1. Material Accounting Policies followed by the Company
a) Basis of Preparation
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with the Indian Accounting Standards
(hereinafter referred to as the 'Ind AS') as notified by Ministry of Corporate Affairs pursuant to Section
133 of the Companies Act, 2013 ('Act') read with of the Companies (Indian Accounting Standards)
Rules, 2015 as amended and other relevant provisions of the Act.
These standalone financial statements were authorised for issue by the Company's Board of Directors
on May 22, 2025.
(ii) Historical cost convention
The 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;
(iii) Current non-current classification
All assets and liabilities have been classified as current or non-current as per the Company's normal
operating cycle (twelve months) and other criteria set out in Schedule III to the Act.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs
as per the requirement of Schedule III, unless otherwise stated.
b) Use of estimates and judgements
The preparation of financial statements requires management of the Company to make estimates
and assumptions that affect the reported assets and liabilities, revenue and expenses and disclosures
relating to contingent liabilities. Management believes that the estimates used in the preparation of the
financial statements are prudent and reasonable. Management at each reporting date reviews estimates
and underlying assumptions. Actual results could differ from these estimates. Any revision of these
estimates is recognised prospectively in the current and future periods.
Following are the critical judgements and estimates:
Critical judgments:
a. Taxes on Income:
Significant judgements are involved in determining the provision for income taxes including
judgement on whether tax positions are probable of being sustained in tax assessments. A tax
assessment can involve complex issues, which can only be resolved over extended time periods.
The recognition of taxes that are subject to certain legal or economic limits or uncertainties is
assessed individually by management based on the specific facts and circumstances.
b. Employee benefits:
Significant judgments are involved in making estimates about the life expectancy discounting
rate, salary increase, etc. which significantly affect the working of the present value of the future
liabilities on account of the employee benefits by way of defined benefit plans.
c. Product warranty and expiry claims:
Significant judgments are involved in determining the estimated stock lying in the market with
product shelf life and estimates of likely claims on account of expiry of such unsold goods lying
with stockists.
d. Impairment of property, plant and equipment
Significant judgment is involved in determining the estimated future cash flows from Property,
Plant and Equipment to determine their value in use to assess whether there is any impairment in
their carrying amounts as reflected in the financials.
e. Contingent liabilities:
Significant judgment is involved in determining whether there is a possible obligation that may,
but probably will not require an outflow of resources.
Critical estimates:
a. Property, Plant and Equipment:
Property, Plant and Equipment represent a significant proportion of the asset base of the
Group. The charge in respect of periodic depreciation is derived after determining an
estimate of an asset's expected useful life and the expected residual value at the end of its
life. Management reviews the residual values, useful lives and methods of depreciation of
Property, Plant and Equipment at the end of each reporting period and any revision to these
is recognised prospectively in current and future periods. The lives are based on historical
experience with similar assets as well as anticipation of future events, which may impact their
life, such as changes in technology.
b. Sales Return
The Company accounts for sales returns accrual by recording an allowance for sales returns
concurrent with the recognition of revenue at the time of a product sale. This allowance is
based on the Company's estimate of expected sales returns. Accordingly, the estimate of
sales returns is determined primarily by the Company's historical experience in the markets
in which the Company operates.
c. Segment Reporting
The Company has only one business segment i.e Pharmaceutical Products.
d. Foreign Currency Translation
i. Functional and presentation currency
The Financial Statements are presented in Indian rupees (INR) which is the functional
and presentation currency.
ii. Transactions and balances
Foreign currency transactions are translated into the functional currency using the
exchange rates at the dates of the transactions. 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 or Loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented
in the statement of profit and loss, within finance costs. All other foreign exchange gains
and losses are presented in the statement of Profit and Loss on a net basis within other
gains / (losses).
e. Revenue Recognition
The company derives major portion of its revenue from manufacturing and marketing of
Formulations (Finished Dosage Forms) and Active Pharmaceutical Ingredients (APIs). Other
sources of revenue include Dossiers development, Analytical Studies and Bio-equivalent
studies undertaken by the company on behalf of customers.
With effect from April 1,2018, the company has adopted Ind AS 115, Revenue from Contracts
with Customers. The company analysed the impact of Ind AS on incomplete contracts, if any
and concluded that the effect of adoption of Ind AS 115 was insignificant.
Recognising revenue from major business activities
i. Sale of goods - FDF and API
Revenue from sale of FDF and API are recognised when the performance obligations
are satisfied in accordance with Ind AS 115. Performance obligations are deemed to
have been satisfied when substantial risk and rewards of ownership are transferred to the
customer and the customer obtains control of the promised goods. In case of domestic
sales, performance obligations are satisfied when goods are dispatched, or delivery
is handed over to the transporter. In case of export sales, performance obligations
are satisfied based on terms defined in the contracts. In case of Ex-works contracts,
performance obligation is satisfied when goods are shipped or dispatched from the
factory and in other cases when the goods are shipped on board based on Bill of Lading/
Airway Bill or any other similar document evidencing delivery thereof.
ii. Revenue from services
Services provided include Dossiers development, Analytical Studies and Bio-equivalent
studies undertaken by the company on behalf of customers.
The contracts with customers for Dossiers and study reports are fixed-price contracts.
Revenue from such contracts, where the performance obligations are satisfied over time
and where there is no significant uncertainty as to measurement or collectability of
consideration, is recognised based on the terms agreed with the customers.
