(ii) Summary of material accounting policies
The standalone financial statements have been
prepared using the accounting policies and
measurement basis summarized below.
a. Functional currency
The standalone financial statements are
presented in Indian Rupee ('INR' or '?') which is
also the functional and presentation currency
of the Company.
b. Current and non-current classification
All the assets and liabilities have been
classified as current or non-current as per
the Company's normal operating cycle and
other criteria set out in the Division II - Ind AS
Schedule III to the Act.
Based on nature of product and activities of
the Company and their realisation in cash
and cash equivalent, the Company has
determined its operating cycle as twelve
months for the purpose of current and non¬
current classification of assets and liabilities.
c. Property, plant and equipment (PPE)
Items of PPE are measured at cost less
accumulated depreciation and accumulated
impairment losses, if any. The cost
comprises purchase price, taxes (other than
those subsequently recoverable from tax
authorities), borrowing cost if capitalisation
criteria are met and directly attributable cost
of bringing the asset to its working condition
for the intended use, and estimated costs
of dismantling and removing the item and
restoring the site on which it is located.
Subsequent costs are included in asset's
carrying amount or recognised as separate
assets, as appropriate, only when it is probable
that future economic benefit associated with
the item will flow to the Company and the cost
of item can be measured reliably. If significant
parts of an item of PPE have different useful
lives, then they are accounted for as separate
items (major components) of PPE.
An item of PPE and any significant part initially
recognised is derecognized upon disposal
or when no future economic benefits are
expected from its use or disposal. Any gain
or loss arising on derecognition of the asset
(calculated as the difference between the net
disposal proceeds and the carrying amount of
the asset) is included in the income statement
when the asset is derecognised.
Advances paid towards the acquisition of
PPE outstanding at each balance sheet date
is classified as capital advances. Capital
work- in- progress includes cost of property,
plant and equipment under installation / under
development as at the balance sheet date.
Depreciation on PPE is calculated on pro-rata
basis on straight-line method using the useful
lives of the assets estimated by management
as prescribed in Schedule II to the Act. The
useful life is as follows:
Land is not depreciated
Depreciation on additions / disposals is
provided on a pro-rata basis i.e. from / upto
the date on which asset is ready for use /
disposed-off.
The useful lives are based on historical
experience with similar assets as well as
anticipation of future events. The residual
values are not more than 5% of the original
cost of the assets. The residual values,
useful lives and method of depreciation of
are reviewed at each financial year-end and
adjusted prospectively, if appropriate.
d. Leases:
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.
Company as a lessee
The Company accounts for each lease
component within the contract as a lease
separately from non-lease components of the
contract and allocates the consideration in the
contract to each lease component on the basis
of the relative standalone price of the lease
component and the aggregate standalone
price of the non-lease components.
The Company recognises right-of-use
asset representing its right to use the
underlying asset for the lease term at the
lease commencement date. The cost of the
right-of-use asset measured at inception
shall comprise of the amount of the initial
measurement of the lease liability adjusted
for any lease payments made at or before
the commencement date less any lease
incentives received, plus any initial direct
costs incurred and an estimate of costs to
be incurred by the lessee in dismantling
and removing the underlying asset or
restoring the underlying asset or site on
which it is located. The right-of-use assets
is subsequently measured at cost less any
accumulated depreciation, accumulated
impairment losses, if any and adjusted for
any remeasurement of the lease liability. The
right-of-use assets is depreciated using the
straightline method from the commencement
date over the shorter of lease term or useful
life of right-of-use asset. The estimated useful
lives of right-ofuse assets are determined on
the same basis as those of property, plant
and equipment. Right-of-use assets are
tested for impairment whenever there is any
indication that their carrying amounts may
not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.
