Accounting Policies of Cohance Lifesciences Ltd. Company

Mar 31, 2025

Note 2 - Material accounting policies and key
accounting estimates and judgements

2.1 Basis of preparation

(i) Compliance with Indian Accounting Standards (Ind AS)

The standalone financial statements comply in all material
aspects with Indian Accounting Standards (Ind AS)

notified under Section 133 of the Companies Act, 2013
(the Act), The Companies (Indian Accounting Standards)
Rules, 2015, and presentation requirements of Division II
of Schedule III to the Companies Act, 2013 as amended
from time to time and other relevant provisions of the Act
and accounting principles generally accepted in India.

These Standalone financial statements have been
prepared by the Company on a going concern basis.

(ii) Basis of measurement

The Standalone financial statement has been prepared
on a historical cost basis and on accrual basis, except for
the following:

â¢ Financial assets and liabilities are measured at fair
value or at amortised cost depending on classification;

â¢ Derivative financial instruments are measured
at fair value;

â¢ Defined benefit plans - plan assets measured
at fair value.

â¢ Share based payments - measured at fair value; and

â¢ Lease liability and Right-of-use assets- measured
at fair value.

(iii) Consistency of accounting policy

The accounting policies are applied consistently to all the
periods presented in the Standalone financial statement,
except where a newly issued accounting standard is
initially adopted or a revision to an existing standard
requires a change in the accounting policy hitherto in use.

(iv) Functional currency and rounding of amounts

The Standalone financial statements are presented in
Indian Rupee (C) which is also the functional currency of
the Company. All amounts disclosed in the standalone
financial statements and notes have been rounded-
off to the nearest Crores or decimal thereof as per the
requirement of Schedule III, unless otherwise stated.

2.2 Current and non-current classification

All assets and liabilities have been classified as current and
non-current as per the Company''s normal operating cycle and
other criteria set out in the Schedule III of the Act and Ind AS 1,
Presentation of Financial Statements.

Assets:

An asset is classified as current when it satisfies any of the
following criteria:

a) it is expected to be realised in, or is intended for
sale or consumption in, the Company''s normal
operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realised within twelve months
after the reporting date; or

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

Liabilities:

A liability is classified as current when it satisfies any of the
following criteria;

a) it is expected to be settled in the Company''s normal
operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within twelve months after the
reporting date; or

d) the Company does not have an unconditional right
to defer settlement of the liability for at least twelve
months after the reporting date. Terms of a liability
that could, at the option of the counterparty, result
in its settlement by the issue of equity instruments
do not affect its classification.

Current assets and liabilities include the current portion
of assets and liabilities, respectively. All other assets and
liabilities are classified as non-current. Deferred tax assets
and liabilities are always disclosed as non-current.

2.3 Use of estimates and judgements

The preparation of Standalone financial statement requires
management of the Company to make judgements, estimates
and assumptions that affect the reported assets and liabilities,
revenue and expenses and disclosures relating to contingent
liabilities. Management believes that the estimates used in the
preparation of the Standalone financial statements are prudent
and reasonable. Estimates and underlying assumptions are

reviewed by management at each reporting date. Actual
results could differ from these estimates. Any revision of
these estimates is recognised prospectively in the current and
future periods.

Following are the critical judgements and estimates:

2.3.1 Judgements

(i) Leases

Ind AS 116 - Leases requires lessees to determine the lease
term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the
use of such option is reasonably certain. The Company
makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or
terminate the contract will be exercised. In evaluating
the lease term, the Company considers factors such as
any significant leasehold improvements undertaken
over the lease term, costs relating to the termination of
the lease and the importance of the underlying asset to
Company''s operations taking into account the location
of the underlying asset and the availability of suitable
alternatives. The lease term in future periods is reassessed
to ensure that the lease term reflects the current economic
circumstances.

(ii) Income taxes

Significant judgements are involved in determining
the provision for income taxes including judgement on
whether tax positions are probable of being sustained in
tax assessments. A tax assessment can involve complex
issues, which can only be resolved over extended time
periods. The recognition of taxes that are subject to certain
legal or economic limits or uncertainties is assessed
individually by management based on the specific facts
and circumstances.

In assessing the realisability of deferred tax assets,
management considers whether some portion or all of
the deferred tax assets will not be realised. The ultimate
realisation of deferred tax assets is dependent upon the
generation of future taxable income during the periods
in which the temporary differences become deductible.
Management considers the scheduled reversals of deferred
income tax liabilities, projected future taxable income and

tax planning strategies in making this assessment. Based
on the level of historical taxable income and projections
for future taxable income over the periods in which the
deferred income tax assets are deductible, management
believes that the company will realise the benefits of
those deductible differences. The amount of the deferred
income tax assets considered realisable, however, could
be reduced in the near term if estimates of future taxable
income during the carry forward period are reduced.

(iii) Provisions and contingent liabilities

The Company exercises judgement in measuring and
recognising provisions and the exposures to contingent
liabilities related to pending litigation or other
outstanding claims subject to negotiated settlement,
mediation, government regulation, as well as other
contingent liabilities. Judgement is necessary in assessing
the likelihood that a pending claim will succeed, or a
liability will arise, and to quantify the possible range of the
financial settlement. Because of the inherent uncertainty
in this evaluation process, actual losses may be different
from the originally estimated provision. Provisions are
reviewed at each balance sheet date and adjusted to
reflect the current best estimate. If it is no longer probable
that the outflow of resources would be required to settle
the obligation, the provision is reversed.

2.3.2 Estimates

(i) Useful lives of property, plant and equipment and
intangible assets

Property, plant and equipment, and intangibles assets
represent a significant proportion of the asset base of the
Company. The charge in respect of periodic depreciation
is derived after determining an estimate of an asset''s
expected useful life and the expected residual value at
the end of its life. The useful lives and residual values of
Company''s assets are determined by the management at
the time the asset is acquired and reviewed periodically,
including at each financial year/period end. The lives are
based on historical experience with similar assets as well
as anticipation of future events, which may impact their
life, such as changes in technology.

(ii) Inventories obsolescence

The factors that the Company considers in determining
the provision for slow moving, obsolete and other nonÂ¬
saleable inventory include estimated shelf life, planned
product discontinuances, price changes, ageing of
inventory and introduction of competitive new products,
to the extent each of these factors impact the Company''s
business and markets. The Company considers all these
factors and adjusts the inventory obsolescence to reflect
its actual experience on a periodic basis.

(iii) Accounting for defined benefit plans

In accounting for post-retirement benefits, several
statistical and other factors that attempt to anticipate
future events are used to calculate plan expenses
and liabilities. These factors include expected return
on plan assets, discount rate assumptions and rate
of future compensation increases. To estimate these
factors, actuarial consultants also use estimates such as
withdrawal, turnover, and mortality rates which require
significant judgement. The actuarial assumptions used
by the Company may differ materially from actual
results in future periods due to changing market and
economic conditions, regulatory events, judicial rulings,
higher or lower withdrawal rates, or longer or shorter
participant life spans.

(iv) Impairment of non-financial assets

An impairment loss is recognised for the amount by
which an asset''s or cash-generating unit''s carrying
amount exceeds its recoverable amount. To determine the
recoverable amount, management estimates expected
future cash flows from each asset or cash generating unit
and determines a suitable interest rate in order to calculate
the present value of those cash flows. In the process of
measuring expected future cash flows, management
makes assumptions about future operating results. These
assumptions relate to future events and circumstances.
The actual results may vary and may cause significant
adjustments to the Company''s assets.

In most cases, determining the applicable discount rate
involves estimating the appropriate adjustment to market
risk and the appropriate adjustment to asset-specific
risk factors.

(v) Fair value of financial instruments

Management uses valuation techniques in measuring the
fair value of financial instruments where active market
quotes are not available. Details of the assumptions

used are given in the notes regarding financial assets
and liabilities. In applying the valuation techniques,
management makes maximum use of market inputs and
uses estimates and assumptions that are, as far as possible,
consistent with observable data that market participants
would use in pricing the instrument. Where applicable
data is not observable, management uses its best estimate
about the assumptions that market participants would
make. These estimates may vary from the actual prices
that would be achieved in an arm''s length transaction at
the reporting date.

2.4 Property, plant and equipment

(i) Recognition and measurement

All items of property, plant and equipment, including
freehold land, are initially recorded at cost.

Cost of property, plant and equipment comprises
purchase price, non-refundable taxes, levies, and any
directly attributable cost of bringing the asset to its
working condition for the intended use.

Such cost includes the cost of replacing part of the
plant and equipment and borrowing costs for longÂ¬
term construction projects if the recognition criteria
are met. When significant parts of plant and equipment
are required to be replaced at intervals, the Company
depreciates them separately based on their specific useful
lives. Likewise, when a major inspection is performed, its
cost is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are
recognised in statement of profit and loss as incurred.

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

Subsequent to initial recognition, property, plant and
equipment other than freehold land are measured at
cost less accumulated depreciation and any accumulated
impairment losses.

The carrying values of property, plant and equipment
are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be
recoverable.

Advances paid towards the acquisition of property, plant
and equipment outstanding at each reporting date is
disclosed as capital advance under non-current assets.

Capital work-in-progress included in non-current assets
comprises of direct costs, related incidental expenses
and attributable interest. Capital work-in-progress are not
depreciated as these assets are not yet available for use.

(ii) Depreciation

Freehold land has an unlimited useful life and therefore is
not depreciated.

Depreciation on the property, plant and equipment
(other than freehold land) is provided based on useful
life of the assets as estimated by the management.
Depreciation on property, plant and equipment, which
are added / disposed-off during the year, is provided on
pro-rata basis with reference to the month of addition/
deletion, in the statement of profit and loss. Depreciation
on Property, Plant and Equipment is provided using
straight line method over the lives of the assets. Lease
hold improvement is being amortised over the period of
lease agreement.

The Company, based on technical assessment and
management estimate, depreciates certain items of
property, plant and equipment over estimated useful
lives which are different from the useful life prescribed
in Schedule II to the Act. The Management believes
that these estimated useful lives are realistic and reflect
fair approximation of the period over which the assets
are likely to be used. The Company has estimated the
following useful lives to provide depreciation on its
property, plant and equipment.

The estimated useful lives are as follows:

The residual values, useful lives and methods of
depreciation of property, plant and equipment are

reviewed at each financial year end and, if expectations
differ from previous estimates, the change(s) are
accounted for as a change in an accounting estimate in
accordance with Ind AS 8 - Accounting Policies, Changes
in Accounting Estimates and Errors.

(iii) De-recognition

An item of property, plant and equipment, is deÂ¬
recognised upon disposal or when no future economic
benefits are expected from its use or disposal. Any gain or
loss arising on de-recognition of the asset (calculated as
the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement
of profit and loss.

2.5 Intangible assets

(i) Recognition and measurement

Intangible assets acquired separately are measured on
initial recognition at cost.

