2.1 Material accounting policies
(i) Statement of compliance
These standalone financial statements have
been prepared to comply in all material aspects
with the 'Indian Accounting Standards' ("Ind AS")
notified under Section 133 of the Companies
Act, 2013(the "Act") read with Companies
(Indian Accounting Standards) Rules, 2015 and
relevant amendment rules issued thereafter, as
applicable to the Company, and other relevant
provisions of the Act.
(ii) Basis of measurement
The standalone financial statements have
been prepared on the historical cost basis
except for certain financial instruments which
are measured at fair value as described in
the accounting policies below. Historical cost
is generally based on the fair value of the
consideration given in exchange of assets.
Fair value is the price that would be received
to sell an asset or paid to transfer a liability
in an orderly transaction between market
participants at the measurement date,
regardless of whether that price is directly
observable or estimated using another
valuation technique. In estimating the fair value
of an asset or a liability, the company takes
into account the characteristics of the asset or
liability if market participants would take those
characteristics into account when pricing the
asset or liability at the measurement date.
Accounting policies have been consistently
applied except where a newly issued accounting
standard is initially adopted or a revision to an
existing accounting standard requires a change
in the accounting policy hitherto in use.
Going Concern
The Company has incurred a loss of ' 7.24 crores
for the year ended March 31, 2026. As of March
31, 2026, the Company has accumulated losses
of ' 319.53 crores and its net current liabilities
exceed its net current assets by ' 78.84 crores.
To mitigate the situation and adequately
fund its operations, the Company has sent
the second and final call notice to the eligible
members as on the record date calling for the
balance amount of ' 134.99 crores of its rights
issue. The Company continues to expect the
renewal of its working capital facilities, as and
when required, in the normal course of business
and also increase revenues and margins on its
products and accordingly expects to continue
to have cash inflows from operations that are
adequate enough to meet all future obligations
as they fall due. Based on the above, the Board
of directors have approved the preparation
of the standalone financial results on a going
concern basis.
(iii) Revenue recognition
Revenue is measured at the amount of
consideration which the Company expects
to be entitled to in exchange for transferring
distinct goods or services to a customer as
specified in the contract, excluding amounts
collected on behalf of third parties (for example
taxes and duties collected on behalf of the
government) and is recorded net of provisions
for sales discounts and returns, which are
established at the time of sale. Consideration is
generally due upon satisfaction of performance
obligations and a receivable is recognized
when it becomes unconditional.
Sale of goods
The Company receives revenue for supply of
pharmaceutical products to external customers
against orders received. The majority of these
contracts contain single performance obligation
for supply of goods. The average duration of a
customers' order is less than 12 months.
Revenue from sale of goods is recognised upon
transfer of control to the customer. The point
at which control passes depends on the terms
set forth in the customer's contract. Generally,
the control is transferred upon shipment of the
product to the customer or when the product
is made available to the customer, provided
transfer of title to the customer occurs and the
Company has not retained any significant risks
of ownership or future obligations with respect
to the product sold.
'Bill and hold' sales, in which delivery is delayed
at the buyer's request but the buyer takes title
and accepts billing, revenue is recognised
when the buyer takes title, provided:
(a) the buyer specifically requests the
deferred delivery;
(b) the product is identified separately as
belonging to buyer;
(c) the product is on hand and ready for
delivery to the buyer at the time the sale
is recognised;
(d) the seller does not have ability to use
product or direct to another buyer; and
(e) the usual payment terms apply."
Sale of services
Revenue from development services is
recognised on achievement of a development
milestone and when it is highly probable that a
significant reversal in the amount of cumulative
revenue recognised will not occur.
Share of Profit
Share of profits under manufacturing and
supply agreements with customers are accrued
based on sales as confirmed by the customers.
iv) Interest income
Interest income from a financial asset is
recognised when it is probable that the
economic benefits will flow to the Company
and the amount of income can be measured
reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding
and at the effective interest rate applicable,
which is the rate that exactly discounts
estimated future cash receipts through the
expected life of the financial asset to that asset's
net carrying amount on initial recognition.