The Company measures the lease liability at
the present value of the lease payments that
are not paid at the commencement date of
the lease. The lease payments are discounted
using the interest rate implicit in the lease,
if that rate can be readily determined. If
that rate cannot be readily determined,
the Company uses incremental borrowing
rate. For leases with reasonably similar
characteristics, the Company, on a lease by
lease basis, may adopt either the incremental
borrowing rate specific to the lease or the
incremental borrowing rate for the portfolio
as a whole. The lease payments shall include
fixed payments, variable lease payments,
residual value guarantees, exercise price of
a purchase option where the Company is
reasonably certain to exercise that option
and payments of penalties for terminating
the lease, if the lease term reflects the
lessee exercising an option to terminate
the lease. The lease liability is subsequently
remeasured by increasing the carrying
amount to reflect interest on the lease liability,
reducing the carrying amount to reflect the
lease payments made and remeasuring the
carrying amount to reflect any reassessment
or lease modifications or to reflect revised
in-substance fixed lease payments. The
Company recognises the amount of the
re-measurement of lease liability due to
modification as an adjustment to the right-
of-use asset and statement of profit and loss
depending upon the nature of modification.
Where the carrying amount of the right-of-
use asset is reduced to zero and there is a
further reduction in the measurement of the
lease liability, the Company recognises any
remaining amount of the re-measurement in
statement of profit and loss.
The Company has elected not to apply the
requirements of Ind AS 116 Leases to short¬
term leases of all assets that have a lease
term of 12 months or less and leases for
which the underlying asset is of low value.
The lease payments associated with these
leases are recognised as an expense on a
straight-line basis over the lease term.
e. Investment properties
Property that is held for long term rental
yields or for capital appreciation or for both,
and that is not occupied by the Company, is
classified as investment property. Investment
properties are initially measured at cost,
including transaction costs. Subsequent to
initial recognition, investment properties are
stated at cost less accumulated depreciation
and accumulated impairment loss, if any.
When the use of a property changes from
owner occupied to investment property,
the property is reclassified as investment
property at it's carrying amount on the date
of reclassification.
The useful life of investment property
is estimated at 60 years based on
technical evaluation performed by
management's expert.
f. Goodwill
Goodwill is initially measured at cost,
being the excess of the aggregate of the
consideration transferred over the fair value
of net identifiable assets acquired and
liabilities assumed. If the fair value of the net
assets acquired is in excess of the aggregate
consideration transferred, the Company re¬
assesses whether it has correctly identified all
of the assets acquired and all of the liabilities
assumed and reviews the procedures used
to measure the amounts to be recognised
at the acquisition date. If the reassessment
still results in an excess of the fair value of
net assets acquired over the aggregate
consideration transferred, then the gain is
recognised in other comprehensive income
and accumulated in equity as capital reserve.
However, if there is no clear evidence of
bargain purchase, the entity recognizes the
gain directly in equity as capital reserve,
without routing the same through other
comprehensive income.
After initial recognition, goodwill is measured
at cost less any accumulated impairment
losses. For the purpose of impairment testing,
goodwill acquired in a business combination
is, from the acquisition date, allocated to each
of the Company's cash-generating units that
are expected to benefit from the combination,
irrespective of whether other assets or
liabilities of the acquiree are assigned to
those units.
A cash generating unit to which goodwill
has been allocated is tested for impairment
annually, or more frequently when there is an
indication that the unit may be impaired. If the
recoverable amount of the cash generating
unit is less than its carrying amount, the
impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated
to the unit and then to the other assets of the
unit pro rata based on the carrying amount of
each asset in the unit. Any impairment loss
for goodwill is recognised in profit or loss. An
impairment loss recognised for goodwill is not
reversed in subsequent periods.
Where goodwill has been allocated to a cash
generating unit and part of the operation
within that
unit is disposed of, the goodwill associated
with the disposed operation is included in
the carrying amount of the operation when
determining the gain or loss on disposal.
Goodwill disposed in these circumstances
is measured based on the relative values of
the disposed operation and the portion of the
cash-generating unit retained.
g. Other intangible assets
Other intangible assets are stated at cost of
acquisition less accumulated amortization
and impairment loss, if any. These are
derecognised upon disposal (i.e., at the
date the recipient obtains control) or when
no future economic benefits are expected
from its use or disposal. Gains or losses
arising from disposal of the intangible assets
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 assets
are disposed off.
