Accounting Policies of Sai Life Science Ltd. Company

Mar 31, 2025

5. Summary of material accounting policies

The standalone financial statements have been prepared
using the material accounting policies and measurement basis
summarized below.

a. Current and non-current classification

All the assets and liabilities have been classified as current
or non-current as per the Company''s normal operating
cycle and other criteria set out in the Schedule III to the
Act. The Company presents assets and liabilities in the
standalone balance sheet based on current / non-current
classification.

An asset is classified as current when it is:

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

• Expected to be realised within twelve months after
the reporting date, or

• Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least
twelve months after the reporting date

A liability is classified as current when:

• It is expected to be settled in normal operating cycle

• It is due to be settled within twelve months after the
reporting date, or

• There is no unconditional right to defer the
settlement of the liability for at least twelve months
after the reporting date

Current assets / liabilities include the current portion of
non-current assets / liabilities respectively. All other assets
/ liabilities including deferred tax assets and liabilities are
classified as non-current.

b. Foreign currency transactions

Transactions in foreign currencies are translated to
the respective functional currency using the exchange
rates at the dates of the transactions or at the rate that
closely approximates the rate at the date of transactions.
The date of transaction for the purpose of determining
the exchange rate on initial recognition of the related
asset, expense or income (part of it) is the date on
which the entity initially recognises the non-monetary
asset or non-monetary liability arising from payment
or receipt of advance consideration. Monetary assets
and liabilities denominated in foreign currencies at the
reporting date are translated into the functional currency
at the exchange rate at that date. Foreign exchange
gains and losses resulting from the settlement of such

transactions and from translation at the exchange rates
prevailing at the reporting date of monetary assets
and liabilities denominated in foreign currencies are
recognised in the standalone statement of profit and loss
are reported as foreign exchange gains/ (losses), net.
Non-monetary assets and liabilities that are measured
in terms of historical cost in foreign currencies are
not translated.

c. Revenue recognition

Revenue is measured at the transaction value of the
consideration received or receivable. Contract research,
development and manufacturing services income :

In contracts involving the rendering of services/
development contracts, revenue is recognised at the point
in time in which services are rendered, in accordance with
the terms of the contracts.

In case of fixed price contracts, the customer pays a
fixed amount based on the payment schedule and the
Company recognises revenue over time on a cost-based
input method, i.e. based on the proportion of cost incurred
for work performed to total estimated cost. The directors
consider that the input method is an appropriate measure
of progress towards complete satisfaction of these
performance obligations under Ind AS 115. If the services
rendered by the Company exceed the payment, a Contract
asset (Unbilled Revenue) is recognised. If the payments
exceed the services rendered, a contract liability (Deferred
Revenue and Advance from Customers) is recognised.

If the contracts involve time-based billing, revenue is
recognised in the amount to which the Company has a
right to invoice.

In case of other contracts, revenue from the operations
is recognised when the Company transfers control of the
product. Control of the product transfers upon shipment
of the product to the customer or when the product is
made available to the customer, provided transfer of title
to the customer occurs and the Company has not retained
any significant risks of ownership or future obligations with
respect to the product shipped.

Amounts disclosed as revenue are net of returns, trade
allowances, rebates and indirect taxes.

‘ Bill and hold'' sales, in which delivery is delayed at the
buyer''s request but the buyer takes title and accepts

billing, revenue is recognised when the buyer takes
title, provided:

(a) the buyer specifically requests the deferred delivery;

(b) the product is identified separately as
belonging to buyer;

(c) the product is on hand and ready for delivery to the
buyer at the time the sale is recognised;

(d) the seller does not have ability to use product or
direct to another buyer; and

(e) the usual payment terms apply.

Interest income

Interest income is recognized on time proportion basis
taking into account the amount outstanding and rate
applicable. For all debt instruments measured at amortised
cost, interest income is recorded using the effective
interest rate (EIR) method.

Dividend income

Dividend income is recognised when the Company''s right
to receive the payment is established, which is generally,
when shareholders approve the dividend.

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.

d. Property, plant and equipment (PPE)

Recognition and measurement

Items of property, plant and equipment are measured at
cost less accumulated depreciation and accumulated
impairment losses, if any. The cost comprises purchase
price, borrowing cost if capitalization criteria are met
and directly attributable cost of bringing the asset to its
working condition for the intended use, and estimated
costs of dismantling and removing the item and restoring
the site on which it is located. Property, Plant and
Equipment not ready for its intended use at the date of
Balance Sheet are disclosed as “Capital Work in progress”.
Such items are classified to specific sections of the
Property, Plant and equipment as and when ready for
its intended use.

If significant parts of an item of PPE have different useful
lives, then they are accounted for as separate items (major
components) of PPE.

Any gain or loss on disposal of an item of PPE is
recognised in standalone statement of profit and loss.

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

Depreciation

Depreciation on items of PPE is provided on the
straight-line method, computed on the basis of useful lives
as estimated by the management which coincides with
the useful lives mentioned in Schedule II to the Companies
Act, 2013. Freehold lands are not depreciated.

The estimated useful lives of the assets are based on a
technical evaluation reflecting actual usage of assets.

Depreciation on additions / disposals is provided on a
pro-rata basis i.e. from / up to the date on which asset is
ready for use / disposed-off.

