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Accounting Policies of Shilpa Medicare Ltd. Company

Mar 31, 2023

Significant Accounting Policies

a) Critical accounting estimates and judgments:

The preparation of financial statements in
conformity with Ind AS requires management to
make judgments, estimates and assumptions that
affect the application of accounting policies and the
reported amounts of assets, liabilities and disclosure
of contingent liabilities at the date of the financial
statements and the results of operations during
the reporting period. Although these estimates
are based upon management''s best knowledge
of current events and actions, actual results could

differ from these estimates. Revisions to accounting
estimates are recognised prospectively.

The areas involving critical estimates or judgments
are:

- Measurement of defined benefit obligation
(Note 1.1 (h))

- Estimation of useful life of property, plant and
equipment and intangibles (Note 1.1(a))

- Recognition of deferred taxes (Note 1.1 (r))

- Estimation of impairment (Note 1.1 (d))

- Estimation of provision and contingent liabilities
(Note 1.1 (s))

- Business Combination (Note-1.1(e))

(a) Property, Plant and Equipment
&Depreciation:

i. Items of property, plant and equipment
are stated at cost less accumulated
depreciation and impairment losses if any.
Cost comprises of purchase price and any
attributable cost of bringing the assets to
its working condition for its intended use.

ii. Capital work-in-progress in respect
of assets which are not ready for
their intended use are carried at cost,
comprising of direct costs, related
incidental expenses and attributable
interest.

iii. Subsequent expenditure is capitalized
only if it is probable that the future
economic benefits associated with the
expenditure will flow to the Company.

iv. Depreciation on Fixed Assets is provided
on ascertain useful life of assets under
Straight Line Method (SLM) prescribed in
Schedule II of the Companies Act 2013,
with exception of those assets whose
useful life is ascertain by the management.

v. The Company follows the policy of
charging depreciation on pro-rate basis
on the assets acquired or disposed off
during the year.

(b) Intangible Assets:

Intangible assets are recognized when it is
probable that the future economic benefits
that are attributable to the assets will flow to
the Company and the cost of the assets can be
measured reliably.

Intangible Assets are stated at cost less
accumulated amortization. Cost includes only
such expenditure that is directly attributable
tomaking the asset ready for its intended use.

Intangible assets are amortized over their
useful life.

Intangible Assets include capitalized expenÂ¬
diture on filing and registration of any

Drug Master File (DMF) or Abbreviated New
Drug Application (ANDA) and compliance with
regulatory procedures of the USFDA, in filing
such DMF or ANDA, which are in respect of
products for which commercial value has been
established by virtue of third party agreements/
arrangements. The cost of each DMF/ANDA is
amortized over its estimated useful life from
the date on which the amount has been
capitalized.

c) Research and Development:

All expenditure on research activities are
recognized in the Profit and Loss Statement
when incurred. Expenditure on development
activities are also recognized in the Profit and
Loss Statement in the year such expenditure is
incurred. However, development expenditure
is capitalized only in cases where such costs
can be measured reliably, the technological
feasibility has been established in respect
of the product or process for which costs
are incurred, future economic benefits are
probable and the Company intends to and has
sufficient resources to complete development
and to use or sell the asset.

Payments to third parties that generally take
the form of up-front payments and milestones
for in-licensed product are capitalized. The
Company''s criteria for capitalization of such
assets are consistent with the guidance given in
paragraph 25 of Ind AS 38 (receipt of economic
benefit out of the separately purchased
transaction is considered to be probable).

Acquired research and development
intangible assets that are under development
are recognized as Intangible Assets under
Development. These assets are not amortized,
but evaluated for potential impairment on an
annual basis or when there are indications
that the carrying value may not be recoverable.
Where a determination of impairment in
respect of any such asset is made, the
impairment of such asset is recognized in
the Profit and Loss Statement in the year in
which such determination is made. Where a
determination is made to the effect that future
economic benefits are probable, the total
cost is capitalized in the year in which such
determination is made

Amortization of capitalized development
expenditure is recognized on a straight-line
basis, over the useful life of the asset

d) 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. An asset is treated as impaired when the
carrying cost of asset exceeds its recoverable
value. Recoverable value being higher of value
in use and fair value less cost of disposal. Value
in use is computed at net present value of cash
flow expected over the balance useful life of the
assets. An impairment loss is recognized as an
expense in the Profit and Loss Account in the
year in which an asset is identified as impaired.

e) Business Combination and Goodwill

The Company uses the acquisition method
of accounting to account for business
combinations. The acquisition date is the
date on which control is transferred to the
acquirer. Judgement is applied in determining
the acquisition date and determining whether
control is transferred from one party to
another. Control exists when the Company is
exposed to, or has rights to variable returns
from its involvement with the entity and has the
ability to affect those returns through power
over the entity. In assessing control, potential
voting rights are considered only if the rights
are substantive.

The Company measures goodwill as of the
applicable acquisition date at the fair value of
the consideration transferred, including the
recognised amount of any non-controlling
interest in the acquiree, less the net recognized
amount of the identifiable assets acquired and
liabilities assumed.

Any goodwill that arises on account of such
business combination is tested annually for
impairment.

f) Non-Current assets held for sale:

Assets are classified as held for sale and stated
at the lower of carrying amount and fair value
less costs to sell if the asset is available for
immediate sale and its sale is highly probable.
Such assets or group of assets are presented

separately in the Balance Sheet as "Assets Held
for Sale".

g) Inventory:

Inventories are valued at the lower of cost and
net realisable value. The cost is determined
on FIFO basis. Cost of finished goods and
workin- progress include all costs of purchases,
conversion costs and other costs incurred
in bringing the inventories to their present
location and condition.

Net realisable value is the estimated selling
price in the ordinary course of business,
less the estimated costs of completion and
selling expenses.

h) Employee Benefits:

Short term employee benefits

Short-term employee benefits are expensed
as the related service is provided. A liability
is recognised for the amount expected to be
paid if the Company has a present legal or
constructive obligation to pay this amount as a
result of past service provided by the employee
and the obligation can be estimated reliably.

Defined Contribution plans

Contribution towards Provident Fund
for employees is made to the regulatory
authorities, where the Company has no further
obligations. Such benefits are classified as
defined contribution schemes as the Company
does not carry any further obligations, apart
from the contributions made on a monthly
basis.

Defined benefit plans

Gratuity liability is defined benefit obligation
and is provided on the basis of an actuarial
valuation on projected unit credit method
made at the end of each year. The Company
funds the benefit through contributions to LIC.

liability (assets) is computed by applying the
discount rate, used to measure the net defined
liability (asset). Net interest expense and other
expenses related to defined benefit plans are
recognised in Statement of Profit and Loss

i) Cash and Cash Equivalent.

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. Cash flow statement is
prepared under the indirect method as per
Ind AS 7, For the purpose of the statement of
cash flows, cash and cash equivalents consist
of cash and short-term deposits net of book
overdraft.

j) Dividend to Shareholders:

Annual dividend distribution to the
shareholders is recognised as a liability in the
period in which the dividends are approved by
the shareholders. Any interim dividend paid is
recognised on approval by Board of Directors,
Dividend payable and corresponding tax on
dividend distribution is recognised directly in
other equity.

k) Leases

The Company assesses whether a contract
contains a lease, at the inception of contract.
A contract is, or contains, a lease if the contract
conveys the right to control the use of an
identified asset for a period of time in exchange
for consideration. To assess whether a contract
conveys the right to control use of an identified
asset, the Company assesses whether:

a) The contract involves use of an identified
asset;

b) The Company has substantially all the
economic benefits from the use of the
asset through the period of lease; and

c) The Company has the right to direct the
use of an asset.

(short term leases) and low value leases. For
short term and low value leases, the Company
recognises the lease payment as an operating
expense on straight line basis over the term of
lease.

Right-of-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 underlying asset.

The lease liability is initially measured at
amortised cost at the present value of the
future lease payments. The lease payments are
discounted using the interest rate explicit in
the lease or, if not readily determinable, using
the incremental borrowing rates in the country
of domicile of these leases.