Intangible assets are amortized over their
useful economic lives and assessed for
impairment whenever there is an indication
that the intangible asset may be impaired. The
other intangible assets comprise of computer
software expenditure and are amortized over
a period of three years. The amortization
period and the amortization method for an
intangible asset is reviewed at least at the
end of each reporting period. Changes in the
expected useful life or the expected pattern
of consumption of future economic benefits
embodied in the asset is accounted for by
changing the amortization period or method,
as appropriate, and are treated as changes in
accounting estimates.
h. Impairment
Impairment of non-financial assets
The carrying amounts of the Company's PPE
and intangible assets are reviewed at each
reporting date to determine whether there
is any indication of impairment. If any such
indication exists, then the asset's recoverable
amount is estimated in order to determine the
extent of the impairment loss, if any.
The recoverable amount of an asset or cash¬
generating unit is the greater of its value in
use and its fair value less costs to sell. 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 the risks specific
to the asset or the cash-generating unit for
which the estimates of future cash flows
have not been adjusted. For the purpose
of impairment testing, assets are grouped
together into the smallest group of assets
that generates cash inflows from continuing
use that are largely independent of the cash
inflows of other assets or groups of assets.
An impairment loss is recognised in the
statement of profit or loss if the estimated
recoverable amount of an asset or its
cash generating unit is lower than its
carrying amount. If, at the reporting date
there is an indication that a previously
assessed impairment loss no longer exists,
the recoverable amount is reassessed
and reversed only to the extent that the
asset's carrying amount does not exceed
the carrying amount that would have
been determined, net of depreciation or
amortisation, if no impairment loss had been
previously recognised.
Impairment of financial assets
In accordance with Ind AS 109, the Company
applies expected credit loss ("ECL") model for
measurement and recognition of impairment
loss on financial assets measured at
amortised cost.
Loss allowance for trade receivables with no
significant financing component is measured
at an amount equal to lifetime expected
credit losses. For all other financial assets,
ECL are measured at an amount equal to
the 12-month ECL, unless there has been a
significant increase in credit risk from initial
recognition in which case those are measured
at lifetime ECL.
Loss allowance for financial assets measured
at amortised cost are deducted from gross
carrying amount of the assets.
i. Financial instruments
Initial Recognition and measurement
Trade receivables are initially recognised
when they are originated. All other financial
assets and financial liabilities are initially
recognised when the Company becomes
a party to the contractual provisions of
the instrument.
A financial asset or financial liability is initially
measured at fair value and, for an item not
at fair value through profit and loss (FVTPL),
transaction costs that are directly attributable
to its acquisition or issue.
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is
classified as measured at
• amortised cost;
• fair value through other comprehensive
income ("FVTOCI") - debt investment;
• FVTOCI - equity investment; or
• FVTPL
Financial assets are not reclassified
subsequent to their initial recognition, except
if and in the period the Company changes its
business model for managing financial assets.
Amortised cost
A financial asset is measured at amortised cost
if it meets both of the following conditions
and is not designated as at FVTPL:
• the asset is held within a business model
whose objective is to hold assets to
collect contractual cash flows; and
• the contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding.
After initial measurement, such financial assets
are subsequently measured at amortised
cost using the effective interest rate (EIR)
method. Amortised cost is calculated by
taking into account any discount or premium
on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation
is included in Other Income in the statement
of profit or loss. The losses arising from
impairment are recognised in the statement
of profit or loss.
FVTOCI - debt investment
A debt investment is measured at FVTOCI if
it meets both of the following conditions and
is not designated as at FVTPL:
• the asset is held within a business model
whose objective is achieved by both
collecting contractual cash flows and
selling financial assets; and
• the contractual terms of the financial
asset give rise on specified dates to
cash flows that are solely payments of
principal and interest on the principal
amount outstanding.
Debt instruments included within the FVTOCI
category are measured initially as well as at
each reporting date at fair value. Fair value
movements are recognised in the other
comprehensive income (OCI). However,
the Company recognises interest income,
impairment losses & reversals and foreign
exchange gain or loss in the statement of
profit or loss. On derecognition of the asset,
cumulative gain or loss previously recognised
in OCI is reclassified from the equity to
statement of profit or loss. Interest earned
whilst holding FVTOCI debt instrument
is reported as interest income using the
EIR method
Equity investment
On initial recognition of an equity investment
that is not held for trading, the Company
may irrevocably elect to present subsequent
changes in the investment's fair value in OCI
(designated as FVTOCI - equity investment).
This election is made on an investment by¬
investment basis.