The residual values, useful lives and method of
depreciation are reviewed at each financial year-end and
adjusted prospectively, if appropriate.

e. Intangible assets

Intangible assets are initially measured at cost.
Subsequently, such intangible assets are measured at
cost less accumulated amortization and any accumulated
impairment losses, if any. Subsequent expenditure is
capitalised only when it increases the future economic
benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on

internally generated goodwill and brands, is recognised in
standalone statement of profit and loss as incurred.

The intangible assets are amortized over the
estimated useful life of the asset, on a straight line
basis. Estimated useful economic life of Intangibles
are as follows:

f. Impairment

Impairment of tangible and intangible assets

The carrying amounts of the Company''s tangible and
intangible assets are reviewed at each reporting date to
determine whether there is any indication of impairment.

If any such indication exists, then the asset''s recoverable
amount is estimated in order to determine the extent of
the impairment loss, if any.

The recoverable amount of an asset or cash-generating
unit is the greater of its value in use and its fair value
less costs to sell. 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 or the cash-generating unit for
which the estimates of future cash flows have not been
adjusted. For the purpose of impairment testing, assets
are grouped together into the smallest group of assets
that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or
groups of assets.

An impairment loss is recognised in the standalone
statement of profit and loss if the estimated recoverable
amount of an asset or its cash generating unit is lower
than its carrying amount. If, at the reporting date there is
an indication that a previously assessed impairment loss
no longer exists, the recoverable amount is reassessed
and reversed only to the extent that the asset''s carrying
amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation,
if no impairment loss had been previously recognised.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies
expected credit loss (“ECL”) model for measurement

and recognition of impairment loss on financial assets
measured at amortised cost.

Loss allowance for trade receivables with no significant
financing component, contract assets is measured at an
amount equal to lifetime expected credit losses. For all
other financial assets, ECL are measured at an amount
equal to the 12-month ECL, unless there has been a
significant increase in credit risk from initial recognition in
which case those are measured at lifetime ECL.

Loss allowance for financial assets measured at
amortised cost are deducted from gross carrying
amount of the assets.

Impairment of property, plant and equipment, intangibles
assets and capital work in progress

The Company assess at each reporting date whether
there is any indication that the carrying amount may
not be recoverable. If any such indication exists, then
the asset''s recoverable amount is estimated and an
impairment loss is recognised if the carrying amount of
an asset exceeds its estimated recoverable amount in the
standalone statement of profit and loss.

g. Inventories

Inventories are measured at the lower of cost and net
realisable value. The method of determining cost of
various categories of inventories is as follows:

(i) Raw materials - Weighted average cost.

Cost includes purchase cost and other
attributable expenses

(ii) Stores and spares and packing material -
Weighted average cost

(iii) Work-in-process - is based on average cost
of production or conversion which comprises
direct material costs, direct wages and
applicable overheads.

Net realisable value is the estimated selling price in the
ordinary course of business, less the estimated costs of
completion and selling expenses. The net realisable value
of work-in-progress is determined with reference to the
selling prices of related finished products.

h. Measurement of fair values

The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient

data are available to measure fair value, maximizing the
use of relevant observable inputs and minimizing the use
of unobservable inputs.

A number of the Company''s accounting policies and
disclosures require the measurement of fair values, for
both financial and non-financial assets and liabilities.

Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.

Level 2: inputs other than quoted prices included
in Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).

Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability,
the Company uses observable market data as far as
possible. If the inputs used to measure the fair value of an
asset or a liability fall into different levels of the fair value
hierarchy, then the fair value measurement is categorised
in its entirety in the same level of the fair value hierarchy
as the lowest level input that is significant to the
entire measurement.

The Company recognises transfers between levels of the
fair value hierarchy at the end of the reporting period
during which the change has occurred.

i. Financial instruments

Recognition and initial measurement

Trade receivables are initially recognised at transaction
price when they are originated. All other financial assets
and financial liabilities are initially recognised when the
Company becomes a party to the contractual provisions of
the instrument.

A financial asset or financial liability is initially measured at
fair value and, for an item not at fair value through profit
and loss (FVTPL), fair value plus transaction costs that
are directly attributable to its acquisition or issue, except
trade receivables, contract assets which are measured at
transaction price.

Classification and subsequent measurement
Financial assets

On initial recognition, a financial asset is
classified as measured at

• amortised cost;

• fair value through other comprehensive
income (“FVOCI”) ; or

• FVTPL

Financial assets are not reclassified subsequent to their
initial recognition, except if and in the period the Company
changes its business model for managing financial assets.

Amortised cost

A financial asset is measured at amortised cost if
it meets both of the following conditions and is not
designated as at FVTPL:

• the asset is held within a business model whose

objective is to hold assets to collect contractual
cash flows; and

• the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.

After initial measurement, 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 Other Income
in the standalone statement of profit and loss. The losses
arising from impairment are recognised in the standalone
statement of profit and loss.

FVOCI - debt investment

A debt investment is measured at FVOCI if it
meets both of the following conditions and is not
designated as at FVTPL:

• the asset is held within a business model whose
objective is achieved by both collecting contractual
cash flows and selling financial assets; and

• the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely

payments of principal and interest on the principal
amount outstanding.

