Note 1: Material Accounting Policies and other information.A. Company Overview
The company is engaged in the business of manufacture of Active Pharmaceutical Ingredients (API) and its intermediates, through its manufacturing facility at Nanded, Maharashtra, India.
B. Segment Reporting
The company operates only one segment i.e., manufacture and sale of Active Pharmaceutical Ingredients (API) and its intermediates.
C. Compliance with Indian Accounting Standards
The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) as notified under section 133 of the Companies Act 2013 (the Act), read with Companies (Indian Accounting Standard) Rules 2015. The company has uniformly applied all the applicable accounting standards in the presentation of the financial statements.
D. Reporting Currency
The financial statements are presented in Indian Rupees which is also the functional and presentation currency of the company. The figures in the financial statements are rounded off to nearest lakhs (two decimals).
E. Overall Considerations
The financial statements have been prepared using accounting policies and applicable Indian Accounting Standards (Ind AS) that are in effect as of March 31, 2024, as presented in detail hereunder. These policies are followed consistently by the company in the presentation of the financial statements. Changes in the accounting policies, if any, will be reported in accordance with the applicable Indian Accounting Standards. Material Accounting policies are disclosed in the financial statements as prescribed by Ind AS 1 - Presentation of Financial Statements.
F. Accounting Policies1) Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost convention on accrual basis. Unless specified otherwise, with reasons, income and expenditure are recognised upon their accrual and provisions are made for all known losses and liabilities.
2) Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.
3) Property Plant & Equipment
i) Property, plant and equipment acquired by the company are reported at acquisition value. The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Interest during construction period up to the date of commencement of operations, indirect project expenditure and trial run expenditure (net of trial run income, if any) incurred in respect of projects under implementation are capitalized to
the asset constructed / created. Spares and tools that are not in the nature of 'Property, Plant & Equipment' are treated as part of inventories. The costs incurred for the repairs and maintenance of these assets are charged to revenue.
ii) The cost of assets under construction as on the Balance Sheet date, are classified under the head "capital work in progress" and the same are capitalized as and when they are put to use.
4) Capital Work In Progress
Capital Work in Progress as on 31.3.24 is Rs.18,32,05,622. This has been largely done on account of Expansion of Existing product capacities and also for construction of Pilot plant facilities for trials of DHDT (a new intermediate for anti-HIV drugs). A further capital expenditure of around Rs. 30 crores expected to be incurred in FY 2024-25 for Commercial manufacturing of DHDT and related works. These expenditures will be capitalised, upon completion of construction and commencement of commercial operations.
5) Land allotment by MIDC.
The company has been allotted land by Maharashtra Industrial Development Corporation, (MIDC) on long lease basis, and a latter of allotment has been issued to the company on March 28, 2024. The one time premium paid for the long lease is accounted for the year ended March 31,2024, under the capital advances. The lease agreement is yet to be executed and the said payment will be recognised as leased land asset upon completion of the agreement.
6) Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset's net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule II of the Companies Act, 2013.
7) Depreciation
Depreciation on Property, Plant and Equipment including assets such as Furniture and Fixtures, Computers etc., is provided over the useful life of the asset in the manner prescribed in Schedule II to the Companies Act,2013. In respect of the assets that are either sold / retired during the year, the accumulated depreciation carried forward relating to such assets is adjusted.
8) Investments
Current investments are carried at lower of cost and quoted / fair value, computed category wise. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary.
9) Research &Development
(i) Equipment purchased for research and development is capitalised when commissioned and included in the gross block of property, plant and equipment.
(ii) Research and Development expenditure incurred, if any, are charged to Profit & Loss account of the year under relevant head of Account.
(iii) Due consideration is given to the deferred tax effect on account of the deduction of the R & D capital expenditure under section 35 of the Income Tax Act, 1961.
(iv) Included in Capital Work In Progress is an amount of Rs.2,93,12,584, relating to DHDT R & D plant.
10) Inventories
Inventories are valued at lower of cost or net realizable value. Obsolete, slow moving and defective inventories are identified at the time of physical verification and necessary provision is made for such
inventories. The cost is determined using the weighted average cost method for all categories of inventories. Cost includes in case of Raw materials, Stores & spares and consumables, the purchase price and direct costs attributable less discounts. In case of work-in-process and finished goods, cost includes direct labour, material costs and production overheads. Duties and Taxes recoverable from the authorities in the future are not included in the cost of inventory.
11) Employee Benefits
Short-term employee benefits are recognized as an expense in the Statement of Profit and Loss of the year in which the related service is rendered. Post-employment and other long-term employee benefits are recognized as an expense in the statement profit and loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of post-employment and other long-term benefits are charged to the Statement of Profit and Loss.
12) Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally recorded at the exchange rates prevailing on the date of transaction.
(ii) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
(iii) Monetary assets & Liabilities denominated in foreign currencies are restated at the appropriate rates of exchange prevailing on the date of Balance Sheet. Resultant gain or loss is accounted during the year.
13) Borrowing Cost
Interest and other borrowing costs attributable to assets under construction are capitalized and these are part of capital work in progress. Other interest and borrowing costs are charged to Statement of Profit & Loss.
14) Provisions, Contingent Liabilities and Contingent Assets
(i) Provisions: Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value.
(ii) Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
(iii) Contingent Assets: Contingent Assets are not recognized in the financial statements.
15) Accounting for Taxes on Income
Income Tax - Current and Deferred - are accounted in accordance with Ind AS - 12, 'Income Taxes" as amended from time to time.
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