Note No. 1: MATERIAL ACCOUNTING POLICIES : -1 BACKGROUND
Headquartered in Chandigarh, India, Ind-Swift
Laboratories Ltd having CIN L24232CH1995PLC015553
is a public limited company incorporated on 04 Jan,
1995 under the provision of Companies Act, 2013.
Company is global manufacturer of Pharamceutical
Formulations . Having commenced operations in 1997 as
an API manufacturer, the Company has shifted its focus
to formulation as its key business driver. The company
shares are listed on Bombay Stock Exchange Limited
and National Stock Exchange of India Limited. These
standalone financial statements were authorised for issue
by the Company's Board of Directors on 28th May 2026.
2 BASIS OF PREPARATION OF STANDALONE FINANCIAL
STATEMENTS2.1 STATEMENT OF COMPLIANCE
The standalone financial statements have been prepared
in accordance with Indian Accounting Standards ("Ind
AS") notified under the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016, as applicable. For
periods up to and including the year ended March 31,
2017, the Company prepared its financial statements
in accordance with the then applicable Accounting
Standards in India ('previous GAAP').
2.2 BASIS OF MEASUREMENT
The standalone financial statements have been prepared
on the historical cost basis except for: - certain financial
assets and liabilities.
2.3 Current and Non-Current Classification
An asset / liability is classified as current if:
a) The amount is expected to be realized or sold or
consumed in the company's normal operating
cycle; the liability is expected to be settled in normal
operating cycle.
b) Asset / liability is held primarily for the purpose of
trading.
c) Asset / Liability is expected to be realized/settled
within twelve months after the reporting period; or
d) The asset 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 period.
e) The entity has no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting period.
All other assets / liabilities are classified as non-current.
The operating cycle is the time between acquisition of
assets for processing and their realization in cash and cash
equivalents. Based on the nature of products and time
between acquisition of assets for processing and their
realization in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for the
purpose of current/non-current classification of assets
and liabilities.
1.4 Cash and Cash Equivalents
Cash and cash equivalents consists of cash on hand,
short-term deposits and highly liquid investments that
are readily convertible into known amounts of cash and
which are subject to an insignificant risk of change in value.
Short-term means investments with original maturities/
holding period of three months or less from the date
of investments. Bank overdrafts that are repayable on
demand and form an integral part of the Company's cash
management are included as a component of cash and
cash equivalent for the purpose of statement of cash flow.
>.5 PROPERTY PLANT & EQUIPMENT2.5.1 COST OF PROPERTY PLANT & EQUIPMENT
All Property, plant and equipment held for use in
the production or supply of goods or services, or for
administrative purposes, are valued at cost/revalued
cost net of tax credit wherever eligible. Cost includes all
expenses and borrowing cost attributable to the project
till the date of commercial production / ready to use. Any
asset transferred to assets held for sale is value at cost or
NRV whichever is lower.
2.5.2 DEPRECIATION /AMORTIZATION
Depreciation is recognized so as to write off the cost of
assets (other than freehold land and properties under
construction) less their residual values over their useful
lives, using the straight-line method. The estimated
useful lives, residual values and depreciation method
are reviewed at the end of each reporting period, with
the effect of any changes in estimate accounted for on
a prospective basis. Depreciation is provided on straight
line method at the rates specified in schedule II of the
Companies Act 2013 on pro rata basis and the assets having
the value up to C5000 have been depreciated at the rate of
100%. The policy of company is to provide depreciation on
the Buildings , Plant & Machinery and Other Fixed assets
from the date of commercial production/ ready to use.
2.5.3 INVESTMENT PROPERTY
Properties that is held for long-term rentals or for capital
appreciation or both, and that is not occupied by the
Group, is classified as investment property. Investment
property is measured initially at its cost, including related
transaction costs and where applicable borrowing costs.
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 group and the cost of the item can be
measured reliably. All other repairs and maintenance costs
are expensed when incurred. When part of the investment
property is replaced, the carrying amount of the replaced
part is derecognized.
Investment property are depreciated using the straight
line method over their estimated useful lives.
