Speciality Medicines Ltd. நிறுவனத்தின் கணக்கியல் கொள்கைகள்

Mar 31, 2025

2. SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Preparation

The Audited Financial Statements were prepared in accordance with generally accepted accounting principles in
India (Indian GAAP) at the relevant time. The Company has prepared the Audited Financial Statements to comply
with in all material aspects with the Accounting Standards notified under Section 133 of the Companies Act, 2013
(“the Act”), read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting
Standards) Rules, 2021.

Current / Non-Current Classification:

Any asset or liability is classified as current if it satisfies any of the following conditions:

i. the asset/liability is expected to be realised/settled in the Company''s normal operating cycle;

ii. the asset is intended for sale or consumption;

iii. the asset/liability is held primarily for the purpose of trading;

iv. the asset/liability is expected to be realised/ settled within twelve months after the reporting period;

v. the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting date;

vi. in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for
at least twelve months after the reporting date.

All other assets and liabilities are classified as non-current.

Based on the nature of products and the time between the acquisition of assets for processing and their realisation
in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of
current - non-current classification of assets and liabilities.

Previous year figures have been reclassified to conform to this year’s classification.

B. Use of Estimates and Judgement

In preparation of the financial statements, the Company is required to make judgments, estimates and assumptions
about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates
and the associated assumptions are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised
and future periods affected significant judgments and estimates about the carrying amount of assets and liabilities
include useful lives of tangible and intangible assets, impairment of Tangible assets, Intangible assets including
goodwill, investments, employee benefits and other provisions and recoverability of deferred tax assets.

C. Functional and presentation currency:

These Audited Financial Statements are presented in Indian Rupees (?), which is also its functional currency. All
amounts have been rounded off to two decimal places to the nearest lakhs, unless otherwise indicated. Amount less
then ? 1,000 have been presented as "0.00".

D. Property, Plant & Equipment and Intangible Assets:

Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost
comprises of all expenses incurred to bring the assets to its present location and condition. Borrowing cost directly
attributable to the acquisition /construction are included in the cost of fixed assets. Adjustments arising from
exchange rate variations attributable to the fixed assets are capitalized.

The company has adopted cost model for all class of items of Property, Plant and Equipment. In case of new projects
/ expansion of existing projects, expenditure incurred during construction / preoperative period including interest and
finance charge on specific / general purpose loans, prior to commencement of commercial production are capitalized.
The same are allocated to the respective on completion of construction / erection of the capital project / fixed assets.
Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the
future economic benefits from the existing asset beyond its previously assessed standard of performance.

Depreciation on Fixed Assets is provided to the extent of depreciable amount on the Written down Value (WDV)
Method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies
Act, 2013. The carrying amount of assets is reviewed at each balance sheet date if there is any indication of
impairment based on internal or external factors. An impairment loss is recognized wherever the carrying amount of
an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets, net selling price 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 risks specific to the
asset. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining
useful life.

The depreciation is provided from the date the asset is ready to use for the commercial operations. The useful lives
taken for the purpose of depreciation of different assets are prescribed as follows:

Based on the technical evaluation, the management believes that the useful lives as given above represent the
period over which the management expects to use these assets. Hence, the useful lives for these assets are different
from the useful life prescribed under schedule of the Companies Act 2013. Depreciation method, useful life and
resident values are reviewed periodically, during at each financial year end.

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized
over their respective individual estimated useful lives on a Written down Value, from the date that they are available
for use. The estimated useful life of an identifiable intangible asset is based on a number of factors, including the
effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and
known technological advances), and the level of maintenance expenditures required to obtain the expected future
cash flows from the asset. Amortization methods and useful lives are reviewed periodically including at each financial
year end.

E. Capital work-in-progress

Projects under which tangible assets are not yet ready for their intended use are carried at cost, comprising direct
cost, related incidental expenses and attributable interest (if any).

F. Borrowing Cost

Borrowing costs include interest, other costs incurred in connection with borrowing and exchange differences arising
from foreign currency borrowings to the extent that they are regarded as an adjustment to the interest cost. General
and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred.

G. Impairment of Assets

The Management periodically assesses using external and internal sources, whether there is an indication that an
asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its
recoverable amount. The recoverable amount is higher of the asset''s net selling price and value in use, which means
the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal.
An impairment loss for an asset is reversed only when the reversal can be related objectively to an event occurring
after the impairment loss was recognized. The carrying amount of an asset is increased to its revised recoverable
amount, provided that this amount does not exceed the carrying amount that would have been determined (net of
any accumulated amortization or depreciation had no impairment loss been recognized for the asset in prior years).

As per Accounting Standard (AS-28) impairment of assets the company has carried the Impairment test during the
year. There is no material impairment loss in the carried cost in the assets in the books and the recoverable amount
is not lower than the carrying amount in the accounts.

H. Inventories

As per (AS) 2, the inventories are physically verified at regular intervals by the management. Stock-in-Trade are
valued at lower of cost and net realizable value. Cost of inventories comprises of cost of purchase, and other costs
incurred in bringing them to their respective present location and condition.

I. Foreign currency Transactions:

Conversion

Foreign currency monetary items are reported using the closing rate.

Non-monetary items, which are carried in terms of historical cost denominated in a foreign currency are reported
using the exchange rate at the date of the transaction.

Exchange Differences

Exchange differences arising on the settlement or reporting of monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous audited financial statement, are recognized as
income or expense in the Statement of Profit and Loss.

J. Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents include cash in hand, demand deposit with banks, other short¬
term highly liquid investments with original maturities of three months or less.

K. Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is
adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts
or payments. The cash flows from operating, investing and financing activities of the Company are segregated based
on the available Information.

L. Revenue Recognition

Revenue from the operations is recognized on generally accepted accounting principal and when it is earned and no
significant uncertainty exists as to its ultimate collection and includes taxes, wherever applicable.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. The capital gain on sale of investments if any are recognized on completion of
transaction. No notional profit/loss are recognized on such investments. Interest income is recognized on time
proportion basis, when it is accrued and due for payment.

M. Investment

Investments, which are readily realizable and intended to be held for not more than one year from the date on which
such investments are made, are classified as current investments. All other investments are classified as long-term
investments. Long Term Investments are valued at cost and Current Investments are valued at Cost or Net
Realizable Value whichever is lower.

N. Retirement Benefits

Short Term Employee Benefits (i.e. benefits payable within one year) are recognised in the period in which the
employee services are rendered.

Long Term Employee benefit (gratuity) are recognized are accounted in the books of account based on Valuation
report of Actuarial.

O. Current and deferred tax

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net
profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in
accordance with the taxation laws prevailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of
deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets
can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been
enacted or substantively enacted on the Balance Sheet date. In situations, where the Company has unabsorbed
depreciation or carry forward losses under tax laws, all deferred tax assets are recognised only to the extent that
there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits. At
each Balance Sheet date, the Company re-assesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the
recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets
and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities
representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income
levied by the same governing taxation laws.

Minimum Alternate Tax credit is recognised as an asset only when and to the extent there is convincing evidence
that the company will pay normal income tax during the specified period. Such asset is reviewed at each Balance
Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer convincing
evidence to the effect that the Company will pay normal income tax during the specified period.

The company is recognized as a startup by DPIIT with certificate number DIPP117839 and has been certified as an
eligible business by Inter-Ministerial Board to avail Income Tax benefits under Section 80-IAC of the Income Tax Act,
1961. Under the benefits, it gives a 100% tax exemption on the incurred profits that the startup made in any three
consecutive assessment years out of 10 years beginning from the year in which the Company is incorporated.
Certificate of registration is valid upto February 04, 2031.