Mar 31, 2023
Company Overview and Significant Accounting Policies
1 General information
Aiembic Pharmaceuticals Limited is in the business of development, manufacturing, and marketing of Pharmaceuticals products i.e. Formulations and Active Pharmaceutical Ingredients. The Company is the public limited Company domiciled in India and is incorporated under the provision of the Companies Act applicable in India. Its shares are listed on the two recognised Stock Exchanges in India. The registered office of the Company is located at Aiembic Road, Vadodara -390 003, India.
The financial statements are approved by the Company''s board of directors on 5th May, 2023.
1.01 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended March 31, 2023 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time together with the comparative period data as at and for the year ended March 31, 2022.
1.02 Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Act to be read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time. The Company''s Financial Statements for the year ended 31st March, 2023 comprises of the Balance
Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of Changes in Equity and the Notes to Financial Statements.
The Company has consistently applied accounting policies to ail periods presented in these financial statements.
The financial statements have been prepared on a historical cost convention on the accrual basis, except for certain financial instruments that are measured at fair value, viz derivatives, employee benefit plan assets.
Til assets and liabilities have been classified as current or non-current as set out in the Schedule Ill (Division II) to the Companies Act, 2013.
Functional and Presentation Currency
The financial statements are presented in Indian rupees, which is the functional currency of the Company.
B ased on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
T air 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 under current market conditions. The Company categorizes assets
and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:
(a) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
(b) Level 2 inputs are inputs that are observable, either directly or indirectly, other than quoted prices included within level 1, for the asset or liability.
(c) Level 3 inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Company''s assumptions about pricing by market participants.
Lor assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
1.04 Significant Accounting Judgments, Estimates and Assumptions
The preparation of financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates.
L stimates and underlying assumptions are reviewed on an ongoing basis. Any change in these estimates and assumptions will generally be reflected in the financial statements in current period or prospectively, unless they are required to be treated retrospectively under relevant accounting standards.
I n particular, information about significant areas of estimates and judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements includes financial instruments, useful lives of property, plant and equipment and intangible assets, valuation of inventories, measurement of defined benefit obligations and actuarial assumptions, provisions and other accruals, sales returns, chargebacks, allowances and discounts, recoverability/recognition of tax assets/liabilities, assessment of functional currency, contingencies and fair valuation of investments.
2 Significant Accounting Policies2.01 Property, Plant and Equipment (PPE) & Investment Property
L roperty, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Property that is held for long-term rental yields or for capital appreciation or both and that is not occupied by the company is classified as investment property, measured at cost. Cost comprises of the purchase price net of eligible input tax credit, and any attributable cost of bringing the assets to its working condition for its intended use, including the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the net realisable value less cost to sell. Freehold land is carried at historical cost and not depreciated.
The company has adopted, "Cost Model" for accounting of its Property Plant and Equipment and Investment Property.
P rojects under construction wherein assets are not ready for use in the manner as intended by the management are shown as Capital Work-In-Progress. It includes expenditure directly attributable for setting up of plants yet to commence commercial operation.
T irectly attributable expenditure comprises of revenue expenses incurred in connection with project implementation during the period upto ready for use in the manner as intended by the management and are treated as part of the project costs and capitalized. Such expenses are capitalized only if the project to which they relate, involve substantial expansion of capacity or upgradation.
I ntangible assets are stated at cost less provisions for amortisation and impairments. Software licenses fees are charged to statement of profit and loss when incurred. Intangible assets are de-recognised either on their disposal or where no future economic benefits are expected from their use.
2.04 Intangible Assets under development
I ntangible assets consisting of development expenditure of certain products, are evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable.
2.05 Impairment of Assets Non- Financial Assets
Tt each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
P ecoverable amount is the higher of fair value less costs to sell 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. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
W here an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of
its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
At each balance sheet date, the Company assesses whether a financial asset is to be impaired. Ind AS 109 requires the Company to apply expected credit loss model for recognition and measurement of impairment loss. In determining the allowances for doubtful trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The impairment loss is based on the ageing of the receivables that are due and allowance rates used in the provision matrix. For all other financial assets, expected credit losses are measured at an amount equal to the 12-months 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.
A orrowing costs attributable to the acquisition and/or construction of an qualifying asset, i.e., that necessarily takes a substantial period of time to get ready for use in the manner as intended by management, are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they are incurred.
I nventories consist of Raw Materials, Stores and Spares, Packing Materials, Work-inProgress, Goods in Transit and Finished Goods and are measured at the lower of cost and net realisable value.
A ost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Cost of purchase is determined on a moving average basis. In the case of Finished Goods and Work-in-Progress, cost includes an appropriate share of overheads based on normal operating capacity.
A et realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Ahe Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
(i) Initial recognition and measurement
Ahe Company recognizes financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way trade of financial assets are accounted for at trade date.
F or the purpose of subsequent measurement, financial assets are classified in four categories:
-Financial assets at amortised cost
A financial asset is subsequently measured at amortised cost, if it is held within a business model whose objective is to hold the asset in order 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, debt instruments are subsequently measured at amortised cost using the effective interest rate method, less impairment, if any.
- Financial assets at fair value through other comprehensive income
A financial asset 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.
Ahe Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
- Financial assets at fair value through profit or loss
F inancial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
Ahe company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109.
A ash 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, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
Arade receivables are carried at original invoice amount less any expected credit loss. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the Statement of Profit and Loss.
-Investments in subsidiaries and associates
The Company has elected to recognise its investments in subsidiaries and associates at cost in the separate financial statements in accordance with the option available in Ind AS 27, ''Separate Financial Statements''.
(i) Initial recognition and measurement
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
F inancial liabilities are classified, at initial recognition, at fair value through profit and loss or as those measured at amortised cost.
The subsequent measurement of financial liabilities depends on their classification as follows:
- Financial liabilities at fair value through profit and loss
F inancial liabilities at fair value through profit and loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial recognition at fair value through profit and loss.
- Financial liabilities measured at amortised cost
Tfter initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method except for those designated in an effective hedging relationship.
T financial liability (or a part of a financial liability) is derecognized from the company''s balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
c. Derivative Financial Instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank and these are not designated as hedges under Ind AS 109, Financial Instruments.
T ny derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
R evenue from contracts with customers is recognised on satisfaction of performance obligation, when control of the goods is passed to the customer, at an amount of transaction price that reflects the consideration the company expects to receive. The point at which control passes is determined based on terms of agreement with the customer or as per general industry/ market practice.
Estimated future returns are calculated based on specific methodology and assumptions. The methodology and assumptions used to estimate returns are monitored and adjusted regularly in the light of contractual and legal obligations, past trend & experience and projected market conditions. Revenue is recognised net of such future expected return and actual return.
Eariable consideration arises on the sale of goods as a result of profit sharing arrangement and various deductions including chargeback. Revenue is recognised considering the impact of variable consideration.
E evenue recognition in case of profit sharing is highly uncertain hence the same is recognised based on reasonable certainty of revenue.
The company enters into development and marketing collaborations and out-licences of the company''s compounds or products to other parties. These contracts give rise to fixed and variable consideration from upfront payments, development milestones, sales-based profit sharing and royalties.
I ncome dependent on the achievement of milestone is recognised when the related event occurs and it is highly probable that significant reversal in the amount of cumulative revenue recognised will not occur. Sales-based royalties on
a licence of intellectual property are recognised on confirmation of actual sales.