On transition to Ind AS, the Group has elected to continue
with the carrying value of its investment property
recognized as at April 1, 2016 measured as per the
previous GAAP and use that carrying value as the deemed
cost of investment properties."
2.5.4 INTANGIBLE ASSETS (OTHER ASSETS)
"Intangible Assets with definite useful lives are subject
to amortization and are reviewed to determine whether
there is any indication that carrying Value of these assets
may not be recoverable . Management judgment is
required in the area of intangible assets loss particularly in
assessing :
Whether an event has occurred that may indicate that the
related assets values may not be recoverable or
Whether the carrying value of an intangible assets can
be supported by the recoverable amount , being the fair
value less costs to sell or net present value of future cash
flows which are estimated based upon the continued use
of the asset in the group .
Useful Lives of Intangible assets:
Intangible assets related to R&D are amortized over the
period of 10 years on straight line method."
2.5.5 LEASES
The Company's lease asset classes consist primarily of land
and buildings . The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to
control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract
conveys the right to control the use of an identified
asset, the Company assesses whether : (i) the contract
involves the use of an identified asset (ii) the Company
has substantially all of the economic benefits from use
of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset. At
the date of commencement of the lease, the Company
recognizes a right-of-use (ROU) asset and a corresponding
lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of 12 months or less
(short-term leases) and low value leases.
For these short-term and low-value leases, the Company
recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease. Certain
lease arrangements includes the options to extend or
terminate the lease before the end of the lease term. ROU
assets and lease liabilities includes these options when it
is reasonably certain that they will be exercised.
The ROU assets are initially recognized at cost, which
comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses. ROU assets are depreciated from the
commencement date on a straight-line basis over the
shorter of the lease term and useful life of the underlying
asset. ROU assets are evaluated for recoverability
whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
The lease liability is initially measured at amortized cost at
the present value of the future lease payments. The lease
payments are discounted using the interest rate implicit
in the lease or, if not readily determinable, using the
incremental borrowing rates in the country of domicile of
these leases.
Lease liabilities are remeasured with a corresponding
adjustment to the related ROU asset if the Company
changes its assessment of whether it will exercise an
extension or a termination option. Lease liability and
ROU assets have been separately presented in the
Balance Sheet and lease payments have been classified as
financing cash flows. "
2.6 BORROWING COSTS
Borrowing costs that are directly attributable to the
acquisition, construction or production of qualifying
assets have been capitalized as part of cost of assets.
Other Borrowing costs are recognized as an expense in
the period in which they are incurred.
2.7 INVENTORIES
Inventories are valued at the lower of cost and net
realizable value. Cost includes all expenses incurred
to bring the inventories to their present location and
condition. Depending on the nature of the inventory, cost
is determined using the weighted average method or,
where appropriate, the specific identification method. The
method of cost determination is as follows:
2.7.1 Raw Materials and Stores and Spares are valued
on a weighted average basis or at net realisable value
whichever is lower.
2.7.2 Work-in-Process is valued at cost plus an appropriate
share of production overheads or at net realizable value,
whichever is lower.
2.7.3 Finished Goods are valued at cost plus an appropriate
share of production overheads or at net realizable value,
whichever is lower.
2.7.4 Stock-in-Trade is valued on a weighted average basis
or at net realisable value whichever is lower.
2.7.5 Stock in Transit - At cost
2.8 REVENUE RECOGNITION
The Company derives revenues primarily from sale of
Pharmaceutical Products.
Ind AS 115 "Revenue from Contracts with Customers"
provides a control-based revenue recognition model and
provides a Five step application approach to be followed
for revenue recognition.
1. Identify the contract(s) with a customer;
2. Identify the performance obligations;
3. Determine the transaction price;
4. Allocate the transaction price to the performance
obligations;
5. Recognize revenue when or as an entity satisfies
performance obligation."
