1. General corporate information
Neogen Chemicals Limited is a Public Limited Company
domiciled in India and incorporated under the provisions
of the Companies Act, 1956 having Corporate Identity
Number L24200MH1989PLC050919. Company
has its registered office at Thane, Maharashtra. The
Company is engaged in the business of manufacturing
of eco - friendly speciality chemicals which are used
in Pharmaceutical, Engineering & Agro-Chemical
industries. Neogen has developed significant expertise in
highly demanding field of Bromine Compounds, Lithium
compounds & more recently advance intermediates for
pharmaceutical industries & pesticides industries of
world class standards. The principal place of business
of the company are at Thane (HO), first Factory at
Mahape in Navi Mumbai, second Factory at Karakhadi
in District Vadodara, Gujarat, third factory at Dahej SEZ,
Gujarat & fourth factory at Patancheru, Telangana. The
Company caters to both domestic and international
markets. The Manufacturing facility is also having well
equipped R & D and analytical labs. Neogen’s Karakhadi,
Vadodara Facility is ISO 9001:2015, ISO 14001:2015,
and ISO 45001:2018 certified by Bureau Veritas
Certification Holding SAS; Its Mahape, Navi Mumbai
Facility is ISO 9001:2015 certified by Bureau Veritas
Certification Holding SAS; Dahej SEZ, Gujarat Facility
is ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018
Certified by Bureau Veritas Certification Holding SAS
and GMP Certified by SGS and Patancheru facility is
ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018
certifications from Bureau Veritas.
2. Summary of basis of compliance, basis
of preparation and presentation, key
accounting estimates, assumptions and
material accounting policies
I. Basis of compliance
The standalone financial statements have been
prepared in accordance with Indian Accounting
Standards (“Ind AS”) as notified by Ministry of Corporate
Affairs pursuant to Section 133 of the Companies Act,
2013 (‘Act’) read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended from time to
time and presentation and disclosures requirement of
Division II of revised Schedule III of the Companies Act
2013, (Ind AS Compliant Schedule III), as applicable to
standalone financial statement. The accounting policies
are applied consistently to all the years presented in the
standalone financial statements.
The standalone financial statements of the Company
for the year ended March 31,2025 were authorized for
issue in accordance with a resolution of the Board of
Directors on May 17 2025.
II. Basis of preparation and presentation
The Company adopted Disclosure of Accounting
Policies (Amendments to Ind AS 1) from 1 April 2023.
Although the amendments did not result in any changes
in the accounting policies themselves, they impacted the
accounting policy information disclosed in the financial
statements. The amendments require the disclosure of
‘material’ rather than ‘significant’ accounting policies. The
amendments also provide guidance on the application of
materiality to disclosure of accounting policies, assisting
entities to provide useful, entity-specific accounting
policy information that users need to understand other
information in the financial statements.
• Current versus non-current classification
All assets and liabilities have been classified as per
the Company’s normal operating cycle and other
criteria set out in Schedule III to the Companies
Act, 2013. Based on the nature of the products and
the time taken between acquisition of assets for
processing and their realization in cash and cash
equivalents, the Company has ascertained its
operating cycle as twelve months for the purpose
of the classification of assets and liabilities into
current and non-current.
• Basis of measurement
The financial statements have been prepared on a
historical cost basis, except for the following:
- certain financial assets and liabilities
(including derivative instruments) that is
measured at fair value;
- defined benefit plans - plan assets measured
at fair value less present value of defined
benefit obligation;
• Functional and presentation currency
These standalone financial statements are
presented in Indian rupees, which is the Company’s
functional currency. All amounts have been
rounded off to the nearest Crore, unless otherwise
indicated.
III. Key estimates and assumptions
While preparing financial statements in conformity with
Ind AS, the management has made certain estimates
and assumptions that require subjective and complex
judgments. These judgments affect the application
of accounting policies and the reported amount of
assets, liabilities, income and expenses, disclosure
of contingent liabilities at the balance sheet date and
the reported amount of income and expenses for the
reporting period. Future events rarely develop exactly as
forecasted and the best estimates require adjustments,
as actual results may differ from these estimates under
different assumptions or conditions. Estimates and
underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized
prospectively. Judgement, estimates and assumptions
are required in particular for:
• Determination of the estimated useful lives
Useful lives of property, plant and equipment are
based on the life prescribed in Schedule II of the
Companies Act, 2013. In cases, where the useful lives
are different from that prescribed in Schedule II and in
case of intangible assets, they are based on technical
advice, taking into account the nature of the asset, the
estimated usage of the asset, the operating conditions
of the asset, past history of replacement, anticipated
technological changes, manufacturers’ warranties and
maintenance support.