G ST and other taxes on sales are excluded from revenue.
I ncome from operations includes Export benefits available under prevalent schemes are recognised to the extent considered receivable.
T ther income is comprised of interest income, Gain / loss on investments, dividend income and Insurance claim. Dividend income and other income is recognized when the right to receive payment is established.
2.10 Research and Development Expense
T ll revenue expenses related to research and development including expenses in relation to development of product/processes and expenses incurred in relation to compliances with international regulatory authorities in obtaining of Abbreviated New Drug Applications (ANDA) and Drug Master Files (DMF) are charged to the statement of profit and loss in the year in which it is incurred.
T evelopment expenditure of certain nature is capitalised as intangible assets under development when the criteria for recognising an intangible asset are met, usually when a regulatory filing is intended to be made in a major market and approval is considered highly probable.
E mployee benefits include salaries, wages, contribution to provident fund, gratuity, leave encashment towards un-availed leave, and other compensated absences.
A Long Term Employment Benefits
(a) Defined Benefit Obligation Plans:
(i) Gratuity
Defined Benefit Obligation Plans:
The Company operates a defined benefit gratuity plan which requires contributions to be made to a separately administered fund by the Life Insurance Corporation of India (LIC) and HDFC Life Insurance Company Ltd. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
The service cost and the net interest cost are charged to the Statement of Profit and Loss. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognizes these re-measurements in the Other Comprehensive Income (OCI).
The Company''s contribution to provident fund, administered through a Company managed trust, is recognised as an expense in the Statement of Profit and Loss.
(b) Defined Contribution plans
S uperannuation fund is administered by the HDFC Life Insurance Company Ltd. The contribution to Superannuation fund, Contribution to pension fund, ESIC, EDLI and Labour Welfare Fund are recognised as an expense in the statement of profit and loss.
The Company has a policy to allow accumulation of leave by employees up to certain days. Accumulated leave liability as at the year end is provided as per actuarial valuation. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognizes these actuarial gains and losses in the statement of Profit and Loss, as income or expense.
B Short Term Employee Benefits
S hort term benefits payable before twelve months after the end of the reporting period in which the employees have rendered service are accounted as expense in statement of profit and loss.
2.12 Depreciation / Amortisation
T epreciation is calculated on a straight-line basis as per the specified life of the assets as provided in schedule II to the Companies Act, 2013
Class of Assets-Tangible |
Range of useful life |
Building |
05 - 60 Years |
Plant & Equipment |
03 - 22 Years |
Furniture & Fixtures |
10 Years |
Vehicles |
08 - 10 Years |
Office Equipment |
05 Years |
Class of Assets-lntangible Range of useful life |
|
Other Intangible Asset |
02 - 05 Years |
The management, based on internal technical evaluation, believes that the useful lives as given above best represent the period over which the assets are expected to be used.
The useful lives for certain assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013, and the same is considered in the above range of useful life. Leasehold Land is amortized over the period of lease.
Tepreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Tepreciation on PPE added during the year is provided on pro rata basis from the month of addition. Depreciation on sale / disposal of PPE is provided pro-rata up to the preceding month of disposal/discarding.
2.13 Leases As lesseeInitial measurement
Lease Liability: At the commencement date, The Company measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments shall be discounted using incremental borrowing rate.
L ight-to-use assets: Initially recognised 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.
Lease Liability: The Company measure the lease liability by (a) increasing the carrying amount to
reflect interest on the lease liability; (b) reducing the carrying amount to reflect the lease payments made; and (c) remeasuring the carrying amount to reflect any reassessment or lease modifications.
R ight-to-use assets: Subsequently measured at cost less accumulated depreciation and impairment losses. Right-to-use assets are depreciated from the commencement date on a straight line basis over the shorter of the lease term and useful life of the under lying asset.
R ight-to-use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
R hort term lease is that, at the commencement date, has a lease term of 12 months or less. A lease that contains a purchase option is not a short-term lease. Low value assets lease are assessed based on the value of an underlying asset when it is new, regardless of the age of the asset being leased. If the company elected to apply for such lease, the lessee shall recognise the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis. The lessee shall apply another systematic basis if that basis is more representative of the pattern of the lessee''s benefit.
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.
Lease income is recognised in the statement of profit and Loss on straight Line basis over the Lease term.
2.14 Foreign Exchange Transactions
Transactions in foreign currencies are initially recorded by the Company at the rate of exchange prevailing on the date of the transaction.
T onetary assets and monetary Liabilities denominated in foreign currencies remaining unsettled at the end of the year are converted at the exchange rate prevailing on the reporting date. Differences arising on settlement or conversion of monetary items are recognised in statement of profit and Loss.
T on-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. In respect of forward cover contracts, the mark to market Loss / gain as at the reporting date is charged to Statement of Profit and Loss. In respect of options contracts to mitigate the probable foreign exchange fluctuation risk, the options contracts are fair valued and the resultant variation as at the reporting date is charged to Statement of Profit and Loss.
2.15 Taxesa. Current income tax
I ncome tax expense is recognised in the statement of profit and Loss except to the extent that it relates to items recognised in Other Comprehensive Income (OCI) or directly in equity, in such case it is recognised in OCI or directly in equity respectively. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax Laws that have been enacted or substantively enacted on the reporting date. The company offsets current tax assets and current tax Liabilities, where it has a Legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the Liability simultaneously.
Teferred income tax assets and Liabilities are recognized for all temporary differences arising between the tax bases of assets and Liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no Longer probable that the related tax benefit will be realized. The benefit of credit against the payment made towards Minimum Alternate Tax for the earlier years is available in accordance with the provisions of the section 115J (AA) of Income Tax Act 1961 over the period of subsequent 15 assessment year and it is recognised to the extent of deferred tax
liability in view of the certainty involved of its realisation against reversal of deferred tax liability.
2.16 Provisions, Contingent Liabilities and
Contingent Assets
a. Provisions
P rovisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 recognised in the statement of profit and loss or balance sheet as the case may be.
b. Contingent Liabilities
P ontingent liability is disclosed for (i) Possible obligations which will be confirmed only by the future events not wholly within the control of the company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
c. Contingent Assets
P ontingent Assets are not recognised in the financial statements. Contingent Assets if any, are disclosed in the notes to the financial statements.
2.17 Earnings per share
P asic earnings per equity share are computed
by dividing the net profit attributable to the
equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
Phe number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
G overnment grants are recognised when there is reasonable assurance that the grant will be received and the company will comply with conditions attached to the grant. Accordingly, Government grants is deducted to calculate the carrying amount of the asset, and is recognised in profit or loss over the life of a depreciable asset as a reduced depreciation expense. Government grant related to specific expenses are shown as other income in the Statement of Profit and Loss.
Government grant relating to income is recognised in the statement of profit and loss and presented with other operating income.
B usiness combinations (Common control transactions):
I n accordance with Ind AS 103, Business combination involving entities that are controlled by the group are accounted for using the pooling of interest method. It is accounted for at carrying value of the assets and liabilities in the Group''s consolidated financial statements. The financial information in the financial statements in respect of prior periods are restated as if the business combination had occurred from the beginning of the preceding period in the financial statements, irrespective of the actual date of the combination. "
2.20 Recent Accounting Pronouncements
0 n March 31, 2023, the Ministry of Corporate Affairs (MCA) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023. This notification has resulted into following amendments in the existing Accounting Standards which are applicable from April 1, 2023.