Following initial recognition of the asset, the asset is
carried at cost less any accumulated amortisation and
accumulated impairment losses. Amortisation of the asset
begins when the asset is available for use. It is amortised
over the estimated useful lives of the assets or any other
basis that reflect the period of expected future benefit.

Subsequent expenditures are capitalised only when they
increase the future economic benefits embodied in the
specific asset to which they relate.

Capital expenditure on research and development is
capitalized. Revenue expenditure is charged off in the year
in which it is incurred.

(ii) Amortisation

All finite-lived intangible assets are accounted for using
the cost model whereby capitalised costs are amortised
on a straight-line basis over their estimated useful lives.
The management has estimated the useful lives of the
intangible assets as 3 to 10 years.

Amortisation expense is recognised in the statement
of profit and loss unless such expenditure forms part of
carrying value of another asset. The amortisation period
and method are reviewed at each reporting date.

(iii) De-recognition

Intangible assets are de-recognised either on their disposal
or where no future economic benefits are expected from
their use. Losses arising on such de-recognition are
recorded in the profit or loss and are measured as the
difference between the net disposal proceeds, if any, and
the carrying amount of respective intangible assets as at
the date of de-recognition.

2.6 Impairment of non-financial assets

The Company assesses at each reporting date, whether there
is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Company estimates the asset''s recoverable
amount. An asset''s recoverable amount is the higher of an
asset''s cash-generating unit''s (CGU) fair value less costs of
disposal and its value in use. Recoverable amount is determined
for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets
or Company''s of assets. When the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. NonÂ¬
financial assets other than goodwill that suffered an impairment
are reviewed for possible reversal of the impairment at the end
of each reporting period.

Impairment losses, including impairment on inventories, are
recognised in the standalone statement of profit and loss.

2.7 Borrowing costs

Borrowing costs consists of interest, ancillary costs and other
costs in connection with the borrowing of funds and exchange
differences arising from foreign currency borrowings to the
extent they are regarded as an adjustment to interest costs.

Borrowing costs attributable to acquisition and/or construction
of qualifying assets are capitalised as a part of the cost of such
assets, up to the date such assets are ready for their intended
use. Other borrowing costs are charged to the statement of
profit and loss.

2.8 Foreign currency transactions and balances

Transactions in foreign currencies are translated to the
functional currency of the Company at exchange rates at the
dates of the transactions. Foreign exchange gains and losses

resulting from the settlement of such transactions and from the
translation of monetary items denominated in foreign currency
at prevailing reporting date exchange rates are recognised in
statement of profit and loss. Non-monetary items are measured
at historical cost (translated using the exchange rates at the
transaction date), except for non-monetary items measured at
fair value which are translated using the exchange rates at the
date when fair value was determined.

2.9 Inventories

Inventories consists of raw materials and packing materials,
stores, spares and consumables, work-in-progress and finished
goods and are measured at the lower of cost and net realizable
value after providing for obsolescence, if any.

Cost of inventories is determined on a weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
costs necessary to make the sale.

Cost includes expenditures incurred in acquiring the
inventories, production or conversion costs and other costs
incurred in bringing them to their existing location and
condition. In the case of finished goods and work-in-progress,
cost includes an appropriate share of overheads based on
normal operating capacity.

Raw materials, components and other supplies held for use
in the production of finished products are not written down
below cost except in cases where material prices have declined
and it is estimated that the cost of the finished products will
exceed their net realisable value.

Stores and spares are inventories that do not qualify to be
recognised as property, plant and equipment and consists of
consumables, engineering spares (such as machinery spare
parts), which are used in operating machines or consumed as
indirect materials in the manufacturing process.

2.10 Government grants

Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to
an asset, it is recognised as income in equal amounts over the
expected useful life of the related asset and presented within
other income.

When loans or similar assistance are provided by the
government or related institutions, with an interest rate below
the current applicable market rate, the effect of this favourable
interest is regarded as a government grant.

The loan or assistance is initially recognised and measured at fair
value and the government grant is measured as the difference
between initial carrying value of the loan and the proceeds
received. The loan is subsequently measured at amortised cost.

Export entitlement from government authorities is recognised
in the statement of profit and loss as other operating revenue
when the right to receive is established as per the terms of
the scheme in respect of the exports made by the Company
with no future related cost and where there is no significant
uncertainty regarding the ultimate collection of the relevant
export proceeds.

2.11 Revenue recognition

A contract with a customer exists only when: the parties to the
contract have approved it and are committed to perform their
respective obligations, the Company can identify each party''s
rights regarding the distinct goods or services to be transferred
("performance obligations"), the Company can determine the
transaction price for the goods or services to be transferred,
the contract has commercial substance and it is probable that
the Company will collect the consideration to which it will
be entitled in exchange for the goods or services that will be
transferred to the customer.

The Company has concluded that it is the principal in all its
revenue arrangements since it is the primary obligor in all the
revenue arrangements as it has pricing latitude and is also
exposed to inventory and credit risks.

Revenues are recorded in the amount of consideration to
which the Company expects to be entitled in exchange for
performance obligations upon transfer of control to the
customer and is measured at the amount of transaction price net
of returns, sales tax and applicable trade discounts, allowances,
Goods and Services Tax (GST) and amounts collected on behalf
of third parties. As the period of time between customer
payment and performance will always be one year or less, the
Company applies the practical expedient in Ind AS 115.63 and
does not adjust the promised amount of consideration for the
effects of financing.

The specific recognition criteria described below must also be
met before revenue is recognised:

Sale of products

Revenue from sale of goods is recognised when a promise
in a customer contract (performance obligation) has been
satisfied by transferring control over the promised goods to the
customer. Control is usually transferred upon shipment, delivery
to, upon receipt of goods by the customer, in accordance with
the delivery and acceptance terms agreed with the customers.
The amount of revenue to be recognised is based on the
transaction price, excluding trade discounts, volume discounts,
sales returns and any taxes or duties collected on behalf of
the government which are levied on sales such as goods and
services tax, etc., where applicable. Any additional amounts
based on terms of agreement entered with customers, is
recognised in the period when the collectability becomes
probable and a reliable measure of the same is available.

In arriving at the transaction price, the Company considers the
terms of the contract with the customers and its customary
business practices. The transaction price is the amount of
consideration the Company is entitled to receive in exchange
for transferring promised goods or services, excluding amounts
collected on behalf of third parties. The amount of consideration
varies because of certain estimated and actual deductions
by customers which are considered to be key estimates. Any
amount of variable consideration is recognised as revenue only
to the extent that it is highly probable that a significant reversal
will not occur. The Company estimates the amount of variable
consideration using the expected value method.

Service income

Revenue from services rendered is recognised in the standalone
statement of profit and loss as the underlying services are
performed. Upfront non-refundable payments received under
these arrangements are deferred and recognised as revenue
over the expected period over which the related services are
expected to be performed.

Profit sharing revenue

The Company from time to time enters into marketing
arrangements with certain business partners for the sale of
its products in certain markets. Under such arrangements,
the Company sells its products to the business partners at

a non-refundable base purchase price agreed upon in the
arrangement and is also entitled to a profit share which is over
and above the base purchase price. The profit share is typically
dependent on the business partner''s ultimate net sale proceeds
or net profits, subject to any reductions or adjustments that are
required by the terms of the arrangement. Such arrangements
typically require the business partner to provide confirmation
of units sold and net sales or net profit computations for the
products covered under the arrangement

Revenue in an amount equal to the base sale price is recognised
in these transactions upon delivery of products to the business
partners. An additional amount representing the profit share
component is recognised as revenue only to the extent that it is
highly probable that a significant reversal will not occur.

Other income (interest income and Others)

a) Interest income

Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on a time basis, by
reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that discounts
estimated future cash receipts through the expected life
of the financial asset to that asset''s net carrying amount
on initial recognition.

b) Dividends

Dividend income from the investments is recognised
when the right to receive payment has been established,
provided that it is probable that the economic benefits
will flow to the Company and the amount of income can
be measured reliably.

c) Others (other than interest and dividend income)

Other Income consists of Facility charges and miscellaneous
income and is recognised when it is probable that the
economic benefits will flow to the Company and amount
of income can be measured reliably.

Contract balances
Contract assets

A Contract asset is the right to consideration in exchange for
goods or services transferred to the customer. If the Company

performs by transferring goods or services to a customer before
the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that
is conditional.

Contract liabilities

A contract liability is the obligation to transfer goods or
services to a customer for which the Company has received
consideration (or an amount of consideration is due) from the
customer. If a customer pays consideration before the Company
transfers goods or services to the customer, a contract liability
is recognised when the payment is made or the payment is
due (whichever is earlier). Contract liabilities are recognised as
revenue when the Company performs under the contract.

2.12 Employee benefits

(i) Short term employee benefits

All employee benefits payable wholly within twelve
months of rendering the service are classified as short
term employee benefits. Benefits such as salaries, wages
etc., and the expected cost of ex-gratia are recognised
in the period in which the employee renders the related
service. 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.

(ii) Defined contribution plans

Post-retirement contribution plans such as Employees''
Provident Fund, Employees'' Pension Scheme, Labour
Welfare Fund, Employee State Insurance Corporation
(ESIC) are charged to the standalone statement of profit
and loss for the year when the contributions to the
respective funds accrue. The Company does not have any
obligation other than the contribution made.

(iii) Defined benefit plans
Gratuity obligations

Post-retirement benefit plans such as gratuity is
determined on the basis of actuarial valuation made by
an independent actuary as at the reporting date. ReÂ¬
measurement, comprising actuarial gains and losses, the
effect of the changes to the asset ceiling (if applicable)

and the return on plan assets (excluding net interest), is
recognised in other comprehensive income in the period
in which they occur. Re-measurement recognised in other
comprehensive income is included in retained earnings
and will not be reclassified to statement of profit and loss.

The present value of the defined benefit obligation is
determined by discounting the estimated future cash
outflows by reference to market yields at the end of the
reporting period on government bonds that have terms
approximating to the terms of the related obligation.

Changes in the present value of the defined benefit
obligation resulting from plan amendments or
curtailments are recognised immediately in statement of
profit and loss as past service cost.

(iv) Other liabilities

Liability in respect of compensated absences becoming
due or expected to be availed within one year from the
reporting date is recognised on the basis of undiscounted
value of estimated amount required to be paid or
estimated value of benefit expected to be availed by the
employees. Liability in respect of compensated absences
becoming due or expected to be availed more than one
year after the reporting date is estimated on the basis
of an actuarial valuation performed by an independent
actuary using the projected unit credit method at the
period-end. Actuarial gains/losses are immediately taken
to the standalone statement of profit and loss and are
not deferred

2.13 Taxes

Income tax expense comprises of current tax expense and
deferred tax expense/benefit. Current and deferred taxes
are recognised in Standalone statement of profit and loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case,
the current and deferred tax are also recognised in other
comprehensive income or directly in equity.