If the Company decides to classify an
equity instrument as at FVTOCI, then all fair
value changes on the instrument, including
foreign exchange gain or loss and excluding
dividends, are recognised in the OCI. There
is no recycling of the amounts from OCI to
profit or loss, even on sale of investment.
However, the Company may transfer the
cumulative gain or loss within equity. Equity
instruments included within the FVTPL
category are measured at fair value with all
changes recognised in the statement of profit
or loss.
FVTPL
All financial assets not classified as
measured at amortised cost as described
above are measured at FVTPL. This includes
all derivative financial assets. On initial
recognition, the Company may irrevocably
designate a financial asset that otherwise
meets the requirements to be measured at
amortised cost or at FVTOCI as at FVTPL
if doing so eliminates or significantly
reduces an accounting mismatch that would
otherwise arise.
Financial liabilities
Financial liabilities are classified as measured
at amortised cost or FVTPL. A financial liability
is classified as at FVTPL if it is classified as
held- for- trading, or it is a derivative or it
is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at
fair value and net gains and losses, including
any interest expense, are recognised in
statement of profit or loss. Other financial
liabilities are subsequently measured at
amortised cost using the effective interest
method. Interest expense and foreign
exchange gains and losses are recognised in
statement of profit or loss. Any gain or loss on
derecognition is also recognised in statement
of profit or loss.
De-recognition
Financial assets
A financial asset is primarily de-recognised
when the rights to receive cash flows from
the asset have expired or the Company has
transferred its rights to receive cash flows
from the asset.
Financial liabilities
A financial liability is de-recognised when the
obligation under the liability is discharged
or cancelled or expires. When an existing
financial liability is replaced by another from
the same lender on substantially different
terms, or the terms of an existing liability are
substantially modified, such an exchange or
modification is treated as the de-recognition
of the original liability and the recognition of a
new liability. The difference in the respective
carrying amounts is recognised in the
statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are
offset and the net amount is reported in
the balance sheet if there is a currently
enforceable legal right to offset the
recognised amounts and there is an intention
to settle on a net basis, to realise the assets
and settle the liabilities simultaneously.
Derivative financial instruments and
hedge accounting
The Company uses derivative financial
instruments such as forward exchange
contracts and interest rate risk exposures
to hedge its risk associated with foreign
currency fluctuations and changes in interest
rates. Derivatives are initially measured at fair
value and subsequent to initial recognition,
derivatives are measured at fair value, and
changes therein are generally recognised
in statement of profit or loss, since the
Company's hedging instruments did not
qualify for hedge accounting in accordance
with the Ind-AS 39. Derivatives are carried as
financial assets when the fair value is positive
and as financial liabilities when the fair value
is negative.
Cash and cash equivalents
Cash and cash equivalent in the balance
sheet comprise cash at banks and on hand
and short-term
deposits with an original maturity of three
months or less, that are readily convertible
to a known amount of cash and subject to
an insignificant risk of changes in value. For
the purpose of presentation in the statement
of cash flows, cash and cash equivalents
includes cash on hand, cash at banks, deposit
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.
Dividend distribution to equity holders of
the Company
The Company recognises a liability to make
dividend distributions to equity holders
of the Company when the distribution is
authorised and the distribution is no longer
at the discretion of the Company. As per
the corporate laws in India, a distribution
is authorised when it is approved by the
shareholders. A corresponding amount is
recognised directly in equity.
j. Inventories
Basis of valuation:
Inventories consist of raw materials, stores
and spares, work-in-progress and finished
goods are measured at the lower of cost and
net realisable value.
The Cost of raw materials, stores and
consumables has been determined by using
weighted average cost method and comprises
all costs of purchase, duties, taxes (other
than those subsequently recoverable from
tax authorities) and all other costs incurred
in bringing the inventories to their present
location and condition.
The Cost of finished goods and work-in¬
progress includes direct labour and an
appropriate share of fixed and variable
production overheads and excise duty as
applicable. Fixed production overheads are
allocated on the basis of normal capacity of
production facilities. Cost is determined on
weighted average basis.
Stores and spares, that do not qualify to be
recognised as property, plant and equipment,
consists of engineering spares (such as
machinery spare parts) and consumables
or consumed as indirect materials in the
manufacturing process.
