3. Summary of Material Accounting Policies:

The standalone financial statements have been prepared using
the accounting policies and measurement basis summarized
below. The Accounting Policies have been consistently applied
to all the years presented, unless otherwise stated.

3.1 Basis of Measurement

The standalone financial statements have been prepared on
a historical cost basis and on accrual basis, except for the
following material items in the balance sheet:

• Long-Term borrowings are measured at amortised cost
using the effective interest rate method.

• Certain financial assets are measured either at fair value or
at amortised cost depending on the classification.

• Employee defined benefit assets/ (liabilities) are recognized
as the net total of the fair value of plan assets, plus actuarial
losses, less actuarial gains and the present value of the
defined benefit obligation.

• Right-of use the assets are recognized at the present value
of lease payments that are not paid at that date.

3.2 Current and Non- Current Classification:

The Company presents assets and liabilities in the balance
sheet based on current and non-current classification.

All 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 schedule III (Division II) to
the companies Act,2013 and Ind AS 1, Presentation of
Financial Statements.

ASSETS:

i. An asset is classified as current when it satisfies any of
the following criteria:

• Expected to be realised or intended to be sold or
consumed in normal operating cycle;

• Held primarily for the purpose of trading;

• Expected to be realised 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.

ii. Current assets include the current portion of non-current
assets. All other Assets are classified as non-current.

LIABILITIES:

(i) A liability is classified as current when it satisfies the
any of the following criteria:

• Expected to settle the liability 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.

(ii) Current liabilities include the current portion of non¬
current liabilities. All Other liabilities are classified
as non-current.

Deferred Tax Assets and Liabilities are always classified
as non-current assets and liabilities.

The Operating Cycle is the time between the acquisition
of assets for processing and their realisation in Cash
and Cash Equivalents. The Company has identified
Twelve months as its Operating Cycle.

3.3 Revenue Recognition:

Revenue is recognized 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. To recognize revenues, the
Company applies the following five step approach:

(1) identify the contract with a customer,

(2) identify the performance obligations in the contract,

(3) determine the transaction price,

(4) allocate the transaction price to the performance

obligations in the contract, and

(5) recognize revenues when a performance

obligation is satisfied.

The specific recognition criteria described below must also
be met before revenue is recognised.

The Company's revenue is derived from sale of goods, sale
of services. Most of such revenue is generated from the sale
of goods. Accounting policies relating to revenue for the
periods are as follows:

(i) Revenue from Sale of Goods:

Revenue is recognized when the control of the goods
has been transferred to a third party. This is usually
when the title passes to the customer, either upon
shipment or upon receipt of goods by the customer.
At that point, the customer has full discretion over the
channel and price to sell the products, and there are no
unfulfilled obligations that could affect the customer's
acceptance of the product.

Revenue from the sale of goods is measured at the
transaction price which is the consideration received
or receivable, net of returns, taxes and applicable trade
discounts and allowances. Revenue includes shipping
and handling costs billed to the customer.

In arriving at the transaction price, the Company
considers the terms of the contract with the customers
and its customary business practices. The transaction
price is the amount of consideration the Company is
entitled to receive in exchange for transferring promised
goods or services, excluding amounts collected on
behalf of third parties. The amount of consideration
varies because of estimated rebates, returns and
chargebacks, which are considered to be key estimates.
Any amount of variable consideration is recognised
as revenue only to the extent that it is highly probable
that a significant reversal will not occur. The Company
estimates the amount of variable consideration using
the expected value method

(ii) Revenue from Sale of Services:

Revenue from Sale of services is recognised as per
the terms of the contracts with customers when
the related services are performed or the agreed
milestones are achieved.

(iii) Export incentives:

Export incentives are recognized as income when the
right to receive credit as per the terms of the scheme
is established in respect of the export made and
where there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.

(iv) Dividend Income:

Dividends are recognised as other income in
profit or loss when the right to receive payment is
established, which is generally when shareholders
approve the dividend.