(i) Current income tax

Current income tax is the amount of tax payable on the
taxable income for the year as determined in accordance
with the provisions of the applicable income tax law. The
current tax is calculated using tax rates that have been
enacted or substantively enacted, at the reporting date,
and any adjustment to tax payable in respect of previous
years. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.

(ii) Deferred tax

Deferred tax is recognised using the Balance Sheet
approach on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts.

Deferred tax assets are recognised to the extent that it
is probable that taxable profit will be available against
which the deductible temporary differences, and the carry
forward of unused tax credits and unused tax losses can
be utilised, except when the deferred tax asset relating
to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor
taxable statement of profit and loss.

The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be
utilised. Unrecognized deferred tax assets are re-assessed
at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured using
substantively enacted tax rates expected to apply to
taxable income in the years in which the temporary
differences are expected to be recovered or settled.

Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash at

bank including fixed deposit with original maturity period of
three months or less and short term highly liquid investments
with an original maturity of three months or less.

Mar 31, 2024

1. Corporate information

2. Material accounting policies

a) Basis of preparation of Financials Statements

(i) Statement of compliance

These standalone financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the standalone financial statements

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The financial statements for the year ended March 31, 2024 were approved by the Board of directors on May 30, 2024

(ii) Basis of measurement

The financial statements have been prepared on a historical cost and on accrual basis, except for the following;

- certain financial assets and liabilities are measured either at fair value or at amortised cost depeding on the classification

- employee defined benefit assets / liability recognised as the net total of the fair value of

plan assets, and actuarial losses/gains, and the present value of defined benefit obligation.

- Right-of-use the assets are recognised at the present value of lease payments that are not paid at that date. This amount is adjusted for any lease payments made at or before the commencement date, lease incentives received and initial direct costs, incurred, if any.

b) Current versus non-current classification

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

An asset is treated as current when it is:

â¢ Expected to be realised or intended to sold or consumed in normal operating cycle

â¢ Held primarily for the purpose of trading

â¢ Expected to be realised within twelve months after the reporting period, or

â¢ Cash and 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:

â¢ It is expected to be settled in normal operating cycle

â¢ It is held primarily for the purpose of trading

â¢ It is due to be settled within twelve months after the reporting period, or

â¢ There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in Cash and Cash equivalents. The Company has identified twelve months as its operating cycle.

c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chairman and Managing director has been identified as being the Chief Operating Decision Maker and he is responsible for allocating the resources, assess the financial performance and position of the Company and makes strategic decisions Refer Note 30 for the segment information presented.

d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency

(ii) Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity''s net investment in that foreign operation.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets

and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non- monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognised in other comprehensive income.

e) Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

â¢ In the principal market for the asset or liability, or

â¢ In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

â¢ Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

â¢ Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above (refer Note 27).

f) Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying

amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation on Property, Plant and Equipment is provided on straight-line basis at the rates arrived at based on the useful lives prescribed in Schedule II of the Companies Act, 2013. The company follows the policy of charging depreciation on pro-rata basis on the assets acquired or disposed off during the year.

Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in Statement of profit or loss when the assets is derecognised.

Estimated useful life:
- Factory buildings	25 - 30 years
- Roads	3 - 10 years
- Machinery	8 - 20 years
- Furniture, fittings and	3 - 10 years
equipment
- Vehicles	8 - 10 years
- Computers	3 - 6 years
- Leasehold improvements	Lower of useful life of the asset or lease term

The Company, based on technical assessment made by technical expert and management estimate, depreciates items of Property, plant and equipment over estimated useful lives which are different from the

useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.

g) Intangibles

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of the carrying value of another asset. Estimated useful lives by major class of finite life intangible assets are as follows:

Estimated useful life:

Software 3-10 years

(i) Computer software

Costs associated with maintaining software programmes are recognised as an expense as incurred.

Research costs are expensed as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the

Company are recognised as intangible assets when the following criteria are met:

- It is technically feasible to complete the software so that it will be available for use

- Management intends to complete the software and use or sell it

- There is an ability to use or sell the software

- It can be demonstrated how the software will generate probable future economic benefits

- Adequate technical, financial and other resources to complete the development and to use or sell the software are available and;

- The expenditure attributable to the software during its development can be reliably measured

Directly attributable costs that are capitalised as part of the software include employee costs and an appropriate portion of relevant overheads.

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use. During the period of development, the asset is tested for impairment annually.

(ii) Amortization methods and periods

Intangible assets with finite useful lives are amortized over their respective individual estimated useful lives (3-10 years in case of computer software) on a straight line basis.

h. Capital work in progress and intangible assets under development

Capital work-in-progress represents Property, Plant and Equipment that are not ready for its intended use as at the balance sheet date. Projects under commissioning and other CWIP/ intangible assets under development

are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost

Advances given to acquire property, plant and equipment are recorded as non-current assets and subsequently transferred to CWIP on acquisition of related assets

i. Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.

For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

j. Inventories

Raw materials, packing materials and stores, work-inprogress, traded and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials, packing materials and stores comprise of cost of purchase. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure allocated based on the normal operating capacity but excluding borrowing costs. Cost of inventories also include all other cost incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in-first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventory provision policy
	Provision % of	Proviosn %
Ageing Bucket	CDMO, API &	for FDF SFG
	FDF RM	& FG
1-2 years	0%	100%
2-3 years	25%	100%
3-4 years	80%	100%
>4 years &	100%	100%
Specific provision

k. Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cheques, cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.

l. Income Taxes

Income tax expense comprises of current and deferred tax.

Current Tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities in accordance with the Indian Income-tax Act, 1961. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most

likely method or expected value method, depending on which method predicts better resolution of the treatment.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

In assessing the recoverability of deferred tax assets, the Company relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports, which, among other things, reflect the potential impact of climate-related development on the business, such as increased cost of production as a result of measures to reduce carbon emission.

rates on deferred income tax assets and liabilities is recognised as income or expense in the period that includes the enactment or substantive enactment date. The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity which intends either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

m. Leases

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

The Company as a lessee

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

i. Right of Use Assets

The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use

assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The useful lives are reviewed by the management at each financial year-end and revised, if appropriate. The right-of-use assets are also subject to impairment. Refer to the accounting policies in Note (2)(i) Impairment of non-financial assets.

ii. Lease Liabilities

At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses interest rate implicit in the lease because incremental borrowing rate at

the lease commencement date is not readily determinable. The incremental borrowing rate is calculated at the rate of interest at which the Company would have been able to borrow for similar term and with a similar security the funds necessary to obtain a similar asset in similar market. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

iii. Short- term leases and leases of low- value assets

The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

n. Financial instrument

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

Financial assets

(i) Initial recognition and measurement Classification

Financial assets are classified, at initial recognition, as financial assets measured at fair value through profit or loss, fair value through

other comprehensive income (OCI) or as financial assets measured at amortised cost.

The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Company has applied the practical expedient are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section Revenue from contracts with customers.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

The Company''s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in four broad categories:

a) Financial assets at amortised cost (debt instruments)

b) Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)

c) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

a) Financial assets at amortised cost (debt instruments):

A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option:

â¢ Business model test: The objective of the Company''s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).

â¢ Cash flow characteristics test: 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. This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. The Group''s financial assets at amortised cost includes trade receivables, loans, deposits and export incentives included under other current and non-current financial assets.

b) Financial assets at fair value through other

comprehensive income (FVTOCI) (debt instruments):

A financial asset that meets the following two conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option:

â¢ Business Model Test: A financial assets that is held for collection of contractual cash flows and for selling of the financial assets

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. For debt instruments, at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from the equity to profit or loss.

The Company''s debt instruments at fair value through OCI includes investments in quoted debt instruments included under other non-current financial assets.

c) Financial assets designated at fair value through OCI (equity instruments)

If an equity investment is not held for trading, an irrevocable election is made at initial recognition to measure it at fair value through other comprehensive income with only dividend income recognised in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

d) Financial assets at Fair value through profit or loss: Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement ofprofit and loss. This category includes investment in mutual funds.

In accordance with Ind AS 109 - Financial Instruments, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets:

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

For debt instruments at fair value through OCI, the Company applies the low credit risk simplification. At every reporting date, the Group evaluates whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Company reassesses the internal credit rating of the debt instrument. In addition, the Company considers that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.

The Company''s debt instruments at fair value through OCI comprise solely of quoted bonds that are graded in the top investment category (Very Good and Good) by the Good Credit Rating Agency and, therefore, are

low credit risk investments. It is the Group''s policy to measure ECLs on such instruments on a 12-month basis. However, when there has been a significant increase in credit risk since origination, the allowance will be based on the lifetime ECL. The Company uses the ratings from the Good Credit Rating Agency both to determine whether the debt instrument has significantly increased in credit risk and to estimate ECLs.

The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables and contract assets only, the Company applies the simplified approach permitted by Ind AS 109"

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:

â¢ The rights to receive cash flows from the asset have expired, or

â¢ The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the

risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group''s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities

Initial recognition and measurement:

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit and loss or at amortized cost, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction.

The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Subsequent measurement:

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments

in hedge relationships as defined by Ind AS 109. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ losses are not subsequently transferred to P&L. However, the Group may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit and loss. The Group has not designated any financial liability as at fair value through profit or loss.

Financial liabilities at amortized cost (Loans and Borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs

that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less, when appropriate, the cumulative amortisation amount of income recognised in accordance with the principles of Ind AS 115.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the DE recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

Reclassification of financial assets

The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines the change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to the external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.

o. Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefit are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience adjustments and changes in actuarial assumptions are recognized in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The Company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity; and

(b) Defined contribution plans such as provident fund.

Gratuity obligations

The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations at the end of the reporting period less the fair value of plan assets. The defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the current in which the benefits will be paid, and that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan

amendments or curtailments are recognized immediately in profit or loss as past service cost.

Defined contribution plans

The company pays provident fund contributions to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 11.

(iv) Bonus plans

The Company recognizes a liability and an expense for bonuses. The company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(v) Compensated Absences

The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected

cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using the projected unit credit method on the additional amount expected to be paid/ availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognised is the period in which the absences occur.

p Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

q. Share-based payments

Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments.

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an Monte Carlo Simulation Pricing ("MCS"), further details of which are given in Note 26. That cost is recognised in employee benefits expense (Note 21), together with a corresponding increase in equity, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date, to the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.

Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best

estimate of the number of equity instruments that will ultimately vest. Market performance conditions are considered within the grant date fair value. Any other conditions attached to an award, but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are considered in the fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions. No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have-not been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the market or non vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification, is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss. Contingently issuable share are treated as outstanding and are included in the calculation of basic earning per share (EPS) only from the date when all the necessary conditions are satisfied (i.e., event have occured). Also contingently issuable share are treated as outstanding and included in calculation of diluted earning per share, if the conditions are satisfied (i.e. the event has occured). (further details are given in Note 26).

r. Revenue recognition

Revenue from contracts with customers is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can

be reliably measured, regardless of when the payment is being made. When a performance obligation is satisfied, the revenue is measured at the transaction price which is consideration received or receivable, net of returns and allowances, trade discounts and volume rebates after taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company derives revenues primarily from manufacture and sale of Active Pharma Ingredients (API) including intermediates and Contract Research services (together called as "Pharmaceuticals")

The following is summary of significant accounting policies relating to revenue recognition.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To recognize revenues, we apply the following five step approach:

(1) Identify the contract with a customer,

(2) Identify the performance obligations in the contract,

(3) Determine the transaction price,

(4) Allocate the transaction price to the performance obligations in the contract, and

(5) Recognize revenues when a performance obligation is satisfied.

Sale of products : The Company recognises revenue for supply of goods to customers against orders received. The majority of contracts that company enters into relate to sales orders containing single performance obligations for the delivery of pharmaceutical products as per Ind AS 115. Product revenue is recognised when control of the goods is passed to the customer. The point at which control passes is determined based on the terms

and conditions by each customer arrangement, but generally occurs on shipment to the customer. Revenue is not recognised until it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not o

Mar 31, 2023

Significant accounting policies

a) Basis of preparation of Financial Statements

(i) Statement of compliance

These financial statements are prepared in
accordance with Indian Accounting Standard
(Ind AS), the provisions of the Companies Act,
2013 (''the Act'') (to the extent notified) and
guidelines issued by the Securities and Exchange
Board of India (SEBI). The Ind AS are prescribed
under Section 133 of the Act read with Rule 3 of
the Companies (Indian Accounting Standards)
Rules, 2015 and relevant amendment rules
issued there after.

Accounting policies have been consistently
applied except where a newly issued accounting
standard is initially adopted or a revision to an
existing accounting standard requires a change
in the accounting policy hitherto in use

The financial statements for the year ended
March 31, 2023 were approved by the Board of
directors on May 25, 2023.

(ii) Basis of measurement

The financial statements have been prepared on
a historical cost and on accrual basis, except for
the following items in the balance sheet:

â¢ Certain financial assets are measured either
at fair value or at amortised cost depending
on the classification

â¢ Employee defined benefit assets/(liability)
are recognised as the net total of the fair
value of plan assets, plus actuarial losses,
less actuarial gains and the present value
of the defined benefit obligation; and

(All amounts In Indian H In Lakhs, unless otherwise stated)

â¢ Share-based payments which are measured
at fair value of the options

â¢ Right-of-use the assets are recognised at
the present value of lease payments that
are not paid at that date. This amount is
adjusted for any lease payments made at
or before the commencement date, lease
incentives received and initial direct costs,
incurred, if any.

b) Current versus non-current classification

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

An asset is treated as current when it is:

â¢ Expected to be realised or intended to sold or
consumed in normal operating cycle

â¢ Held primarily for the purpose of trading

â¢ Expected to be realised within twelve months
after the reporting period, or

â¢ Cash and 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:

â¢ It is expected to be settled in normal operating
cycle

â¢ It is held primarily for the purpose of trading

â¢ It is due to be settled within twelve months after
the reporting period, or

â¢ There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period

The Company classifies all other liabilities as
non-current.

Deferred tax assets and liabilities are classified as
non-current assets and liabilities.

The operating cycle is the time between the acquisition
of assets for processing and their realization in Cash
and Cash equivalents. The Company has identified
twelve months as its operating cycle.

c) Segment reporting

Operating segments are reported in a manner
consistent with the internal reporting provided to the
chief operating decision maker. The chairman and
Managing director has been identified as being the
Chief Operating Decision Maker and he is responsible
for allocating the resources, assess the financial
performance and position of the Company and makes
strategic decisions Refer note 30 for the segment
information presented.

d) Foreign currency translation

(i) Functional and presentation currency

I tems included in the financial statements are
measured using the currency of the primary
economic environment in which the entity
operates (''the functional currency''). The financial
statements are presented in Indian rupee (INR),
which is Company''s functional and presentation
currency.

(ii) Transactions and balances

Foreign currency transactions are translated into
the functional currency using the exchange rates
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement
of such transactions and from the translation
of monetary assets and liabilities denominated
in foreign currencies at year end exchange
rates are generally recognised in profit or loss.
They are deferred in equity if they relate to
qualifying cash flow hedges and qualifying net
investment hedges or are attributable to part
of the net investment in a foreign operation.
A monetary item for which settlement is neither
planned nor likely to occur in the foreseeable
future is considered as a part of the entity''s net
investment in that foreign operation.

and liabilities such as equity instruments held at
fair value through profit or loss are recognised in
profit or loss as part of the fair value gain or loss
and translation differences on non-monetary
assets such as equity investments classified as
FVOCI are recognised in other comprehensive
income.

e) Fair value measurement

The Company measures financial instruments, such as,
derivatives at fair value at each balance sheet date.

Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to sell
the asset or transfer the liability takes place either:

â¢ In the principal market for the asset or liability, or

â¢ In the absence of a principal market, in the most
advantageous market for the asset or liability.

The principal or the most advantageous market must
be accessible by the Company.

The fair value of an asset or a liability is measured
using the assumptions that market participants would
use when pricing the asset or liability, assuming that
market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes
into account a market participant''s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant
that would use the asset in its highest and best use.

The Company uses valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair value,
maximising the use of relevant observable inputs and
minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to
the fair value measurement as a whole:

â¢ Level 1 â Quoted (unadjusted) market prices in
active markets for identical assets or liabilities

â¢ Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is directly or indirectly
observable

â¢ Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair
value measurement is unobservable

For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to
the fair value measurement as a whole) at the end of
each reporting period.

For the purpose of fair value disclosures, the Company
has determined classes of assets and liabilities on the
basis of the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy
as explained above (refer note 27).

f) Property, plant and equipment

Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated
at historical cost less accumulated depreciation.
Historical cost includes expenditure that is directly
attributable to the acquisition of the items.

Capital Work-in-Progress represents Property, Plant
and Equipment that are not ready for their intended
use as at the balance sheet date.

Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Capital Work-in-Progress represents Property,
Plant and Equipment that are not ready for
their intended use as at the balance sheet date.
All other repairs and maintenance are charged to
profit or loss during the reporting period in which
they are incurred.

Subsequent costs are included in the asset''s
carrying amount or recognized as a separate asset,

as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Company and the cost of the item can
be measured reliably. The carrying amount of any
component accounted for as separate asset is
derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the
reporting period in which they are incurred.

On transition to Ind AS, the Company elected to
continue with the carrying value of all of its Property,
Plant and Equipment recognized as at 1^st April, 2015
("transition date") measured as per the previous GAAP
and use that carrying value as its deemed cost as of the
transition date.

Depreciation methods, estimated useful lives
and residual value

The residual values are not more than 5% of the
original cost of the asset. The assets''residual values and
useful lives are reviewed, and adjusted if appropriate,
at the end of each reporting period. An asset''s
carrying amount is written down immediately to its
recoverable amount if the asset''s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposal are determined by
comparing proceeds with carrying amount. These are
included in Statement of profit or loss when the assets
is derecognised.

g) Intangible assets

I ntangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost less
any accumulated amortization and accumulated
impairment losses.

Intangible assets with finite lives are amortised over
the useful economic life and assessed for impairment
whenever there is an indication that the intangible
asset may be impaired. The amortisation period and
the amortisation method for an intangible asset with
a finite useful life are reviewed at least at the end
of each reporting period. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefits embodied in the asset
are considered to modify the amortisation period or
method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense
on intangible assets with finite lives is recognised
in the statement of profit and loss unless such
expenditure forms part of carrying value of another
asset. Estimated useful lives by major class of finite life
intangible assets are as follows:

Estimated useful life :

Software 3 - 10 years

(i) Computer software

Costs associated with maintaining software
programmes are recognised as an expense as
incurred.

Development costs that are directly attributable
to the design and testing of identifiable and
unique software products controlled by the
Company are recognised as intangible assets
when the following criteria are met:

- I t is technically feasible to complete the
software so that it will be available for use

- Management intends to complete the
software and use or sell it

- There is an ability to use or sell the software

- It can be demonstrated how the software
will generate probable future economic
benefits

- Adequate technical, financial and other
resources to complete the development
and to use or sell the software are available
and;

- The expenditure attributable to the
software during its development can be
reliably measured

Directly attributable costs that are capitalized as
part of the software include employee costs and
an appropriate portion of relevant overheads.

Capitalized development costs are recorded as
intangible assets and amortized from the point
at which the asset is available for use.

On transition to Ind AS, the Company has elected
to continue with the carrying value of all of its
intangible assets recognised as at April 01,2015,
measured as per the previous GAAP, and use
that carrying value as the deemed cost of such
intangible assets.

(ii) Amortization methods and periods

Intangible assets with finite useful live are
amortized over their respective individual
estimated useful lives (3-10 years in case of
computer software''s) on a straight line basis"

h) Capital work in Progress and Intangible
assets under development

Projects under commissioning and other CWIP/
intangible assets under development are carried
at cost, comprising direct cost, related incidental
expenses and attributable borrowing cost

Subsequent expenditures relating to property,
plant and equipment are capitalised only when it is
probable that future economic benefit associated with
these will flow to the Company and the cost of the
item can be measured reliably.

Advances given to acquire property, plant and
equipment are recorded as non-current assets and
subsequently transferred to CWIP on acquisition of
related assets

i) Impairment of non-financial assets

The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired.
If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates
the asset''s recoverable amount. An asset''s recoverable
amount is the higher of an asset''s or cash-generating
unit''s (CGU) fair value less costs of disposal and its
value in use. Recoverable amount is determined for
an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from
other assets or Company of assets. When the carrying
amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is
written down to its recoverable amount.

In assessing value in use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset. In determining fair value
less costs of disposal, recent market transactions are
taken into account. If no such transactions can be
identified, an appropriate valuation model is used.
These calculations are corroborated by valuation
multiples, quoted share prices for publicly traded
companies or other available fair value indicators.

The Company bases its impairment calculation on
detailed budgets and forecast calculations, which
are prepared separately for each of the Company''s
CGUs to which the individual assets are allocated.
These budgets and forecast calculations generally
cover a period of five years. For longer periods, a
long-term growth rate is calculated and applied to
project future cash flows after the fifth year.

or CGU''s recoverable amount. A previously recognised
impairment loss is reversed only if there has been a
change in the assumptions used to determine the
asset''s recoverable amount since the last impairment
loss was recognised. The reversal is limited so that
the carrying amount of the asset does not exceed its
recoverable amount, nor exceed the carrying amount
that would have been determined, net of depreciation,
had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the
statement of profit or loss unless the asset is carried
at a revalued amount, in which case, the reversal is
treated as a revaluation increase.