1 I nd AS 107 - Financial Instruments Disclosures - modification relating to disclosure of material accounting policies including information about basis of measurement of financial instruments.
II I nd AS 109 - Fina ncial Instruments -modification relating to reassessment of embedded derivatives.
III I nd AS 1 - Presentation of Financials Statements - modification relating to disclosure of ''material accounting policy information'' in place of ''significant accounting policies''.
IV I nd AS 8 - Accounting Policies, Change in Accounting Estimates and Errors -modification of definition of ''accounting estimate'' and application of changes in accounting estimates.
V I nd AS 12 - I ncome Taxes - modification relating to recognition of deferred tax liabilities and deferred tax assets.
VI I nd AS 34 - Interi m Financial Reporting -modification in interim financial reporting relating to disclosure of ''material accounting policy information'' in place of ''significant accounting policies''.
Ohe Company is evaluating the amendments and the expected impact, if any, on the Company''s financialstatementsonapplicationoftheamendments for annual reporting periods beginning on or after 1 April 2023.
Mar 31, 2019
1. Significant Accounting Policies
1.01 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended 31st March, 2019 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at and for the year ended 31st March, 2018
1.02 Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Act to be read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016. The Companyâs Financial Statements for the year ended 31st March, 2019 comprises of the Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of Changes in Equity and the Notes to Financial Statements.
The Company has consistently applied accounting policies to all periods presented in these financial statements.
1.03 Basis of Measurement
The financial statements have been prepared on a historical cost convention on the accrual basis, except for certain financial instruments that are measured at fair value, viz. derivatives, employee benefit plan assets.
Functional and Presentation Currency
The financial statements are presented in Indian rupees, which is the functional currency of the Company.
1.04 Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Any change in these estimates and assumptions will generally be reflected in the financial statements in current period or prospectively, unless they are required to be treated retrospectively under relevant accounting standards.
In particular, information about significant areas of estimates and judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements includes financial instruments, useful lives of property, plant and equipment and intangible assets, valuation of inventories, measurement of defined benefit obligations and actuarial assumptions, provisions and other accruals, sales returns, chargebacks, allowances and discounts, recoverability/recognition of deferred tax assets, Assessment of functional currency, Contingencies.
1.05 Property, Plant and Equipment (PPE)
Property, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises of the purchase price net of eligible input credit, and any attributable cost of bringing the assets to its working condition for its intended use, including the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognised in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the net realisable value less cost to sell.
The Company has adopted, âCost Modelâ for accounting of its Property Plant and Equipment.
1.06 Capital Work-in-Progress
Projects under construction wherein assets are not ready for use in the manner as intended by the management are shown as Capital Work-in-Progress.
1.07 Intangible Assets
Intangible assets are stated at cost less provisions for amortisation and impairments. Software licences fees are charged to statement of profit and loss when incurred.
1.08 Intangible Assets under development
Intangible assets consisting of development expenditure of certain products are amortised on straight-line method from the date they are available for use, over the useful life of the assets (5-20 years), as estimated by the Management.
1.09 Impairment of Assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss
1.10 Borrowing Cost
Borrowing costs attributable to the acquisition and/or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they are incurred.
1.11 Inventories
Inventories consist of Raw Materials, Stores and Spares, Packing Materials Work-in-Progress, Goods in Transit and Finished Goods and are measured at the lower of cost and net realisable value.
Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of Finished Goods and Work-in-Progress, cost includes an appropriate share of overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
1.12 Trade receivables
Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written-off, firstly against any provision available and then to the Statement of Profit and Loss.
1.13 Financial Instruments
The Company recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
(a) Financial Assets
(i) Initial recognition and measurement
The Company recognises financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognised at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way trade of financial assets are accounted for at trade date.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order 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, debt instruments are subsequently measured at amortised cost using the effective interest rate method, less impairment, if any.
- Financial assets at fair value through other comprehensive income
A financial asset 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 made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
- Financial assets at fair value through profit or loss
Financial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
De-recognition:
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind. AS 109.
- Investments in subsidiaries and associates
The Company has elected to recognise its investments in subsidiaries and associates at cost in the separate financial statements in accordance with the option available in Ind AS 27, âSeparate Financial Statementsâ.
(b). Financial Liabilities
(i) Initial recognition and measurement
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial liabilities are classified, at initial recognition, at fair value through profit and loss or as those measured at amortised cost.
(ii) Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
- Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial recognition at fair value through profit and loss.
- Financial liabilities measured at amortised cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method except for those designated in an effective hedging relationship.
De-recognition
A financial liability (or a part of a financial liability) is derecognised from the Companyâs balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
(c) Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank and these are not designated as hedges under Ind AS 109, Financial Instruments.
Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorised as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognised initially at fair value and attributable transaction costs are recognised in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss. Assets/liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realised within 12 months after the balance sheet date.
1.14 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, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
1.15 Operating cycle:
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.16 Revenue Recognition
Revenue from contracts with customers is recognised on satisfaction of performance obligation, when control of the goods is passed to customer, at an amount that reflect the consideration the company expects to receive. The point at which control passes is determined based on terms of agreement with customer or as per general market practice.
Estimated future returns are calculated based on specific methodology and assumptions. The methodology and assumptions used to estimate returns are monitored and adjusted regularly in the light of contractual and legal obligations, past trend & experience and projected market conditions. Revenue is recognised net of such future expected return and actual return.
Variable consideration arises on the sale of goods as a result of profit sharing arrangement and various deductions including charge back.
The Company enters into development and marketing collaborations and out-licences of the Companyâs compounds or products to other parties. These contracts give rise to fixed and variable consideration from upfront payments, development milestones, sales-based profit sharing and royalties.
Income dependent on the achievement of milestone is recognised when the related event occurs and it is highly probable that significant reversal in the amount of cumulative revenue recognised will not occur. Sales-based royalties on a licence of intellectual property are recognised on confirmation of actual sales.
Revenue recognition in case of profit sharing is highly uncertain hence the same is recognised based on reasonable certainty of revenue.
GST and other taxes on sales are excluded from revenue.
The Company has applied Ind As 115 âRevenue from contracts with customersâ with effect from 1st April, 2018. Ind As 115 provides a single, principles-based approach to the recognition of revenue from all contracts with customers. It focuses on the identification of performance obligations in a contract and requires revenue to be recognised when or as those performance obligations are satisfied.
The Company has adopted Ind As 115 applying the cumulative catch-up transaction approach. Ind As
115 did not have a material impact on the amount or timing of recognition of reported revenue.
Income from operations includes Export benefits available under prevalent schemes are recognised to the extent considered realisable.
Other income is comprised of interest income, gain / loss on investments, dividend income and Insurance claim. Interest income is recognized using the effective interest method. Dividend income and other income is recognized when the right to receive payment is established.
1.17 Research and Development Expense
All revenue expenses related to research and development including expenses in relation to development of product/processes and expenses incurred in relation to compliances with international regulatory authorities in obtaining of Abbreviated New Drug Applications (ANDA) and Drug Master Files (DMF) are charged to the statement of profit and loss in the year in which it is incurred
Development expenditure of certain nature is capitalised when the criteria for recognising an intangible asset are met, usually when a regulatory filing is intended to be made in a major market and approval is considered highly probable.