(v) Interest Income:

Interest income from financial assets at fair value
through profit or loss is disclosed as interest income
within other income. Interest income, on financial
assets at amortised cost and financial assets at FVOCI,
is calculated using the effective interest method and the
same is recognized in the statement of profit and loss
as part of other income. Interest income is calculated by
applying the effective interest rate to the gross carrying
amount of a financial asset except for financial assets

that subsequently become credit-impaired. For credit-
impaired financial assets, the effective interest rate is
applied to the net carrying amount of the financial asset
(after deduction of the loss allowance).

3.4 Foreign Currency Transactions:

(i) Functional and Presentation Currency:

The standalone financial statements are presented in
Indian Rupee ('INR' or 'H') which is also the functional
currency of the Company.

(ii) Initial Recognition:

Foreign currency transactions are recorded in the
functional currency, by applying to the exchange
rate between the functional currency and the foreign
currency at the date of the transaction.

(iii) Conversion on Reporting Date:

Transactions in foreign currencies are initially
recorded by the Company at its functional currency
spot rates at the date the transaction first qualifies
for initial recognition. Monetary assets and liabilities
denominated in foreign currencies are translated at
the functional currency spot rates of exchange at the
reporting date.

(iv) Exchange Differences:

Exchange differences arising on the settlement of
monetary items, or on reporting monetary items of
company at rates different from those at which they
were initially recorded during the year or reported
in previous financial statements are recognized
in the statement of profit and loss in the year in
which they arise.

(v) Non-Monetary Items:

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 the
initial transactions.

3.5 Property, Plant and Equipment:

(i) Recognition and Initial Measurement

Property, Plant and Equipment is initially recognized at
their cost of acquisition. The cost comprises purchase
price, including import duties and non-refundable taxes,
after deducting trade discounts and rebates.

Cost includes any directly attributable costs of bringing
the asset to its working condition for the intended use
by management and borrowing costs if recognition
criteria are met.

Assets under installation or under construction as at
the Balance Sheet date are stated at cost and shown
as Capital Work in Progress. Advances paid towards
acquisition of assets are shown as Capital Advances.

Borrowing Cost relating to acquisition of Property, Plant
and Equipment which takes substantial period of time
to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready
for its intended use.

Subsequent Costs are included in the asset's
carrying amount or recognized as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Company. All other repair and maintenance costs
are recognized in statement of profit or loss as incurred.

(ii) Subsequent Measurement (Depreciation and Useful
Lives)

Depreciation on property, plant and equipment is
provided on the straight-line basis over the useful lives
as estimated by management which coincides with
useful life prescribed in Schedule II to the Companies
Act, 2013. Freehold land is not depreciated.

Depreciation on addition to/deletion from fixed assets
made during the year is provided on pro-rata basis
from/up to the date of such addition/deletion as
the case may be. In case of assets costing less than
H5,000/- purchased during the year also depreciation
has been provided at normal rates on pro-rata basis
from the date of purchase.

The residual values, useful lives and method of
depreciation are reviewed at each financial year end by
management based on the expected utility of the asset
and adjusted prospectively, if appropriate.

(iii) 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 statement of profit and loss when the asset
is derecognized.

(iv) Capital advances

Advances paid towards acquisition of tangible
fixed assets outstanding at each balance sheet
date are shown under other non-current assets as
capital advances.

(v) Capital work-in-progress

Capital work-in-progress includes cost of property,
plant and equipment under installation/construction as
at the balance sheet date.

(vi) Impairment :

The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset's recoverable amount. An asset's recoverable
amount is the higher of an asset's or cash-generating
unit's (CGU) fair value less costs of disposal and its
value in use. Recoverable amount is determined for an
individual asset, unless the asset does not generate
cash inflows that are largely independent of those from
other assets or groups of assets. When the carrying
amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written
down to its recoverable amount.

3.6 Intangible Assets:

(i) Recognition and Initial Measurement

Intangible Assets are initially recognized at their cost
of acquisition. The cost comprises purchase price,
including import duties and non-refundable taxes, after
deducting trade discounts and rebates.

Cost includes any directly attributable costs of bringing
the asset to its working condition for the intended use
by management and borrowing costs if recognition
criteria is met.