Goodwill is tested for impairment annually and when
circumstances indicate that the carrying value may
be impaired.Impairment is determined for goodwill
by assessing the recoverable amount of each CGU
(or group of CGUs) to which the goodwill relates.
When the recoverable amount of the CGU is less than
its carrying amount, an impairment loss is recognised.
Impairment losses relating to goodwill cannot be
reversed in future periods.

j) Inventories

Raw materials and stores, work-in-progress, traded
and finished goods are stated at the lower of cost and
net realizable value. Cost of raw materials comprise of
cost of purchase. Cost of work-in-progress and finished
goods comprises direct materials, direct labour and an
appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis
of normal operating capacity. Cost of inventories
also include all other cost incurred in bringing the
inventories to their present location and condition.
Costs are assigned to individual items of inventory on
the basis of first-in-first-out basis. Costs of purchased
inventory are determined after deducting rebates
and discounts. Net realizable value is the estimated
selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs
necessary to make the sale.

k) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet
comprise cash at banks and on hand and short-term

deposits with a maturity of three months or less, which
are subject to an insignificant risk of changes in value.
For the purpose of the Statement of Cash Flows, cash
and cash equivalents consist of cash and short-term
deposits, as defined above, net of outstanding bank
overdrafts, if any, as they are considered an integral
part of the Company''s cash management

l) Income Taxes
Current Tax

Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted
or substantively enacted, at the reporting date in the
countries where the Company operates and generates
taxable income. Current income tax relating to items
recognised outside profit or loss is recognised outside
profit or loss (either in other comprehensive income
("OG") or in equity). Current tax items are recognised
in correlation to the underlying transaction either in
OCI or directly in equity.

Deferred Tax

date. The Company offsets income-tax assets and
liabilities, where it has a legally enforceable right to
set off the recognised amounts and where it intends
either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.

Deferred tax relating to items recognised outside
profit or loss is recognised outside profit or loss(either
in other comprehensive income or in equity).

Deferred tax items are recognised in correlation to
the underlying transaction either in OCI or directly
inequity.

m) Equity

Ordinary shares are classified as equity share capital.
Incremental costs directly attributable to the issuance
of new ordinary shares, share options and buyback are
recognized as a deduction from equity, net of any tax
effects.

Retained earnings

Retained earnings represent the amount of
accumulated earnings of the Company

Securities premium

The amount received in excess of the par value
of equity shares has been classified as securities
premium.

n) Leases

The Company as a lessee

The Company recognises right of use assets under lease
arrangements in which it is the lessee. Rights to use
assets owned by third parties under lease agreements
are capitalised at the inception of the lease and
recognised on the balance sheet. The corresponding
liability to the lessor is recognised as a lease obligation.
The carrying amount is subsequently increased to
reflect interest on the lease liability and reduced by
lease payments made. For alculating the discounted
lease liability, the lessee''s incremental borrowing rate
is used. The incremental borrowing rate is calculated
at the rate of interest at which the Company would
have been able to borrow for a similar term and with a
similar security the funds necessary to obtain a similar
asset in a similar market.

Finance costs are charged to the income statement
so as to produce a constant periodic rate of charge
on the remaining balance of the obligations for each
accounting period.

Variable rents are not part of the lease liability and
the right of use asset. These payments are charged
to the income statement as incurred. If modifications
or reassessments occur, the lease liability and right
of use asset are re-measured. Right of use assets
are depreciated over the shorter of the useful life of
theasset or the lease term.

The Company as Lessor

Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Rental
income from operating lease is recognised on a
straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating
and arranging an operating lease are added to the
carrying amount of the leased asset and recognised
over the lease term on the same basis as rental
income. Leases are classified as finance leases when
substantially all of the risks and rewards of ownership
transfer from the Company to the lessee.

Amounts due from lessees under finance leases are
recorded as receivables at the Company''s net investment
in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic
rate of return on the net investment outstanding
inrespect of the lease.

iv) Income recognition
Interest income

Interest income from the debt instruments is
recognised using the effective interest rate method.
The effective interest rate is the rate that exactly
discounts estimated future cash receipts through
the expected life of the financial asset to the gross
carrying amount of a financial asset. When calculating
the effective interest rate, the Company estimates the
expected cash flows by considering all the contractual
terms of the financial instrument (for example,
prepayment, extension, call and similar options) but
does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when
the right to receive payment is established, it is
probable that the economic benefits associated with
the dividend will flow to the company, and the amount
of the dividend can be measured reliably.

Royalty

Royalty revenue is recognized on an accrual basis
in accordance with the substance of the relevant
agreement (provided that it is probable that
economic benefits will flow to the Company and
the amount of revenue can be measured reliably).
Royalty arrangements that are based on production,
sales and other measures are recognized by reference
to the underlying arrangement.

o) Financial instruments

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

Financial assets
(i) Classification

The Company classifies its financial assets in the
following measurement categories: - those to
be measured subsequently at fair value (either
through other comprehensive income, or
through profit or loss), and - those measured at
amortised cost.

The classification depends on the Company''s
business model for managing financial assets
and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses
will either be recorded in the statement of profit
and loss or other comprehensive income.

For investments in debt instruments, this will
depend on the business model in which the
investment is held.

For investments in equity instruments, this will
depend on whether the Company has made
an irrevocable election at the time of initial
recognition to account for the equity investment
at fair value through other comprehensive
income.

The Company reclassifies debt investments when
and only when its business model for managing
those assets changes.

Measurement

At initial recognition, the Company measures a
financial asset at its fair value plus, in the case
of a financial asset not at fair value through
profit or loss, transaction costs that are directly
attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried
at fair value through profit or loss are expensed in
the statement of profit and loss. Financial assets
with embedded derivatives are considered in
their entirety when determining whether their
cash flows are solely payment of principal and
interest.

Debt instruments

Subsequent measurement of debt instruments
depends on the Company''s business model
for managing the asset and the cash flow
characteristics of the asset. There are three
measurement categories into which the
Company classifies its debt instruments:

Amortised cost:

Assets that are held for collection of contractual
cash flows where those cash flows represent
solely payments of principal and interest are
measured at amortised cost. A gain or loss on a
debt investment that is subsequently measured
at amortised cost and is not part of a hedging
relationship is recognised in the statement of
profit and loss when the asset is derecognised
or impaired. Interest income from these financial
assets is included in other income using the
effective interest rate method.

Fair value through other comprehensive
income (FVOCI):

Assets that are held for collection of contractual
cash flows and for selling the financial assets,
where assets cash flow represents solely
payments of principal and interest, are measured
at fair value through other comprehensive
income (FVOCI). Movements in the carrying

amount are taken through OCI, except for the
recognition of impairment gains or losses,
interest revenue and foreign exchange gains
and losses which are recognised in the statement
of profit and loss. When the financial asset
is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from
equity to profit and loss and recognised in other
expenses/ income. Interest income from these
financial assets is included in other income using
the effective interest rate method.

Fair value through profit or loss:

Assets that do not meet the criteria for amortised
cost or FVOCI are measured at fair value
through profit or loss. A gain or loss on a debt
investment that is subsequently measured at
fair value through profit or loss and is not part
of a hedging relationship is recognised in the
statement of profit and loss and presented net
in the statement of profit and loss within other
Expenses/income in the period in which it arises.

I nterest income from these financial assets is
included in other income.

Equity instruments

The Company subsequently measures all equity
investments at fair value. Where the Company''s
management has elected to present fair value
gains and losses on equity investments in other
comprehensive income, there is no subsequent
reclassification of fair value gains and losses to
profit and loss. Dividends from such investments
are recognised in the statement of profit and loss
as other income when the Company''s right to
receive.

Payments is established

Changes in the fair value of financial assets at
fair value through profit or loss statement are
Recognised in other income/ expense in the
statement of profit and loss. Impairment losses
(and reversal of impairment losses) on equity
investments measured at FVOCI are not reported
separately from other changes in fair value.

(iii) Impairment of financial assets

The Company assesses on a forward-looking
basis the expected credit losses associated with
its assets carried at amortised cost and FVOCI
debt instruments. The impairment methodology
applied depends on whether there has been
a significant increase in credit risk. For trade
receivables only, the Company applies the
simplified approach permitted by Ind AS 109.

"Financial Instruments", which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.

(iv) DE recognition of financial assets A financial
asset is derecognised only when the Company
has transferred the rights to receive cash flows
from the financial asset or retains the contractual
rights to receive the cash flows of the financial
asset, but assumes a contractual obligation to
pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership
of the financial asset. In such cases, the financial
asset is derecognised. Where the entity has not
transferred substantially all risks and rewards of
ownership of the financial asset, the financial
asset is not derecognised.

Where the entity has neither transferred a
financial asset nor retains substantially all risks
and rewards of ownership of the financial asset,
the financial

Asset is derecognised if the Company has not
retained control of the financial asset. Where the
Company retains control of the financial asset,
these is continued to be recognised to the extent
of continuing involvement in the financial asset.

Financial liabilities and equity instruments

Classification as debt or equity Debt and
equity instruments issued by the Company are
classified as either financial liability oras equity in
accordance with the substance of the contractual

arrangements and the definitions of a financial
liability and an equity instrument.

Equity instruments

An equity instrument is any contract that
evidences a residual interest in the assets of
an entity after deducting all of its liabilities.
Equity instruments issued by the Company is
recognised at the proceeds received, net of direct
issue costs. Repurchase of the Company''s own
equity instruments is recognised and deducted
directly in equity. No gain or loss is recognised in
the statement of profit and loss on the purchase,
sale, issue or cancellation of the Company''s own
equity instruments.

Financial liabilities

All financial liabilities are subsequently measured
at amortised cost using the effective interest
method. Financial liabilities subsequently
measured at amortised cost financial liabilities
are classified, at initial recognition, as financial
liabilities at fair value through profit or loss,
loans and borrowings, payables, as appropriate.
Financial liabilities that are not held-for-trading
and are not designated as at fair value through
profit or loss are measured at amortised cost at
the end of the subsequent accounting period.
The carrying amount of financial liabilities that
are subsequently measured at amortised cost
are determined based on the effective interest
method. Interest expense that is not capitalised
as part of costs of an asset is included in the
"Finance costs" line item. The effective interest
method is a method of calculating the amortised
cost of a financial liability and of allocating
interest expense over the relevant period.
The effective interest rate is the rate that exactly
discounts estimated future cash payments
through the expected life of the financial liability,
or, where appropriate, a shorter period, to the net
carrying amount in initial recognition.

De recognition

A financial liability is derecognised when the
obligation under the liability is discharged or

cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification
is treated as the DE recognition of the original
liability and the recognition of a new liability.
The difference in the respective carrying amounts
is recognised in the statement of profit and loss.