1.18 Employee benefits
(a) Defined Benefit Obligation Plans
(i) Gratuity
The Company operates a defined benefit gratuity plan which requires contributions to be made to a separately administered fund by the Life Insurance Corporation of India (LIC) and HDFC Standard Life Insurance. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
The service cost and the net interest cost would be charged to the Statement of Profit and Loss. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognises these re-measurements in the Other Comprehensive Income (OCI).
(ii) Provident Fund
The Companyâs contribution to provident fund, administered through a Company managed trust, is recognised as an expense in the Statement of Profit and Loss.
(iii) Leave Liability
The Company has a policy to allow accumulation of leave by employees up to certain days. Accumulated leave liability (other than sick leave) as at the year end is provided as per actuarial valuation. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognises these actuarial gains and losses in the statement of Profit and Loss, as income or expense.
(iv) Sick Leave
Accumulated sick leave is provided for at actual in the Statement of Profit and Loss.
(b) Defined Contribution plans
Superannuation fund is administered by the HDFC Life Insurance Company Ltd. The contribution to Superannuation fund, Contribution to pension fund, ESIC, EDLI and Labour Welfare Fund are recognised as an expense in the statement of profit and loss.
1.19 Depreciation / Amortisation
Depreciation is calculated on a straight-line basis as per the specified life of the assets as provided in Schedule II to the Companies Act, 2013
The management, based on internal technical evaluation, believes that the useful lives as given above best represent the period over which the assets are expected to be used.
The useful lives for certain assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013, and the same is considered in the above range of useful life. Leasehold Land is amortised over the period of lease.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Depreciation on PPE added during the year is provided on pro rata basis from the month of addition. Depreciation on PPE disposed off/discarded during the year is provided up to the preceding month of disposal/discarding.
Impairment
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell 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. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately
1.20 Leases
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. Finance leases pertaining to certain land are capitalised at the commencement of the lease at fair value.
Lease income is recognised in the statement of profit and loss on straight line basis over the lease term.
1.21 Foreign Exchange Transactions
Transactions in foreign currencies are initially recorded by the Company at the rate of exchange prevailing on the date of the transaction.
Monetary assets and monetary liabilities denominated in foreign currencies remaining unsettled at the end of the year are converted at the exchange rate prevailing on the reporting date. Differences arising on settlement or conversion of monetary items are recognised in statement of profit and loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. In respect of forward cover contracts, the mark to market loss / gain as at the reporting date is charged to Statement of Profit and Loss. In respect of options contracts to mitigate the probable foreign exchange fluctuation risk, the options contracts are fair valued and the resultant variation as at the reporting date is charged to Statement of Profit and Loss
1.22 Taxes:
(a) Current income tax
Income tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised in Other Comprehensive Income (OCI) or directly in equity, in such case it is recognised in OCI or directly in equity respectively. Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted on the reporting date. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(b) Deferred tax
Deferred income tax assets and liabilities are recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The benefit of credit against the payment made towards Minimum Alternate Tax for the earlier years is available in accordance with the provisions of the Section 115J (AA) of Income Tax Act 1961 over the period of subsequent 15 assessment years and it is recognised to the extent of deferred tax liability in view of the certainty involved of its realisation against reversal of deferred tax liability.
1.23 Provisions, Contingent Liabilities and
Contingent Assets
(a) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 recognised in the statement of profit and loss net of any reimbursement.
(b) Contingent Liabilities
Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by the future events not wholly within the control of the Company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
(c) Contingent Assets
Contingent Assets are not recognised in the financial statements. Contingent Assets if any, are disclosed in the notes to the financial statements.
1.24 Earnings per share
Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
1.25 Government Grant
Government grants are recognised when there is reasonable assurance that the grant will be received and the Company will comply with conditions attached to the grant. Accordingly, Government grants is deducted to calculate the carrying amount of the asset, and is recognised in profit or loss over the life of a depreciable asset as a reduced depreciation expense. Government grant related to specific expenses are shown as other income in the Statement of Profit and Loss.
Mar 31, 2018
1.01 Statement of compliance
These financial statements are separate financial statements of the Company (also called standalone financial statements). The Company has prepared financial statements for the year ended 31st March, 2018 in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) together with the comparative period data as at and for the year ended 31st March, 2017â
1.02 Basis of preparation of financial statements
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Act to be read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies ( Indian Accounting Standards) Amendment Rules, 2016. The Companyâs Financial Statements for the year ended 31st March, 2018 comprises of the Balance Sheet, Statement of Profit and Loss, Cash Flow Statement, Statement of Changes in Equity and the Notes to Financial Statements.
The Company has consistently applied accounting policies to all periods presented in these financial statements.
1.03 Basis of Measurement
The financial statements have been prepared on a historical cost convention on the accrual basis, except for certain financial instruments that are measured at fair value, viz derivatives, employee benefit plan assets.
Functional and Presentation Currency
The financial statements are presented in Indian rupees, which is the functional currency of the Company.
1.04 Significant Accounting Judgments, Estimates and Assumptions
The preparation of financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Any change in these estimates and assumptions will generally be reflected in the financial statements in current period or prospectively, unless they are required to be treated retrospectively under relevant accounting standards.
1.05 Property, Plant and Equipment
Property, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises of the purchase price net of eligible input credit, and any attributable cost of bringing the assets to its working condition for its intended use, including the cost of replacing parts and borrowing costs for longterm construction projects if the recognition criteria are met.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the net realisable value less cost to sell.
The company has adopted, âCost Modelâ for accounting of its Property Plant and Equipment.
1.06 Capital Work-In-Progress
Projects under construction wherein assets are not ready for use in the manner as intended by the management are shown as Capital Work-In-Progress.
1.07 Intangible Assets
Intangible assets are stated at cost less provisions for amortisation and impairments. Software licenses fees are charged to statement of profit and loss when incurred.
1.08 Intangible Assets under development
Intangible assets consisting of development expenditure of certain products are amortised on straight line method from the date they are available for use, over the useful life of the assets (5-20 years), as estimated by the Management.
1.09 Impairment of Assets
The carrying values of assets / cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognised for such excess amount. The impairment loss is recognised as an expense in the Statement of Profit and Loss
1.10 Borrowing Cost
Borrowing costs attributable to the acquisition and/ or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they are incurred.
1.11 Inventories
All Inventories are valued at the lower of cost and net realisable value.
Raw materials, Stores and Spares & Packing Material are valued at lower of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods are valued at lower of cost and net realisable value.
Traded Goods are valued at lower of purchase price and net realisable value.
1.12 Trade receivables
Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the Statement of Profit and Loss
1.13 Financial Instruments
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
a. Financial Assets
(i) Initial recognition and measurement
The Company recognizes financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way trade of financial assets are accounted for at trade date.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost:
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order 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, debt instruments are subsequently measured at amortised cost using the effective interest rate method, less impairment, if any.
- Financial assets at fair value through other comprehensive income
A financial asset 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 made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
- Financial assets at fair value through profit or loss
Financial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
De-recognition:
The company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind. AS 109.
- Investments in subsidiaries and associates
The Company has elected to recognise its investments in subsidiaries and associates at cost in the separate financial statements in accordance with the option available in Ind AS 27, âSeparate Financial Statementsâ.
b. Financial Liabilities
(i) Initial recognition and measurement
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial liabilities are classified, at initial recognition, at fair value through profit and loss or as those measured at amortised cost.