• Recognition and measurement of defined benefit
obligations
The obligation arising from defined benefit plan is
determined on the basis of actuarial assumptions. Key
actuarial assumptions include discount rate, trends in
salary escalation, actuarial rates and life expectancy.
The discount rate is determined by reference to market
yields at the end of the reporting period on government
bonds. The period to maturity of the underlying bonds
correspond to the probable maturity of the post¬
employment benefit obligations. Due to complexities
involved in the valuation and its long term nature,
defined benefit obligation is sensitive to changes in
these assumptions. All assumptions are reviewed at
each reporting period.
• Recognition of deferred tax assets and liabilities
Deferred tax assets and liabilities are recognized for
the future tax consequences of temporary differences
between the carrying values of assets and liabilities
and their respective tax bases. Deferred tax assets are
recognized to the extent that it is probable that future
taxable income will be available against which the
deductible temporary differences.
• Recognition and measurement of other provisions
The recognition and measurement of other provisions
are based on the assessment of the probability of
an outflow of resources, and on past experience and
circumstances known at the balance sheet date. The
actual outflow of resources at a future date may therefore,
vary from the amount included in other provisions.
• Discounting of long-term financial assets / liabilities
All financial assets / liabilities are required to be
measured at fair value on initial recognition. In case
of financial liabilities/assets which are required to
subsequently be measured at amortised cost, interest
is accrued using the effective interest method.
• Determining whether an arrangement contains a lease
Ind AS 116 requires lessee to determine the lease term
as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use
of such option is reasonably certain. The Company
makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or
terminate the contract will be exercised. In evaluating the
lease term, the Company considers factors such as any
significant leasehold improvements undertaken over the
lease term, costs relating to the termination of the lease
and the importance of the underlying asset taking into
account the location of the underlying asset and the
availability of suitable alternatives. The lease term in
future periods is reassessed to ensure that the lease
term reflects the current economic circumstances. After
considering current and future economic conditions, the
Company has concluded that no changes are required
to lease period relating to the existing lease contracts.
• Fair value of financial instruments
Derivatives are carried at fair value. Derivatives includes
foreign currency forward contracts. Fair value of foreign
currency forward contracts are determined using the fair
value reports provided by respective bankers.
• Provisions and contingent liabilities and assets
A provision is recognised when the Company has
a present obligation because of past event and it is
probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable
estimate can be made. These are reviewed at each
balance sheet date and adjusted to reflect the current
best estimates.
I n the normal course of business, contingent liabilities
may arise from litigation and other claims against
the Company. Potential liabilities that are possible
but not probable of crystalising or are very difficult to
quantify reliably are treated as contingent liabilities.
Such liabilities are disclosed in the notes but are not
recognised. The cases which have been determined as
remote by the Company are not disclosed.
Contingent assets are neither recognised nor disclosed
in the standalone financial statements.
IV. Measurement of fair values
The Company’s accounting policies and disclosures
require the measurement of fair values for, both financial
and non-financial assets and liabilities. The Company
has an established control framework with respect to the
measurement of fair values. The management regularly
reviews significant unobservable inputs and valuation
adjustments. If third party information, such as broker
quotes or pricing services, is used to measure fair
values, then the management assesses the evidence
obtained from the third parties to support the conclusion
that such valuations meet the requirements of Ind AS,
including the level in the fair value hierarchy in which
such valuations should be classified.
When measuring the fair value of a financial asset or a
financial liability, the Company uses observable market
data as far as possible. Fair values are categorised into
different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows.
a. Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities.
b. Level 2: inputs other than quoted prices included
in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices)
c. Level 3: inputs for the asset or liability that are not
based on observable market data (unobservable
inputs)
If the inputs used to measure the fair value of an asset
or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the entire
measurement.