Debt instruments included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised in
the other comprehensive income (OCI). However, the
Company recognises interest income, impairment losses
& reversals and foreign exchange gain or loss in the
standalone statement of profit and loss. On derecognition
of the asset, cumulative gain or loss previously recognised
in OCI is reclassified from the equity to standalone
statement of profit and loss. Interest earned whilst holding
FVTOCI debt instrument is reported as interest income
using the EIR method.

FVTOCI - Equity investment

On initial recognition of an equity investment that is
not held for trading, the Company may irrevocably elect
to present subsequent changes in the investment''s
fair value in OCI (designated as FVTOCI - equity
investment). This election is made on an investment-by¬
investment basis.

If the Company decides to classify an equity instrument as
at FVTOCI, then all fair value changes on the instrument,
including foreign exchange gain or loss and excluding
dividends, are recognised in the OCI. There is no recycling
of the amounts from OCI to profit or loss, even on sale
of investment. However, the Company may transfer the
cumulative gain or loss within equity. Equity instruments
included within the FVTPL category are measured at
fair value with all changes recognised in the standalone
statement of profit and loss.

FVTPL

All financial assets not classified as measured at
amortised cost or at FVTOCI as described above
are measured at FVTPL. This includes all derivative
financial assets. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise
meets the requirements to be measured at amortised
cost or at FVOCI as at FVTPL if doing so eliminates or
significantly reduces an accounting mismatch that would
otherwise arise.

Financial liabilities

Financial liabilities are classified as measured at amortised
cost or FVTPL. A financial liability is classified as at

FVTPL if it is classified as held- for- trading, or it is a
derivative or it is designated as such on initial recognition.
Financial liabilities at FVTPL are measured at fair value
and net gains and losses, including any interest expense,
are recognised in standalone statement of profit and
loss. Other financial liabilities are subsequently measured
at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses
are recognised in standalone statement of profit and loss.
Any gain or loss on derecognition is also recognised in
standalone statement of profit and loss.

De-recognition
Financial assets

A financial asset is primarily de-recognised when
the rights to receive cash flows from the asset have
expired or the Company has transferred its rights to
receive cash flows from the asset; or the company
has neither transferred nor retained substantially all
the risk and rewards of the asset but has transferred
control of the asset.

Trade Receivables which are subject to a factoring
arrangement without recourse are derecognized from the
Balance sheet in its entirety. Under this arrangement, the
Company transfers relevant receivables to the factor in
exchange for cash and does not retain credit risk.

Financial liabilities

The Company derecognises a financial liability when
its contractual obligations are discharged or cancelled,
or expired. The Company also derecognises a financial
liability when its terms are modified and the cash flows
under the modified terms are substantially different. In this
case, a new financial liability based on the modified terms
is recognised at fair value. The difference between the
carrying amount of the financial liability extinguished and
the new financial liability with modified terms is recognised
in profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the
net amount is reported in the standalone balance sheet
if there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities
simultaneously.

Derivative financial instruments:

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. The accounting for subsequent
changes in fair value depends on whether the derivative
is designated as a hedging instrument, and if so, the
nature of the item being hedged and the type of hedge
relationship designated.

The Company designates their derivatives as hedges of
foreign exchange risk associated with the cash flows of
highly probable forecast transactions and variable interest
rate risk associated with borrowings (cash flow hedges).

The Company documents at the inception of the hedging
transaction the economic relationship between hedging
instruments and hedged items including whether the
hedging instrument is expected to offset changes in
cash flows of hedged items. The group documents its
risk management objective and strategy for undertaking
various hedge transactions at the inception of each
hedge relationship.

The full fair value of a hedging derivative is classified
as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months; it is
classified as a current asset or liability when the remaining
maturity of the hedged item is less than 12 months.
Trading derivatives are also classified as a current asset
or liability when expected to be realised/settled within 12
months of the balance sheet date.

(i) Cash flow hedges that qualify for hedge
accounting

The effective portion of changes in the fair value
of derivatives that are designated and qualify
as cash flow hedges is recognised in the other
comprehensive income in cash flow hedging reserve
within equity, limited to the cumulative change in
fair value of the hedged item on a present value
basis from the inception of the hedge. The gain or
loss relating to the ineffective portion is recognised
immediately in profit or loss.

When option contracts are used to hedge
forecast transactions, the group designates only
the intrinsic value of the option contract as the
hedging instrument.

Gains or losses relating to the effective portion of
the change in intrinsic value of the option contracts
are recognised in the cash flow hedging reserve
within equity. The changes in the time value of the
option contracts that relate to the hedged item
(‘aligned time value'') are recognised within other
comprehensive income in the costs of hedging
reserve within equity.

When forward contracts are used to hedge forecast
transactions, the Company generally designates
only the change in fair value of the forward contract
related to the spot component as the hedging
instrument. Gains or losses relating to the effective
portion of the change in the spot component of
the forward contracts are recognised in other
comprehensive income in cash flow hedging reserve
within equity. The change in the forward element
of the contract that relates to the hedged item
(‘aligned forward element'') is recognised within
other comprehensive income in the costs of hedging
reserve within equity. In some cases, the entity may
designate the full change in fair value of the forward
contract (including forward points) as the hedging
instrument. In such cases, the gains and losses
relating to the effective portion of the change in fair
value of the entire forward contract are recognised
in the cash flow hedging reserve within equity.

Amounts accumulated in equity are reclassified to
profit or loss in the periods when the hedged item
affects profit or loss (for example, when the forecast
sale that is hedged takes place).