(ii) Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
- Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading. The Company has not designated any financial liabilities upon initial recognition at fair value through profit and loss.
- Financial liabilities measured at amortised cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method except for those designated in an effective hedging relationship.
De-recognition
A financial liability (or a part of a financial liability) is derecognized from the companyâs balance sheet when the obligation specified in the contract is discharged or cancelled or expires.
c. Derivative Financial Instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank and these are not designated as hedges under Ind AS 109, Financial Instruments.
Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
1.14 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, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
1.15 Operating cycle:
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.16 Revenue Recognition
The Company recognises revenue in accordance with Ind AS 18. Revenue from the sale of goods is recognised when (a) It is probable that the economic benefits associated with the transaction will flow to the entity and the amount of revenue can be measured reliably. (b) The significant risks and rewards of ownership of the goods have been passed to the buyer; and (c) The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
Revenue represents net invoice value after the deduction of discounts and allowances given and accruals for estimated future rebates, including for Expiry Breakage and Spoilage (EBS) and returns. The methodology and assumptions used to estimate the allowances and accruals are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience. Revenue is disclosed inclusive of excise duty but net of sales return, Good and Service Tax, service tax, value added tax and CST,
Income from operations includes revenue earned, as per the terms agreed with the customers, from development of products and assignment of patent rights.
Export benefits available under prevalent schemes are accounted to the extent considered receivable.
1.17 Research and Development Expense
All revenue expenses related to research and development including expenses in relation to development of product/processes and expenses incurred in relation to compliances with international regulatory authorities in obtaining of Abbreviated New Drug Applications (ANDA) and Drug Master Files (DMF) are charged to the statement of profit and loss in the year in which it is incurred
Development expenditure of certain nature is capitalised when the criteria for recognising an intangible asset are met, usually when a regulatory filing is intended to be made in a major market and approval is considered highly probable.
1.18 Employee benefits
a. Defined Benefit Obligation Plans
(i) Gratuity
The Company operates a defined benefit gratuity plan which requires contributions to be made to a separately administered fund by the Life Insurance Corporation of India (LIC) and HDFC Standard Life Insurance. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
The service cost and the net interest cost would be charged to the Statement of Profit and Loss. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognizes these re-measurements in the Other Comprehensive Income (OCI).
(ii) Provident Fund
The Companyâs contribution to provident fund, administered through a Company managed trust, is recognised as an expense in the Statement of Profit and Loss.
(iii) Leave Liability
The Company has a policy to allow accumulation of leave by employees up to certain days. The excess leave will either be encased or funded by the Company to LIC for and on behalf of employees. Accordingly, the excess leave liability is discharged by the Company upon such funding to LIC. Remaining accumulated leave liability (other than sick leave) as at the year end is provided as per actuarial valuation. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The Company recognises actuarial gains and losses that arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation, in other comprehensive income.
(iv) Sick Leave
Accumulated sick leave is provided for at actual in the Statement of Profit and Loss.
b. Defined Contribution plans
Superannuation fund is administered by the HDFC Standard Life Insurance Company Ltd. and ICICI Prudential Life Insurance Company Ltd. The contribution to Superannuation fund,Contribution to pension fund, ESIC and Labour Welfare Fund are recognised as an expense in the statement of profit and loss.
1.19 Depreciation / Amortisation
Depreciation is calculated on a straight-line basis as per the specified life of the assets as provided in schedule II to the Companies Act, 2013.
The management, based on internal technical evaluation, believes that the useful lives as given above best represent the period over which the assets are expected to be used.
The useful lives for certain assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013, and the same is considered in the above range of useful life. Leasehold Land is amortized over the period of lease.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Depreciation on PPE added during the year is provided on pro rata basis from the month of addition. Depreciation on PPE disposed off/ discarded during the year is provided up to the preceding month of disposal/discarding.
Impairment
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell 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. An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying value of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately
1.20 Leases
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. Finance leases pertaining to certain land are capitalised at the commencement of the lease at fair value.
1.21 Foreign Exchange Transactions
Transactions in foreign currencies are initially recorded by the Company at the rate of exchange prevailing on the date of the transaction.
Monetary assets and monetary liabilities denominated in foreign currencies remaining unsettled at the end of the year are converted at the exchange rate prevailing on the reporting date. Differences arising on settlement or conversion of monetary items are recognised in statement of profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. In respect of forward cover contracts for future probable transactions, the mark to market loss as at the reporting date is charged to Statement of Profit and Loss. In respect of options contracts to mitigate the probable foreign exchange fluctuation risk, the options contracts are fair valued and the resultant variation as at the reporting date is charged to Statement of Profit and Loss
1.22 Taxes:
a. Current income tax
Income tax expense is recognised in profit or loss 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 for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted on the reporting date. The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
b. Deferred tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. The benefit of credit against the payment made towards Minimum Alternate Tax for the earlier years is available in accordance with the provisions of the Section 115J (AA) of income tax act 1961 over the period of subsequent 15 assessment year and it is recognised to the extent of deferred tax liability in view of the certainty involved of its realisation against reversal of deferred tax liability.
1.23 Provisions, Contingent Liabilities and Contingent
Assets
a. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 net of any reimbursement.
b. Contingent Liabilities
Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by the future events not wholly within the control of the company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
c. Contingent Assets
Contingent Assets are not recognised in the financial statements. Contingent Assets if any, are disclosed in the notes to the financial statements.
1.24 Earnings per share
Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
Mar 31, 2017
1.1 Property, Plant and Equipment
Property, Plant and Equipment were carried on historical cost / value transferred as per the scheme of arrangement in the balance sheet as on 31 March 2015 prepared in accordance with Indian GAAP. The Company has elected to regard those values as deemed cost at the date of the transition i.e 1st April, 2015 as permitted under Ind AS 101.
Property, Plant and Equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises of the purchase price net of Cenvat, Service Tax and Value Added Tax and any attributable cost of bringing the assets to its working condition for its intended use, including the cost of replacing parts, borrowing costs for long-term construction projects if the recognition criteria are met.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
1.2 Captial Work-in-Progress
Projects under construction wherein assets are not ready for use in the manner as intended by the management are shown as Capital Work-In-Progress.
1.3 Intangible Assets
Intangible assets are stated at cost less provisions for amortisation and impairments.
1.4 Intangible Assets under development
Intangible assets consisting of development expenditure of certain products are amortised on straight line method from the date they are available for use, over the useful life of the assets (5-20 years), as estimated by the Management.
1.5 Borrowing Cost
Borrowing costs directly attributable to the acquisition and/or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they are incurred.
1.6 Inventories
All Inventories are valued at the lower of cost and net realisable value.
Raw materials, Stores and Spares & Packing Material are valued at lower of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods are valued at lower of cost including excise payable thereon and net realisable value.
Traded Goods are valued at lower of purchase price and net realisable value.
1.7 Trade receivables
Trade receivables are carried at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into account ageing, previous experience and general economic conditions. When a trade receivable is determined to be uncollectable it is written off, firstly against any provision available and then to the Statement of Profit and Loss Account.
1.8 Financial Instruments
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument.
a. Financial Assets
(i) Initial recognition and measurement
The Company recognizes financial assets when it becomes a party to the contractual provisions of the instrument. All financial assets are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way trade of financial assets are accounted for at trade date.
(ii) Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order 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, debt instruments at amortised cost are subsequently measured at amortised cost using the effective interest rate method, less impairment, if any.