The Company recognises transfers between levels of
the fair value hierarchy at the end of the reporting period
during which the change has occurred.
V. Material accounting policies
A. Revenue recognition and Other income
• Sale of goods
The company manufactures and sells a range of
products to various customers. In case of contracts
with customers, revenue is recognised when the
significant risk and rewards of ownership have
been transferred to the customer, recovery of the
consideration is probable, the associated costs and
possible return of goods can be estimated reliably,
there is no continuing management involvement
with the goods to the degree usually associated
with the ownership, and the amount of revenue
can be measured reliably, regardless of when the
payment is being made. Revenue is measured
at the fair value of the consideration received or
receivable. Revenue recognised in relation to
these contracts in excess of billing is recognised
as a Contract Asset. In remaining cases revenue
is recognised over Company’s performance does
not create an asset with alternative use to the
Company and the entity has an enforceable right
to payment for performance completed till date.
Accumulated experience is used to estimate
and provide for the discounts and returns and
revenue is only recognised to the extent that it is
highly probable that a significant reversal will not
occur. A refund liability (included in other current
liabilities) is recognised for expected returns from
the customer. Liability (included in other financial
liabilities) is recognised for expected volume
discounts payable to customers in relation to sales
made until the end of the reporting period. Amounts
disclosed as revenue are net of returns, discounts,
volume rebates and net of goods and service tax.
Incentives on exports are recognised in books after
due consideration of certainty of utilisation / receipt
of such incentives.
• Interest income
I nterest income is recognized on time proportion
basis considering the amount outstanding and rate
applicable. For all financial assets measured at
amortized cost, interest income is recorded using
the effective interest rate (EIR) i.e. the rate that
exactly discounts estimated future cash receipts
through the expected life of the financial asset to
the net carrying amount of the financial assets.
Interest income is included in other income in the
Statement of Profit and Loss.
• Government grant
Grants and subsidies from the government are
recognised when there is reasonable assurance
that (i) the company will comply with the condition
attached to them and (ii) the grant /subsidy will be
received. Government grants are recognised in the
Statement of Profit and Loss on a systematic basis
over the years in which the Company recognises
the related costs for which the grants are intended
to compensate or when performance obligations
are made. Where the grant relates to an asset, it
is recognized as deferred income and credited to
income in equal amounts over the expected useful
life of the related asset.
B. Foreign currency
• Transaction and balances
Transactions in foreign currencies are translated
into the respective functional currencies of the
Company at the exchange rates at the dates of
the transactions or an average rate if the average
rate approximates the actual rate at the date of
the transaction. Foreign currency transactions are
recorded on initial recognition in the functional
currency, using the exchange rate at the date of the
transaction. At each balance sheet date, foreign
currency monetary items are reported using the
closing exchange rate. Exchange differences
that arise on settlement of monetary items or
on reporting at each balance sheet date of the
Company’s monetary items at the closing rate are
recognized as income and expenses in the period
in which they arise.
Non-monetary items that are measured in
terms of historical cost in a foreign currency are
translated using the exchange rates at the dates
of transactions. Non-monetary items that are
measured at fair value in a foreign currency shall
be translated using the exchange rates at the date
when the fair value was measured.
Exchange differences are generally recognised in
the Statement of Profit and Loss.
C. Employment Benefits
• Short-term obligations
All employee benefits payable wholly within
twelve months of rendering services are classified
as short-term employee benefits. Short-term
employee benefits are expensed as the related
service is provided. A liability is recognized for the
amount expected to be paid if the Company has
a present legal or constructive obligation to pay
this amount as a result of past service provided by
the employee and the obligation can be estimated
reliably. Short-term benefits such as salaries,
wages, short-term compensation absences, etc.,
are determined on an undiscounted basis and
recognized in the period in which the employee
renders the related service.
• Other long-term employee benefit obligations
ability toward Long-term Compensated Absences
is provided for on the basis of an actuarial
valuation, using the Projected Unit Credit Method,
as at the date of the Balance Sheet. Actuarial gains
/ losses comprising of experience adjustments and
the effects of changes in actuarial assumptions are
immediately recognised in the Statement of Profit
and Loss. The obligations are presented as current
liabilities in the balance sheet if the entity does
not have an unconditional right to defer settlement
for at least twelve months after the reporting
period, regardless of when the actual settlement is
expected to occur.