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

l) Revenue Recognition:

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.

i) Sale of products:

Revenue from sale of goods is recognized
when all the significant risks and rewards
of ownership in the goods are transferred
to the buyer as per the terms of the
contract, there is no continuing managerial
involvement with the goods and the
amount of revenue can be measured
reliably. The Company retains no effective
control of the goods transferred to a
degree usually associated with ownership
and no significant uncertainty exists
regarding the amount of the consideration
that will be derived from the sale of goods.
Revenue is measured at fair value of the
consideration received or receivable,
Amount disclosed as revenue are inclusive
of excise duty, excluding goods and service
tax (GST), sales tax or value added taxes or
service taxes or duties collected on behalf
of the government, and net off returns,
trade discounts, rebates and any amount
collected on behalf of third parties.

ii) Development Revenue:

Development revenue are recognized
over the time period of the development
activity and are recognized on the
completion of each mile- stones as per
term of the agreement.

III) Recognition of Export benefits

Export benefit entitlements in respect of
incentive schemes including Merchandise
Export Incentive Scheme (MEIS) and Focus
Product Scheme (FPS) of the government
of India are recognized in the period in
which they are approved.

(v) Milestone payments and out licensing
arrangements

The Company enters into certain dossier
sales, licensing and supply arrangements
that, in certain instances, include certain
performance obligations. Based on
an evaluation of these obligations,
the Company recognise or defer the
upfront payments received under these
arrangements. Milestone payments which
are contingent on achieving certain clinical
milestones are recognised as revenues
either on achievement of such milestones.

Income from out-licensing agreements
typically arises from the receipt of upfront,
milestone and other similar payments
from third parties for granting a license
to product- or technology- related
intellectual property (IP). Milestone
payments which are contingent on
achieving certain clinical milestones
are recognised as revenues either on
achievement of such milestones, if the
Milestones are considered substantive,
or over the period we have continuing
performance obligations, if the milestones
are not considered substantive.

The Company recognises a deferred
income (contract liability) if consideration
has been received (or has become
receivable) before the company transfers
the promised goods or services to the
customer."

m) other Income

i) Interest Income is recognized using the
Effective interest rate (EIR) method.

ii) Dividend income is recognized when right
to receive is established.

iii) The Company recognises government
grants only when there is reasonable
assurance that the conditions attached to
them will be complied with and the grants
is received. Government grants received
in relation to assets are recognised as
deferred income and amortized over the
useful life of such asset. Grants related to
income are recognised in the profit & loss
account under other income.

n) Foreign Currency Transactions/Translations:
Initial Recognition

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

Translations

Monetary assets and liabilities denominated
in foreign currencies at the reporting date
are translated into the functional currency
at the exchange rate at the reporting date.
Non-monetary assets and liabilities that are
measured based on historical cost in a foreign
currency are translated at the exchange rate at
the date of the transaction.

Exchange Differences

The exchange difference arising on the
settlement of monetary items or on reporting
Company''s monetary items at rates different
from those at which they were initially recorded
during the year, or reported in the previous
financial statements, are recognized in the
Statement of Profit and Loss in the period in
which they arise as income or as expense.

o) Government Grant

Grants from the government are recognized
at their fair value where there is a reasonable
assurance that the grant will be received and
the Company will comply with all attached

conditions.

Grants related to revenue items are presented
as part of profit or loss under general heading
such as other income.

Government grants relating to the purchase of
property, plant and equipment are included in
non-current liabilities as ''Deferred Government
Grant'' and are credited to profit & loss account
under other income on a straight line basis
over the expected lives of the related assets.

The benefit of a government loan at a
below market rate of interest is treated as a
government grant, measured as the difference
between proceeds received and the fair value
of the loan based on prevailing market interest
rates.

p) Borrowing Costs

Borrowing costs that are attributable to the
acquisition or construction of qualifying assets
are capitalized as part of the cost of such
assets. A qualifying asset is one that necessarily
takes substantial period of time to get ready for
its intended use. All other borrowing costs are
recognized as an expense in the period in which
they are incurred. Further, interest earned out
of borrowed funds from temporary investments
are reduced from the borrowing cost.

Qualifying assets are assets that necessarily
take a substantial period of time to get
ready for their intended use or sale.

q) Financial Instrument:

A financial instrument is any contract that
gives rise to a financial asset of one entity
and financial liability or equity instrument of
another entity.

I) Financial Asset:

Initial recognition and measurement

All financial instruments are recognized initially
at fair value plus, in case of financial assets not
recorded at fair value through P&L, transaction
costs that are attributable to the acquisition
of the financial asset, purchase or sales of
financial assets that require delivery of assets
within a time frame established by regulation or
convention in the market place are recognized

on the trade date i.e. the date that the company
commits to purchase or sell the asset.

Subsequent Measurement

For the purpose of subsequent measurement
financial assets are classified as measured at:

â¢ Amortised cost

â¢ Fair value through profit and loss (FVTPL)

â¢ Fair value through other comprehensive
income (FVTOCI).

a) Financial Asset measured at amortized
cost

Financial Assets held within a business
model whose objective is to hold financial
assets 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 are measured at
amortized cost using effective interest
rate (EIR) method. The EIR amortization
is recognized as finance income in the
statement of Profit & Loss. The company
while applying above criteria has classified
the following at amortized cost:

â¢ Trade receivables

â¢ Loans

â¢ Other Financial Assets

b) Financial Assets Measured at fair value
through other comprehensive income
(FVTOCL)

Fair value movements are recognized in
the other comprehensive income (OCI).
Interest income measured using the EIR

method and impairment losses, if any
are recognized in the Statement of Profit
and Loss. On derecognition, cumulative
gain or loss previously recognised in OCI
is reclassified from the equity to ''other
income'' in the Statement of Profit and
Loss.

c) Financial Assets at fair value through
profitor loss (FVTPL)

Financial Assets are measured at Fair
value through Profit & Loss if it does
not meet the criteria for classification as
measured at amortized cost or at FVTOCI.
All fair value changes are recognized in
the statement ofProfit & Loss.

Equity Instruments

All investments in equity instruments
classified under financial assets are initially
measured at fair value, the group may,
on initial recognition, irrevocably elect
to measure the same either at FVTOCI or
FVTPL. The classification is based on initial
recognition and is irrevocable

De-recognition of Financial Assets:

Financial assets are derecognized when
the contractual rights to the cash flows
from the financial asset expire or the
financial asset is transferred and the
transfer qualifies for Derecognition. On
Derecognition of a financial asset in its
entirety, the difference between the
carrying amount (measured on the date
of recognition) and the consideration
received (including any new asset obtained
less any new liability assumed) shall be
recognized in the statement of Profit &
Loss.

Impairment of Financial Assets:

In accordance with Ind AS 109, the
company applies expected credit
loss (ECL) model by adopting the
simplified approach using a provision
matrix reflecting current condition and
forecasts of future economic conditions
for measurement and recognition
of impairment loss on the following

financial assets and credit risk exposure:

â¢ FinancialAssets that are debt
instruments, and are measured
at amortized cost e.g. loans, debt
securities, deposits, trade receivables
and bank balance

â¢ FinancialAssets that are debt
instruments and are measured at
FVTOCI.

â¢ Lease receivables under Ind AS 17.

â¢ Trade receivables or any contractual
right to receive cash or another
financial asset

â¢ Loan commitments which are not
measured at FVTPL

â¢ Financial guarantee contracts which
are not measured at FVTPL

II) Financial Liability

Initial recognition and measurement

Financial liabilities are recognized initially at
fair value plus any transaction cost that are
attributable to the acquisition of the financial
liability except financial liabilities at FVTPL that
are measured at fair value.

Subsequent measurement

Financial liabilities are subsequently measured
at amortised cost using the EIR method.
Financial liabilities carried at fair value through
profit or loss are measured at fair value with
all changes in fair value recognised in the
Statement of Profit and Loss.

Financial Liabilities at amortized cost:

Amortized cost for financial liabilities
represents amount at which financial liability
is measured at initial recognition minus the
principal repayments, plus or minus the
cumulative amortization using the effective
interest method of any difference between
theinitial amount and the maturity amount.

â¢ The company is classifying the following

under amortized cost

â¢ Borrowings from banks

â¢ Borrowings from others

â¢ Trade payables

â¢ Other financial liabilities
Derecognition:

A financial liability shall be derecognized when,
and only when, it is extinguished i.e. when
the obligation specified in the contract is
discharged or cancelled or expires.