- Financial assets at fair value through other comprehensive income
A financial asset 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 made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.
- Financial assets at fair value through profit or loss
Financial assets which are not classified in any of the above categories are subsequently fair valued through profit or loss.
- Investment in Subsidiaries
Investment in subsidiaries is carried at cost in the financial statements
b. Financial Liabilities
(i) Initial recognition and measurement
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. Financial liabilities are classified, at initial recognition, at fair value through profit and loss or as those measured at amortised cost.
(ii) Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit and loss include financial liabilities held for trading.
The Company has not designated any financial liabilities upon initial recognition at fair value through profit and loss.
Financial liabilities measured at amortised cost
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method except for those designated in an effective hedging relationship.
c. Derivative Financial Instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank and these are not designated as hedges under Ind AS 109, Financial Instruments.
Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss. Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss. Assets/liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
1.9 Revenue Recognition
The Company recognises revenue in accordance with Ind AS 18. Revenue from the sale of goods is recognised when (a) It is probable that the economic benefits associated with the transaction will flow to the entity and the amount revenue can be measured reliably. (b) The significant risks and rewards of ownership of the goods have been passed to the buyer; and (c) The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
Revenue represents net invoice value after the deduction of discounts and allowances given and accruals for estimated future rebates, including for Expiry Breakage and Spoilage (EBS) and returns. The methodology and assumptions used to estimate the allowances and accruals are monitored and adjusted regularly in the light of contractual and legal obligations, historical trends, past experience. Revenue is disclosed inclusive of excise duty but net of sales return, service tax, value added tax and CST.
Income from operations includes revenue earned, as per the terms agreed with the customers, from development of products and assignment of patent rights.
Export benefits available under prevalent schemes are accounted to the extent considered receivable.
1.10 Research and Development Expense
All revenue expenses related to research and development including expenses in relation to development of product/processes and expenses incurred in relation to compliances with international regulatory authorities in obtaining of Abbreviated New Drug Applications (ANDA) and Drug Master Files (DMF) are charged to the statement of profit and loss in the year in which it is incurred. Development expenditure of certain nature is capitalised when the criteria for recognising an intangible asset are met, usually when a regulatory filing is intended to be made in a major market and approval is considered highly probable.
1.11 Employee benefits
a. Defined Benefit Obligation Plans
(i) Gratuity
The Company operates a defined benefit gratuity plan which requires contributions to be made to a separately administered fund by the Life Insurance Corporation of India (LIC) and HDFC Standard Life Insurance. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.
The service cost and the net interest cost would be charged to the Statement of Profit and Loss. Actuarial gains and losses arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation. The Company recognizes these re-measurements in the Other Comprehensive Income (OCI).
(ii) Provident Fund
The Companyâs contribution to provident fund, administered through a Company managed trust, is recognised as an expense in the Statement of Profit and Loss.
(iii) Leave Liability
The Company has a policy to allow accumulation of leave by employees up to certain days. The excess leave will either be encashed or funded by the Company to LIC for and on behalf of employees. Accordingly, the excess leave liability is discharged by the Company upon such funding to LIC. Remaining accumulated leave liability (other than sick leave) as at the year end is provided as per actuarial valuation. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. The Company recognises actuarial gains and losses that arise due to difference in the actual experience and the assumed parameters and also due to changes in the assumptions used for valuation, in the statement of Profit and Loss,as income or expense.
(iv) Sick Leave
Accumulated sick leave is provided for at actual in the Statement of Profit and Loss.
b. Defined Contribution plans
Superannuation fund is administered by the HDFC Standard Life Insurance Company Ltd. and ICICI Prudential Life Insurance Company Ltd. The contribution to Superannuation fund, Contribution to pension fund, ESIC and Labour Welfare Fund are recognised as an expense in the statement of profit and loss.
1.12 Depreciation / Amortisation
Depreciation is calculated on a straight-line basis as per the specified life of the assets as provided in schedule II to the Companies Act, 2013
Class of Assets Range of useful life
Building 05 - 60 Years
Plant & Equipment 03 - 22 Years
Furniture & Fixtures 10 Years
Vehicles 08 - 10 Years
Office Equipment 5 Years
The management, based on internal technical evaluation, believes that the useful lives as given above best represent the period over which the assets are expected to be used.
The useful lives for certain assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013. Certain assets are depreciated on written down value basis. Leasehold Land is amortized over the period of lease.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
1.13 Leases
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term. Finance leases pertaining to certain land are capitalised at the commencement of the lease at fair value.
1.14 Foreign Exchange Transactions
Transactions in foreign currencies are initially recorded by the Company at the rate of exchange prevailing on the date of the transaction. Monetary assets and monetary liabilities denominated in foreign currencies remaining unsettled at the end of the year are converted at the exchange rate prevailing on the reporting date.
Differences arising on settlement or conversion of monetary items are recognised in statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. In respect of forward cover contracts for future probable transactions, the mark to market loss as at the reporting date is charged to Statement of Profit and Loss. In respect of options contracts to mitigate the probable foreign exchange fluctuation risk, the options contracts are fair valued and the resultant variation as at the reporting date is charged to Statement of Profit and Loss.
1.15 Taxes:
a. Current income tax
Income tax expense is recognized in the statement of profit and loss except to the extent that it relates to items recognized directly in equity/OCI, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted on the reporting date. The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
b. Deferred tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
The benefit of credit against the payment made towards Minimum Alternate Tax for the earlier years is available in accordance with the provisions of the section 115J (AA) of income tax act 1961 over the period of subsequent 15 assessment year and it is recognised to the extent of deferred tax liability in view of the certainty involved of its realisation against reversal of deferred tax liability.
1.16 Provisions, Contingent Liabilities and Contingent Assets
a. Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 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 net of any reimbursement.
b. Contingent Liabilities
Contingent liability is disclosed for (i) Possible obligations which will be confirmed only by the future events not wholly within the control of the company or (ii) Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
c. Contingent Assets
Contingent Assets are not recognised in the financial statements. Contingent Assets if any, are disclosed in the notes to the financial statements.
1.17 Earnings per share
Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
Mar 31, 2015
A) Basis of Preparation of Financial Statements
The Financial Statements of the Company have been prepared and
presented in accordance with the Generally Accepted Accounting
Priciples in India (Indian GAAP) under the Historical Cost Convention
on an accrual basis of accounting. The Company has prepared Financial
Statements to comply in all material respects with the Accounting
Standards specified under Section 133 of the Companies Act 2013 read
with rule 7 of Companies (Accounts) Rules 2014.
The Accounting Policies adopted in the preparation in Financial
Statements are consistent with those of previous year. The Company has
elected to present earning before interest, tax, depreciation and
amortisation (EBITDA) as a separate line item on the face of the
Statement of the Profit and Loss.
b) Use of Estimates and Judgements
In preparation of the Financial Statements, in conformity with Indian
GAAP the management is required to make Judgements, Estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosures of contingent liabilities on the date of the Financial
Statements and the reported amount of revenues and expenses for the
year. All though these estimates are based on the managementÂs best
knowledge of current events and actions, uncertainty of these
assumptions and estimates could result in the outcomes different from
the estimates. Estimates and underlying assumptions are reviewed on an
ongoing basis. Any revision to accounting estimates is recognised
prospectively in the current and future periods.
c) Fixed Assets
Certain Fixed Assets have been recorded at a value transferred as per
the Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use. d)
Depreciation / Amortisation Depreciation on Fixed Assets is provided on
Straight Line Basis as per the useful life prescribed in Schedule II of
the Companies Act 2013. Leasehold Land is amortized over the period of
lease.
e) Borrowing Cost
Borrowing Costs directly attributable to the acquisition and
construction of an asset which takes a substantial period of time to
get ready for their intended use are capitalised as part of the cost of
such assets until such time the asset is ready for its intended use.
