss), and

- those measured at amortised cost.

The classification depends on the Company's business
model for managing financial assets and the contractual
terms of the cash flows.

For assets measured at fair value, gains and losses will
either be recorded in the statement of profit and loss or
other comprehensive income. For investments in debt
instruments, this will depend on the business model in
which the investment is held. For investments in equity
instruments, this will depend on whether the Company
has made an irrevocable election at the time of initial

recognition to account for the equity investment at fair
value through other comprehensive income.

Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at
amortised cost.

Fair value through profit or loss: Assets that do not meet
the criteria for amortised cost or FVOCI are measured at
fair value through profit or loss.

Unquoted investments are classified under Level 3 of the
fair value hierarchy.

The fair value is determined using valuation techniques
including discounted cash flow method, comparable
companies' multiples or recent transaction prices,
where available.

Where the investment has been recently made, cost may
represent the best estimate of fair value in the absence
of significant changes in the investee's performance or
market conditions.

Current Investments

Current investments comprise mutual fund investments
(limited life funds) which the Company holds with the
intention to sell and which it may sell in the short term.
Where acquired with this intention, they are measured
at FVTPL. They are initially recorded at fair value and
then remeasured at subsequent reporting dates to fair
value. Unrealised gains and losses are recognised in the
income statement

Financial liabilities

All financial liabilities (other than derivative instruments)
are subsequently measured at amortized cost using
the effective interest method. The carrying amounts of
financial liabilities that are subsequently measured at
amortized cost are determined based on the effective
interest method. Interest expense that is not capitalised as
a part of cost of an asset is included in the “Finance Costs”

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and
only when, the Company's obligations are discharged,
cancelled or have expired. The difference between the
carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised in
profit or loss.

Trade Receivables

Trade receivables are measured in accordance with
the business model under which each portfolio of trade
receivables is held. Trade receivables measured at

amortised cost are carried at the original invoice amount
less allowances for expected credit losses.

Expected credit losses are calculated in accordance with
the simplified approach permitted by IND AS 109, using
a provision matrix applying lifetime historical credit loss
experience to the trade receivables. The expected credit
loss rate varies depending on whether, and the extent
to which, settlement of the trade receivables is overdue
and it is also adjusted as appropriate to reflect current
economic conditions and estimates of future conditions.
For the purpose of determining credit loss rates, customers
are classified into groupings that have similar loss
patterns. The key drivers of the loss rate are the nature of
the business unit and the location and type of customer.

When a trade receivable is determined to have no
reasonable expectation of recovery it is written off, firstly
against any expected credit loss allowance available and
then to the income statement. Subsequent recoveries of
amounts previously provided for or written off are credited
to the income statement.

Derecognition of Financial Assets

The company derecognises a financial asset only
when the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership
of the asset to another entity. If the Company neither
transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred
asset, the Company recognises its retained interest in
the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the
risks and rewards of ownership of a transferred financial
asset, the Company continues to recognise the financial
asset. On derecognition of a financial asset in its entirety,
the difference between the carrying amount at the
date of derecognition and the consideration received is
recognised in profit or loss.

j) Inventories

Inventories are valued at lower of cost and net realisable
value. Cost is determined on weighted average cost
basis. The cost of work-in-progress (other than those
lying at third party manufacturing sites which is valued
at material cost) and finished goods comprises of raw
materials, direct labour, other direct costs and related
production overheads, but excludes interest expense. Net
realisable value is the estimate of the selling price in the
ordinary course of business, less the costs of completion
and selling expenses.

The Company regularly assesses whether there is any
indication of a diminution in the value of inventories. Such
indications may include, but are not limited to, evidence
of obsolescence, damage, changes in market conditions,

or significant declines in selling prices. If there is objective
evidence of a diminution in the value of inventories, the
carrying amount of the inventories is reduced to their net
realizable value.

k) Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.

For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash on hand,
short-term balances (with an original maturity of three
months or less from date of acquisition).

l) Foreign currency transactions

Items included in the standalone financial statements
of the Company are measured using the currency of
the primary economic environment in which the entity
operates ('the functional currency'). The standalone
financial statements are presented in Indian Rupee (INR),
which is Company's functional and presentation currency.

In preparing the financial statements, transactions in
currencies other than the entity's functional currency
(foreign currencies) are recognised at the rates of
exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the
rates prevailing at that date. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange
rates are generally recognised in the statement of profit
and loss.

Foreign exchange gains and losses are presented in the
statement of profit and loss on a net basis within other
expenses/ income.

m) Taxes

Income tax expense represents the sum of the current tax
and deferred tax.

Current tax charge is based on taxable profit for the
year. Taxable profit differs from profit as reported in the
statement of profit and loss because some items of income
or expense are taxable or deductible in different years
or may never be taxable or deductible. The Company's
liability for current tax is calculated using Indian tax rates
and laws that have been enacted by the reporting date.

Current tax assets and liabilities are offset when there is
a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to
income taxes levied by the same taxation authority.

The Company 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 is the tax expected to be payable or
recoverable in the future arising from temporary differences
between the carrying amounts of assets and liabilities in
the balance sheet and the corresponding tax bases used in
the computation of taxable profit. It is accounted for using
the balance sheet liability method. Deferred tax liabilities
are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to
the extent that it is probable that taxable profits will be
available against which deductible temporary differences
can be utilised. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the
assets to be recovered. Deferred tax is calculated at the
tax rates that are expected to apply in the period when
the liability is settled or the asset realised, based on tax
rates that have been enacted or substantively enacted by
the reporting date.