Revenue from contracts with customers is recognized
when control of the goods or services are transferred to
the customer at an amount that reflects the consideration
to which the Company expects to be entitled in
exchange for those goods or services. The Company has
generally concluded that it is the principal in its revenue
arrangements, except for the agency services below,
because it typically controls the goods or services before
transferring them to the customer. Revenue excludes
amounts collected on behalf of third parties.
2.8.1 SALE OF GOODS
For sale of goods, revenue is recognized when control
of the goods has transferred at a point in time i.e. when
the goods have been delivered to the specific location
(delivery). Following delivery, the customer has full
discretion over the responsibility, manner of distribution,
price to sell the goods and bears the risks of obsolescence
and loss in relation to the goods. A receivable is recognized
by the Company when the goods are delivered to the
customer as this represents the point in time at which the
right to consideration becomes unconditional, as only
the passage of time is required before payment is due.
Payment is due within 0-180 days. The Company considers
the effects of variable consideration, the existence of
significant financing components, noncash consideration,
and consideration payable to the customer (if any).
2.8.2 CONTRACT BALANCES
Trade receivables
A receivable represents the Company's right to an amount
of consideration that is unconditional (i.e., only the passage
of time is required before payment of the consideration is
due). Refer to accounting policies of financial assets.
Contract liabilities
A contract liability is the obligation to transfer goods or
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from
the customer. If a customer pays consideration before the
Company transfers goods or services to the customer, a
contract liability is recognized when the payment is made
or the payment is due (whichever is earlier). Contract
liabilities are recognized as revenue when the Company
performs under the contract.
2.8.3 Cost to obtain a contract
The Company pays sales commission to its selling agents
for each contract that they obtain for the Company. The
Company has elected to apply the optional practical
expedient for costs to obtain a contract which allows the
Company to immediately expense sales commissions
(included in advertisement and sales promotion expense
under other expenses) because the amortization period of
the asset that the Company otherwise would have used is
one year or less.
Costs to fulfil a contract i.e. freight, insurance and other
selling expenses are recognized as an expense in the
period in which related revenue is recognized.
2.8.4 Other revenue streams
EXPORT & OTHER INCENTIVES
In case of sale made by the Company as Manufacturer,
export benefits arising from RODTEP and other Govt
Scheme are recognized on accrual basis on fulfilment of
eligibility criteria for availing the incentives and when
there is no uncertainty in receiving the same. These
incentives include estimated realizable values/benefits
from special import licenses and benefits under specified
schemes as applicable.
In case of sale made by the Company as Manufacturer,
export benefits arising from Duty Drawback scheme,
RODTEP and other Govt Scheme, are recognized on sale
of such goods in accordance with the agreed terms and
conditions with customers.
Revenue from exports benefits measured at the fair value
of consideration received or receivable net of returns and
allowances, cash discounts, trade discounts and volume
rebates.
Obligation / entitlements on account of Advance Licenses
Scheme for import of raw materials are not accounted for
as income and correspondingly no expenses is booked at
time of payment of custom duty. Custom duty amount
of pending export obligations are shown as contingent
liability by way of note.
Rendering of Services
Revenue from rendering of services is recognized when
the performance obligation to render the services are
completed as per contractually agreed terms.
Dividend
The Company recognises a liability to pay a dividend
when the distribution is authorised, and the distribution
is no longer at the discretion of the Company.
In the case of interim dividends to equity shareholders, this
is when declared by the Board of Directors. In the case of
final dividends, this is when approved by the shareholders
at the Annual General Meeting of the Company
2.9 FOREIGN CURRENCY TRANSACTIONS
Transactions in foreign currencies are recorded at the
exchange rates prevailing at the date of the transactions.
The gain or loss arising from forward transactions have
been recognized in the year in which the contract has been
cancelled/ matured. Monetary assets & current liabilities
are translated at year end exchange rates. The resulting
gain or loss on translation or settlement is recognized in
the Profit& Loss Account except to the extent of exchange
differences which are regarded as an adjustment to
interest costs on foreign currency borrowings that are
directly attributable to the acquisition or construction of
qualifying assets, are capitalized as cost of assets. Non¬
monetary assets and liabilities that are measured in terms
of historical cost in foreign currencies are not retranslated.