(v) Export Incentives
Export incentives are accrued for based on
fulfilment of eligibility criteria for availing the
incentives and when there is no uncertainty in
receiving the same. These incentives include
estimated realisable values/benefits from
special import licenses and benefits under
specified schemes as applicable.
(vi) Leases
The Company as lessor
"Leases for which the Company is a lessor
is classified as a finance or operating lease.
Whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee, the contract is
classified as a finance lease. All other leases are
classified as operating leases.
When the Company is an intermediate lessor,
it accounts for its interests in the head lease
and the sublease separately. The sublease is
classified as a finance or operating lease by
reference to the right-of-use asset arising from
the head lease.
For operating leases, rental income is
recognized on a straight line basis over the
term of the relevant lease.
The Company as lessee
The Company at the inception of the lease
contract recognizes a Right-of-Use (RoU) .The
Company assesses, whether the contract is, or
contains, a lease. A contract is, or contains, a
lease if the contract involves-
(a) the use of an identified asset,
(b) the right to obtain substantially all the
economic benefits from use of the
identified asset, and
(c) the right to direct the use of the
identified asset.
The Company at the inception of the lease
contract recognizes a Right-of-Use (RoU) asset
at cost and corresponding lease liability, except
for leases with term of less than twelve months
(short term) and low-value assets.
The cost of the right-of-use assets comprises
the amount of the initial measurement of the
lease liability, any lease payments made at or
before the inception date of the lease plus any
initial direct costs, less any lease incentives
received. Subsequently, the right-of-use assets
is measured at cost less any accumulated
depreciation and accumulated impairment
losses, if any. The right-of-use assets is
depreciated using the straight-line method
from the commencement date over the shorter
of lease term or useful life of right-of-use assets.
The lease liability is initially measured at
amortized cost at the present value of the
future lease payments. The lease payments
are discounted using the interest rate implicit
in the lease or, if not readily determinable,
using the incremental borrowing rates. Lease
liabilities are remeasured with a corresponding
adjustment to the related right of use asset
if the Company changes its assessment if
whether it will exercise an extension or a
termination option.
For short-term and low value leases, the
Company recognizes the lease payments as an
operating expense on a straight-line basis over
the lease term.
(vii) Foreign currencies transactions and
translation
Items included in the standalone financial
statements of the entity are measured
using the currency of the primary economic
environment in which the entity operates
('the functional currency'). The financial
statements are presented in Indian Rupee
(INR), which is the Company's functional and
presentation currency.
Transactions in foreign currencies are recorded
at the exchange rate prevailing on the date of
transaction. Monetary assets and liabilities
denominated in foreign currencies are
translated at the functional currency closing
rates of exchange at the reporting date.
Exchange differences arising on settlement or
translation of monetary items are recognised
in Statement of Profit and Loss except to the
extent of exchange differences which are
regarded as an adjustment to interest costs on
foreign currency borrowings that are directly
attributable to the acquisition or construction
of qualifying assets, are capitalized as cost
of assets.
Non-monetary assets and liabilities that are
measured in terms of historical cost in foreign
currencies are not retranslated. Income and
expense items in foreign currency are translated
at the average exchange rates for the period,
unless exchange rates fluctuate significantly
during that period, in which case the exchange
rates at the dates of the transactions are used..
(viii) Borrowing costs
Borrowing costs include:
(i) interest expense calculated using the
effective interest rate method,
(ii) finance charges in respect of finance
leases, and
(iii) exchange differences arising from foreign
currency borrowings to the extent that
they are regarded as an adjustment to
interest costs.
Borrowing costs directly attributable to
the acquisition, construction or production
of qualifying assets, which are assets that
necessarily take a substantial period of time
to get ready for their intended use or sale, are
added to the cost of those assets, until such
time as the assets are substantially ready for
their intended use or sale.
Interest income earned on the temporary
investment of specific borrowings pending
their expenditure on qualifying assets is
deducted from the borrowing costs eligible
for capitalisation.