Deferred income tax assets and liabilities are off-set
against each other and the resultant net amount is
presented in the balance sheet, if and only when the
Company currently has a legally enforceable right to set¬
off the current income tax assets and liabilities.

The carrying amount of deferred tax assets is reviewed
at each reporting date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be
available to allow all or part of the asset to be recovered.

Current and deferred tax is recognised in the statement of
profit and loss, except to the extent that it relates to items
recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.

n) Employee benefits

(a) Short Term Employee Benefits

A liability is recognised for benefits accruing to employees
in respect of salaries, wages, performance incentives,
medical benefits and other short term benefits in the
period the related service is rendered, at the undiscounted
amount of the benefits expected to be paid in exchange
for that service.

(b) Post-Employment Benefits

(i) Defined Contribution Plans

The Company's defined contribution plans are
superannuation and employees' pension scheme (under
the provisions of the Employees' Provident Funds and

Miscellaneous Provisions Act, 1952) since the Company
has no further obligation beyond making the contributions.
The Company's contributions to these plans are charged
to the statement of profit and loss as incurred.

(ii) Defined Benefits Plans

Liability for defined benefit plans is provided on the basis
of valuations, as at the balance sheet date, carried out by
an independent actuary.

Gratuity and Post-Retirement Medical
The actuarial valuation method used for measuring
the liability for gratuity and post-retirement medical is
projected unit credit method. Actuarial gains and losses
are recognised in the statement of other comprehensive
income in the period of occurrence of such gains and
losses. The obligations for gratuity and post-retirement
medical are measured as the present value of estimated
future cashflows discounted at rates reflecting the
prevailing market yields of Indian Government securities
as at the balance sheet date for the estimated term of
the obligations. The estimate of future salary increases
considered takes into account the inflation, seniority,
promotion and other relevant factors. The expected rate of
return of plan assets is the Company's expectation of the
average long term rate of return expected on investments
of the fund during the estimated term of the obligations.
Plan assets are measured at fair value as at the balance
sheet date.

Provident Fund

Provident fund contributions are made to a Trust
administered by the Company. The Company has an
obligation to make good the shortfall, if any, between the
return from the investments of the Trust and the notified
interest rate. The actuarial valuation method, carried out
by an independent actuary, used for measuring the liability
for provident fund is projected accrued benefit method.
This approach determines the present value of the interest
rate guarantee under three interest rate scenarios: base
case scenario, rising interest rate scenario and falling
interest rate scenario. The defined benefit obligation of
the interest rate guarantee is set equal to the average of
the present values determined under these scenarios in
respect of accumulated provident fund contributions as
at the valuation date.

(c) Other Long Term Benefit Plans

The liabilities for earned leave and sick leave are not
expected to be settled wholly within 12 months after
the end of the period in which the employees render
the related service. They are therefore measured as the
present value of expected future payments to be made
in respect of services provided by employees up to the
end of the reporting period using the projected unit credit
method. The benefits are discounted using the market

yields at the end of the reporting period that have terms
approximating to the terms of the related obligation. Re¬
measurements as a result of experience adjustments and
changes in actuarial assumptions are recognised in the
statement of profit and loss.

(d) The expenditure on voluntary retirement schemes is
charged to the statement of profit and loss in the year in
which it is incurred.

(e) Share Based Payment Arrangements

In terms of a long-term incentive plan, the eligible
members of the senior management are entitled to
receive cash settled awards at the end of a three year
'restricted period', provided they remain in continuous
employment with the Company for the aforesaid period.
The value of such incentive is based on the price of
shares of GlaxoSmithKline Plc, U.K. The above scheme is
applicable for all grants to employees till 2022. Starting
2023, Incentives in the form of shares are provided to
employees under share award schemes.

The fair values of these awards are calculated at their grant
dates using a Black-Scholes option pricing model and
charged to the income statement with a corresponding
credit to ESOP Reserve over the relevant vesting periods.
Recharge by the Group Company is accounted with a
corresponding debit to ESOP Reserve.

o) Investment property

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 property.
Investment property is measured initially at its cost,
including related transaction costs and where applicable
borrowing costs. All other repairs and maintenance costs
are expensed when incurred.

Based on technical evaluation the following is the best
estimate of period over which investment property is
depreciated on a straight-line basis.

Asset Management estimate of useful life

Building 30 Years

Freehold Land -

An investment property is derecognised upon disposal or
when the investment property is permanently withdrawn
from use and no future economic benefits are expected
from the disposal. Any gain or loss on disposal of an
investment property is recognised in statement of profit
and loss.

p) Investment in subsidiary

Investment in subsidiary is carried at cost less
impairment loss, if any, in the separate Standalone
Financial Statements.

q) Earnings per share

Basic earnings per share is calculated by dividing
the profit for the period attributable to the owners of
Company by the weighted average number of equity
shares outstanding during the period. The weighted
average number of equity shares outstanding during the
period and for all periods presented is adjusted for events,
such as bonus shares.

r) Exceptional items

When items of income or expense are of such nature,
size or incidence that their disclosure is necessary to
explain the performance of the Company for the year, the
company makes a disclosure of the nature and amount of
such items separately under the head “Exceptional items”.

s) Segment reporting

Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM). The Managing Director of
the Company has been identified as CODM and he
is responsible for allocating the resources, assess the
financial performance and position of the Company and
makes strategic decisions.

The Company has identified one reportable segment
“Pharmaceuticals” based on the information
reviewed by the CODM. Refer note 49 for segment
information presented.