In translating the financial statement of representative
foreign offices for incorporation in main financial
statements, the monetary assets and liabilities are
translated at the closing rates non monetary assets and
liabilities are translated at exchange rates prevailing at the
dates of the transactions and income and expenses items
are converted at the yearly average rate.
2.10 RETIREMENT BENEFITS
The retirement benefits of the employees include Gratuity
,Provident Fund & Compensated absences.
Defined Benefit Plans for defined benefit retirement plans,
the cost of providing benefits is determined using the
projected unit credit method, with actuarial valuations
being carried out at the end of each annual reporting
period. Remeasurement, comprising actuarial gains and
losses, the effect of the changes to the asset ceiling (if
applicable) and the return on plan assets (excluding net
interest), is reflected immediately in the balance sheet
with a charge or credit recognized in other comprehensive
income in the period in which they occur. Remeasurement
recognized in other comprehensive income is reflected
immediately in retained earnings and is not reclassified to
statement of profit and loss. Past service cost is recognized
in statement of profit and loss in the period of a plan
amendment. Net interest is calculated by applying the
discount rate at the beginning of the period to the net
defined benefit liability or asset.
- service cost (including current service cost, past service
cost, as well as gains and losses on curtailments and
settlements);
- net interest expense or income; and
- remeasurement
The Group presents the first two components of defined
benefit costs in statement of profit and loss in the line
item 'Employee benefits expense' Curtailment gains and
losses are accounted for as past service costs.
The retirement benefit obligation recognized in the
balance sheet represents the actual deficit or surplus in
the Group's defined benefit plans. Any surplus resulting
from this calculation is limited to the present value of
any economic benefits available in the form of refunds
from the plans or reductions in future contributions to
the plans.
Defined contribution plans which include contribution
to the provident fund are recognized as expense when
employees have rendered services entitling them to such
benefits.
The compensated absences are provided on the basis
of actuarial valuation of employees entitlement in
accordance with company's rules."
2.11 Share Based Payment Arrangements
Share-based payment transactions of the Company
Equity-settled share-based payments to employees are
measured at the Fair value of the equity instruments at
the grant date. The fair value determined at the grant date
of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based
on the Company's estimate of equity instruments that
will eventually vest, with a corresponding increase in
equity. At the end of each reporting period, the Company
revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original
estimates, if any, is recognized in statement of profit and
loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the equity-
settled employee benefits reserve.
2.12 TAXATION2.12.1 Current tax
Current tax is the tax currently payable is based on taxable
profit for the year. Taxable profit differs from 'profit before
tax' as reported in the standalone statement of profit
and loss because of items of income or expense that are
taxable or deductible in other years and items that are
never taxable or deductible. The Company's current tax
is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
2.12.2 Deferred Tax
Deferred tax is recognized on temporary differences
between the carrying amounts of assets and liabilities
in the standalone financial statements and the
corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognized for all taxable temporary differences. Deferred
tax assets are generally recognized for all deductible
temporary differences to the extent that it is probable
that taxable profits will be available against which those
deductible temporary differences can be utilized. Such
deferred tax assets and liabilities are not recognized if the
temporary difference arises from the initial recognition
(other than in a business combination) of assets and
liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. In addition, deferred tax
liabilities are not recognized if the temporary difference
arises from the initial recognition of goodwill. The carrying
amount of deferred tax assets is reviewed at the end of
each reporting period 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 asset to be
recovered. Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in the period
in which the liability is settled or the asset realized, based
on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Company expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets include Minimum Alternate Tax (MAT)
paid in accordance with the tax laws in India, which is likely
to give future economic benefits in the form of availability
of set-off against future tax liability. Accordingly, MAT
is recognized as deferred tax asset in the Balance sheet
when the asset can be measured reliably and it is probable
that the future economic benefit associated with the asset
will be realized.
2.12.3 Current and deferred tax for the year
Current and deferred tax are recognized in statement of
profit and loss, except when they relate to items that are
recognized in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also
recognized in other comprehensive income or directly in
equity respectively.
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