When the hedged forecast transaction results in the
recognition of a non-financial asset (for example
inventory), the amounts accumulated in equity are
transferred to profit or loss as follows:

• With respect to gain or loss relating to the

effective portion of the intrinsic value of option
contracts, both the deferred hedging gains
and losses and the deferred aligned time value
of the option contracts are included within the
initial cost of the asset. The deferred amounts
are ultimately recognised in profit or loss as
the hedged item affects profit or loss (for
example, through cost of sales).

• With respect to gain or loss relating to the
effective portion of the spot component of
forward contracts, both the deferred hedging
gains and losses and the deferred aligned
forward element of the forward contract

are included within the initial cost of the
asset. The deferred amounts are ultimately
recognised in profit or loss as the hedged item
affects profit or loss (for example, through
cost of sales).

• The gain or loss relating to the effective
portion of the interest rate swaps hedging
variable rate borrowings is recognised in profit
or loss within ‘finance cost''.

When a hedging instrument expires, or is sold
or terminated, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative
deferred gain or loss and deferred costs of
hedging in equity at that time remains in equity
until the forecast transaction occurs. When the
forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred
costs of hedging that were reported in equity are
immediately reclassified to profit or loss within other
gains/(losses). Hedge ineffectiveness is recognised
in profit and loss within other gains/(losses).

If the hedge ratio for risk management purposes
is no longer optimal but the risk management
objective remains unchanged and the hedge
continues to qualify for hedge accounting, the
hedge relationship will be rebalanced by adjusting
either the volume of the hedging instrument or
the volume of the hedged item so that the hedge
ratio aligns with the ratio used for risk management
purposes. Any hedge ineffectiveness is calculated
and accounted for in profit or loss at the time of the
hedge relationship rebalancing.

Dividend distribution to equity holders of the
Company

The Company recognises a liability to make
dividend distributions to equity holders of the
Company when the distribution is authorised and
the distribution is no longer at the discretion of
the Company. As per the corporate laws in India, a
distribution is authorised when it is approved by the

shareholders. A corresponding amount is recognised
directly in equity.

j. Leases

The Company evaluates if an arrangement qualifies to be a
lease as per the requirements of Ind AS 116. Identification
of a lease requires significant judgment. 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. The determination of whether
an arrangement is (or contains) a lease is based on the
substance of the arrangement at the inception of the
lease. The arrangement is, or contains, a lease if fulfilment
of the arrangement is dependent on the use of a specific
asset or assets and the arrangement conveys a right to
use the asset or assets, even if that right is not explicitly
specified in an arrangement.

Company as a lessee

The Company assesses whether a contract contains a
lease, at 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. The Company uses significant
judgement in assessing the lease term (including
anticipated renewals) and the applicable discount
rate. The determination of whether an arrangement
is (or contains) a lease is based on the substance
of the arrangement at the inception of the lease.

The arrangement is, or contains, a lease if fulfilment of the
arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the
asset or assets, even if that right is not explicitly specified
in an arrangement. At the date of commencement of
the lease, the Company recognises a right-of-use asset
(“ROU”) and a corresponding lease liability for all lease
arrangements in which it is a lessee, except for leases
with a term of twelve months or less (short-term leases)
and low value leases. For these short-term and low value
leases, the Company recognises the lease payments as
an operating expense on a straight-line basis over the
term of the lease.

The right-of-use assets are initially recognised at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses. Right-of-use assets are depreciated
from the commencement date on a straight-line basis
over the lease term and useful life of the underlying
asset. The lease liability is initially measured at amortised
cost at the present value of the future lease payments.

The lease payments are discounted using the interest
rate 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 right
of use asset if the Company changes its assessment if
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.

k. Cash and cash equivalents

Cash and cash equivalent in the standalone balance sheet
comprise cash at banks and on hand, debit balance in
cash credit accounts and short-term deposits with an
original maturity of three months or less, which are subject
to an insignificant risk of changes in value.

l. Government Grants

The Company recognises government grants only
when there is reasonable assurance that the conditions
attached to them will be complied with, and the grants
will be received. Government grants received in relation
to assets are recognised by deducting the grant from the
carrying amount of the asset. Grants related to Income are
recognized in standalone statement of profit and loss as
other operating revenues.

m. Investments in the nature of equity in subsidiaries

The Company has elected to recognise its investments in
equity instruments in subsidiaries at cost in the separate
financial statements in accordance with the option
available in Ind AS 27, ‘Separate Financial Statements''.

n. Borrowing costs

Borrowing costs are interest and other costs (including
exchange differences relating to foreign currency
borrowings to the extent that they are regarded as an

adjustment to interest costs) incurred in connection
with the borrowing of funds. Borrowing costs directly
attributable to acquisition or construction of an asset
which necessarily take a substantial period of time to get
ready for their intended use are capitalised as part of the
cost of that asset. Other borrowing costs are recognised
as an expense in the period in which they are incurred.

o. Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into
a separate entity and will have no legal or constructive
obligation to pay further amounts. Eligible employees of
the Company receive benefits from provident fund, which
is a defined contribution plan. Both the eligible employees
and the Company make monthly contributions to the
Government administered provident fund scheme equal
to a specified percentage of the eligible employee''s salary.
Amounts collected under the provident fund plan are
deposited with in a government administered provident
fund. The Company has no further obligation to the plan
beyond its monthly contributions.