(ii) Subsequent measurement (amortization):

The cost incurred on Intangible Assets is amortized
on straight line basis over a period of estimated useful
life of 6 years in case of Computer Software and 4
years for Patents.

3.7 Leases:

The company assesses at contract inception whether a
contract is, or contains, a lease. That is, 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

At the date of commencement of the lease, the company
recognizes a right-of-use-asset ("ROU”) and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for short-term leases and leases of low-value assets.
Lease liabilities representing the lease payments to be made
and right-of-use assets representing the right to control the
use of underlying assets.

i) Right-of-use assets

Right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation
and impairment losses, if any, and adjusted for any
measurement of lease liabilities. Right-of-use assets
are depreciated on a straight line basis over the shorter
of the lease term and estimated useful lives of the
assets, as follows:

If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost of
right to use asset reflects the exercise of a purchase
option, depreciation is calculated using the estimated
useful life of the asset.

Costs incurred relating to Right-of-use assets
accounted by applying other applicable standards,such
as Ind AS 16 and depreciated on straight line basis over
the lease period.

ii) Lease Liabilities

At the commencement date of the lease, lease
liabilities initially recognized at amortized cost at the
present value of lease payments to be made over the
lease term. The lease payments include fixed payments
(including in substance fixed payments) less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid by lessee under residual value guarantees.
The lease payments also include the exercise price of

a purchase option if the company is reasonably certain
to be exercised that option and payments of penalties
for terminating the lease, if the lease term reflects the
Company exercising the option to terminate.

In calculating the present value of lease payments, the
Company uses its incremental borrowing rate being
the rate that the company would have to pay to borrow
the funds necessary to obtain an asset of similar
value to the right- of-use asset in a similar economic
environment with similar terms, security and conditions
at the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest
and reduced for the lease payments made. In addition,
the carrying amount of lease liabilities is remeasured if
there is a change in the lease term, a change in the lease
payments (e.g., changes to future payments resulting
from a change in an index or rate used to determine
such lease payments) or a change in the assessment
of an option to purchase the underlying asset.

iii) Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases of asset (i.e., those
leases that have a lease term of 12 months or less from
the commencement date and do not contain a purchase
option). It also applies the lease of low value assets
recognition exemption to leases in which underlying
assets are considered to be low value. Lease payments
on short-term leases and leases of low-value assets
are recognized as expense on a straight-line basis over
the lease term or another systematic basis if that basis
is more representative of the pattern of the benefit.

Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments
have been classified as financing activity in cash
flow statement.

Company as a Lessor:

Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Rental
income from operating lease is recognised on a
straight-line basis over the term of the relevant lease.
Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying

amount of the leased asset and recognised over the
lease term on the same basis as rental income.

3.8 Inventories:

Raw material, packaging material, are carried at cost. Stores
and spares are being charged to revenue as and when
purchased. Cost includes purchase price excluding taxes
those are subsequently recoverable by the company from the
concerned authorities, freight inwards and other expenditure
incurred in bringing such inventories to their present location
and condition. Cost of Raw Material, packaging material is
determined using the weighted average cost method.

The carrying cost of raw materials, packing materials are
appropriately written down to replacement cost if the finished
products in which they will be incorporated are expected to
be sold below cost.

Finished goods and work in progress are valued at the lower
of cost and net realizable value. Cost of work in progress and
manufactured finished goods is determined on weighted
average basis and comprises cost of direct material, cost
of conversion and other costs incurred in bringing these
inventories to their present location and condition. Cost of
traded goods is determined on weighted average basis.

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.

Spare Parts, Stand-by Equipment and Servicing Equipment
are recognized in accordance with Ind AS-16 when they meet
the definition of property, plant and Equipment. Otherwise,
such items are classified as inventory and are valued at Cost.

3.9 Cash and Cash Equivalents:

Cash and Cash equivalents include cash on hand and at bank,
deposits held at call with banks, other short-term, highly
liquid investment with original maturities of three months or
less that are readily convertible to a known amount of cash
which are subject to an insignificant risk of changes in value
and are held for meeting short-term cash commitments.