Investment in subsidiaries

Investments in subsidiaries 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, the
difference between net disposal proceeds and
the carrying amounts are recognized in the
statement of profit and loss.

p) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including
non-monetary benefits that are expected to
be settled wholly within 12 months after the
end of the period in which the employees
render the related service are recognized in
respect of employees'' services up to the end of
the reporting period and are measured at the
amounts expected to be paid when the liabilities
are settled. The liabilities are presented as current
employee benefit obligations in the balance
sheet.

(ii) Other long-term employee benefit
obligations

are discounted using the market yields at the
end of the reporting period that have terms
approximating to the terms of the related
obligations. Remeasurements as a result of
the experience adjustments and changes in
actuarial assumptions are recognized in profit
or loss. The obligations are presented as current
liabilities in the balance sheet if the entity
does not have an unconditional right to defer
settlement for at least twelve months after the
reporting period, regardless of when the actual
settlement is expected to occur."

(iii) Post-employment obligations

The Company operates the following
post-employment schemes:

(a) Defined benefit plans such as gratuity; and

(b) Defined contribution plans such as
provident fund.

Gratuity obligations

The present value of the defined benefit
obligation denominated in INR is determined
by discounting the estimated future cash
outflows by reference to market yields at the
end of the reporting period on government
bonds that have terms approximating to the
terms of the related obligation. The benefits
which are denominated in currency other than
INR, the cash flows are discounted using market
yields determined by reference to high-quality
corporate bonds that are denominated in the
current in which the benefits will be paid, and

that have terms approximating to the terms of
the related obligation.

Remeasurement gains and losses arising
from experience adjustments and change in
actuarial assumptions are recognized in the
period in which they occur, directly in other
comprehensive income. They are included in
retained earnings in the statement of changes
in equity and in the balance sheet.

Changes in the present value of the defined
benefit obligation resulting from plan
amendments or curtailments are recognized
immediately in profit or loss as past service cost.

Defined contribution plans

The company pays provident fund contributions
to publicly administered funds as per local
regulations. The Company has no further
payment obligations once the contributions have
been paid. The contributions are accounted for as
defined contribution plans and the contributions
are recognized as employee benefit expense
when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash
refund or a reduction in the future payments is
available.

(iv) Bonus plans

The group recognizes a liability and an expense
for bonuses. The group recognizes a provision
where contractually obliged or where there is
a past practice that has created a constructive
obligation.

(v) Compensated absences

The Group has a policy on compensated
absences which are both accumulating and
non-accumulating in nature. The expected

cost of accumulating compensated absences is
determined by actuarial valuation performed by
an independent actuary at each balance sheet
date using the projected unit credit method
on the additional amount expected to be paid/
availed as a result of the unused entitlement
that has accumulated at the balance sheet date.
Expense on non-accumulating compensated
absences is recognised is the period in which
the absences occur.

q) Derivatives and hedging activities

Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently re-measured to their fair value at the
end of each reporting period.

r) Offsetting financial instruments

Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognized
amounts and there is an intention to settle on a
net basis or realize the asset and settle the liability
simultaneously. The legally enforceable right must
not be contingent on future events and must be
enforceable in the normal course of business and in
the event of default, insolvency or bankruptcy of the
group or the counterparty.

s) Revenue recognition

Revenue from contracts with customers is recognised
to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can
be reliably measured, regardless of when the payment
is being made. When a performance obligation is
satisfied, the revenue is measured at the transaction
price which is consideration received or receivable, net
of returns and allowances, trade discounts and volume
rebates after taking into account contractually defined
terms of payment and excluding taxes or duties
collected on behalf of the government. The Company
derives revenues primarily from manufacture and
sale of Active Pharma Ingredients (API) including
intermediates and Contract Research services
(together called as "Pharmaceuticals")

The following is summary of significant accounting
policies relating to revenue recognition.

Revenue is recognized upon transfer of control of
promised products or services to customers in an
amount that reflects the consideration the Company
expects to receive in exchange for those products
or services. To recognize revenues, we apply the
following five step approach:

(1) Identify the contract with a customer,

(2) Identify the performance obligations in the
contract,

(3) Determine the transaction price,

(4) Allocate the transaction price to the performance
obligations in the contract, and

(5) Recognize revenues when a performance
obligation is satisfied.

Sale of products

The Company recognises revenue for supply of goods
to customers against orders received. The majority of
contracts that company enters into relate to sales
orders containing single performance obligations for
the delivery of pharmaceutical products as per Ind
AS 115. Product revenue is recognised when control
of the goods is passed to the customer. The point
at which control passes is determined based on the
terms and conditions by each customer arrangement,
but generally occurs on delivery to the customer.
Revenue is not recognised until it is highly probable
that a significant reversal in the amount of cumulative
revenue recognised will not occur.

Sale of services: Revenue from contract research
operations is recognised based on services performed
till date as a percentage of total services. The agreed
milestones are specified in the contracts with
customers which determine the total services to be
performed.

Contract Liabilities: A contract liability is the
obligation to transfer goods or services to a
customer for which the Company has received
consideration (or the amount is due) from the
customer. If a customer pays consideration before the

Company transfers goods or services to the customer,
a contract liability is recognised when the payment
is made, or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the
Company performs under the contract.

Interest income: For all debt financial instruments
measured either at amortised cost or at fair value
through other comprehensive income, interest income
is recorded using the effective interest rate (EIR). EIR is
the rate that exactly discounts the estimated future
cash payments or receipts over the expected life of
the financial instrument or a shorter period, where
appropriate, to the gross carrying amount of the
financial asset or to the amortised cost of a financial
liability. Interest income is included in finance income
in the Statement of Profit and Loss.

Export Incentives: Export incentives are recognised
as income when the right to receive credit as per
the terms of the scheme is established in respect of
the exports made and where there is no significant
uncertainty regarding the ultimate collection of the
relevant export proceeds.

t) Borrowing costs

Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted
from the borrowing cost eligible for capitalization.
Other borrowings costs are expensed in the period in
which they are incurred.

u) Research and Development

been established, in which case such expenditure
is capitalised. Development expenditures on an
individual project are recognised as an intangible
asset when the Company can demonstrate :

- The technical feasibility of completing the
intangible asset so that the asset will be available
for use or sale

- I ts intention to complete and its ability and
intention to use or sell the asset

- How the asset will generate future economic
benefits

- The availability of resources to complete the
asset

- The ability to measure reliably the expenditure
during development.

The amount capitalised comprises expenditure that
can be directly attributed or allocated on a reasonable
and consistent basis to creating, producing and
making the asset ready for its intended use.

v) Government Grants:

Government grants are recognised at fair value as and
when there is a reasonable assurance that grant will be
received and all attached conditions will be complied
with. When the grant is related to an expense item,
it is recognised as income on systematic basis over
the period of related costs, for which it is intended to
compensate, are expensed. When the grant relates to
an asset,it is recognised as income in equal amounts
over the expected useful life of the related assets.

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

w) Dividends

Provision is made for the amount of any dividend
declared, being appropriately authorized and no
longer at the discretion of the entity, on or before the
end of the reporting period but not distributed at the
end of the reporting period.

x) Earning per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

â¢ The profit attributable to owners of the
company

â¢ By the weighted average number of equity
shares outstanding during the financial
year, adjusted for bonus elements in equity
shares issued during the year and excluding
treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures

used in the determination of basic earnings per

share to take into account:

â¢ The after income tax effect of interest
and other financing costs associated with
dilutive potential equity shares, and

â¢ The weighted average number of additional
equity shares that would have been
outstanding assuming the conversion of
all dilutive potential equity shares.

y) Cash flow statement

Cash flows are reported using the Indirect method,
whereby profit before tax is adjusted for the effects
of transactions of a non-cash nature, any deferrals or
accruals of past or future operating cash receipts or
payments and items of income or expenses associated
with investing or financing cash flows. The cash flows
from operating, financing activities of the company
are segregated.

z) Rounding of Amounts

All amounts disclosed in the financial statements and
notes have been rounded off to the nearest lakhs as
per the requirements of Schedule III, unless otherwise
stated.

Mar 31, 2022

1 Corporate Information

Suven Pharmaceuticals Limited (SPL) is a bio-pharmaceutical company, incorporated on 6^th November, 2018 with the object of being engaged in the business of development and manufacturing of New Chemical Entity (NCE) based Intermediates, Active Pharmaceutical Ingredients (API), Specialty Chemicals and formulated drugs under contract research and manufacturing services for global pharmaceutical, biotechnology and chemical companies. Suven Pharma Inc., a Delaware Company, is a WOS (wholly owned subsidiary) of SPL, is a SPV (Special Purpose Vehicle) created on 9^th March 2019, for undertaking various business opportunities in Pharma Industry.

2 Significant accounting policies

a) Basis of preparation of Financial Statements

(i) Statement of compliance

These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), the provisions of the Companies Act, 2013 (''the Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued there after.

The financial statements for the year ended March 31, 2022 were approved by the Board of directors on May 9, 2022.

(ii) Basis of measurement

The financial statements have been prepared on a historical cost and on accrual basis, except for the following items in the balance sheet:

â¢ Certain financial assets are measured either at fair value or at amortised cost depending on the classification

â¢ Employee defined benefit assets/(liability) are recognised as the net total of the fair value of plan assets, plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation; and

â¢ Share-based payments which are measured at fair value of the options

â¢ Right-of-use the assets are recognised at the present value of lease payments that are not paid at that date. This amount is adjusted for any lease payments made at or before the commencement date, lease incentives received and initial direct costs, incurred, if any.

b) Current versus non-current classification

The Company presents assets and liabilities in the balance sheet based on current/ noncurrent classification.

An asset is treated as current when it is:

â¢ Expected to be realised or intended to sold or consumed in normal operating cycle

â¢ Held primarily for the purpose of trading

â¢ Expected to be realised within twelve months after the reporting period, or

â¢ Cash and 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:

â¢ It is expected to be settled in normal operating cycle

â¢ It is held primarily for the purpose of trading

â¢ It is due to be settled within twelve months after the reporting period, or

â¢ There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Company classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in Cash and Cash equivalents. The Company has identified twelve months as its operating cycle.

c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chairman and Managing director has been identified as being the

Chief Operating Decision Maker. Refer note 30 for the segment information presented.

d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian rupee (H), which is Company''s functional and presentation currency.

(ii) Transactions and balances

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non- monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognised in other comprehensive income.

e) Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.

based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

â¢ In the principal market for the asset or liability, or

â¢ In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

â¢ Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

â¢ Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset

or liability and the level of the fair value hierarchy as explained above (refer note 27).

f) Property, plant and equipment

Capital Work-in-Progress represents Property, Plant and Equipment that are not ready for their intended use as at the balance sheet date.

All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

On transition to Ind AS, the Company elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at 1^st April, 2015 ("transition dateâ) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

Depreciation methods, estimated useful lives and residual value

carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in Statement of profit or loss when the assets is derecognised.