III) Derivative financial instrument and hedge
accounting

r) Taxes on Income:

Tax expense comprises of current and deferred
tax.

i) Current income tax is measured at the
amount expected to be paid to the tax
authorities in accordance with the Indian
Tax Act

ii) Deferred tax is recognised in respect
of temporary differences between the
carrying amount of assets and liabilities
for financial reporting purposes and the
corresponding amounts used for taxation
purposes. Deferred tax is measured based
on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet
date. Deferred tax assets are recognised
only to the extent that it is probable that
future taxable profits will be available
against which the asset can be utilized.

iii) Minimum Alternate Tax (MAT) credit is
recognised as an asset only when and
to the extent it is reasonably certain that
the Company will pay normal income tax
during the specified period. Such asset is

reviewed at each reporting date and the
carrying amount of the MAT credit asset
is written down to the extent there is no
longer a convincing evidence to the effect
that the Company will pay normal income
tax during the specified period.

Mar 31, 2022

CORPORATE INFORMATION

Shilpa Medicare Limited (SML) is a listed Company engaged in the manufacturing of API, Formulation and Development service. Shilpa Medicare Limited (SML) started its operations as API manufacturer way back in 1987 at Raichur, Karnataka-India. The Company started its commercial production in November 1989. In November 1993, Shilpa Medicare Limited was converted into a Public Limited Company. The Company was listed on Bombay Stock Exchange on June 19, 1995 and National Stock Exchange (NSE) on December 03, 2009. Subsequently Shilpa Medicare has gained World Health Organization-Good Manufacturing Practices (GMP) Certificate recognition.

SML is presently dealing in high-quality Active Pharmaceutical Ingredients (APIs), Intermediates, Formulations, New Drug Delivery Systems, Peptides / Biotech products and Specialty Chemicals etc. using sophisticated technology meticulously in order to comply with laid down international standards/ specifications. Today SML is among the world''s leading suppliers of Oncology/Non-Oncology APIs and intermediates.

1. Basis of Preparation of Financial Statements

I. Statement of Compliance

These financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as specified under section 133 of the Companies Act 2013 read together with the Rule 4 of Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules 2016 to the extent applicable and the other relevant provisions of the Act, pronouncements of the regulatory bodies applicable to the Company.

These financial statements have been prepared by the Company as a going concern on the basis of relevant Ind AS that are effective or elected for early adoption at the Company''s annual reporting date March 31, 2022.The accounting policies are applied consistently to all the periods presented in the financial statements. The Standalone financial statements of the Company for the year ended 31 March, 2022 were approved by the Board of Directors on May 23, 2022.

II. Basis of Measurement

The financial statements have been prepared on the historical cost convention and on accrual basis, except for the following assets and liabilities

which have been measured at fair value wherever applicable

- Derivative financial instruments

- Certain financial assets / liability measured at fair value,

- Net defined benefit assets/(liability) are measured at fair value of plan assets, less present value of defined benefit obligations.

III. Functional and presentation currency

The financial statements are presented in Indian Rupees which is the functional currency of the Company. All amounts have been rounded-off to the nearest lakhs unless otherwise stated.

IV. Current v/s Non-current classification

The assets and liabilities in the balance sheet are presented based on current/non-current classification.

An asset is current when it satisfies the below mentioned criteria:

(i) Expected to be realised or intended to be sold or consumed in normal operating cycle, or

(ii) Held primarily for the purpose of trading,or

(iii) Expected to be realised within twelve months after the reporting period, or

(iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when it satisfies the below mentioned criteria:

(i) Expected to be settled in normal operating cycle, or

(ii) Held primarily for the purpose of trading, or

(iii) Due to be settled within twelve months after the reporting period, or

(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are treated as non-current.

1.1 Significant Accounting Policies

Critical accounting Estimates and Judgments:

The preparation of financial statements in conformity with IndAS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognised prospectively.

The areas involving critical estimates or judgments are:

- Measurement of defined benefit obligation (Note 1.1 (h))

- Estimation of Useful life of Property, plant and equipment and intangibles (Note 1.1(a))

- Recognition of deferred taxes (Note 1.1 (r))

- Estimation of impairment (Note 1.1 (d))

- Estimation of provision and contingent-liabilities (Note 1.1 (s))

- Business Combination (Note-1.1(e))

a) Property, Plant and Equipment &

Depreciation:

i. Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

iii. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

iv. Depreciation on Fixed Assets is provided on ascertain useful life of assets under Straight Line Method (SLM) prescribed in Schedule II of the Companies Act 2013, with exception of those assets whose useful life is ascertain by the management.

v. The Company follows the policy of charging depreciation on pro-rate basis on the assets acquired or disposed off during the year.

b) Intangible Assets:

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the assets can be measured reliably.

Intangible Assets are stated at cost less accumulated amortization. Cost includes only such expenditure that is directly attributable to making the asset ready for its intended use.

Intangible assets are amortized over their useful life.

Intangible Assets include capitalized expenditure on filing and registration of any Drug Master File (DMF) or Abbreviated New Drug Application (ANDA) and compliance with regulatory procedures of the USFDA, in filing such DMF or ANDA, which are in respect of products for which commercial value has been established by virtue of third party agreements/ arrangements. The cost of each DMF/ANDA is amortized over its estimated useful life from the date on which the amount has been capitalized.

c) Research and Development:

All expenditure on research activities are recognized in the Profit and Loss Statement when incurred. Expenditure on development activities are also recognized in the Profit and Loss Statement in the year such expenditure is incurred. However, development expenditure is capitalized only in cases where such costs can be measured reliably, the technological feasibility has been established in respect of the product or process for which costs are incurred, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset.

Payments to third parties that generally take the form of up-front payments and milestones for in-licensed product are capitalized. The Company''s criteria for capitalization of such assets are consistent with the guidance given in paragraph 25 of Ind AS 38 (receipt of economic benefit out of the separately purchased transaction is considered to be probable).

Acquired research and development intangible assets that are under development are recognized as Intangible Assets under Development. These assets are not amortized, but evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable. Where a determination of impairment in respect of any such asset is made, the impairment of such asset is recognized in the Profit and Loss Statement in the year in which such determination is made. Where a determination is made to the effect that future economic benefits are probable, the total cost is capitalized in the year in which such determination is made.

Amortization of capitalized development expenditure is recognized on a straight-line basis, over the useful life of the asset

d) 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. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable value being higher of value in use and fair value less cost of disposal. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

e) Business Combination and Goodwill:

The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.

The Company measures goodwill as of the applicable acquisition date at the fair value of the consideration transferred, including the recognised amount of any non-controlling interest in the acquiree, less the net recognized amount of the identifiable assets acquired and liabilities assumed.

Any goodwill that arises on account of such business combination is tested annually for impairment.

f) Non-Current asset held for sale:

Assets are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if the asset is available for immediate sale and its sale is highly probable. Such assets or group of assets are presented separately in the Balance Sheet as "Assets Held for Sale".

g) Inventory:

Inventories are valued at the lower of cost and net realisable value. The cost is determined on FIFO basis. Cost of finished goods and workin- progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

h) Employee Benefits:

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be

paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined Contribution plans

Contribution towards Provident Fund for employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Defined benefit plans

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense/(income) on the net defined (liability)/assets is computed by applying the discount rate, used to measure the net defined (liability)/asset. Net interest expense and other expenses related to defined benefit plans are recognised in Statement of Profit and Loss

i) Cash and Cash Equivalent:

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. Cash flow statement is prepared under the indirect method as per Ind AS 7, For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits net of book overdraft.

j) Dividends to Shareholders:

Annual dividend distribution to the shareholders is recognised as a liability in the period in which the dividends are approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors, Dividend payable and corresponding tax on dividend distribution is recognised directly in other equity.

k) Leases:

The Company assesses whether a contract contains a lease, at the inception of contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control use of an identified asset, the Company assesses whether:

a) The contract involves use of an identified asset;

b) The Company has substantially all the economic benefits from the use of the asset through the period of lease; and

c) The Company has the right to direct the use of an asset.

At the date of commencement of lease, the Company recognises a Right-of-use asset ("ROU") and a corresponding liability for all lease arrangements in which it is a lessee, except for leases with the term of twelve months or less (short term leases) and low value leases. For short term and low value leases, the Company recognises the lease payment as an operating expense on straight line basis over the term of lease.