Short-term employee benefits

Short-term employee benefit obligations are measured
on an undiscounted basis and are expensed during the
period as the related service is provided. These benefits
include salaries and wages, bonus and ex- gratia. 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 amount of obligation can be
estimated reliably.

Long-term employee benefits

Employee benefits payable after twelve months of
receiving employee services are classified as long-term
employee benefits. These benefits primarily include
one-off retention incentive and long-term bonus
provision, in accordance with the policy of the company.
The company accrues these costs based on the
expected pay out and the same is amortised over a
period of services.

Gratuity

The Company provides for gratuity, a defined benefit plan
(“the Gratuity Plan”) covering the eligible employees of

the Company. The Gratuity Plan provides a lump-sum
payment to vested employees at retirement, death,
incapacitation or termination of employment, of an
amount based on the respective employee''s last drawn
salary and the tenure of the employment with the
Company. Liability with regard to the Gratuity Plan is
determined by actuarial valuation, performed by an
independent actuary, at each balance sheet date using the
projected unit credit method. The defined benefit plan is
administered by a trust formed for this purpose through
the Company gratuity scheme. The Company recognises
the net obligation of a defined benefit plan as a liability
in its standalone balance sheet. Gains or losses through
re-measurement of the net defined benefit liability are
recognized in other comprehensive income and are not
reclassified to profit and loss in the subsequent periods.
The actual return of the portfolio of plan assets, in excess
of the yields computed by applying the discount rate used
to measure the defined benefit obligation is recognised
in other comprehensive income. The effect of any plan
amendments are recognised in the standalone statement
of profit and loss. The net interest on net defined benefit
liability which reflects the change in net defined benefit
liability that arises from the passage of time is considered
as employee cost and disclosed under “Employee
benefits expense”.

Compensated absences

The Company''s policy permits employees to accumulate
and carry forward a portion of unutilized compensated
absences and utilize them in future periods or receive
cash in lieu thereof in accordance with the terms of such
policy. The expected cost of accumulating compensated
absences is determined by actuarial valuation performed
by an independent actuary at each balance sheet.

Share based compensation

The cost of equity-settled transactions is determined by
the fair value at the date when the grant is made using an
appropriate valuation model. The grant date fair value of
equity settled share-based payment awards granted to
employees is recognised as an employee expense, with
a corresponding increase in equity, over the period that
the employees unconditionally become entitled to the
awards. The amount recognised as expense is based on
the estimate of the number of awards for which the related
service and non-market vesting conditions are expected
to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that

do meet the related service and non-market vesting
conditions at the vesting date.

---

Mar 31, 2024

1. Corporate information

Sai Life Sciences Limited (“the Company”) is a closely held public limited company domiciled and incorporated in India. The registered office of the Company is situated in Hyderabad, Telangana, and has facilities in the states of Telangana, Karnataka and Maharashtra, India.

The Company carries out contract research and manufacturing activities for customers engaged in pharmaceutical and biotechnology industries.

BASIS OF PREPARATION AND PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION

2. Statement of compliance

The standalone financial statements of the Company which comprise of the Standalone Balance Sheet, Standalone Statement of Profit and Loss (including Other Comprehensive Income), Standalone Statement of Changes in Equity and Standalone Statement of Cash Flows (“standalone financial statements”) have been prepared in accordance with the Indian Accounting Standards (“Ind AS”) as notified under Section 133 of the Companies Act 2013 (“the Act”) read with the Companies (Indian Accounting Standards) Rules 2015, as amended, issued by the Ministry of Corporate Affairs (‘MCA’) and other relevant provisions of the Act, as applicable. 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.

3. Basis of preparation and measurement

These standalone financial statements have been prepared for the Company as a going concern on the basis of relevant Ind AS that are effective at the Company’s annual reporting date 31 March 2024. These standalone financial statements were authorised for issuance by the Company’s Board of Directors on 21 May 2024.

These standalone financial statements have been prepared on the historical cost convention and on an accrual basis except for the following material items in the balance sheet:

• Certain financial assets and liabilities which are measured at fair value; and

• Share based payments, which are measured at fair value of the options.

Functional and presentation currency

The standalone financial statements are presented in Indian Rupee (‘INR’ or ^{1 2 3 4 5}?⁶) which is also the functional and presentation currency of the Company. All financial information presented in Indian rupees has been rounded to the nearest millions, unless otherwise stated.

Revenue recognition

The Company applies judgement to determine whether each product or service promised to a customer are capable of being distinct, and are distinct in the context of the contract, if not, the promised product or services are combined and accounted as a single performance obligation. Revenue will be recognised as the customer obtains control of the product and services promised in the Contract. Given the nature of the product and terms and conditions in case of certain contracts, the customer obtains control as the Company performs the work under the contract. Therefore, revenue is recognised over time for such contracts and for other contracts at a point in time. Judgement is involved in assessing whether the contract/agreement meets the criteria for recognition of revenue over the period on percentage of completion. Further, the Company uses the percentage of completion method to measure progress towards completion in respect of fixed price contracts. When estimates indicate that a loss will be incurred, the loss is provided for in the period in which the loss becomes probable.

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the standalone financial statements is included in the following notes:

Assumptions and estimation uncertainties

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected m t e assumptions when they occur.