Net realisable value is the estimated selling
price in the ordinary course of business,
less the estimated costs of completion and
selling expenses.
k. Foreign currency transactions
On initial recognition, Transactions in foreign
currencies are translated to the functional
currency of the Company at exchange rates
at the dates of the transactions. Monetary
assets and liabilities denominated in foreign
currencies at the reporting period are
translated into the functional currency at the
exchange rate at that date. Non-monetary
items denominated in foreign currencies which
are carried at historical cost are reported
using the exchange rate at the date of the
transaction; and non-monetary items which
are carried at fair value or any other similar
valuation denominated in a foreign currency
are reported using the exchange rates at the
date when the fair value was measured.
Exchange differences arising on monetary
items on settlement, or restatement as at
reporting date, at rates different from those
at which they were initially recorded, are
recognized in the statement of profit and loss
in the year in which they arise
l. Investments in the nature of equity in
subsidiaries
The Company has elected to recognise
its investments in equity instruments in
subsidiaries at cost in the separate financial
statements in accordance with the option
available in Ind AS 27, 'Separate Financial
Statements'. The Company regardless of the
nature of its involvement with an entity (the
investee), determines whether it is a parent
by assessing whether it controls the investee.
The Company controls an investee when it
is exposed, or has rights, to variable returns
from its involvement with the investee and has
the ability to affect those returns through its
power over the investee. Thus, the Company
controls an investee if and only if it has all
the following:
(a) power over the investee;
(b) exposure, or rights, to variable
returns from its involvement with the
investee and
(c) the ability to use its power over the
investee to affect the amount of
the returns.
Investments are accounted in accordance
with Ind AS 105 when they are classified as
held for sale. On disposal of investment, the
difference between its carrying amount and
net disposal proceeds is charged or credited
to the statement of profit and loss
m. Revenue recognition
Revenue from contract with customers
The Company derives revenues primarily from
sale of active pharmaceutical ingredients
and contract research services. Revenue is
recognized on satisfaction of performance
obligation upon transfer of control of
promised products or services to customers
in an amount that reflects the consideration
the Company expects to receive in exchange
for those products or services.
The Company satisfies a performance
obligation and recognises revenue over time,
if one of the following criteria is met:
i. the customer simultaneously receives
and consumes the benefits provided
by the Company's performance as the
Company performs; or
ii. the Company's performance creates or
enhances an asset that the customer
controls as the asset is created or
enhanced; or
iii. the Company's performance does not
create an asset with an alternative
use to the Company and an entity has
an enforceable right to payment for
performance completed to date.
For performance obligations where one of
the above conditions are not met, revenue is
recognised at the point in time at which the
performance obligation is satisfied.
Revenue in excess of invoicing are classified
as contract asset /unbilled revenue while
collections in excess of revenues are
classified as contract liabilities / advance
from customers.
In respect of contracts involving bill-and-
hold arrangements, the Company determines
whether the control of the underlying products
have been transferred to the customer. For
the purpose of determining whether such
control is transferred, the entity considers
the following requirements as required by Ind
AS 115:
i. The reason for the bill-and-hold
arrangement is substantive (i.e. the
physical possession with the entity
is pursuant to the customer's explicit
request);
ii. The product is separately identified as
belonging to the customer;
iii. The product is ready for physical transfer
to the customer; and
iv. The entity does not have the ability
to use the product or to direct it to
another customer.
The Company recognizes revenue in respect
of bill-and-hold arrangements only when all
of the aforementioned requirements are met.
Further, at the time of such recognition, the
entity also determines whether there are any
material unsatisfied performance obligations
and determines the portion of the aggregate
consideration, if any, that needs to be
allocated and deferred.
The Company does not expect to have any
contracts where the period between the
transfer of the promised goods or services to
the customer and payment by the customer
exceeds one year. As a consequence, it does
not adjust any of the transaction prices for
the time value of money.
Other operating revenue - Export incentives
The Company recognises exports incentives
only when there is reasonable assurance
that the conditions attached to them will
be complied with, and the incentives will
be received.
Other income - Interest income
Interest income is recognized on time
proportion basis taking into account the
amount outstanding and rate applicable.