All other borrowing costs are recognised in
standalone statement of profit and loss in the
period in which they are incurred.
(ix) Employee benefits
Short term obligations
Liabilities for wages and salaries, including other
benefits that are expected to be settled wholly
within 12 months after the end of the period
in which the employees render the related
services are recognised in respect of employees'
services up to the end of the reporting period
and are measured at the amounts expected to
be paid when the liabilities are settled.
Retirement benefit costs and termination
benefits
For defined benefit retirement plans, the cost
of providing benefits is determined using the
projected unit credit method, with actuarial
valuations being carried out at the end of each
annual reporting period. Remeasurement,
comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable)
and the return on plan assets (excluding net
interest), is reflected immediately in the balance
sheet with a charge or credit recognised in other
comprehensive income in the period in which
they occur. Remeasurement recognised in other
comprehensive income is reflected immediately
in retained earnings and is not reclassified to
statement of profit and loss. Past service cost
is recognised in standalone statement of profit
and loss in the period of a plan amendment. Net
interest is calculated by applying the discount
rate at the beginning of the period to the net
defined benefit liability or asset. Defined benefit
costs are categorised as follows:
• service cost (including current service
cost, past service cost, as well as gains and
losses on curtailments and settlements);
• net interest expense or income; and
• remeasurement
The Company presents the first two
components of defined benefit costs in
standalone statement of profit and loss in
the line item 'Employee benefits expense'.
Curtailment gains and losses are accounted for
as past service costs.
The retirement benefit obligation recognised
in the standalone balance sheet represents
the actual deficit or surplus in the Company's
defined benefit plans. Any surplus resulting
from this calculation is limited to the present
value of any economic benefits available in the
form of refunds from the plans or reductions in
future contributions to the plans.
A liability for a termination benefit is recognised
at the earlier of when the entity can no longer
withdraw the offer of the termination benefit
and when the entity recognises any related
restructuring costs.
Defined contribution plan
Contribution to defined contribution plans
are recognised as expense when employees
have rendered services entitling them to
such benefits.
Compensated absences
Compensated absences which are expected
to occur within twelve months after the
end of the period in which the employee
renders the related services are recognized
as undiscounted liability at the balance sheet
date. Compensated absences which are not
expected to occur within twelve months after
the end of the year in which the employee
renders the related services are recognized
as an actuarially determined liability at the
present value of the defined benefit obligation
at the balance sheet date.
The Company presents the entire obligation for
compensated absences as a current liability in
the balance sheet, since it does not have an
unconditional right to defer its settlement
beyond 12 months from the reporting date.
(x) Taxation
The income tax expense or credit for the year
is the tax payable on the current year's taxable
income, based on the applicable income
tax rate for each jurisdiction adjusted by the
changes in deferred tax assets and liabilities
attributable to temporary differences.
Current tax
The tax currently payable is based on taxable
profit for the year. Taxable profit differs from
'profit before tax' as reported in the standalone
statement of profit and loss because of items
of income or expense that are taxable or
deductible in other years and items that are
never taxable or deductible. The Company's
current tax is calculated using tax rates that
have been enacted or substantively enacted
by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary
differences between the carrying amounts of
assets and liabilities in the standalone financial
statements and the corresponding tax bases
used in the computation of taxable profit.
Deferred tax liabilities are generally recognised
for all taxable temporary differences. Deferred
tax assets are generally recognised for all
deductible temporary differences and unused
tax losses to the extent that it is probable that
taxable profits will be available against which
those deductible temporary differences and
losses can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary
difference arises from the initial recognition
(other than in a business combination) of
assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting
profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises
from the initial recognition of goodwill.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period
and reduced to the extent that it is no longer
probable that sufficient taxable profits will be
available to allow all or part of the asset to
be recovered.
Deferred tax liabilities and assets are measured
at the tax rates that are expected to apply in
the period in which the liability is settled or
the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities
and assets reflects the tax consequences that
would follow from the manner in which the
Company expects, at the end of the reporting
period, to recover or settle the carrying amount
of its assets and liabilities.
