q) Provisions, contingent liabilities and contingent assets
General
Provisions are recognised when the Company hasa present obligation (legal or constructive) as a result ofa past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the
statement of profit and loss.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
Contingent liabilities and contingent assets
Contingent liabilities is disclosed in the case of :
- present obligation arising from past events, when it is not probable that an outflow of resources embodying economic
benefits will be required to settle the obligation.
- present obligation arising from past events, when no reliable estimate can be made.
- possible obligation arising from past events, unless the probability of outflow of resources is remote.
Commitments includes the amount of purchase order (net of advances) issued to parties for completion of assets.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Expenditure
Expenditures are accounted net of taxes recoverable, wherever applicable.
r) Fair value measurement
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:
> In the principal market forthe asset or liability, or Inthe absence of a principal market, in the most advantageous market forthe
asset or liability.
>
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
> Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities .
> Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable.
> Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company's management determines the policies and procedures for both recurring fair value measurement, such
as derivative instruments and unquoted financial assets measured at fair value.
External valuer are involved for valuation of unquoted financial assets and financial liabilities, such as contingent
consideration. Involvement of external valuer is decided upon annually by the management. Selection criteria includes
market knowledge, reputation, independence and whether professional standards are maintained. The management
decides, after discussions with the Company's external valuer, which valuation techniques and inputs to use for each
case.
At each reporting date, the Company analyses the movements in the values of assets and liabilities which are required
to be remeasured or re-assessed as per the Company's accounting policies. For this analysis, the Company verifies the
major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and
other relevant documents.
The Company , in conjunction with the Company's external valuers, also compares the change in the fair value of each
asset and liability with relevant external sources to determine whether the change is reasonable on a yearly basis.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant
notes.
s) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity. The Company recognizes financial assets and financial liabilities when it becomes a party
to the contractual provisions of the instrument. It is broadly classified in financial assets, financial liabilities, derivatives
& equity.
(A) Financial assets
Initial recognition and measurement
All financial assets, except investment in subsidiaries, associates and joint ventures are recognised initially at fair value.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
> Debt instruments at amortised cost.
> Debt instruments at fair value through other comprehensive income (FVTOCI).
> Debt instruments, derivatives and equity instruments at fair value through profit or loss (FVTPL).
> Equity instruments measured at fair value through other comprehensive income (FVTOCI).
i) Debt instruments at amortised cost
A 'debt instrument' is measured at the amortised cost if both the following conditions are met:
(a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
(b) 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.
This category is the most relevant to the Company. 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 finance income in the profit or loss. The losses arising from impairment are recognised in
the profit or loss. This category generally applies to trade and other receivables.
ii) Debt instrument at FVTOCI
A debt instrument is subsequently measured at fair value through other comprehensive income if it 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. The Company has not classified any financial asset into this
category.
iii) Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI
criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or
recognition inconsistency (referred to as 'accounting mismatch'). The Company has not designated any debt
instrument as at FVTPL.
Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
(B) Equity instruments
All equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading
and contingent consideration recognised by an acquirer in a business combination are classified as at FVTPL. For all
other equity instruments, the Company may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The
classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, 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 recognized in the
P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Company's balance sheet) 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 or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a)
the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither
transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither
transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the
Company continues to recognise the transferred asset to the extent of the Company's continuing involvement. In that
case, the Company also recognises an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the Company could be required
to repay.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the
following financial assets and credit risk exposure ;
a) Financial assets that are debt instruments, and are measured at amortised cost e.g. loans, debt securities, deposits,
trade receivables and bank balances.
b) Financial assets that are debt instruments and are measured as at other comprehensive income (FVTOCI).
c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that
are within the scope of Ind AS 11 and Ind AS 18.
The Company follows 'simplified approach' for recognition of impairment loss allowance on:
> Trade receivables or contract revenue receivables; and
> All lease receivables resulting from transactions within the scope of Ind AS 17.
Under the simplified approach the Company does not track changes in credit risk. Rather, it recognises impairment loss
allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether
there has been a significant increase in the credit risk said 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.
ECL is the difference between all contracted cash flows that are due to the Company in accordance with the contract
and all the cash flows that the Company expects to receive, discounted at the original EIR. ECL impairment loss
allowance ( or reversal) recognised during the period is recognised as (expense) / income in the statement of profit and
loss (P&L). This amount is reflected under the head " Other Expense" in the P&L.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The Company's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Subsequent Measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the
initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair
value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However, The Company may transfer the cumulative gain or loss within equity. All
other changes in fair value of such liability are recognised in the statement of profit or loss. The Company has not
designated any financial liability as at FVTPL.
Loans and borrowings
This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the EIR amortisation process.
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 as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised 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 derecognition 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.
Reclassification of financial instruments
After initial recognition, no reclassification is made for financial assets which are equity instruments. For financial
assets, which are debt instruments, a reclassification is made only if there is a change in the business model for
managing those assets. Changes to the business model are expected to be infrequent. If the Company reclassifies the
financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the
immediately next reporting period following the change in the business model.
Offsetting financial assets and financial liabilities
Financial assets and 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.
Recent accounting pronouncements
The Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. On 12 August 2024, MCA amended the
Companies (Indian Accounting Standards) Amendment Rules, as below.
Amendments to Ind AS 117
MCA notified Ind AS 117 a comprehensive standard that prescribe, recognition,measurement and disclosure
requirements, to avoid diversities In practice for accounting Insurance contracts and It applies to all companies i.e.. to
all insurance contracts regardless of the issuer. However Ind AS 117 is not applicable to the entities whose are
insurance companies registered with IRDAI.
Additionally,amendments have been made to Ind AS 101 First time Adoption of Indian Accounting Standards Ind AS 103
Business Combinations.
AS 105 Non-current Assets Held for Sale and Discontinued Operations, Ind AS 107 Financial Instruments: Disclosures
,Ind AS 109 Financial Instruments and Ind AS 115 Revenue from Contracts with Customers to align them with Ind AS
117 The amendments also Introduce enhanced disclosure requirements,particularly In Ind AS 107, to provide clarity
regarding financial Instruments associated with Insurance contracts.
Amendments to Ind AS 116
The amendments require an entity to recognise lease liability including variable lease payments which are not linked to
index or a rate In a way It does not result Into gain on Right or use asset It retains.
The Company has reviewed the new pronouncements and based on its evaluation has determined that these
amendments do not have a significant impact on the Company's Financial Statements.
The accompanying notes form an integral part of financials statements For and on behalf of Board of Directors of,
As per our report of even date SHUKRA PHARMACEUTICALS LIMITED
FOR, MAAK and Associates Sd/- Sd/-
Chartered Accountants Dakshesh Shah Payal Mehta
Firm Registration No.: 135024W Director Director
DIN:00561666 DIN: 02145421
Sd/- Sd/- Sd/-
Marmik Shah Anar patel Arpita Kabra
Partner Chief Finance Officer Compliance Officer
Membership No. 133926 AHYPP8690E DQRPK6544M
Place: Ahmedabad
Date: 29/05/2025 Place: Ahmedabad Place: Ahmedabad
UDIN: 25133926BMJGYP8497 Date: 29/05/2025 Date: 29/05/2025
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