For all debt instruments measured either at
amortised cost or at fair value through other
comprehensive income, interest income is
recorded using the effective interest rate
(EIR). EIR is the rate that exactly discounts
the estimated future cash payments or
receipts over the expected life of the financial
instrument or a shorter period, where
appropriate, to the gross carrying amount of
the financial asset or to the amortised cost
of a financial liability. When calculating the
effective interest rate, the Company estimates
the expected cash flows by considering all the
contractual terms of the financial instrument
(for example, prepayment, extension, call and
similar options) but does not consider the
expected credit losses.
Other income - Dividend income
Dividend income is recognised when the
Company's right to receive the payment
is established, which is generally, when
shareholders approve the dividend.
n. Borrowing costs
Borrowing costs are interest and other costs
(including exchange differences relating to
foreign currency borrowings to the extent
that they are regarded as an adjustment to
interest costs) incurred in connection with the
borrowing of funds. Borrowing costs directly
attributable to acquisition or construction of
an asset which necessarily take a substantial
period of time to get ready for their intended
use are capitalised as part of the cost of that
asset. Other borrowing costs are recognised
as an expense in the period in which they
are incurred.
o. Retirement and other employee benefits
Defined contribution plan
The Company's contributions to defined
contribution plans are recognised as an
expense as and when the services are
received from the employees entitling them
to the contributions.
Defined benefit plan
The liability in respect of defined benefit
plans is calculated using the projected unit
credit method with actuarial valuations
being carried out at the end of each annual
reporting period. The Company recognises
the net obligation of a defined benefit plan
as a liability in its balance sheet. Gains or
losses through remeasurement of the net
defined benefit liability are recognised
in other comprehensive income and are
not reclassified to profit and loss in the
subsequent periods. The effect of any plan
amendments are recognised in the statement
of profit and loss.
p. Taxes
Tax expense recognized in statement of profit
or loss consists of current and deferred tax
except to the extent that it relates to items
recognised in OCI or directly in equity, in
which case it is recognised in OCI or directly
in equity respectively.
Current income tax, assets and liabilities are
measured at the amount expected to be paid
to or recovered from the taxation authorities
in accordance with the Income Tax Act, 1961
and the Income Computation and Disclosure
Standards (ICDS) enacted in India by using
tax rates and the tax laws that are enacted or
substantively enacted at the reporting date.
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 realise the asset and settle
the liability simultaneously.
Management periodically evaluates positions
taken in the tax returns with respect to
situations in which applicable tax regulations
are subject to interpretation and establishes
provisions where appropriate.
Deferred tax is recognised using the balance
sheet method on temporary differences
between the carrying amounts of assets
and liabilities in the financial statements.
Deferred tax is measured at the tax rates that
are expected to be applied to the temporary
differences when they reverse, based on the
laws that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset
if there is a legally enforceable right to set
off corresponding current tax assets against
current tax liabilities and the deferred tax
assets and deferred tax liabilities relate to
income taxes levied by the same taxation
authority on the Company.
A deferred tax asset is recognised to the
extent that it is probable that future taxable
profits will be available against which
the temporary difference can be utilised.
Deferred tax assets are reviewed at each
reporting date and are reduced to the extent
that it is no longer probable that sufficient
taxable profit will be available to allow the
benefit of part or all of that deferred tax
asset to be utilised. Deferred tax relating
to items recognised outside profit or loss
is recognised outside profit or loss(either
in OCI or inequity). Deferred tax items are
recognised in correlation to the underlying
transaction either in OCI or directly in equity.
Withholding tax arising out of payment of
dividends to shareholders under the Indian
Income tax regulations is not considered as
tax expense for the Company and all such
taxes are recognised in the statement of
changes in equity as part of the associated
dividend payment.
q. Research and development expense
Expenditure on research activities
undertaken with the prospect of gaining
new scientific or technical knowledge and
understanding is recognized as expense
when incurred. Development activities
involve a plan or design for the production
of new or substantially improved products
and processes. Development expenditure is
capitalized only if:
• The product or the process is technically
and commercially feasible;
• Future economic benefits are probable
and ascertainable;
• The Company intends to and has
sufficient resources, technical and
financial, to complete development of
the product and has the ability to use or
sell the asset; and
• Development costs can be
measured reliably.
Where the aforementioned criteria are
not met, the expenditure is transferred to
statement of profit and loss.
|