For the purpose of the statement of Cash Flows, cash and
cash equivalents consists of cash and short term deposits,
as defined above, net of outstanding bank overdraft as they
are being considered as integral part of the Company's
cash management.

3.10 Financial Instruments:

(i) Financial Assets

(a) Initial recognition and measurement

All financial assets are recognised initially at fair
value and transaction cost that is attributable
to the acquisition of the financial asset
is also adjusted.

(b) Subsequent measurement
Debt instruments -

A 'debt instrument' is measured at the amortised
cost if both the following conditions are met:

• The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

• Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on
the principal amount outstanding

After initial measurement, such financial assets
are subsequently measured at amortised cost
using the effective interest rate (EIR) method.

Equity investments -

All equity investments in scope of Ind-AS 109
are measured at fair value. Equity instruments
which are held for trading are generally classified
as at fair value through profit and loss (FVTPL).
For all other equity instruments, the Company
decides to classify the same either as at fair value
through other comprehensive income (FVOCI) or
fair value through profit and loss (FVTPL). The
Company makes such election on an instrument
by instrument basis. The classification is made on
initial recognition and is irrevocable.

Investment in Associates, Subsidiaries and Joint
Venture:

Investments in Subsidiaries, Associates and Joint
ventures are carried at cost less accumulated
impairment losses, if any. Where an indication
of impairment exists, the carrying amount of the
investment is assessed and written down to its
recoverable amount. On disposal of investments
in subsidiaries and joint venture, the difference
between net disposal proceeds and the carrying

amounts are recognised in the statement of
profit and loss.

(c) De-recognition of 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.

(d) Trade Receivables:

Trade receivables are amounts due from
customers for goods sold or services performed
in the ordinary course of business and reflects
unconditional right to consideration (that is,
payment is due only on the passage of time).
Trade receivables are recognized initially at the
transaction price as they do not contain significant
financing components. The Company holds the
trade receivables with the objective of collecting
the contractual cash flows and therefore measures
them subsequently at amortised cost using the
effective interest method, less loss allowance.

(ii) Financial liabilities

(a) Initial Recognition and Measurement

All financial liabilities are recognized initially at
fair value and transaction cost that is attributable
to the acquisition of the financial liabilities is
also adjusted. These liabilities are classified as
amortized cost.

(b) Subsequent Measurement

These liabilities include borrowings and deposits.
Subsequent to initial recognition, these liabilities
are measured at amortized cost using the
effective interest method.

(c) De-recognition of 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.

(d) Loans and Borrowings:

Borrowings are initially recognized at fair value,
net of transaction cost incurred. Borrowings
are subsequently measured at amortized cost.
Any difference between the proceeds (net of
transaction costs) and the redemption amount is
recognized in profit or loss over the period of the
borrowings using the effective interest method.

Borrowings are removed from the balance sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial liability
that has been extinguished or transferred to another
party and the consideration paid, including any non¬
cash assets transferred or liabilities assumed, is
recognized in profit or loss as other gains/(losses).

Where there is a breach of a material provision
of a long-term loan arrangement on or before
the end of the reporting period with the effect
that the liability becomes payable on demand on
the reporting date, the entity does not classify
the liability as current, if the lender agreed, after
the reporting period and before the approval of
financial statements for issue, not to demand
payment as consequence of the breach.

(e) Trade and other Payables:

These amounts represent liabilities for goods
and services provided to the company prior to the
end of financial year which are unpaid. Trade and
other payables are presented as current liabilities
unless payment is not due within 12 months after
the reporting period. They are recognized initially
at their fair value and subsequently measured at
amortised cost using the effective interest method

(iii) Financial Guarantee Contracts

Financial Guarantee Contracts are those contracts
that require a payment to be made to reimburse the
holder for a loss it incurs because the specified party
fails to make a payment when due in accordance with
the terms of a debt instrument. Financial guarantee
contracts are recognized initially as a liability at
fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of
the amount of expected loss allowance determined as
per impairment requirements of Ind-AS 109 and the
amount recognised less cumulative amortization.