Right-of-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 underlying asset.

The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate explicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases.

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

l) Revenue Recognition:

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.

i. Sale of products:

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, Amount disclosed as revenue are excluding goods and service tax (GST), sales tax or value added taxes or service taxes or duties collected on behalf of the government, and net off returns, trade discounts, rebates and any amount collected on behalf of third parties.

ii. Development Revenue:

Development revenue are recognized over the time period of the development activity and are recognized on the completion of each mile- stones as per term of the agreement.

iii. Recognition of Export benefits:

Export benefit entitlements in respect of incentive schemes including Merchandise Export Incentive Scheme (MEIS) and Focus Product Scheme (FPS) of the government of India are recognized in the period in which they are approved.

m) Other Income:

i. Interest Income is recognized using the Effective interest rate (EIR) method.

ii. Dividend income is recognized when right to receive is established.

iii. The Company recognises government grants only when there is reasonable assurance that the conditions attached to them will be complied with and the grants is received. Government grants received in relation to assets are recognised as deferred income and amortized over the useful life of such asset. Grants related to income are recognised in the profit & loss account under other income.

n) Foreign Currency Transactions/ Translations:

Initial Recognition

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

Translations

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized in the Statement of Profit and Loss in the period in which they arise as income or as expense.

o) Government Grant:

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Grants related to revenue items are presented as part of profit or loss under general heading such as other income.

Government grants relating to the purchase of property, plant and equipment are included in non- current liabilities as ''Deferred Government Grant'' and are credited to profit & loss account under other income on a straight-line basis over the expected lives of the related assets.

The benefit of a government loan at a below- market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

p) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred. Further, interest earned out of borrowed funds from temporary investments are reduced from the borrowing cost.

q) Financial Instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

I) Financial Asset:

Initial recognition and measurement

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through P&L, transaction costs that are attributable to the acquisition of the financial asset, purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent Measurement

For the purpose of subsequent measurement financial assets are

classified as measured at:

â¢ Amortised cost

â¢ Fair value through profit and loss (FVTPL)

â¢ Fair value through other comprehensive income (FVOCI).

(a) Financial Asset measured at amortized Cost

Financial Assets held within a business model whose objective is to hold financial assets 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 are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of Profit & Loss. The company while applying above criteria has classified the following at amortized cost:

â¢ Trade receivables

â¢ Loans

â¢ Other financial assets

(b) Financial Assets measured at fair value through other comprehensive income (FVTOCI)

inancial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to ''other income'' in the Statement of Profit and Loss

Financial Assets are measured at Fair value through Profit & Loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of Profit & Loss.

Equity Instruments:

All investments in equity instruments classified under financial assets are initially measured at fair value, the group may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The classification is made on initial recognition and is irrevocable

Investments in subsidiaries, associates and joint venture:

Investments in subsidiaries, associates and joint venture are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries and joint venture, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit and loss.

De-recognition of financial Assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for Derecognition. On Derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of Profit & Loss.

Impairment of financial Assets:

In accordance with Ind AS 109, the

company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of

impairment loss on the following financial assets and credit risk exposure:

â¢ FinancialAssets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance

â¢ FinancialAssets that are debt instruments and are measured at FVTOCI.

â¢ Lease receivables under Ind AS 17.

â¢ Trade receivables or any contractual right to receive cash or another financial asset

â¢ Loan commitments which are not measured at FVTPL

â¢ Financial guarantee contracts which are not measured at FVTPL

II) Financial Liability:

Initial recognition and measurement

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.

Financial Liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus

or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

â¢ Borrowings from banks

â¢ Borrowings from others

â¢ Trade payables

â¢ Other financial liabilities Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.

III. Derivative financial instrument and hedge accounting:

r) Taxes on Income:

Tax expense comprises of current and deferred tax.

I. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act.

II. Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is measured

based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

III. Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent it is reasonably certain that the Company will pay normal income tax during the specified period. Such asset is reviewed at each reporting date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

s) Provisions, Contingent Liabilities and Contingent Assets:

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. If effect of the time value of money is material, provisions are discounted using an appropriate discount rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance cost. Contingent Liabilities are not recognized but are disclosed in the notes.

t) Offsetting:

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

u) Earnings per share:

Basic earnings per share are computed using the weighted average number of equity shares outstanding during the period adjusted for treasury shares held. Diluted earnings per

share is computed using the weighted-average number of equity and dilutive equivalent shares outstanding during the period.

v) Exceptional Items:

Exceptional items refer to items of income or expense within the statement of profit and loss from ordinary activities which are nonrecurring and are of such size, nature or incidence that their separate disclosure is considered necessary to explain the performance of the Company.

1.2 Recent Indian Accounting Standards (Ind AS):Standards Issued But Not Yet EffectiveInd AS 16 - Proceeds before intended use

The amendments mainly prohibit an entity from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, an entity will recognise such sales proceeds and related cost in profit or loss. The Company does not expect the amendments to have any impact in its recognition of its property, plant and equipment in its financial statements.

Ind AS 37 - Onerous Contracts - Costs of Fulfilling a Contract

The amendments specify that that the ''cost of fulfilling'' a contract comprises the ''costs that relate

directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts. The amendment is essentially a clarification, and the Company does not expect the amendment to have any significant impact in its financial statements.

Ind AS 109 - Annual Improvements to Ind AS (2021)

The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to de recognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements

Ind AS 106 - Annual Improvements to Ind AS (2021)

The amendments remove the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion regarding the treatment of lease incentives that might arise because of how lease incentives were described in that illustration. The Company does not expect the amendment to have any significant impact in its financial statements.

Mar 31, 2018

Critical accounting Estimates and Judgments:

The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognised prospectively.

The areas involving critical estimates or judgments are:

- Measurement of defined benefit obligation (Note 1.1 (h))

- Estimation of Useful life of Property, plant and equipment and intangibles (Note 1.1(a))

- Recognition of deferred taxes (Note l.l(r))

- Estimation of impairment (Note 1.1(d))

- Estimation of provision and contingent liabilities (Note l.l(s))

- Business Combination (Note 1.1(e))

a) Property, Plant and Equipment & Depreciation:

i. Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

iii. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

iv Depreciation on Fixed Assets is provided on ascertain useful life of assets under Straight Line Method (SLM) prescribed in Schedule II of the Companies Act 2013, with exception of those assets whose useful life is ascertain by the management.

v. The Company follows the policy of charging depreciation on pro-rate basis on the assets acquired or disposed off during the year.

b) Intangible Assets:

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the assets can be measured reliably.

Intangible Assets are stated at cost less accumulated amortization. Cost includes only such expenditure that is directly attributable to making the asset ready for its intended use

Intangible assets are amortized over their useful life.

Intangible Assets include capitalized expenditure on filing and registration of any Drug Master File (DMF) or Abbreviated New Drug Application (ANDA) and compliance with regulatory procedures of the USFDA, in filing such DMF or ANDA, which are in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. The cost of each DMF/ANDA is amortized over its estimated useful life from the date on which the amount has been capitalized.

c) Research and Development:

All expenditure on research activities are recognized in the Profit and Loss Statement when incurred. expenditure on development activities are also recognized in the Profit and Loss Statement in the year such expenditure is incurred. However, development expenditure is capitalized only in cases where such costs can be measured reliably, the technological feasibility has been established in respect of the product or process for which costs are incurred, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset.

Payments to third parties that generally take the form of up-front payments and milestones for in-licensed product are capitalized. The Companyâs criteria for capitalization of such assets are consistent with the guidance given in paragraph 25 of Ind AS 38 (receipt of economic benefit out of the separately purchased transaction is considered to be probable).

Acquired research and development intangible assets that are under development are recognized as Intangible Assets under Development. These assets are not amortized, but evaluated for potential impairment on an annual basis or when there are indications that the carrying value may not be recoverable. Where a determination of impairment in respect of any such asset is made, the impairment of such asset is recognized in the Profit and Loss Statement in the year in which such determination is made. Where a determination is made to the effect that future economic benefits are probable, the total cost is capitalized in the year in which such determination is made.

Amortization of capitalized development expenditure is recognized on a straight-line basis, over the useful life of the asset

d) 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. An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable value being higher of value in use and fair value less cost of disposal. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

e) Business Combination and goodwill

The Company uses the acquisition method of accounting to account for business combinations. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.