All other borrowing costs are regonised in the statement of profit and
Loss in the period they are incurred.
f) Investments
Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair value. Long
Term Investments are stated at cost less provision, if any, for decline
other than temporary in their value.
Certain Investment in Subsidiary company are stated at a value
transferred as per the Scheme of Arrangement. The subsequent
investments in the Subsidiary are valued at cost.
g) Inventories
All Inventories are valued at lower of cost and net realisable value.
Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods are valued at lower of cost including excise payable
thereon and net realisable value.
Traded Goods are valued at lower of Purchase price and net realisable
value.
Slow moving Raw Materials, Stores & Spares are valued at estimated net
realizable value.
h) Revenue from Operations
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue is recognised when the significant risks and rewards of the
ownership of the goods have been passed to the buyer. Sales are
disclosed inclusive of excise duty, but net of sales return, service
tax, value added tax and CST.
Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.
Export benefits available under prevalent schemes are accounted to the
extent considered receivable.
i) R & D Expenses
All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Statement
of Profit & Loss in the year in which it is incurred.
j) Foreign Exchange Transactions
Foreign Currency transactions are initially recorded at the rate of
exchange prevailing on the date of transaction.
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are converted
at year end exchange rates.
The difference in conversion of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Statement of Profit and Loss.
In respect of forward cover contracts for future probable transactions,
the mark to market loss as at the year end is charged to Statement of
Profit and Loss.
k) Employee benefits
Defined Contribution plan
Contribution to pension fund, Superannuation payable as per
superannuation scheme is provided by payment to superannuation trust
fund, administered by the HDFC Standard Life Insurance Company Ltd. and
ICICI Prudential Life Insurance Company Ltd. and ESIC and labour
welfare fund are recognised as an expense in the statement of profit
and loss. Defined Benefit plan The CompanyÂs contribution to provident
fund, administered through a Company managed trust, is recognised as an
expense in the Statement of Profit and Loss.
The gratuity liability, actuarially valued, is funded through the
scheme administered by the Life Insurance Corporation of India (LIC)
and HDFC Standard Life Insurance and the amounts paid / provided under
the scheme are charged to Statement of Profit and Loss.
Accumulated leave liability (other than sick leave) as at the year end
is provided as per actuarial valuation. Accumulated sick leave is
provided for at actuals in the Statement of Profit and Loss.
l) Taxes on Income
Provision for taxation comprises of Current Tax and Deferred Tax.
Current Tax provision has been made on the basis of reliefs and
deductions available under the Income Tax Act, 1961. Deferred tax
resulting from Âtiming differences between taxable and accounting
income is accounted in accordance with Accounting Standard 22 (AS-22)
ÂAccounting for taxes on income notified under the Companies
(Accounting ) Rules, 2014, using the tax rates and laws that are
enacted or substantively enacted as on the balance sheet date. The
deferred tax asset is recognised and carried forward only to the extent
that there is a reasonable certainty that the assets can be realised in
future. However, where there is unabsorbed depreciation or carry
forward losses under taxation laws, deferred tax assets are recognized
only if there is virtual certainty of realisation of such assets.
Deferred tax assets are reviewed as at each Balance sheet date to
reassess its realisation. The benefit of credit against the payment
made towards MAT for the earlier years is available in accordance with
the provisions of section 115J (AA) of Income Tax Act 1961 over a
period of subsequent 10 assessment year and it is recognized to the
extent of deferred tax liability in view of the certainity involved of
its realization against reversal of deferred tax liability.
m) Provisions, Contingent Liabilities and Contingent Assets Provisions
are recognised only when there is a present obligation as a result of
past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.
n) Impairment of assets
In accordance with Accounting Standard 28 (AS 28) on ÂImpairment of
Assets where there is an indication of impairment of the CompanyÂs
assets, the carrying amounts of the CompanyÂs assets are reviewed at
each Balance Sheet date to determine whether there is any impairment.
The recoverable amount of the assets (or where applicable that of the
cash generating unit to which the asset belongs) is estimated at the
higher of its net selling price and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from
the continuing use of the assets and from its disposal at the end of
its useful life. An impairment loss is recognised whenever the
carrying amount of an asset or a cash-generating unit exceeds its
recoverable amount. Impairment loss is recognized in the Statement of
the Profit and Loss. If at the Balance Sheet date there is an
indication that if a previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the lower of recoverable amount and the carrying amount that would
have been determined had no impairment loss being recognised.
o) Earning per share
Basic and diluted earnings per share are computed by dividing the net
profit after tax attributable to equity shareholders for the year, with
the weighted average number of equity shares outstanding during the
year.
Mar 31, 2013
A) Basis of Accounting
The Financial Statements are prepared as per historical cost convention
and on accrual basis and are in conformity with mandatory Accounting
Standards and relevant provisions of the Companies Act, 1956.
b) Fixed Assets
Certain Fixed Assets have been recorded at a value transferred as per
the Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use.
Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.
c) Depreciation / Amortisation
Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act, 1956
Leasehold Land is amortised over the period of Lease.
d) Investments
Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair value. Long
Term Investments are stated at cost less provision, if any for decline
other than temporary in their value.
Investment in Subsidiary company are stated at a value transferred as
per the Scheme of Arrangement
e) Inventories
All Inventories are valued at lower of cost and net realisable value.
Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.
Traded Goods is valued at lower of Purchase price and net realisable
value.
Slow moving Raw Materials, Stores & Spares are valued at estimated net
realisable value.
f) Revenue from Operations
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
dispatch of goods. Sales are inclusive of excise duty but net of sales
return, Service Tax & Value Added Tax & CST
Export sales are recognised on the date of bill of lading / Airway
bill.
Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.
g) R & D Expenses
All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Statement
of Profit & Loss in the year in which it is incurred.
h) Foreign Exchange Transactions
Foreign Currency transactions are initially recorded at the rate of
exchange prevailing on the date of transaction Monetary assets and
liabilities related to foreign currency transactions remaining
unsettled at the end of the year are converted at year end exchange
rates.
The difference in conversion of monetary assets & liabilities and
realised gains & losses on foreign exchange transaction are recognised
in the Statement of Profit and Loss.
In respect of forward cover contracts for future probable transactions,
the mark to market loss as at the year end is charged to Statement of
Profit and Loss.
i) Employee benefits Defined Contribution plan
Contribution to pension fund, Superannuation payable as per
superannuation scheme is provided by payment to superannuation trust
fund, administered by the HDFC Standard Life Insurance and ICICI
Prudential Life Insurance Co. Ltd., ESIC and labour welfare fund are
recognised as an expense in the statement of profit and loss.
Defined Benefit plan
The Company''s contribution to provident fund, administered through a
Company managed trust, is recognised as an expense in the statement of
profit and loss.
The gratuity liability, actuarially valued, is funded through the
scheme administered by the Life Insurance Corporation of India (LIC)
and HDFC Standard Life Insurance and the amounts paid / provided under
the scheme are charged to statement of profit and loss.