• Post-employment obligations
The Company operates the following post¬
employment schemes:
(a) Defined benefit plans such as gratuity, and
(b) Defined contribution plans such as provident
fund.
(a) Defined benefit plans: The following post -
employment benefit plans are covered under
the defined benefit plans:
Gratuity: The Company’s net obligation in
respect of defined benefit plans is calculated
by estimating the amount of future benefit that
employees have earned in the current and
prior periods, discounting that amount and
deducting the fair value of any plan assets.
The calculation of defined benefit obligations
is performed annually by a qualified actuary
using the projected unit credit method. When
the calculation results in a potential asset for
the Company, the recognised asset is limited
to the present value of economic benefits
available in the form of any future refunds from
the plan or reductions in future contributions
to the plan.
Remeasurement gains and losses arising
from experience adjustments and changes in
actuarial assumptions are recognized in the
period in which they occur, directly in other
comprehensive income. They are included in
retained earnings in the statement of changes
in equity and in the balance sheet.
(b) Defined contribution plans
The Company pays provident fund
contributions to publicly administered
provident funds as per local regulations. The
Company has no further payment obligations
once the contributions have been paid. The
contributions are accounted for as defined
contribution plans and the contributions are
recognised as employee benefit expense
when they are due.
D. Income-tax
Income tax expense comprises current and
deferred tax. It is recognised in the Statement of
Profit and Loss except to the extent that it relates
to a business combination, or items recognised
directly in equity or in the OCI.
• Current tax
Current tax is the amount of tax payable
(recoverable) in respect of the taxable
profit / (tax loss) for the year determined in
accordance with the provisions of the Income-
Tax Act, 1961. Current income tax for current
and prior periods is recognized at the amount
expected to be paid to or recovered from the
tax authorities, using tax rates and tax laws
that have been enacted or substantively
enacted at the reporting date. Current tax
assets and liabilities are offset only if, the
Company:
(a) has a legally enforceable right to set off
the recognised amounts; and
(b) i ntends either to settle on a net basis, or
to realise the asset and settle the liability
simultaneously.
• Deferred tax
Deferred tax is recognised in respect of
temporary differences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes. Deferred tax is not
recognised for:
a) temporary differences on the initial
recognition of assets or liabilities in
a transaction that is not a business
combination and that affects neither
accounting nor taxable profit or loss;
b) temporary differences related to
investments in subsidiaries and
associates to the extent that the
Company is able to control the timing of
the reversal of the temporary differences
and it is probable that they will not
reverse in the foreseeable future; and
c) taxable temporary differences arising on
the initial recognition of goodwill
Deferred tax assets are recognised for
deductible temporary differences to the extent
that it is probable that future taxable profits will
be available against which they can be used.
Deferred tax assets are reviewed at each
reporting date and are reduced to the extent
that it is no longer probable that the related tax
benefit will be realised; such reductions are
reversed when the probability of future taxable
profits improves. Unrecognized deferred tax
assets are reassessed at each reporting
date and recognised to the extent that it has
become probable that future taxable profits will
be available against which they can be used.
Deferred tax assets and liabilities are
measured at the tax rates that are expected
to apply in the year when the asset is realized
or the liability is settled, based on tax rates
(and tax laws) that have been enacted or
substantively enacted at the reporting date.
The measurement of deferred tax reflects the
tax consequences that would follow from the
manner in which the Company expects, at the
reporting date, to recover or settle the carrying
amount of its assets and liabilities. Deferred
tax assets and liabilities are offset only if:
a) the entity has a legally enforceable right
to set off current tax assets against
current tax liabilities; and
b) the deferred tax assets and the deferred
tax liabilities relate to income taxes
levied by the same taxation authority on
the same taxable entity.
E. Inventories
Inventories are carried in the balance sheet as
follows:
(a) Raw materials, Packing materials and Stores
& Spares: Cost of purchases and other costs
incurred in bringing the inventories to their
present location and condition
(b) Work-in-progress / project in progress: At
lower of cost of materials, plus appropriate
manufacturing overheads and net realizable
value.
(c) Finished Goods: At lower of cost of materials,
plus appropriate manufacturing overheads
and net realizable value.