The Company measures goodwill as of the applicable acquisition date at the fair value of the consideration transferred, including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount of the identifiable assets acquired and liabilities assumed.

Any goodwill that arises on account of such business combination is tested annually for impairment.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at fair value.

iii. Non-current investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature.

iv On disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss Account.

g) Inventory:

Inventories are valued at the lower of cost and net realisable value. The cost is determined on FIFO basis. Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

h) Employee Benefits:

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined Contribution plans

Defined benefit plans

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognised in Statement of Profit and Loss.

i) Cash and Cash Equivalent.

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.

Cash flow statement is prepared under the indirect method as per Ind As 7, For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits net of book overdraft.

j) Dividends to Shareholders:

Annual dividend distribution to the shareholders is recognised as a liability in the period in which the dividends are approved by the shareholders. Any interim dividend paid is recognised on approval by Board of Directors, dividend payable and corresponding tax on dividend distribution is recognised directly in other equity.

k) Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of Profit & Loss on a straight-line basis over the lease term.

l) Revenue Recognition:

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.

(i) Sale of products:

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, Amount disclosed as revenue are inclusive of excise duty, excluding goods and service tax (GST), sales tax or value added taxes or service taxes or duties collected on behalf of the government, and net off returns, trade discounts, rebates and any amount collected on behalf of third parties.

(ii) Development Revenue:

Development revenue are recognized over the time period of the development activity and are recognized on the completion of each mile-stones as per term of the agreement.

(iii) Recognition of Export Incentives:

Export benefit entitlements in respect of incentive schemes including Merchandise Export Incentive Scheme (MEIS) and Focus Product Scheme (FPS) of the Government of India are recognized in the period in which they are approved.

m) Other Income

i. Interest Income is recognized using the Effective interest rate (EIR) method.

ii. Dividend income is recognized when right to receive is established.

n) Foreign Currency Transactions/Translations: Initial Recognition

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

Translations

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized in the Statement of Profit and Loss in the period in which they arise as income or as expense.

(o) Government Grant

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.

Grants related to revenue items are presented as part of profit or loss under general heading such as other income.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

p) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

q) Financial Instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

(i) Financial Asset:

Initial recognition and measurement

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through P&L, transaction costs that are attributable to the acquisition of the financial asset, purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent Measurement

For the purpose of subsequent measurement financial assets are classified as measured at:

- Amortised cost

- Fair value through profit and loss (FVTPL)

- Fair value through other comprehensive income (FVOCI).

(a) Financial Asset measured at amortized cost

Financial Assets held within a business model whose objective is to hold financial assets 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 are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of Profit & Loss. The company while applying above criteria has classified the following at amortized cost:

- Trade receivables

- Investment in Subsidiaries

- Loans

- Other financial assets

(b) Financial Assets measured at fair value through other comprehensive income (FVTOCL)

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other c omprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to âother incomeâ in the Statement of Profit and Loss.

(c) Financial Assets at fair value through profit or loss (FVTPL)

Financial Assets are measured at Fair value through Profit & Loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of Profit & Loss.

Equity Instruments

All investments in equity instruments classified under financial assets are initially measured at fair value, the group may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

De-recognition of Financial Assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of Profit & Loss.

Impairment of Financial Assets:

In accordance with Ind AS 109, the company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

- Financial Assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance

- Financial Assets that are debt instruments and are measured at FVTOCI.

- Lease receivables under IndAS 17.

- Trade receivables or any contractual right to receive cash or another financial asset

- Loan commitments which are not measured at FVTPL

- Financial guarantee contracts which are not measured at FVTPL

(ii) Financial Liability:

Initial recognition and measurement

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement

Financial liabilities are subsequently measured at amortised cost using the EIR method, financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.

Financial Liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other Financial liabilities

Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.

(iii) Derivative financial instruments and hedge accounting

r) Taxes on Income

Tax expense comprises of current and deferred tax.

i. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act.

ii. Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

iii. Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss account as current tax. The Company recognizes MAT credit available as an asset to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss account and shown as âMAT Credit Entitlementâ.

s) Provisions, Contingent Liabilities and Contingent Assets.

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. If effect of the time value of money is material, provisions are discounted using an appropriate discount rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as finance Cost. Contingent Liabilities are not recognized but are disclosed in the notes.

t) Offsetting

u) Earning per share

Basic earnings per share are computed using the weighted average number of equity shares outstanding during the period adjusted for treasury shares held. Diluted earnings per share is computed using the weighted-average number of equity and dilutive equivalent shares outstanding during the period.

Mar 31, 2017

CORPORATE INFORMATION

Shilpa Medicare Limited (SML)is a listed Company engaged in the manufacturing of Bulk Drugs Intermediates/ API, Formulation and Product Development . Shilpa Medicare Limited (SML) started its operations as API manufacturer way back in 1987 at Raichur, Karnataka- India. The Company started its commercial production in November 1989. In November 1993, Shilpa Medicare Limited was converted into a Public Limited Company. The Company was listed on Bombay Stock Exchange on Jun 19, 1995 and National Stock Exchange (NSE) on Dec 03, 2009. Subsequently; Shilpa Medicare has gained World Health Organization-Good Manufacturing Practices (GMP) Certificate recognition

SML is presently dealing in high-quality Active Pharmaceutical Ingredients (APIs) Bulk drug, Intermediates, Formulations, New Drug Delivery Systems, Peptides / Biotech products and Specialty Chemicals etc. using sophisticated technology meticulously in order to comply with laid down international standards/specifications. Today SML is among the worldâs leading suppliers of Oncology/non- Oncology APIs and intermediates.

1. Basis of Preparation

i. These financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as specified under section 133 of the Companies Act 2013 read together with the Rule 4 of Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Amendment Rules 2016 to the extent applicable and the other relevant provisions of the Act, pronouncements of the regulatory bodies applicable to the Company.

ii. The financial statements for the year ended 31st March, 2016 and the opening Balance Sheet as at 1st April, 2015 have been restated in accordance with Ind AS for comparative information. The financial statements for the year ended on 31st March, 2017 are the first financial statement of the Company under Ind AS. In accordance of Ind AS 101, First time Adoption of Indian Accounting Standard, the Company has given an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance refer note C(2).

iii. The financial statements have been prepared on going concern and accrual basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1st April, 2015 being the âdate of transition to Ind ASâ.

The financial statements of the Company for the year ended March 31, 2017 were approved by the Board of Directors on 29/5/2017.

iv. The financial statements have been prepared to comply in all material aspects with applicable accounting principal in India and as notified under the Companies Act 2013 and the other relevant provisions of the Act.

v. The Ind AS Financial Statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities as specified and defined benefit plans which have been measured at actuarial valuation as required by relevant Ind AS.

1.1 Significant Accounting Policies

a) Critical accounting Estimates and Judgments:

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates. Revisions to accounting estimates are recognized prospectively.

The areas involving critical estimates or judgments are:

- Measurement of defined benefit obligation (Note 1.1 (h))

- Estimation of Useful life of Property, plant and equipment and intangibles (Note 1.1 (c)

- Recognition of deferred taxes (Note 1.1(o))

- Estimation of impairment (Note 1.1(e))

- Estimation of provision and contingent liabilities (Note 1.1(p))

b) Recent accounting developments

i. Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian

Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, âStatement of Cash Flowsâ and Ind AS 102, âShare-based payment.â These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, âStatement of Cash Flowsâ and IFRS 2, âShare based payment,â respectively. The amendments are applicable to the Company from April 1, 2017.

ii. Amendment to Ind-AS 7:

The amendment to Ind-AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. The Company is evaluating the requirements of the amendment and the effect on the financial statements is being evaluated.

iii. Amendment to Ind-AS 102

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market based performance conditions and non-vesting conditions are reflected in the âfair valuesâ, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement. The Company is evaluating the requirements of the amendment and the impact on the financial statements is being evaluated.

c) Property, Plant and Equipment & Depreciation:

i. Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.

iii. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

iv. Depreciation on Fixed Assets is provided on ascertain useful life of assets under Straight Line Method (SLM) prescribed in Schedule II of the Companies act-2013, with exception of those assets whose useful life is ascertain by the management.

v. The Company follows the policy of charging depreciation on pro-rate basis on the assets acquired or disposed off during the year.

vi. Transition to Ind AS:

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at April 1, 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.

d) Intangible Assets:

Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

Intangible assets are amortized over their useful life.

DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the USFDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. The cost of each DMF is amortized over itâs estimated useful life from the date on which the amount have been capitalized.

e) 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.

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable value being higher of value in use and fair value less cost of disposal. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

iii. Non-current investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature.

iv. On Disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss Account/.

g) Inventory:

Inventories are valued at the lower of cost and net realizable value. The cost is determined on FIFO basis. Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition.

h) Employee Benefits:

Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Defined Contribution plans

Defined benefit plans

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses and the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income (OCI). Net interest expense (income) on the net defined liability (assets) is computed by applying the discount rate, used to measure the net defined liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in Statement of Profit and Loss.

i) Leases

Operating Lease

Leases where the less or effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of Profit & Loss on a straight-line basis over the lease term.

j) Revenue Recognition:

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.

(i) Sale of products:

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is no continuing managerial involvement with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as Excise duty, Central sales tax and, Value added tax, etc.

(ii) Development Charges:

Development charges are earned over the time period of the development activity and are recognized on the basis of each mile-stones identified in the agreement

k) Other Income

i. Interest Income is recognized using the Effective interest rate (EIR) method.

ii. Dividend income is recognized when right to receive is established.

l) Foreign Currency Transactions/Translations:

Initial Recognition

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

Translations

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized in the Statement of Profit and Loss in the period in which they arise as income or as expense.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

n) Financial Instrument:

A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity.

(I) Financial Asset:

Initial recognition and measurement

All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit & loss account transaction costs that are attributable to the acquisition of the financial asset, purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place are recognized on the trade date i.e. the date that the company commits to purchase or sell the asset.

Subsequent Measurement

For the purpose of subsequent measurement financial assets are classified as measured at:

- Amortized cost

- Fair value through profit and loss (FVTPL)

- Fair value through other comprehensive income (FVOCI).

(a) Financial Asset measured at amortized cost

Financial Assets held within a business model whose objective is to hold financial assets 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 are measured at amortized cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the statement of Profit & Loss. The company while applying above criteria has classified the following at amortized cost:

(a) Trade receivables

(b) Investment in Subsidiaries

(d) Other financial assets

(b) Financial Assets Measured at fair value through other comprehensive income

Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity to âother incomeâ in the Statement of Profit and Loss.

Financial Asset are measured at fair value through Profit & Loss if it does not meet the criteria for classification as measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of Profit & Loss.

Equity Instruments

All investments in equity instruments classified under financial assets are initially measured at fair value , the group may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.

De-recognition of Financial Assets:

Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured on the date of recognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the statement of Profit & Loss account

Impairment of Financial Assets:

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model by adopting the simplified approach using a provision matrix reflecting current condition and forecasts of future economic conditions for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

(a) Financial Assets that are debt instruments, and are measured at amortized cost e.g. loans, debt securities, deposits, trade receivables and bank balance

(b) Financial Assets that are debt instruments and are measured at FVTOCI.

(d) Trade receivables or any contractual right to receive cash or another financial asset

(e) Loan commitments which are not measured at FVTPL

(f) Financial guarantee contracts which are not measured at FVTPL

(II) Financial Liability

Initial recognition and measurement

Financial liabilities are recognized initially at fair value plus any transaction cost that are attributable to the acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.

Subsequent measurement

Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.

Financial Liabilities at amortized cost:

Amortized cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount.

The company is classifying the following under amortized cost

- Borrowings from banks

- Borrowings from others

- Trade payables

- Other Financial Liabilities Derecognition:

A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.

(III) Derivative financial instruments and hedging

The Company uses derivative financial instruments, such as foreign exchange forward contracts, interest rate swaps and currency options to manage its exposure to interest rate and foreign exchange risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Changes in the fair value of these derivative financial instruments that are designated and effective as hedges of future cash flows are recognized directly in Other Comprehensive Income (OCI) and accumulated in âCross Currency Hedge Reserve Accountâ under Other Equity, net of a exchange difference arises from instatement of respective loan and applicable deferred income taxes and the ineffective portion is recognized immediately in the Statement of Profit and Loss. Amounts accumulated in the âCash Flow Hedge Reserve Accountâ are reclassified to the Statement of Profit and Loss in the same period during which the transaction affects Statement of Profit and Loss. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. The derivative financial instruments that are not designated as hedging instruments in hedge relationships as defined by Ind-AS 109 are classified as fair value through profit or loss.

o) Taxes on Income:

Tax expense comprises of current and deferred tax.

i. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act.

ii. Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

p) Provisions, Contingent Liabilities and Contingent Assets

A provision is recognized when the Company has a

present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. If effect of the time value of money is material, provisions are discounted using an appropriate discount rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Contingent Liabilities are not recognized but are disclosed in the notes.

q) Offsetting

r) Earnings per share

The Company presents basic and diluted earnings per share (âEPSâ) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes all stock options granted to employees.

s) Government Grant

The Company recognizes government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants received in relation to assets are presented in the balance sheet by setting up the grant as deferred income. Grants related to income are deducted in reporting the related expense in the statement of profit and loss.

2. First-time adoption of Ind AS

These financial statements, for the year ended 31 March

2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the company has prepared financial statements which comply with Ind AS applicable for periods ending on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1 April 2015, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016.

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind-AS 101, as explained below.

A. Mandatory Exceptions from retrospective application Estimates:

An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after accounting policies), unless there is an objective evidence that those estimates were in error.

Ind AS estimates as at 1 April, 2015 are consistent with the estimates as at same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

- Investments in equity instruments carried at FVTPL or FVTOCI

- Investments in debt instruments carried at FVTPL

- Impairment of financial assets based on expected credit loss model.

Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

B. Optional Exemptions from retrospective application

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date.

Business combinations occurring prior to the transition date have not been restated. The Company has applied same exemption for investment in associates and joint ventures.

Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

Accordingly, the company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value.

Investment in Subsidiaries, Associates & Joint Ventures

When an entity prepares Separate Financial Statements, Ind AS 27 requires it to account for its investments in subsidiaries, joint ventures and associate either at cost or in accordance with Ind AS 109.

The Company has elected to measure investment in subsidiaries, joint venture and associate at cost.

C. Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101

1. Reconciliation of Equity as at 1st April, 2015

2. Reconciliation of Equity as at 31st March, 2016

Notes to reconciliation of balance sheet as previously reported under IGAAP to Ind-AS

1. Property, Plant & Equipment, Non-current Asset

Leasehold land under Ind-AS is classified as operating lease, however under Indian GAAP, the same was considered as part of Property, Plant & Equipment.

2. Non-current Investment

Company has applied exemption in respect of Foreign Currency Translation Reserve as per appendix D of Ind AS 101 which states that the cumulative translation difference of all foreign operations are deemed to be zero at the date of transition to Ind-AS.

3. Current Investment

- Mutual funds - Under Previous GAAP, the mutual funds are measured at cost or market value, whichever is lower. Under Ind AS, the Company has designated these investments at fair value through profit or loss (FVTPL). Accordingly, these investments are required to be measured at fair value.

- At the date of transition to Ind AS, difference between the fair value of the instruments and its Previous GAAP carrying amount has been recognized in retained earnings. Fair value changes are recognized in the Statement of Profit and Loss for the year ended 31^st March, 2016.

4. Other Equity

Adjustments to retained earnings have been made in accordance with Ind-AS for the mentioned line items.

5. Other Financial Liability

- Under Ind AS, Derivative Instruments used for hedging is measured at fair value.

- Capital Subsidy received is treated as Capital Reserve in Indian GAAP. Under Ind AS, only income approach is allowed and the amount is to be transferred to Statement of Profit and loss over the period to match the fulfillment of the obligation.

6. Deferred Tax

Under Previous GAAP, deferred taxes were recognized for the tax effect of timing differences between accounting profit and taxable profit for the year using the income statement approach. Under Ind AS, deferred taxes are recognized using the balance sheet approach for future tax consequences of temporary differences between the carrying value of assets and liabilities and their respective tax bases. The above difference, together with the consequential tax impact of the other Ind AS transitional adjustments lead to temporary differences and deferred tax has been recognized on the same.

