Infinium Pharmachem Limited (the company) is a company limited by shares domiciled in India, and
incorporated under the provisions of Companies Act, 1956 on 21/11/2003. The registered office of
the company is situated at 38, Sojitra GIDC, Sojitra, Dist : Anand - Gujarat, India. The Company is
engaged in manufacturing and selling of Iodian based Pharmaceutical Intermediates.
1.0 STATEMENT ON SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the Significant Accounting Policies adopted in the preparation of the
financial statement. These policies have been consistently applied to all the years presented, unless
otherwise stated.
1.1 BASIC FOR PREPARATION OF ACCOUNTS
The Standalone Financial Statements have been prepared in accordance with the Indian Accounting
Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as
amended from time to time and presentation requirements of Division II of Schedule III to the
Companies Act, 2013. The Financial statements provide comparative information in respect of the
corresponding previous year. The functional currency of the Company is the Indian rupee. These
financial statements are presented in Indian rupees. All amounts have been rounded-off to the nearest
thousands, up to two places of decimal, unless otherwise indicated.
Current versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current
classification.
An asset is classified as current when it is:
* Expected to be realized or intended to sold or consumed in normal operating cycle;
* held primarily for the purpose of trading;
* expected to be realized within twelve months after the reporting period; or
* cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
expected to be settled in normal operating cycle;
* held primarily for the purpose of trading;
* due to be settled within twelve months after the reporting period; or
* there is no unconditional right to defer the settlement of the liability for at least twelve months
after the reporting period.
All other liabilities are classified as non-current.
Deferred Tax Assets and Liabilities are classified as noncurrent assets and liabilities respectively.
Historical Cost Convention
These financial statements have been prepared on the historical cost basis except for the following
items that are measured at fair value:
- Certain financial assets and liabilities (including derivative instruments)
- Defined benefit plans - plan assets measured at fair value
- Share-based payments
1.2 USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting period. Although these
estimates are based upon management's best knowledge of current events and actions,
actual results could differ from these estimates.
1.3 REVENUE RECOGNITION
i) Sale Of Goods: Revenue from the sales of goods is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer and no significant uncertainty exists regarding
the amount of the consideration that will be derived from the sales of goods. Revenue from the sales
of goods is measured at the fair value of the consideration received or receivable, net of returns and
allowances, related discounts and volume rebates. It excludes GST.
ii) Export Benefit: Income in respect of Duty Drawback in respect of exports made during the year are
accounted on accrual basis. Merchandise Exports from India Scheme (MEIS) income is recognised on
accrual basis when considering the related expenses to the same profit or losses on transfer of licences
are accounted in year of the sales.
iii) Insurance Claims: Insurance claims are accounted for on the basis of claims admitted/expected to
be admitted and to the extent that there is no uncertainty in receiving the claims.
1.4 FOREIGN CURRENCY TRANSACTIONS
Functional and Presentation Currency
On initial recognition, transactions in currencies other than the company's functional currency (foreign
currencies) are translated at exchange rates on the date of the transactions.
Transactions and Balances
(i) Transaction in foreign currencies are recorded in Indian Rupees using the rates of exchange
prevailing on the dates of the transactions. At each balance sheet date, recorded monetary balance
are reported in Indian Rupees at the rates of exchange prevailing at the balance sheet date. All realised
and unrealised exchange adjustment gains and losses are with in the statement of Profit and Loss.
(ii) In order to hedge exposure to foreign exchange risks arising from Export or Import foreign
currency, bank borrowings and trade receivables, the Company may enter into forward contracts.
Any profit or loss arising on the cancellation or renewal of a forward exchange contract is recognised
as income or expenses for the year.
(iii) Foreign exchange gains and losses are presented in the statement of profit and loss on a net basis
within other gains/(losses).
(iv) Non-Monetary items which are carried in terms of historical cost denominated in a foreign
currency are reported using the exchange rate at the transaction.
1.5 PROPERTY, PLANT AND EQUIPMENTS
Property, plant and equipment represent a significant proportion of the assets base of the Company.
The change 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. The useful life and the
expected residual values of Company's assets are determined by the Management at the time the
assets are acquired and reviewed periodically.
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if
any. Costs directly attributable to acquisition are capitalised until the property, plant and equipment
are ready for use, as intended by the management. The Company depreciates property, plant and
equipment over their estimated useful lives using written down value method. the estimated useful
lives of assets are as follows:
• Based on evaluation, the Management believes that the useful lives as given above best represent
the period over which the management expects to use these assets. Hence, the useful lives for these
assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies
Act 2013.
1.6 DEPRECIATION AND AMORISATION
Depreciation on the fixed assets is provided under written down value method as per the rates
prescribed in Schedule II to the Companies Act, 2013or at rates permissible under applicable local laws
so as to charge off the cost of assets to the Statement of Profit and Loss over their estimated useful
life, except on the following categories of assets:
(i) Assets costing up to Rs5, 000/- are fully depreciated in the year of acquisition.
(ii) Leasehold land and leasehold improvements are amortised over the primary period of lease.
(iii) Intangible assets are amortised over their useful life of 5 years.