(iv) 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 recognized amounts and there is an intention to
settle on a net basis, to realise the assets and settle the
liabilities simultaneously.

(v) Impairment of Trade Receivables

In accordance with Ind-AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on trade receivables.

For this purpose, the company follows a "simplified
approach” for recognition of impairment loss allowance
on the trade receivable balances. The application of
this simplified approach does not require the company
to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.

ECL is the difference between all contractual cash
flows that are due to the Company in accordance with
the contract and all the cash flows that the Company
expects to receive.

As a practical expedient, the company uses a provision
matrix to determine impairment loss allowance on
portfolio of its trade receivables. The provision matrix is
based on its historically observed default rates over the
expected life of the trade receivables and is adjusted
for forward-looking estimates. At every reporting date,
the historical observed default rates are updated and
changes in the forward-looking estimates are analysed.

(vi) Impairment of other Financial Assets:

For recognition of impairment loss on other financial
assets and risk exposure, the company determines
whether there has been a significant increase in the
credit risk since initial recognition.

If credit risk has not increased significantly,12-month
ECL is used to provide for impairment loss. However,
if credit risk has increased significantly, lifetime ECL
is used. Lifetime ECL are the expected credit losses
resulting from all possible default events over the
expected life of a financial instrument. The 12-month
ECL is a portion of the lifetime ECL which results from
default events that are possible within 12 months after
the reporting date.

3.11 Income Taxes:

Current Tax

Tax expense comprises of current and deferred tax. Current
tax is measured at the amount expected to be paid to the
tax authorities in accordance with tax laws enacted or
substantially enacted at the end of the reporting period.
Current tax includes taxes to be paid on the profit earned
during the year and adjustment to tax payable in respect of
prior periods, if any.

Deferred Tax

Deferred income taxes are provided based on the balance
sheet approach considering the temporary differences
between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the
reporting date.

Deferred tax liabilities are recognized for all taxable temporary
differences, except for the 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.

Deferred tax assets are recognized for all deductible
temporary differences, the carry forward of unused tax
credits and any unused tax losses except for the deductible
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. Deferred
tax assets are recognised only to the extent that there is
reasonable certainty that sufficient future taxable income
will be available against which the deductible temporary
differences can be utilized. In situations where a component
has unabsorbed depreciation or carry forward tax losses, all
deferred tax assets are recognised only if it is probable that
they can be utilised against future taxable profits.

The Carrying amount of deferred tax assets are reviewed at
each balance sheet date and reduced to the extent that it
is no longer probable that sufficient future taxable income
will be available against which the deductible temporary
differences can be utilized. Unrecognized deferred tax assets
are re-assessed at each reporting date and are recognized to
the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.

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 at the reporting date.

Deferred tax relating to items recognized outside profit
or loss is recognized outside profit or loss(either in other
comprehensive income or in equity).Deferred tax items are
recognized in correlation to the underlying transaction either
in OCI or directly in equity.

3.12 Segment Reporting:

Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The Chairman and managing director has
been identified as being the Chief Operating Decision Maker
(CODM). The Company is engaged in manufacturing and
sale of Active Pharma Ingredients and their Intermediates
and operates in a single operating segment. Revenues
are attributed to geographical areas based on the location
of the customers.

3.13 Government Grants:

Government grants are recognized at their fair value where
there is reasonable assurance that the grant will be received
and all attached conditions will be complied with.

Government grants relating to income are deferred and
recognized in the profit or loss over the period necessary
to match them with the costs that they are intended to
compensate and presented within other income.

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 or loss on a
straight-line basis over the expected lives of the related
assets and presented within other income.

Export incentives are recognized as income when the right to
receive credit as per the terms of the scheme is established
in respect of the exports made and where there is no
significant uncertainty regarding the ultimate collection of
the relevant export proceeds.

3.14 Borrowing Cost

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 asset.
All other borrowing costs are expensed in the period in
which they occur. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes exchange
differences to the extent regarded as an adjustment to the
borrowing costs.