7. Provision

Under Previous GAAP, proposed dividends and related the dividend distribution tax are recognized as a provision in the year to which they relate, irrespective of when they are declared. Under Ind-AS, dividends and related dividend distribution tax are recognized as a liability in the year in which it is approved by the shareholders in the Annual General Meeting of the Company.

Explanation for reconciliation of profit as previously reported under IGAAP to Ind AS

1. Other Income

- Under Ind AS, the Investment is classified at Fair Value through Profit & Loss (FVPL). The adjustment reflect amount of change in value of investment measured at FVTPL.

- Capital Subsidy received is treated as part of Reserve & Surplus in Indian GAAP.Under Ind AS, only Income Approach is allowed and the amount is to be transferred to PL over the period in the ratio of fulfillment of the obligation.

2. Employee benefit expenses

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to the statement of profit and loss. Under Ind AS, measurements (comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

3. Other expenses

Leasehold land under Ind AS is classified as operating lease and hence the lease rentals for the period are charged to the Statement of profit and loss.

4. Deferred Tax

The Ind AS adjustments lead to temporary differences and deferred tax has been recognized on the amount of impact due to transition to Ind AS.

13(b) Rights, Preferences and restrictions attached to each class of Shares:

Equity Shares:

The Company has only one class of equity shares having par value of Re .1/- per share. Each holder of equity shares is entitle to one vote per share.

The Board of Directors have declared and paid interim dividend of Re.0.60 (P.Y 0.60) per equity of face value of Re.1/- per share.

In the event of liquidation, the holders of equity are entitled to receive the remaining assets of the Company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds, ETFs and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

Valuation technique used to determine fair value:

1. The use of quoted market prices or dealer quotes for similar instruments.

2. The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves.

3. The fair value of forward foreign exchange contracts and principal swap is determined using forward exchange rates at the balance sheet date.

i4. Financial Risk Management

The Company activities expose it to a variety of financial risks such as Market Risk, Credit Risk and Liquidity Risk. The company''s focuses on minimizing potential adverse effect on its financial performance.

A Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The changes in the values of financial assets/liability may result from change in the foreign currency exchange rates (Foreign Currency Risk), change in interest rates (Cash flow & interest rate risk), and change in price of investments (Price Risk).

(i) Foreign Currency Risk

The Company operates internationally and a major portion of the business is transacted in USD, EURO & GBP currencies and consequently,the Company is exposed to foreign exchange risk through operating and borrowing activities in foreign currency. The Company holds derivative instruments such as foreign exchange forward, interest rate swaps and option contracts to mitigate the risk of changes in exchange rates and foreign currency exposure.

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of the financial instruments will fluctuate because of changes in market interest rates. In order to optimize the Companyâs position with regards to interest expenses/ income and to manage the interest rate risk, the Company weighted average balance manage its interest rate risk by having portfolio of fixed / variable interest rate on long / short term borrowings. The analysis is prepared assuming the amount of liability outstanding at the ending of the reporting period is the average weighted balance of the respective reporting period.

According to the Company interest rate risk exposure is only for floating rate borrowings, change in 0.5% in the interest rate component applicable to the short term borrowings would affect the Companies net profit before tax at the end of the reporting period year ended March 31, 2017 and March 31, 2016, respectively.

Note: 1) ECB loan availed during the reporting period are hedged with the SCB bank, hence no interest rate risk is involve in ECB.

2) Interest on term loan from HSBC availed during the reporting period is not considered for interest rate risk as interest on such term loan is capitalized till the assets are put to use and not charged to profit & loss account.

(iii) Price Risk

The groupâs exposure to equity securities price risk arises from investments held by the group and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss. âTo manage its price risk arising from investments in equity securities, the group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the group.

Sensitivity analysis

Sensitivity analysis of 1% change in price of security as on reporting date

(B) Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises from its operation activity primarly from trade receivable and from its financial activity. Customer credit risk is controlee by analysis of credit limit and credit worthiness of the customer on a continuous basis to whom the credit has been granted

Long outstanding receivable from customer are regularly monitored and transaction with such customer are covered under letter of credit The maximum exposure to credit risk at the reporting date is the carrying value of trade and other receivable. Two customer are accounted for more than 10% of the trade receivable as of 31st March ,17 and

2016, since the Company is dealing with both the customer from past several years, hence there is no significant risk in dealing with said customers.

(C) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations of its financial liability. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for making liability when they are due, under normal and stressed condition without incurring losses and risk.

The present available working capital facility is sufficient to meet its current requirement. Accordingly no liquidity risk is perceived. In addition, the Company maintains the following line of credit facility.

Mar 31, 2016

CORPORATE INFORMATION

Shilpa Medicare Limited is a listed Company engaged in the manufacturing of Bulk Drugs/API & Intermediates. Shilpa Medicare Limited (SML) started its operations as API manufacturer way back in 1987 at Raichur, Karnataka- India. The commercial production in the SML was started in November 1989. In November 1993, Shilpa Medicare was converted into a Public Limited Company. The Company was listed on Bombay Stock Exchange on Jun 19, 1995 and National Stock Exchange (NSE) on Dec 03, 2009. Subsequently; Shilpa Medicare has gained World Health Organization-Good Manufacturing Practices (GMP) Certificate recognition

SML is presently dealing in high-quality Active Pharmaceutical Ingredients (APIs), Intermediates, Formulations, New Drug Delivery Systems, Peptides / Biotech products and Specialty Chemicals etc. using sophisticated technology meticulously in order to comply with laid down international standards/ specifications. Today SML is among the world''s leading suppliers of Oncology/non-Oncology APIs and intermediates.

1. Basis of Preparation

The financial statements have been prepared to comply in all material aspects with applicable accounting principal in India and as notified under the Companies Act 2013 and the other relevant provisions of the Act. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

1.1 Significant Accounting Policies

a) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2016, as per the revised schedule VI notified under the Companies Act 2013. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year where ever required.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the USFDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the amount have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on ascertain useful life of assets under Straight Line Method (SLM) prescribed in Schedule II of the Companies Act, 2013, with exception of those assets whose useful life is ascertain by the management.

ii. Intangible assets are amortized over their useful life/period of ten years.

iii. The Company follows the policy of charging depreciation on pro-rate basis on the assets acquired or disposed off during the year.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

iii. Non-current investments are stated at cost and provision for diminution is made if the decline in value is other than temporary in nature.

iv. On Disposal of an investment, the difference between its carrying amount and the net disposal proceeds is charged or credited to the Statement of Profit and Loss Account/.

g) Inventory:

i. Raw-Materials, Stores & Spares and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress are valued at estimated cost.

iii. Finished goods are valued at estimated cost or net realizable value whichever is lower.

iv. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight- line basis over the lease term.

j) Revenue Recognition:

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.

(i) Sale of products:

Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

(ii) Development Charges:

Development charges are earned over the time period of the development activity and are recognized on the basis of each mile-stones identified in the agreement

k) Other Income

i. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

ii. Dividend income is recognized when right to receive is established.

l) Foreign Currency Transactions:

Initial Recognition

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of the Transaction.

Conversion

Foreign currency monetary Items are reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or as expense for revenue items and are capitalized/transferred to Foreign Currency Monetary Item Translation Difference Account (FCTR) in case of Investments in subsidiaries respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense in the year of payment.

o) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss account as current tax. The Company recognizes MAT credit available as an asset to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss account and shown as "MAT Credit Entitlement".

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.

Mar 31, 2014

Basis of Preparation

The financial statements have been prepared to comply with all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and as notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis. The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

The Accounting policies adopted in the presentation of financial statements are consistent with those of previous year.

a) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2014,as per the revised schedule VI notified under the Companies Act 1956. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the US FDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the expenses have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of India.

ii. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores, and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Revenue Recognition:

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.

(i) Sale of products:

Revenue from sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

(ii) Development Charges:

Development charges are earned over the time period of the development activity and are recognized on the basis of each mile-stones identified in the agreement

k) Other Income

i. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

ii. Dividend income is recognized when right to receive is established. l) Foreign Currency Transactions:

Initial Recognition

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the Transaction.