Estimated useful life :

- Factory buildings 25 - 30 years

- Roads 3 - 10 years

- Machinery 8 - 20 years

- Furniture, fittings and equipment 3 - 10 years

- Vehicles 8 - 10 years

g) Intangible assets

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Estimated useful lives by major class of finite life intangible assets are as follows:

Estimated useful life :

Software 3 - 10 years

(i) Computer software

Costs associated with maintaining software programmes are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible assets when the following criteria are met:

- It is technically feasible to complete the software so that it will be available for use

- Management intends to complete the software and use or sell it

- There is an ability to use or sell the software

- It can be demonstrated how the software will generate probable future economic benefits

- Adequate technical, financial and other resources to complete the development and to use or sell the software are available and;

- The expenditure attributable to the software during its development can be reliably measured Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.

Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at April 01, 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.

(ii) Amortization methods and periods

Intangible assets with finite useful live are amortized over their respective individual estimated useful lives (3-10 years in case of computer software''s) on a straight line basis.

(iii) Research and development

Research expenditure and development expenditure that do not meet the criteria in (i) above are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in the subsequent period.

h) Capital work in Progress and Intangible assets under development

Projects under commissioning and other CWIP/ intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost

Subsequent expenditures relating to property, plant and equipment are capitalised only when it is probable that future economic benefit associated with these will

flow to the Company and the cost of the item can be measured reliably.

Advances given to acquire property, plant and equipment are recorded as non-current assets and subsequently transferred to CWIP on acquisition of related assets

i) Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Company of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year.

asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

An impairment loss in respect of equity accounted investee is measured by comparing the recoverable amount of investment with its carrying amount. An impairment loss is recognised in the statement of profit and loss, and reversed if there has been a favorable change in the estimates used to determine the recoverable amount.

j) Inventories

Raw materials and stores, work-in-progress, traded and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials comprise of cost of purchase. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other cost incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in-first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

k) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost

using the effective interest method, less provision for impairment.

l) Cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts, if any, as they are considered an integral part of the Company''s cash management

m) Income Taxes

Income tax comprises of current and deferred income tax. Income tax expense is recognised in statement of profit and loss except to the extent that it relates to an item recognised directly in equity in which case it is recognised in other comprehensive income. Current income tax for current year and prior periods is recognised at the amount expected to be paid or recovered from the tax authorities, using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date

Deferred income tax assets and liabilities are recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when:

- taxable temporary differences arising on the initial recognition of goodwill;

- temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss at the time of transaction; and

- temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised

Deferred income tax assets and liabilities are measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date and

are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognised as income or expense in the period that includes the enactment or substantive enactment date. A deferred income tax assets is recognised to the extent it is probable that future taxable income will be available against which the deductible temporary timing differences and tax losses can be utilised. The Company offsets income-tax assets and liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Dividend Distribution Tax:

Tax on Dividends declared by the Company are recognised as an appropriation of Profit. Dividend Distribution Tax is not applicable from April 1,2020.

n) Equity

Ordinary shares are classified as equity share capital. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.

Retained earnings

Retained earnings represent the amount of accumulated earnings of the Company.

Securities premium

The amount received in excess of the par value of equity shares has been classified as securities premium.

o) Leases

The Company as a lessee

The Company''s lease asset classes primarily consist of leases for Buildings and Facility charges.

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of

the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low-value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities include these options when it is reasonably certain that they will be exercised.

ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

ROU 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. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.

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

The Company as Lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risk and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating lease

p) Investments and other financial assets

i) Classification

The Company classifies its financial assets in the following measurement categories:

â¢ Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

â¢ Those measured at amortised cost.

The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.â

ii) Measurement

Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified

from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.

Equity instruments

The Company subsequently measures all equity investments at fair value. Where the company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

iii) Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Refer Note 28 details how the Company determines whether there has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

iv) Income recognition Interest income

Interest income from the debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the company, and the amount of the dividend can be measured reliably.

Royalty

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement (provided that it is probable that economic benefits will flow to the Company and the amount of revenue can be measured reliably). Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.

q) Financial instruments

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

Financial assets

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortised cost.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in two broad categories:

â¢ Financial assets at fair value

â¢ Financial assets at amortised cost

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).

â¢ Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ''accounting mismatch'') that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

All other financial asset is measured at fair value through profit or loss.

De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the company''s statement of financial position) when:

â¢ The rights to receive cash flows from the asset have expired, or

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.

Investment in subsidiaries

immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.

Investments in units of mutual funds

In respect of investments in mutual funds, the fair values represent net asset value as stated by the issuers of these mutual fund units in the published statements. Net asset values represent the price at which the issuer will issue further units in the mutual fund and the price at which issuers will redeem such units from the investors. Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at such prices between investors and the issuers of these units of mutual funds.

r) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and Borrowings

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

s) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Other long-term employee benefit obligations

that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience adjustments and changes in actuarial assumptions are recognized in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii)Post-employment obligations

The Company operates the following postemployment schemes:

(a) Defined benefit plans such as gratuity; and

(b) Defined contribution plans such as provident fund.

Gratuity obligations

The liability or assets recognized in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligations at the end of the reporting period less the fair value of plan assets. The defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method. The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the current in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss. Remeasurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included

in retained earnings in the statement of changes in equity and in the balance sheet. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

Defined contribution plans

(iv) Bonus plans

The group recognizes a liability and an expense for bonuses. The group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(v) Compensated absences

The Group has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using the projected unit credit method on the additional amount expected to be paid/ availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognised is the period in which the absences occur.

t) Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

u) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the group or the counterparty.

v) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates after taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The Company derives revenues primarily from manufacture and sale of Active Pharma Ingredients (API) including intermediates and Contract Research services (together called as "Pharmaceuticalsâ)

The following is summary of significant accounting policies relating to revenue recognition.

The Company earns revenue primarily from sale of New Chemical Entity (NCE) based Intermediates, Active Pharmaceutical Ingredients (API) Specialty chemicals and formulated drugs under contract research and manufacturing services.

(1) Identify the contract with a customer,

(2) I dentify the performance obligations in the contract,

(3) Determine the transaction price,

(4) Allocate the transaction price to the performance obligations in the contract, and

(5) Recognize revenues when a performance obligation is satisfied.

Sale of products The Company recognises revenue for supply of goods to customers against orders received. The majority of contracts that company enters into relate to sales orders containing single performance obligations for the delivery of pharmaceutical products as per Ind AS 115. Product revenue is recognised when control of the goods is passed to the customer. The point at which control passes is determined based on the terms and conditions by each customer arrangement, but generally occurs on delivery to the customer. Revenue is not recognised until it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur

Sale of services Revenue from contract research operations is recognised based on services performed till date as a percentage of total services. The agreed milestones are specified in the contracts with customers which determine the total services to be performed.

Interest income For all debt financial instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. Interest income is included in finance income in the Statement of Profit and Loss

Export Incentives:Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds

w) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization. Other borrowings costs are expensed in the period in which they are incurred.

x) Research and Development

been established, in which case such expenditure is capitalised. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate :

- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

- Its intention to complete and its ability and intention to use or sell the asset

- How the asset will generate future economic benefits

- The availability of resources to complete the asset

- The ability to measure reliably the expenditure during development.

The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use.

y) Government Grants:

Government grants are recognised at fair value as and when there is a reasonable assurance that grant will be received and all attached conditions will be complied with. When the grant is related to an expense item, it is recognised as income on systematic basis over the period of related costs, for which it is intended to compensate, are expensed. when the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related assets.

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

z) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

aa) Earning per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

â¢ The profit attributable to owners ofthe company

â¢ By the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity

shares issued during the year and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

â¢ The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

â¢ The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

ab) Cash flow statement

Cash flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, financing activities of the company are segregated.

ac) Rounding of Amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

ad) Provisions, Contingent Liabilities, Contingent Assets and commitmentsProvisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent Liabilities

Contingent liabilities are disclosed, unless the possibility of outflow of resources is remote, when there is

- A possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or

- A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or reliable estimate of the amount cannot be made

Contingent Assets

A contingent asset is disclosed, where an inflow of economic benefits is probable.

Commitments

- Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.

Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date (Refer Note 32 & 33).

ae) Excepti

Mar 31, 2021

1 Corporate Information

Suven Pharmaceuticals Limited (SPL) is a bio-pharmaceutical company, incorporated on 6th November, 2018 with the object of being engaged in the business of development and manufacturing of New Chemical Entity (NCE) based Intermediates, Active Pharmaceutical Ingredients (API), Speciality Chemicals and formulated drugs under contract research and manufacturing services for global pharmaceutical,biotechnology and chemical companies. Suven Pharma Inc., a Delaware Company, is a WOS (wholly owned subsidiary) of SPL, is a SPV (Special Purpose Vehicle) created on 9th March, 2019, for undertaking various business opportunities in Pharma Industry.

2 Significant accounting policies

a) Basis of preparation of Financial Statements

(i) Statement of compliance

These financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), the provisions of the Companies Act, 2013 (''the Act'') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued there after.

The financial statements for the year ended 31st March, 2021 were approved by the Board of directors on June 8, 2020.

(ii) Basis of measurement

The financial statements have been prepared on a historical cost and on accurual basis, except for the following items in the balance sheet:

â¢ Certain financial assets are measured either at fair value or at amortised cost depending on the classification

â¢ Employee defined benefit assets/(liability) are recognised as the net total of the fair value of plan assets, plus actuarial losses, less actuarial gains and the present value of the defined benefit obligation; and

â¢ Share-based payments which are measured at fair value of the options

â¢ Right-of-use the assets are recognised at the present value of lease payments that are not paid at that date. This amount is adjusted for any lease payments made at or before the commencement date, lease incentives received and initial direct costs, incurred, if any.

b) Current versus non-current classification

The Company presents assets and liabilities in the balance

sheet based on current/ non-current classification.

An asset is treated as current when it is:

â¢ Expected to be realised or intended to sold or consumed in normal operating cycle

â¢ Held primarily for the purpose of trading

â¢ Expected to be realised within twelve months after the reporting period, or

â¢ Cash and 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:

â¢ It is expected to be settled in normal operating cycle

â¢ It is held primarily for the purpose of trading

â¢ It is due to be settled within twelve months after the reporting period, or

â¢ There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Company classifies all other liabilities as noncurrent.

Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.

The operating cycle is the time between the acquisition of assets for processing and their realisation in Cash and Cash equivalents. The Company has identified twelve months as its operating cycle.

c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chairman and managing director has been identified as being the Chief Operating Decision Maker. Refer note 30 for the segment information presented.

d) Foreign currency translation

(i) Functional and presentation currency

Items included in the standalone financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.

(ii) Transactions and balances

Non-monetary items that are measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non- monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognised in other comprehensive income.

e) Fair value measurement

The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.