Net realizable value is the estimated selling price in
the ordinary course of business, less the estimated
costs of completion and the estimated costs
necessary to make the sale. The net realizable
value of work-in-progress is determined with
reference to the selling prices of related finished
products. Raw materials and other supplies held
for use in the production of finished products are
not written down below cost, except in cases where
material prices have declined, and it is estimated
that the cost of the finished products will exceed
their net realizable value.
F. Property, plant and equipment (including
Capital work in progress)
• Recognition and initial measurement
Items of property, plant and equipment
are measured at cost less accumulated
depreciation and any accumulated impairment
losses, if any. The cost of an item of property,
plant and equipment comprises:
a) its purchase price, including import duties
and non-refundable purchase taxes, after
deducting trade discounts and rebates.
b) any costs directly attributable to bringing the
asset to the location and condition necessary
for it to be capable of operating in the manner
intended by management.
c) the initial estimate of the costs of dismantling
and removing the item and restoring the
site on which it is located, the obligation for
which an entity incurs either when the item
is acquired or as a consequence of having
used the item during a particular period for
purposes other than to produce inventories
during that period.
d) Items of property, plant and equipment
(including capital-work-in progress) are
measured at cost, which includes capitalised
borrowing costs, less accumulated
depreciation and any accumulated impairment
losses Income and expenses related to
the incidental operations, not necessary to
bring the item to the location and condition
necessary for it to be capable of operating
in the manner intended by management,
are recognised in the Statement of Profit and
Loss.
If significant parts of an item of property, plant
and equipment have different useful lives,
then they are accounted and depreciated
for as separate items (major components) of
property, plant and equipment.
Any gain or loss on disposal of an item of
property, plant and equipment is recognised
in the Statement of Profit and Loss.
• De-recognition
An item of property, plant and equipment
and any significant part initially recognized
is derecognized upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the standalone statement of profit
and loss when the asset is derecognized.
• Subsequent expenditure
Subsequent expenditure is capitalised only if
it is probable that the future economic benefits
associated with the expenditure will flow to the
Company
• Depreciation/ Amortizations
Depreciation is calculated using the straight¬
line method to allocate their cost, net of their
residual values, over their estimated useful
lives specified in schedule II to the Companies
Act, 2013 except for the following:
(a) Building - 30 years
(b) Plant and Machinery- 20 years
(c) M.S. Structure & FRP Gratings- 20 years
(d) Effluent Treatment Plant- 20 years
(e) Safety Equipment’s- 20 years
(f) Quality Control Instruments & R & D
Equipment’s- 10 years
(g) Office equipment’s- 5 years
(h) I T Equipment’s- 3 years
(i) Furniture and fixtures- 10 years
(j) Vehicles- 8 years
(k) Leasehold land - 60 years
Depreciation methods, useful lives and
residual values are reviewed at each reporting
date and adjusted if appropriate. 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).
G. Intangible assets:
• Recognition and initial measurement
Intangible assets with finite useful lives
that are acquired separately are carried at
cost less accumulated amortisation and
accumulated impairment losses. Amortisation
is recognised on a straight-line basis over
their estimated useful lives. The estimated
useful life and amortisation method are
reviewed at the end of each reporting year,
with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives
that are acquired separately are carried at
cost less accumulated impairment losses.
• Useful life and amortisation
I ntangible assets with finite useful lives that
are acquired separately are carried at cost less
accumulated amortisation and impairment
losses. Amortisation is recognised on a
straight-line basis over the useful lives of the
asset from the date of capitalisation as below:
Computer software 3-5 years
The estimated useful life is reviewed at the
end of each reporting period and the effect
of any changes in estimate is accounted for
prospectively.
Intangible assets acquired in a business
combination viz. Goodwill, Patents, Copyrights
and Brands do not have definite useful life
and thus, are not amortised. However, these
assets are tested for impairment on an annual
basis. These are further tested for impairment
upon any indication of impairment subsequent
to annual testing.
• De recognition
Intangible assets are derecognised on
disposal, or when no future economic
benefits are expected from use or disposal.
Gains or losses arising from de-recognition
of an intangible asset are measured as the
difference between the net disposal proceeds
and the carrying amount of the asset and are
recognized in the statement of profit and loss
when the asset is derecognized.
|