Deferred tax assets include Minimum Alternate
Tax (MAT) paid in accordance with the tax laws
in India, which is likely to give future economic
benefits in the form of availability of set-off
against future tax liability. Accordingly, MAT
is recognised as deferred tax asset in the
Standalone Balance sheet when the asset can
be measured reliably and it is probable that the
future economic benefit associated with the
asset will be realised.
Current tax assets and current tax liabilities
are offset when there is a legally enforceable
right to set off the recognised amounts and
there is an intention to settle the asset and the
liability on a net basis. Deferred tax assets and
deferred tax liabilities are offset when there is a
legally enforceable right to set off assets against
liabilities representing current tax and where
the deferred tax assets and the deferred tax
liabilities relate to taxes on income levied by
the same governing taxation laws.
Current and deferred tax for the year
Current and deferred tax are recognised in
standalone statement of profit and loss, except
when they relate to items that are recognised
in other comprehensive income or directly in
equity, in which case, the current and deferred
tax are also recognised in other comprehensive
income or directly in equity respectively.
(xi) Exceptional items
Exceptional items comprise income or
expenses arising from events or transactions
that are significant by virtue of their size, nature,
or incidence and are not expected to recur
frequently in the normal course of business.
These items, though arising from ordinary
activities, are considered exceptional when
their separate disclosure is necessary to enable
users to obtain a proper understanding of the
Company's financial performance. Accordingly,
such items are presented separately in the
Standalone Statement of Profit and Loss.
(xii) Property, plant and equipment
Property, plant and equipment held for use in
the production or supply of goods or services,
or for administrative purposes, are stated in
the standalone balance sheet at cost less
accumulated depreciation and accumulated
impairment losses.
Properties in the course of construction for
production, supply or administrative purposes
are carried at cost, less any recognised
impairment loss. Cost includes professional
fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Company's
accounting policy. Such properties are classified
to the appropriate categories of property, plant
and equipment when completed and ready
for intended use. Depreciation of these assets,
on the same basis as other property assets,
commences when the assets are ready for their
intended use.
Freehold land is not depreciated.
Depreciation is recognised so as to write off
the cost of assets (other than freehold land
and properties under construction) less their
residual values over their useful lives, using the
straight-line method. The estimated useful lives,
residual values and depreciation method are
reviewed at the end of each reporting period,
with the effect of any changes in estimate
accounted for on a prospective basis.
Right-of-use assets are depreciated over
their expected useful lives on the same basis
as owned assets. However, when there is no
reasonable certainty that ownership will be
obtained by the end of the lease term, assets
are depreciated over the shorter of the lease
term and their useful lives.
Depreciation on Property, plant and equipment
has been provided on the straight-line method
as per the useful life prescribed in Schedule II to
the Companies Act, 2013 except in respect of
the following categories of assets, in whose case
the life of the assets has been assessed to be
different and are as under 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, etc.:
Building : 10 - 60 years
Plant & Machinery : 8 - 20 years
Vehicles : 5 years
Office Equipment : 3 - 5 years"
Individual assets costing less than ' 5,000 are
depreciated in full in the year of purchase.
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of property, plant and equipment is determined
as the difference between the sales proceeds
and the carrying amount of the asset and is
recognised in standalone statement of profit
and loss.
(xiii) Investment property
Properties that is held for long-term rentals
or for capital appreciation or both, and that
is not occupied by the Company, is classified
as investment property. Investment property
is measured initially at its cost, including
related transaction costs and where applicable
borrowing costs. Subsequent expenditure
is capitalised to the asset's carrying amount
only when it is probable that future economic
benefits associated with the expenditure will
flow to the company and the cost of the item
can be measured reliably. All other repairs
and maintenance costs are expensed when
incurred. When part of the investment property
is replaced, the carrying amount of the replaced
part is derecognised.