â¢ In the principal market for the asset or liability, or

â¢ In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Company.

â¢ Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities

â¢ Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

â¢ Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

f) Property, plant and equipment

Capital Work-in-Progress represents Property, Plant and Equipment that are not ready for their intended use as at the balance sheet date.

All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

On transition to Ind AS, the Company elected to continue with the carrying value of all of its Property, Plant and Equipment recognised as at 1st April, 2015 ("transition date") measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.

Depreciation methods, estimated useful lives and residual value

Depreciation on Property , Plant & Equipment is provided on straight-line basis at the rates arrived at based on the useful lives prescribed in Schedule II of the Companies Act, 2013. The company follows the policy of charging depreciation on pro-rata basis on the assets acquired or disposed off during the year. The residual values are not more than 5% of the original cost of the asset. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing proceeds with carrying amount. These are included in Statement of profit or loss when the assets is derecognised.

Estimated useful life :
- Factory buildings	25 - 30 years
- Roads	3 - 10 years

- Machinery	8 - 20 years
- Furniture fittings and equipment	3 - 10 years
- Vehicles	8 - 10 years

g) Intangible assets

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset. Estimated useful lives by major class of finite life intangible assets are as follows:

(i) Computer software

- It is technically feasible to complete the software so that it will be available for use

- Management intends to complete the software and use or sell it

- There is an ability to use or sell the software

- It can be demonstrated how the software will generate probable future economic benefits

- Adequate technical, financial and other resources to complete the development and to use or sell the software are available and;

- The expenditure attributable to the software during its development can be reliably measured

Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads. Capitalized development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.

On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at April 01, 2015, measured as per the previous GAAP, and use that carrying value as the deemed cost of such intangible assets.

(ii) Amortization methods and periods

Intangible assets with finite useful live are amortised over their respective individual estimated useful lives (3-10 years in case of computer softwares) on a straight line basis.

(iii) Research and development

Estimated useful life :

Software 3 - 10 years

h) Capital work in Progress and Intangible assets under development

Projects under commissioning and other CWIP/ intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost

Subsequent expenditures relating to property, plant and equipment are capitalised only when it is probable that future economic benefit associated with these will flow to the Company and the cost of the item can be measured reliably.

Advances given to acquire property, plant and equipment are recorded as non-current assets and subsequently transferred to CWIP on acquisition of related assets

i) Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Company of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is

calculated and applied to project future cash flows after the fifth year.

For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exist or have decreased. If such indication exists, the company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit or loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.

j) Inventories

Raw materials and stores, work-in-progress, traded and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials comprise of

cost of purchase. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other cost incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in-first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

k) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

l) Cash and cash equivalents

m) Income Taxes

- taxable temporary differences arising on the initial recognition of goodwill;

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised

Deferred income tax assets and liabilities are measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognised as income or expense in the period that includes the enactment or substantive enactment date. A deferred income tax assets is recognised to the extent it is probable that future taxable income will be available against which the deductible temporary timing differences and tax losses can be utilised. The Company offsets income-tax assets and liabilities, where it has a legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Dividend Distribution Tax:

Tax on Dividends declared by the Company are

recognised as an appropriation of Profit. Dividend Distribution Tax is not applicable from 1st April, 2020.

n) Equity

Ordinary shares are classified as equity share capital. Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity, net of any tax effects.

Retained earnings

Retained earnings represent the amount of accumulated earnings of the Company.

Securities premium

The amount received in excess of the par value of equity shares has been classified as securities premium."

o) Leases

The Company as a lessee

The Company''s lease asset classes primarily consist of leases for Buildings and Facility charges.

The Company assesses whether a contract contains a lease at the inception of a 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 the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

ROU 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. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

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 implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option

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

The Company as Lessor

Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of

the lease transfer substantially all the risk and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating lease.

p) Investments and other financial assetsi) Classification

The Company classifies its financial assets in the following measurement categories:

â¢ Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

â¢ Those measured at amortised cost.

ii) Measurement

previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.

Equity instruments

iii) Impairment of financial assets

has been a significant increase in credit risk. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

iv) Income recognition Interest income

Interest income from the debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the company, and the amount of the dividend can be measured reliably.

Royalty

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement (provided that it is probable that economic benefits will flow to the Company and the amount of revenue can be measured reliably). Royalty arrangements that are based on production, sales and other measures are recognized by reference to the underlying arrangement.

q) Financial instruments

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

Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortised cost.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in two broad categories:

â¢ Financial assets at fair value

â¢ Financial assets at amortised cost

A financial asset that meets the following two conditions is measured at fair value through other comprehensive

income unless the asset is designated at fair value through profit or loss under the fair value option

â¢ Business model test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

All other financial asset is measured at fair value through profit or loss.

De-recognition

â¢ The rights to receive cash flows from the asset have expired, or

neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Investment in subsidiaries

Investments in subsidiaries 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, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.

Investments in units of mutual funds

Accordingly, such net asset values are analogous to fair market value with respect to these investments, as transactions of these mutual funds are carried out at

such prices between investors and the issuers of these units of mutual funds.

r) Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and Borrowings

Financial guarantee contracts

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

s) Employee benefits

(i) Short-term obligations

(ii) Other long-term employee benefit obligations

the experience adjustments and changes in actuarial assumptions are recognized in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The Company operates the following postemployment schemes:

(a) Defined benefit plans such as gratuity; and

(b) Defined contribution plans such as provident fund.

Gratuity obligations

The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation. The benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the current in which the benefits will be paid, and that have terms approximating to the terms of the related obligation.

Remeasurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.

Defined contribution plans

(iv) Bonus plans

The group recognizes a liability and an expense for bonuses. The group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(v) Compensated absences

t) Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period.

u) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the group or the counterparty.

v) Revenue recognition

The following is summary of significant accounting policies relating to revenue recognition.

Revenue is recognised upon transfer of control of promised products or services to customers in an

amount that reflects the consideration the Company expects to receive in exchange for those products or services. To recognize revenues, we apply the following five step approach:

(1) Identify the contract with a customer,

(2) Identify the performance obligations in the contract,

(3) Determine the transaction price,

(4) Allocate the transaction price to the performance obligations in the contract, and

(5) Recognize revenues when a performance obligation is satisfied.

Sale of products

The Company recognises revenue for supply of goods to customers against orders received. The majority of contracts that company enters into relate to sales orders containing single performance obligations for the delivery of pharmaceutical products as per Ind AS 115. Product revenue is recognised when control of the goods is passed to the customer. The point at which control passes is determined based on the terms and conditions by each customer arrangement, but generally occurs on delivery to the customer. Revenue is not recognised until it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur

Sale of services

Revenue from contract research operations is recognised based on services performed till date as a percentage of total services. The agreed milestones are specified in the contracts with customers which determine the total services to be performed.

Interest income: For all debt financial instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial

liability. Interest income is included in finance income in the Statement of Profit and Loss

Export Incentives: Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds

w) Borrowing costs

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization.

Other borrowings costs are expensed in the period in which they are incurred.

x) Research and Development

Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalised. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate :

- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

- Its intention to complete and its ability and intention to use or sell the asset

- How the asset will generate future economic benefits

- The availability of resources to complete the asset

- The ability to measure reliably the expenditure during development.

The amount capitalised comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use.

y) Government Grants

Government grants are recognised at fair value as and when there is a reasonable assurance that grant will be received and all attached conditions will be complied with. When the grant is related to an expense item , it is recognised as income on systematic basis over the period of related costs , for which it is intended to compensate , are expensed . when the grant relates to an asset,it is recognised as income in equal amounts over the expected useful life of the related assets.

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

z) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

aa) Earning per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

â¢ The profit attributable to owners of the company

â¢ By the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

â¢ The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

â¢ The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

ab) Cash flow statement

Cash flows are reported using the Indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows . The cash flows from operating , financing activities of the company are segregated.

ac) Rounding of Amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

ad) Provisions, Contingent Liabilities and Contingent AssetsProvisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is prob

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Accounting Policies of Cohance Lifesciences Ltd. Company

Note 2 - Material accounting policies and keyaccounting estimates and judgements

2.1 Basis of preparation

(i) Compliance with Indian Accounting Standards (Ind AS)

(ii) Basis of measurement

(iii) Consistency of accounting policy

(iv) Functional currency and rounding of amounts

2.2 Current and non-current classification

Assets:

Liabilities:

2.3 Use of estimates and judgements

2.3.1 Judgements

(ii) Income taxes

(iii) Provisions and contingent liabilities

2.3.2 Estimates

(i) Useful lives of property, plant and equipment andintangible assets

(ii) Inventories obsolescence

(iii) Accounting for defined benefit plans

(iv) Impairment of non-financial assets

(v) Fair value of financial instruments

2.4 Property, plant and equipment

(i) Recognition and measurement

(ii) Depreciation

(iii) De-recognition

2.5 Intangible assets

(i) Recognition and measurement

(ii) Amortisation

(iii) De-recognition

2.6 Impairment of non-financial assets

2.7 Borrowing costs

2.8 Foreign currency transactions and balances

2.9 Inventories

2.10 Government grants

2.11 Revenue recognition

Sale of products

Service income

Profit sharing revenue

Other income (interest income and Others)

b) Dividends

c) Others (other than interest and dividend income)

Contract balancesContract assets

Contract liabilities

2.12 Employee benefits

(i) Short term employee benefits

(ii) Defined contribution plans

(iii) Defined benefit plansGratuity obligations

(iv) Other liabilities

2.13 Taxes

(i) Current income tax

(ii) Deferred tax

2.14 Cash and cash equivalents

a) Basis of preparation of Financial Statements

(i) Statement of compliance

(ii) Basis of measurement

b) Current versus non-current classification

An asset is treated as current when it is:

A liability is current when:

c) Segment reporting

d) Foreign currency translation

(i) Functional and presentation currency

(ii) Transactions and balances

e) Fair value measurement

f) Property, plant and equipment

Depreciation methods, estimated useful livesand residual value

g) Intangible assets

Estimated useful life :

(i) Computer software

(ii) Amortization methods and periods

h) Capital work in Progress and Intangibleassets under development

i) Impairment of non-financial assets

j) Inventories

k) Cash and cash equivalents

l) Income TaxesCurrent Tax

Deferred Tax

m) Equity

Retained earnings

Securities premium

n) Leases

The Company as a lessee

The Company as Lessor

Note 2 - Material accounting policies and key
accounting estimates and judgements

(i) Useful lives of property, plant and equipment and
intangible assets

Contract balances
Contract assets

(iii) Defined benefit plans
Gratuity obligations

Depreciation methods, estimated useful lives
and residual value

h) Capital work in Progress and Intangible
assets under development

l) Income Taxes
Current Tax

iv) Income recognition
Interest income

Financial assets
(i) Classification

Fair value through other comprehensive
income (FVOCI):

(ii) Other long-term employee benefit
obligations