Items requiring significant estimate	Assumption and estimation uncertainty
Useful lives of property, plant and equipment and Intangible assets	The Company reviews the estimated useful lives of property, plant and equipment and the intangible assets at the end of each reporting period. During the current year, there has been no change in life considered for the assets.
Estimation of net realisable value of inventories	Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale. At the end of each reporting year, the Company assess the potential usage of inventories held and judgements are involved in assessing the alternate usage and realisability of inventories. ------
Fair valuation measurement and valuation process	Some of the Company’s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. Finance team works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.
Contract assets	Contract asset is recognised when the performance obligations are fulfilled and revenue is recognised over a period of time. Judgement^''iipvolved in assessing Whether the contract/agreement meets the criteria forrecogniUon of revenue over
i		;V- m

Items requiring einnifiriiiit	Assumption and estimation uncertainty
	the period on percentage of completion. Estimates are involved in determining the percentage of completion of the contract. —.-----———--
Leases	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 the Company’s operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future years is reassessed to ensure that the lease term reflects the current economic circumstances. The Company makes an assessment of the buy back option while determining the useful life for amortising the Right of use assets. _____________—
Employee benefits	The Company uses actuarial assumptions to determine the obligations tor employee benefits at each reporting date. These assumptions include the discount rate, expected long-term rate of return on plan assets, rate of increase m compensation levels and mortality rates. -----—-—:—
Valuation of investments in subsidiaries	The Company uses assumptions to determine the valuation of investments in subsidiaries at each reporting date. These assumptions include the discount rate, Ion" term rate projected cash flows etc. ---—
Provisions, contingencies Recognition and measurement of provisions and contingencies; key assumptions about the likelihood and magnitude of an outflow of resources	The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management’s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can invo ve estimation uncertainty. Information about such litigations is disclosed in the notes to the standalone financial statements.
Loss allowance for trade receivables	Loss allowance for trade receivables with no significant fmancing component is measured at an amount equal to lifetime expected credit losses (ECL). For all other financial assets, ECL are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.---—
Government grants	The Group recognises government grants only when there is no uncertainty on compliance with conditions attached and on receipt of grants. Judgments are involved in assessing compliance with conditions and ultimate receipt of grants. ---------
Share based compensation	At the end of each reporting year, the Company revises its estimate ot the num er of equity instruments expected to vest. The impact of the revision of the origuia estimates, if any, is recognised in Statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the eciuitv-settled employee benefits reserye. -------
Provision for taxes	Significant judgments are required in determining the provision for income and deferred taxes, including the amount expected to be paid/ recovered for uncertain tax positions. In assessing the realisability of deferred income tax assets, the Management considers whether some portion or all of the deferred income tax assets will not_
-- NSLV MJf

Items requiring significant estimate
	Assumption and estimation uncertainty '' i
	be realised. The ultimate realisation of deferredmcomelax assets is denemW'' estimates of future taxablemcome during the cany forward Period are 1

5. Summary of material accounting policies

The standalone financial statements have been prepared usinv the _mQt • ,

measurement basis summarized below. P P o using the material accounting policies and

a. Current and non-current classification

terahnrcycTand to^heTtT c ^ ** ^C°^mpany’^{S noimal}

liabilities in .he standee balance sheet based on current / non-^utSfaZn. ***** ““

An asset is classified as current when it is:

" Z-Z ^0ri"^{Bnded 10 be sold or} consumed in nonnal opening cycle

. C,r i, ^rea ‘“^d ”" "" ^I“''^{dVC months atter lhe} reporting date, or ^?

StoZSEZSZSZS? ^fr°^{m W}"⁸ - — to -.1= a liability foe a, leas.

A liability is classified as current when:

• It is expected to be settled in normal operating cycle

• It is due to be settled within twelve months after the reporting date or

&“g"r^di,i°^nal ** “ ^defa *^he «“““ °^f liability for a, leas, twelve months alter

o^c.raⁿLr/w£z,uZ:^

b. Foreign currency transactions

^tac,ionsi -*¦* «-

transactions. The dale of transaction forthepurposeofdeteini’n''^yth^PPI°^X|!^m“^teS ''^{h “ lhc datc of}

Of the related asset, expense or incomJ (part ^ ftTifthe hT ^g ? ^{ange rate on initi}al recognition non-monetary asset ornon-mon3hawSv^1S“ ? ^ °^{n whlch the entit}y initially recognises the Monetary assets and liabilities denominated L foreiL ^{m payment} °^{r recei}Pt of advance consideration, the functional currency at the exchanae rate at that date ^Cp^^{enCieS at re}P^ortmg date are translated into

the settlement of such transactions and from translation atftlf“®^Xf^{hange gamS and l0SSCS resultin}S ^from

liabilities that are measured hZZsof iStZZcost''inforefiZ^rrencies Zn^tZsIatah^ ^{3SSelS and}

c. Revenue recognition

Revenue is measured at the transaction value of the consideration received or receivable.

Contract research, development and manufacturing services income •

in time ZZ^Sc''^Zrade^^aZlfSZ⁵”'' ^C°^{ntr‘S’ ''erame point}

baaed on the payment schedole and

\\*xr

Percentage of Completion. If the services rendered by the Company exceed the payment, a Contract asset (Unbilled Revenue) is recognised. If the payments exceed the services rendered,, a contract liability (Deferred Revenue and Advance from Customers) is recognised. If the contracts involve time-based billing, revenue is recognised in the amount to which the Company has a right to invoice.