Conversion

Foreign currency monetary Items are reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

o) Taxes on Income:

Tax expense comprises of Current and Deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss account as current tax. The Company recognizes MAT credit available as an asset to the extent that there is a convincing evidence that the Company will pay normal income tax during the specified period i.e, the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss account and shown as "MAT Credit Entitlement".

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.

Mar 31, 2013

A) Presentation and disclosure of financial statements

The Company has presented its financial statements for the year ended March 31, 2013,as per the revised schedule VI notified under the Companies Act 1956. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

iii. DMF costs represent expenses incurred on development of processes and compliance with regulatory procedures of the US FDA, in filing Drug Master Files (DMF), in respect of products for which commercial value has been established by virtue of third party agreements/arrangements. This is in accordance with the requirements of Accounting Standard 26.

The cost of each DMF is amortized over a period of ten years from the date on which the expenses have been capitalized.

d) Depreciation:

i. Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of India.

ii. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores and Packing Materials are valued at cost Â Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases

Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Revenue Recognition:

Revenue is recognized only when it can be reliably measured and it is reasonable to expect ultimate collection. Revenue from operations includes sale of goods. Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements/ Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

k) Other Income

i. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

ii. Dividend income is recognized when right to receive is established.

l) Foreign Currency Transactions:

Initial Recognition

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the Transaction.

Conversion

Foreign currency monetary items are reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Borrowing Costs

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to Profit and Loss account. Further, interest earned out of borrowed funds from temporary investments is reduced from the borrowing cost.

n) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

o) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss account as current tax. The Company recognizes MAT credit available as an asset to the extent that there is a convincing evidence that the Company will pay normal income tax during the specified period i.e, the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss account and shown as "MAT Credit Entitlement".

p) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the notes.

Mar 31, 2012

A) Presentation and disclosure of financial statements :

During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The Company has reclassified the previous year figures in accordance with the requirements applicable in the current year in view of the revised schedule VI.

b) Use of Estimates :

The preparation of financial statements requires estimates and assumptions to be made that effect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

c) Fixed Assets:

i. Tangible Assets are stated at cost less accumulated depreciation and impairment losses if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

ii. Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

d) Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies Act 1956 of India. Intangible assets are amortized over their useful life/ a period of ten years.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

f) Investments:

i. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

ii. Current investments are stated at lower of cost and fair value.

g) Inventory:

i. Raw-Materials, Stores and Packing Materials are valued at cost - Cost is determined on FIFO basis.

ii. Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower.

iii. Provision for obsolescence if any, is made, wherever necessary.

h) Employee Benefits:

Provident Fund

Contribution towards Provident Fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution schemes as the Company does not carry any further obligations, apart from the Contributions made on a monthly basis.

Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each year. The Company funds the benefit through contributions to LIC. The Company recognizes the actuarial gains & losses in the statement of profit & loss in the period in which they arise.

i) Leases Operating Lease

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement Profit & Loss on a straight-line basis over the lease term.

j) Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements/ Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

k) Other Income

Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable.

l) Foreign Currency Transactions:

Initial Recognition

Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the Transaction.

Conversion

Foreign currency monetary Items are reinstated using the exchange rate prevailing at the reporting date.

Exchange Differences

The exchange difference arising on the settlement of monetary items or on reporting Company''s monetary items at rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or as expense for revenue items and are capitalized / transferred to Foreign Currency Monetary Item Translation Difference Account in case of Long Term Loans / Investments respectively.

m) Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract if any, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

n) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Tax Act. Deferred income taxes reflect the impact of current period timing differences between taxable income and accounting income for the period. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future income will be available against which such deferred tax assets can be realized.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss account as current tax. The Company recognizes MAT credit available as an asset to the extent that there is a convincing evidence that the Company will pay normal income tax during the specified period i.e, the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss account and shown as "MAT Credit Entitlement".

b) Rights, Preferences and restrictions attached to each class of Shares:

Equity Shares: The Company has one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(e) On 22.03.2012, 500,000 equity shares of Face value of Rs.2/- each were issued at a premium of Rs.348/- per share upon conversion of share warrants which were issued by the Company in the year 2010-2011.

Mar 31, 2011

Basis of preparation of financial statements:

(a) The financial statements are prepared on historical cost convention and on the presumption of going concern in accordance with generally accepted accounting principles in India the applicable mandatory Accounting Standards and the relevant provisions of the Companies Act, 1956 of India adopted consistently by the Company.

(b) The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

Use of Estimates :

The preparation of financial statements in conformity with generally accounting principles requires management to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the said reporting period. Although these estimates are based upon management's best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

Fixed Assets:

a) Tangible Assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

b) Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies Act, 1956 of India. Intangible assets are amortized over their useful life/ a period of ten years.

Impairment:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

Investments:

a. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

b. Current investments are stated at lower of cost and fair value.

Inventory:

a) Raw-Materials, Stores and Packing Materials are valued at cost Ã Cost is determined on FIFO basis.

b) Work-in-progress & finished goods are valued at estimated cost or net realizable value whichever is lower.

Employee Benefits:

Employee benefits of short term nature are recognized as expenses as and when it accrues. Long Term employee benefits/ post employment benefits (e.g. gratuity), both funded and non-funded, are recognized as expense based on actuarial valuation at year end which takes into account actuarial gains and losses.

Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements / Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

Foreign Currency Transactions:

Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. The exchange difference arising out of these transactions are dealt in profit and loss account.

Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fl uctuation. In respect of transactions covered by Forward Exchange Contract, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

Taxes on Income:

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is provided in conformity with Accounting Standard-22 issued by the Institute of Chartered Accountants of India based on the timing difference between the accounting income and the taxable income.

Mar 31, 2010

Basis of preparation of financial statements:

(a) The financial statements are prepared on historical cost convention and on the presumption of going concern in accordance with generally accepted accounting principles in India and the applicable mandatory Accounting Standards and the relevant provisions of the Companies Act, 1956 of India as adopted consistently by the Company.

(b) The Company generally follows mercantile system of accounting and recognizes all the income and expenditure on accrual basis.

Use of Estimates

The preparation of financial statements in conformity with generally accounting principles requires management to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the said reporting period. Although these estimates are based upon managements best knowledge of current events and actions, actual results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

Fixed Assets:

a) Tangible Assets are stated at cost less accumulated depreciation and impairment loss if any. Cost comprises of purchase price and any attributable cost of bringing the assets to its working condition for its intended use.

b) Intangible Assets are stated at cost less accumulated amortization. Cost includes any expenditure directly attributable on making the asset ready for its intended use.

Depreciation:

Depreciation on Fixed Assets is provided on straight line method as prescribed in Schedule XIV of the Companies act 1956 of

India. Intangible assets are amortized over their useful life/ a period of ten years.

Impairment:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value being higher of value in use and net selling price. Value in use is computed at net present value of cash flow expected over the balance useful life of the assets. An impairment loss is recognized as an expense in the Profit and Loss Account in the year in which an asset is identified as impaired.

Investments:

a. Long Term Investments are carried at cost after deducting provision, if any, for diminution in value considered being other than temporary in nature.

b. Current investments are stated at lower of cost and fair value. Inventory:

a) Raw-Materials, Stores and Packing Materials are valued at cost - Cost is determined on FIFO basis.

b) Work-in-progress & Finished goods are valued at estimated cost or net realizable value whichever is lower. Employee Benefits:

Employee benefits of short term nature are recognized as expenses as and when it accrues. Long Term employee benefits/ post employment benefits (e.g. gratuity), both funded and non-funded, are recognized as expense based on actuarial valuation at year end which takes into account actuarial gains and losses.

Sales and Purchases:

Sales and Purchases are accounted net of returns basis. Sales include Export Entitlements / Benefits. Export entitlements are accounted on accrual basis at realizable value or entitlement value whichever is less.

Foreign Currency Transactions:

Transactions in foreign exchange are accounted at the exchange rate prevailing on the date of transaction. The exchange difference arising out of these transactions are dealt in profit and loss account.

Derivative Instruments:

The Company uses derivative financial instrument such as forward contract to hedge its risk associated with foreign currency fluctuation. In respect of transactions covered by Forward Exchange Contract, the difference between the forward rate and the exchange rate at inception of contract is recognized as income or expense over the life of the contract.

Taxes on Income:

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is provided in conformity with Accounting Standard-22 issued by the Institute of Chartered Accountants of India based on the timing difference between the accounting income and the taxable income.

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