Estimates of revenues, costs or extent of progress toward completion are revised if
circumstances change. The effect that the contract modification has on the transaction
price, and on the entity's measure of progress towards complete satisfaction of the
performance obligation, is recognised as an adjustment to revenue (either as an increase
in or a reduction of revenue) at the date of the contract modification (i.e. the adjustment
to revenue is made on a cumulative catch-up basis).
iii. Other operating revenue - Export incentives
Revenue from Export Incentives under various schemes is recognised when the
performance obligations are satisfied i.e. when the related export sales are effected.
iv. Sales Return
The Company recognises provision for sales return, on the basis of past experience,
measured on net basis of the margin of the sales. Any unutilised provision for sales return
is reversed to the Statement of Profit and Loss on completion of 3 years from the date of
creation.
f. Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that
the grant will be received and the Company will comply with all attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non¬
current liabilities as deferred income and are credited to Profit and Loss on a straight - line basis over
the expected lives of related assets and presented within other income.
g. Income Tax
The income tax expense or credit for the period is the tax payable on the current period's taxable
income based on the applicable income tax rate adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences.
Deferred income tax is provided in full, using the liability method on temporary differences arising
between the tax bases of assets and liabilities and their carrying amount in the financial statement.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are excepted to apply when the related deferred income
tax assets is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only
if, it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and
intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
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.
h. Business Combinations
The acquisition method of accounting is used to account for all business combinations, regardless
of whether equity instruments or other assets are acquired. The consideration transferred for the
acquisition of a subsidiary comprises the
• fair values of the assets transferred;
• liabilities incurred to the former owners of the acquired business;
• equity interests issued by the Company; and
• Fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are, with limited exceptions, measured initially at their fair values at the acquisition date. The Company
recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis
either at fair value or at the non-controlling interest's proportionate share of the acquired entity's net
identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the
• consideration transferred;
• amount of any non-controlling interest in the acquired entity, and
• acquisition-date fair value of any previous equity interest in the acquired entity over the fair value
of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than
the fair value of the net identifiable assets of the business acquired, the difference is recognised
in other comprehensive income and accumulated in equity as capital reserve provided there is
clear evidence of the underlying reasons for classifying the business combination as a bargain
purchase. In other cases, the bargain purchase gain is recognised directly in equity as capital
reserve.
i. Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments
with original maturities of three months or less that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts
are shown within borrowings in current liabilities in the balance sheet.
j. Cash Flow Statements
Cash flows are prepared using the indirect method, whereby net profit before tax is adjusted for the
effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or financing cash
flows. The cash flow from operating, investing and financing activities of company are segregated.
k. Inventories
Inventories of Raw Materials, Work-in-Progress, Stores and Spares, Finished Goods and Stock-in-trade
are stated 'at cost or net realisable value, whichever is lower'. Goods-in-Transit are stated' at cost'.
Cost comprises all costs of purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost formulas used are-'Weighted Average Cost'.
Due allowance is estimated and made for defective and obsolete items, wherever necessary.
l. Non-Current Assets held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable.
They are measured at the lower of their carrying amount and fair value less costs to sell, except for
assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual
rights under insurance contracts, which are specifically exempt from this requirement.
Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of a disposal Company classified as held for sale
continue to be recognised.
m. Derivatives and Hedging Activities
Derivative financial instruments such as forward contracts, option contracts and cross currency
swaps, to hedge its foreign currency risks are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently re-measured at their fair value with changes in fair value
recognised in the Statement of Profit and Loss in the period when they arise.
n. Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated
at historical cost less depreciation. Cost includes purchase price, non-refundable taxes, levies, and any
directly attributable cost of bringing the asset to its working condition for the intended use.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost of the item can be measured reliably. The carrying amount of any
component accounted for as a separate asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting period in which they are incurred.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its
property, plant and equipment recognised as at April 1,2015 measured as per the previous GAAP and
use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual
values, over their estimated useful lives or, in the case of certain leased furniture, fittings and equipment,
the shorter lease term as follows:
The management believes that useful lives currently used is as prescribed under Part C of Schedule II to
the Companies Act, 2013, fairly reflects its estimate of the useful lives and residual values of property,
plant and equipment. The residual values are not more than 5% of the original cost of the asset.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).
o. Intangible Assets
i. Computer Software
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and
unique software products controlled by the Company are recognised as intangible assets when
the following criteria are met:
• It is technically feasible to complete the software so that it will be available for use
• Management intends to complete the software and use it
• There is an ability to use the software
• It can be demonstrated how the software will generate probable future economic benefits
/
• Adequate technical, financial and other resources to complete the development and to use
the software are available, and
• The expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalized as part of the software include employee costs and
an appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at
which the asset is available for use.
ii. ANDA / DMFs / Dossiers
All revenue expenditure incurred till the development of ANDAs / DMFs / Dossiers etc. are
grouped under intangible assets under development. Once the development is complete, the
expenditures incurred on the said project is capitalised & grouped under "Intangible Assets"
and amortised based on best estimated commercial revenue period, not exceeding 5 years. The
carrying value of the capitalised project is reviewed for impairment annually.
iii. Amortisation methods and periods
The Company amortises intangible assets with a finite useful life using the straight-line method
over the following periods:
p. Research and Development Expenditure
Research costs are expensed as incurred. Development expenditures on an individual project are
recognised as an intangible asset when the Company can demonstrate:
- development costs can be measured reliably;
- the product or process is technically and commercially feasible;
- future economic benefits are probable; and
- the company intends to, and has sufficient resources to complete development and to use or sell
the asset.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less
any accumulated amortization and accumulated impairment losses. Amortisation of the asset begins
when development is complete and the asset is available for use. It is amortised over the period of
expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless
such expenditure forms part of carrying value of another asset. During the period of development, the
asset is tested for impairment annually.
q. Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in the Statement of Profit and Loss over the period of the borrowings using the effective
interest method.
r. Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and
borrowing costs are charged to Statement of Profit and Loss.
|