Revenue from the operations is recognised when the Company transfers Control of the product. Control of the product transfers upon shipment of the product to the customer or when the product is made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the product shipped. Amounts disclosed as revenue are net of returns, trade allowances, rebates and indirect taxes.

''Bill and hold’ sales, in which delivery is delayed at the buyer’s request but the buyer takes title and accepts billing, revenue is recognised when the buyer takes title, provided:

(a) it is probable that deliver)'' will be made;

(b) the item is on hand, identified and ready for delivery to the buyer at the time the sale is recognised;

(c) the buyer specifically acknowledges the deferred delivery instructions; and

(d) the usual payment terms apply.

Revenue is not recognized when there is simply an intention to acquire or manufacture the goods in time for delivery.

Interest income

Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. For all debt instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR) method.

Dividend income

Dividend income is recognised when the Company’s right to receive the payment is established, which is generally, when shareholders approve the dividend.

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.

d. Property, plant and equipment (PPE)

Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located. Property, Plant and Equipment not ready for its intended use at the date of Balance Sheet are disclosed as "Capital Work in progress”. Such items are classified to specific sections of the Property, Plant and equipment as and when ready for its intended use.

If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.

Any gain or loss on disposal of an item of PPE is recognised in standalone statement of profit and loss.

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

Depreciation

Depreciation on items of PPE is provided on the straight-line method, computed on the basis of useful lives as estimated by the management which coincides with the useful lives mentioned in Schedule II to the Companies Act, 2013. Freehold land are not depreciated.

The estini ated useful lives of the assets are based on a technical evaluation reflecting actual usage of assets.

Asset Category	Estimated useful life (in years)
Buildings	30
Leasehold improvements	Over the lease period or over the useful life of asset if the Company is certain to opt for purchase option
Plant and equipment	3 - 20
Furniture	10
Freehold Vehicles	4-10
Freehold Computers	3-6
Depreciation on additions / disposals is provided on a pro-rata basis i.e. from / up to the date on which asset is ready for use / disposed-off.

The residual values, useful lives and method of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

e. Intangible assets

Intangible assets are initially measured at cost. Subsequently, such intangible assets are measured at cost less accumulated amortization and any accumulated impairment losses, if any. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in standalone statement of profit and loss as incurred.

The intangible assets are amortized over the estimated useful life of the asset, on a straight line basis. Estimated useful economic life of Intangibles are as follows:

Asset Category	Estimated useful life (in years)
Acquired Software	i 1-6

f. Impairment

Impairment of tangible and intangible assets

The carrying amounts of the Company’s tangible and intangible assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated in order to determine the extent of the impairment loss, if any.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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 or the cash-generating unit for w hich the estimates of future cash flows have not been adjusted. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets.

An impairment loss is recognised in the standalone statement of profit and loss if the estimated recoverable amount of an asset or its cash generating unit is lower than its carrying amount. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been previously recognised.

Impairment of financial assets

In accordance with Ind AS 109, the Company applies expected credit loss (“ECL”) model for measurement and recognition of impairment loss on financial assets measured at amortised cost.

Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime expected credit losses. For all other financial assets, ECL are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.

Loss allowance for financial assets measured at amortised cost are deducted from gross carrying amount of the assets.

Impairment of property, plant and equipment, intangibles assets and capital work in progress The Company assess at each reporting date whether there is any indication that the carrying amount may not be recoverable. If any such indication exists, then the assef s recoverable amount is estimated and an impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount in the standalone statement of profit and loss.

g. Inventories

Inventories are measured at the lower of cost and net realisable value. The method of determining cost of various categories of inventories is as follows:

(i) Raw materials - Weighted average cost. Cost includes purchase cost and other attributable expenses

(ii) Stores and spares and packing material - Weighted average cost

(iii) Finished goods and work-in-process - is based on average cost of production or conversion which comprises direct material costs, direct wages and applicable overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished products.

h. Measurement of fair values

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

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall injp^ffi£r|ut levels of

f/fa s''n

the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

i. Financial instruments

Recognition and initial measurement

Trade receivables are initially recognised at transaction price when they are originated. All other financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value and, for an item not at fair value through profit and loss (FVTPL), fair value plus transaction costs that are directly attributable to its acquisition or issue, except trade receivables which are measured at transaction price.

Classification and subsequent measurement

Financial assets

On initial recognition, a financial asset is classified as measured at

• amortised cost;

• fair value through other comprehensive income (“FVOCf⁵) - debt investment;

• FVOCI - equity investment; or

• FVTPL

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.

Amortised cost

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial measurement, 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 Other Income in the standalone statement of profit and loss. The losses arising from impairment are recognised in the standalone statement of profit and loss.

FVOCI - debt investment

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• the contractual terms of the financial asset give rise on specified dates to casi^i^^tjiat are solely payments of principal and interest on the principal amount outstanding.

My

pfesafp

Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gain or loss in the standalone statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to standalone statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.

FVTOCI - Equity investment

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI (designated as FVTOCI - equity investment). This election is made on an investment-by-investment basis.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, including foreign exchange gain or loss and excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit or loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the standalone statement of profit and loss.