Investment property are depreciated using the
straight line method over their estimated useful
lives. Investment properties generally have a
useful life of 25-40 years. The useful life has
been determined based on technical evaluation
performed by the Management's expert.
(xiv) Intangible assets
Intangible assets acquired separately
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 period, 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.
Intangible assets acquired in a business
combination
Intangible assets acquired in a business
combination and recognised separately from
goodwill are initially recognised at their fair
value at the acquisition date (which is regarded
as their cost).
Subsequent to initial recognition, intangible
assets acquired in a business combination are
reported at cost less accumulated amortisation
and accumulated impairment losses, on
the same basis as intangible assets that are
acquired separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal,
or when no future economic benefits are
expected from use or disposal. Gains or losses
arising from derecognition of an intangible
asset, measured as the difference between the
net disposal proceeds and the carrying amount
of the asset, are recognised in standalone
statement of profit and loss when the asset
is derecognised.
Useful lives of intangible assets
Intangible assets are amortised over their
estimated useful life on straight line method
as follows:
Product portfolio : 10 years
Software Licenses : 3 - 5 years
Registration and brands : 5 - 10 years
(xv) Impairment of assets
Impairment of financial assets:
The Company assesses at each date of balance
sheet, whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through
a loss allowance. The Company recognises
lifetime expected losses for all contract assets
and / or all trade receivables that do not
constitute a financing transaction. For all other
financial assets, expected credit losses are
measured at an amount equal to the twelve¬
month expected credit losses or at an amount
equal to the life time expected credit losses
if the credit risk on the financial asset has
increased significantly, since initial recognition.
Impairment of investment in subsidiaries
The Company reviews its carrying value of
investments in subsidiaries at cost, annually, or
more frequently when there is an indication for
impairment. If the recoverable amount is less
than its carrying amount, the impairment loss
is accounted for.
Impairment of goodwill
For the purposes of impairment testing,
goodwill is allocated to cash-generating units.
The allocation is made to those cash generating
units or groups of cash generating units that
are expected to benefit from the business
combination in which such goodwill arose.
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 directly in standalone
statement of profit and loss. An impairment
loss recognised for goodwill is not reversed in
subsequent periods.
On disposal of the relevant cash-generating
unit, the attributable amount of goodwill is
included in the determination of the profit or
loss on disposal.
Impairment of non-financial assets other
than goodwill
At the end of each reporting period, the
Company reviews the carrying amounts of its
tangible and intangible assets to determine
whether there is any indication that those
assets have suffered an impairment loss. If any
such indication exists, the recoverable amount
of the asset is estimated in order to determine
the extent of the impairment loss (if any). When
it is not possible to estimate the recoverable
amount of an individual asset, the Company
estimates the recoverable amount of the cash¬
generating unit to which the asset belongs.
When a reasonable and consistent basis of
allocation can be identified, corporate assets
are also allocated to individual cash-generating
units, or otherwise they are allocated to the
smallest group of cash-generating units for
which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and
intangible assets not yet available for use are
tested for impairment at least annually, and
whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair
value less costs of disposal and value in use.
In assessing value in use, the estimated future
cash flows are discounted to their present
value using a pre-tax discount rate that reflects
current market assessments of the time value
of money and the risks specific to the asset for
which the estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset (or cash¬
generating unit) is estimated to be less than
its carrying amount, the carrying amount of
the asset (or cash-generating unit) is reduced
to its recoverable amount. An impairment
loss is recognised immediately in standalone
statement of profit and loss.
(xvi) Inventories
Inventories are valued at the lower of cost
and the net realisable value after providing
for obsolescence and other losses, where
considered necessary. Cost includes all
charges in bringing the goods to the point
of sale, including octroi and other levies,
transit insurance and receiving charges.
Work-in-progress and finished goods include
appropriate proportion of overheads. Cost is
determined as follows:
Raw materials, packing materials and
consumables: weighted average basis
Work-in progress: at material cost and an
appropriate share of production overheads
Finished goods: material cost and an
appropriate share of production overheads
Stock-in trade: weighted average basis
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