1.7 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 is recognized wherever the
carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater
of the asset's net selling price and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and risks specific to the asset. Net selling price is the amount
obtainable from the sale of an asset in an arm's length transaction between knowledgeable, willing
parties, less the costs of disposal.
• After impairment, depreciation is provided on the revised carrying amount of the asset over its
remaining useful life.
1.8 INVENTORIES
Inventories are stated at lower of cost and net realisable value. Cost of Raw Material is determined on
FIFO basis. Stores and Consumables are valued at cost or net realisable value whichever is lower.
Finished goods are valued at cost or net realisable value whichever is lower. Cost comprises direct
materials and where applicable, direct labour costs, those overheads that have been incurred in
bringing the inventories to their present location and condition. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be incurred in marketing,
selling and distribution. Work in progress is valued at cost or net realisable value whichever is less.
Cost comprises direct materials and appropriate portion of direct labour costs, manufacturing
overheads and depreciation.
1.9 RECOVERABILITY OF TRADE RECEIVABLE
Judgements are required in assessing the recoverability of overdue trade receivables and determining
whether a provision against those receivables is required. Factors considered include the credit rating
of the counterparty, the amount and timing of anticipated future payments and any possible actions
that can be taken to mitigate the risk of non-payment.
1.10 BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized
as part of the cost of the respective asset. All other borrowing costs are expensed in the period they
occur. Borrowing costs consist of interest, exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that
an entity incurs in connection with the borrowing of funds.
Borrowing costs is net off with Interest income on fixed deposits with banks
1.11 RETIREMENT AND EMPLOYEE BENEFITS
Employee benefits obligations for wages, salaries, including non-monetary benefits that's are
expected to be settled wholly within 12 months after the end of the period in which the employees
render the related services are recognised and are measured at the amounts expected to be paid
when liabilities are settled.
A defined Benefit plan is a post-employment benefit plan other than a defined contribution plan.
Gratuity is a defined benefit plan. The administration of the gratuity scheme has been entrusted to
the Life Insurance Corporation of India('LIC'). The Company's net obligation in respect of gratuity is
calculated on the basis of an actuarial valuation as carried out by LIC. The actuarial method used for
measuring the liability is the Projected Unit Credit Method.
A defined contribution plan is a post-employment benefit plan under which entity pays specified
contributions to separate entity and will have no legal or constructive obligation to pay further
amounts. The Company make specified monthly contributions towards employee provident fund to
Government administered scheme which is a defined contribution plan. The contribution to provident
fund is recognised as employee benefit expenses when they are due. The Company's contributions to
defined Contribution Plans are charged to the Profit and Loss Account as and when incurred.
Termination Benefits, if any, are recognised as in expenses as and when incurred.
1.12 GOVERNMENT GRANT
Preliminary expenses are costs incurred by a company for its expansion and which is essential for
setting up the infrastructure and obtaining necessary permits and licenses, market research expenses
for understanding the target market, analysing competitors, and identifying potential challenges and
opportunities. Deferred Charges are not immediately expensed but instead capitalized as they are
expected to provide future economic benefits to the company.
Preliminary expenses and Deferred Expenses are systematically expensed through the process of
amortization. Amortization involves spreading the cost of the preliminary expenses over their
estimated useful life. The useful life is determined based on factors such as the nature of the expenses
and the expected benefits derived from them. Commonly used methods for amortization include
straight-line or accelerated methods. Expenses are amortised over a period of 5 years.
1.14 GST
GST Credit of Raw Materials and Other Consumables is accounted at the time of purchase and the
same is being adjusted to the cost of Raw Materials and Other Consumables.
1.15 ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income tax expense comprises taxes on
income from operations in India and in foreign jurisdictions. Income tax payable in India is determined
in accordance with the provisions of the Income Tax Act, 1961 and tax expense relating to overseas
operations is determined in accordance with tax laws applicable in countries where such operations
are domiciled.
• Deferred tax expense or benefit is recognized on timing differences being the difference between
taxable income and accounting income that originate in one period and are capable of reversal in one
or more subsequent periods.
• Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date. Deferred tax assets and deferred tax
liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied
by the same governing taxation laws
• Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that sufficient future taxable income
will be available against which such deferred tax assets can be realized. In situations where the
Company has unabsorbed depreciation or carries forward tax losses, all deferred tax assets are
recognized only if there is virtual certainty supported by convincing evidence that they can be realized
against future taxable profits.
• At each balance sheet date, the Company re-assesses recognized and unrecognized deferred tax
assets. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is
no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which the deferred tax asset can be realized. Any such write-down is
reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available. The Company recognizes unrecognized deferred tax
assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such deferred tax assets can be
realized.
1.16 CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise cash and deposits with banks. The Company considers all highly
liquid investments with a remaining maturity at the date of purchase of three months or less and that
are readily convertible to know amounts of cash to be cash equivalents. For the purpose of
presentation in the statement of cash flows, cash and cash equivalents incudes cash on hand,
deposited held at call with financial institutions and other short term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and
cash equivalents which are subject to an insignificant risk of changes in value.
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