Accumulated leave liability (other than sick leave) as at the year end
is provided as per actuarial valuation. Accumulated sick leave is
provided for at actuals in the statement of profit and loss.
j) Taxes on Income
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income tax law). Deferred Tax
asset & liabilities are recognised as per Accounting Standard -22 on
accounting forTaxes on Income, issued pursuant to the Companies
(Accounting Standards) Rules 2006 by the Central Government.
k) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.
l) Measurement of EBITDA
The Company has elected to present earning before interest, tax,
depreciation and amortisation ( EBITDA) as a separate line item on the
face of the statement of the profit and loss.
Mar 31, 2012
A) Basis of Accounting
The accounts are prepared as per historical cost convention and on
accrual basis and are in confirmity with mandatory Accounting Standards
and relevant provisions of the Companies Act, 1956.
b) Fixed Assets
Fixed Assets have been recorded at a value transferred as per the
Scheme of Arrangement. Other Fixed Assets are recorded at cost of
acquisition / construction less accumulated depreciation and impairment
losses, if any. Cost comprises of the purchase price net of Cenvat,
Service Tax and Value Added Tax and any attributable cost of bringing
the assets to its working condition for its intended use.
Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.
c) Depreciation / Amortisation
Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act,1956
Leasehold Land is amortized over the period of Lease.
d) Investments
Long Term investments are classified as non current and are valued at
cost or net realisable value whichever is lower. Investment in
Subsidiary company are stated at a value transferred as per the Scheme
of Arrangement
e) Inventories
All Inventories are valued at lower of cost and net realisable value.
Raw Materials, Stores and Spares & Packing Material are valued at lower
of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.
Traded Goods is valued at lower of Purchase price and net realisable
value.
Slow moving Raw Materials, Stores & Spares are valued at estimated net
realizable value.
f) Revenue from Operations.
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
despatch of goods. Sales are inclusive of excise duty, but net of sales
return, Service Tax & Value Added Tax & CST.
Export sales are recognized on the date of bill of lading / Airway
bill.
Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights.
g) R & D Expenses
All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Profit &
Loss Account in the year in which it is incurred.
h) Foreign Exchange Transactions
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are converted
at year end exchange rates.
The difference in conversion of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Profit and Loss Account.
In respect of forward cover contracts for future probable transactions,
the mark to market loss / profit as at the year end is charged to
Profit and Loss Account.
i) Employee benefits
The gratuity liability is funded through the scheme administered by the
Life Insurance Corporation of India (LIC), and the amounts paid /
provided under the scheme are charged to Profit and Loss Account.
Superannuation payable as per Company's scheme is provided by payment
to superannuation trust fund, administered by the ICICI Prudential Life
Insurance Co.Ltd.
Accumulated leave liability as at the year end is provided as per
actuarial valuation.
j) Taxes on Income
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income tax law).
Deferred Tax asset & liabilities are recognised as per Accounting
Standard -22 on accounting for Taxes on Income, issued pursuant to the
Companies (Accounting Standards) Rules 2006 by the Central Government.
k) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.
l) Measurement of EBITDA
The Company has elected to present earning before interest, tax,
depreciation and amortisation ( EBITDA) as a separate line item on the
face of the statement of the profit and loss.
Mar 31, 2011
A. Basis of Accounting
The accounts are prepared as per historical cost convention and on
accrual basis and are in confirmity with mandatory Accounting Standards
and relevant provisions of the Companies Act, 1956.
b. Fixed Assets
Fixed Assets transferred upon the Scheme of Arrangement have been
recorded at Net Book Value as appearing in the Demerged Company. Fixed
Assets are recorded at cost of acquisition / construction less
accumulated depreciation and impairment losses, if any. Cost comprises
of the purchase price net of Cenvat, Service Tax and Value Added Tax
and any attributable cost of bringing the assets to its working
condition for its intended use.
Borrowing Cost directly attributable to acquisition / construction of
fixed asset which necessarily take a substantial period of time to get
ready for their intended use are capitalised.
c. Depreciation / Amortisation
Depreciation on Fixed Assets is provided on Straight Line Method at the
rates specified in Schedule XIV to the Companies Act,1956
Leasehold Land is amortized over the period of Lease. Depreciation on
Research and Development Equipments acquired upto 31.03.2003 @ 100% and
Acquired from 01.04.2003 on Straight Line Method at the rate prescribed
in schedule XIV of the Companies Act, 1956.
d. Investments
Investments are classified into Current and Long Term Investments.
Current Investments are valued at lower of cost and fair market value.
Long Term Investments are stated at cost less provision, if any, for
decline other than temporary in their value.
Investment in Subsidiary company are stated at cost of acquisition / or
as appearing in the Demerged Company.
e. Inventories
All Inventories are valued at lower of cost and net realisable value.
Raw Materials, Stores and Spares & packing material are valued at lower
of cost determined on weighted average basis and net realisable value.
Work in process is valued at lower of cost and net realisable value.
Finished Goods is valued at lower of cost including excise payable
thereon and net realisable value.
Slow moving, Raw Materials, Stores & Spares are valued at estimated net
realizable value.
f. Sales and Income from Operations
Sale of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on the
despatch of goods. Sales are inclusive of excise duty, but net of sales
return, Service Tax & Value Added Tax & CST.
Export sales are recognized on the date of bill of lading / Airway
bill.
Income from operations includes revenue earned, as per the terms agreed
with the customers, from development of products and assignment of
patent rights. Income from royalty is recognised on an accrual basis in
accordance with the terms of the relevant agreement
g. R & D Expenses
All revenue expenses related to R & D including expenses in relation to
development of product/ processes and expenses incurred in relation to
compliances with international regulatory authorities in obtaining of
Abbreviated New Drug Applications (ANDA) are charged to the Profit &
Loss Account in the year in which it is incurred.
h. Foreign Exchange Transactions
Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year end exchange rates.
The difference in translation of monetary assets & liabilities and
realized gains & losses on foreign exchange transaction are recognized
in the Profit and Loss Account.
In respect of transactions covered by forward contracts, the difference
between the contract rate and the rate on the date of the transactions
is charged to Profit and Loss Account over the contract period.
i. Employee benefits
The gratuity liability is funded through the scheme administered by the
Life Insurance Corporation of India (LIC), and the amounts paid /
provided under the scheme are charged to Profit and Loss Account. Upon
the Scheme of Arrangement the said LIC Policy and the accumulated funds
therein are in process of being transferred to the Trust created for
the purpose.
Superannuation payable as per superannuation scheme is provided by
payment to superannuation trust fund, administered by the ICICI
Prudential Life Insurance Co.Ltd.
Accumulated leave liability as at the year end is provided as per
actuarial valuation.
j. Taxes on Income
Income tax expense comprises current tax (i.e amount of tax for the
year determined in accordance with the Income tax law).
Deferred Tax asset & liabilities are recognised as per Accounting
Standard -22 on accounting for Taxes on Income, issued by Institute of
Chartered Accountant of India.
k. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised only when there is a present obligation as a
result of past events and when a reliable estimate of the amount of the
obligation can be made. Contingent liability is disclosed for (i)
Possible obligations which will be confirmed only by the future events
not wholly within the control of the company or (ii) Present
obligations arising from past events where it is not probable that an
outflow of resources will be required to settle the obligation or a
reliable estimate of the amount of the obligation can not be made.
Contingent Assets are not recognised in the financial statements.