FVTPL

All financial assets not classified as measured at amortised cost or at FVTOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held- for- trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in standalone statement of profit and loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in standalone statement of profit and loss. Any gain or loss on derecognition is also recognised in standalone statement of profit and loss.

De-recognition Financial assets

A financial asset is primarily de-recognised when the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset; or the company has neither transferred nor retained substantially all the risk and rewards of the asset but has transferred control of the asset.

Trade Receivables which are subject to a factoring arrangement without recourse are derecognized from the Balance sheet in its entirety. Under this arrangement, the Company transfers relevant receivables to the factor in exchange for cash and does not retain credit risk

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired. The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference betweendie. carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Derivative financial instruments:

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. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.

The Company designates their derivatives as hedges of foreign exchange risk associated with the cash flows of highly probable forecast transactions and variable interest rate risk associated with borrowings (cash flow hedges).

The Company documents at the inception of the hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset changes in cash flows of hedged items. The group documents its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are also classified as a current asset or liability when expected to be realised/settied within 12 months of the balance sheet date.

(i) Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the other comprehensive income in cash flow hedging reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

When option contracts are used to hedge forecast transactions, the group designates only the intrinsic value of the option contract as the hedging instrument.

Gains or losses relating to the effective portion of the change in intrinsic value of the option contracts are recognised in the cash flow hedging reserve within equity. The changes in the time value of the option contracts that relate to the hedged item (''aligned time value'') are recognised within other comprehensive income in the costs of hedging reserve within equity.

When forward contracts are used to hedge forecast transactions, the group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognised in other comprehensive income in cash flow hedging reserve within equity. The change in the forward element of the contract that relates to the hedged item (''aligned forward element'') is recognised within other comprehensive income in the costs of hedging reserve within equit^Jjgsbtne cases, the entity may designate the full change in fair value of the forward contract (including forward points) as the hedging instrument. In such cases, the gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognised in the cash flow hedging reserve within equity.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place).

When the hedged forecast transaction results in the recognition of a non-financial asset (for example inventory), the amounts accumulated in equity are transferred to profit or loss as follows:

• With respect to gain or loss relating to the effective portion of the intrinsic value of option contracts, both the deferred hedging gains and losses and the deferred aligned time value of the option contracts are included within the initial cost of the asset. The deferred amounts are ultimately recognised in profit or loss as the hedged item affects profit or loss (for example, through cost of sales).

• With respect to gain or loss relating to the effective portion of the spot component of forward contracts, both the deferred hedging gains and losses and the deferred aligned forward element of the forward contract are included within the initial cost of the asset. The deferred amounts are ultimately recognised in profit or loss as the hedged item affects profit or loss (for example, through cost of sales).

• The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in profit or loss within ''finance cost''.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging that were reported in equity are immediately reclassified to profit or loss within other gains/(losses). Hedge ineffectiveness is recognised in profit and loss within other gains/(losses).

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

Dividend distribution to equity holders of the Company

The Company recognises a liability to make dividend distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised w^rhen it is approved by the shareholders. A corresponding amount is recognised directly in equity.

j. Leases

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. 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. The determination of whether an arrangement is (or contains) a lease is based on the substStfci^fJthe arrangement at the inception of the lease. The arrangement is, or contains, a lease if/ftmiifienFbft|e\

iff (^Sai)tj)

arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Company as a lessee

The Company assesses whether a contract contains a lease, at 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. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. At the date of commencement of the lease, the Company recognises a right-of-use asset (“ROIT) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impainnent losses. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the lease term and useful life of the underlying asset. The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate 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 right of use asset if the Company changes its assessment if 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.

k. Cash and cash equivalents

Cash and cash equivalent in the standalone balance sheet comprise cash at banks and on hand, debit balance in cash credit accounts and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

l. Government Grants

The Company recognises government grants only when there is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants received in relation to assets are recognised by deducting the grant from the carrying amount of the asset. Grants related to Income are recognized in standalone statement of profit and loss as other operating revenues.

m. Investments in the nature of equity in subsidiaries

The Company has elected to recognise its investments in equity instruments in subsidiaries at cost in the separate financial statements in accordance with the option available in Ind AS 27, ‘Separate Financial Statements''.

n. Borrowing costs

Borrowing costs are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

o. Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Eligible employees of the Company receive benefits from provident fund, which is a defined contribution plan. Both the eligible employees and the Company make monthly contributions to the Government administered provident fund scheme equal to a specified percentage of the eligible employee''s salary. Amounts collected under the provident fund plan are deposited with in a government administered provident fund. The Company has no further obligation to the plan beyond its monthly contributions.

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed during the period as the related service is provided. These benefits include salaries and wages, bonus and ex-gratia. 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 amount of obligation can be estimated reliably.

Long-term employee benefits

Employee benefits payable after twelve months of receiving employee services are classified as long-term employee benefits. These benefits primarily include one-off retention incentive and long-term bonus provision, in accordance with the policy of the company. The company accrues these costs based on the expected pay out and the same is amortised over a period of services.

Gratuity

The Company provides for gratuity, a defined benefit plan (“the Gratuity Plan”) covering the eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s last drawn salary and the tenure of the employment with the Company. Liability with regard to the Gratuity Plan is determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The defined benefit plan is administered by a trust formed for this purpose through the Company gratuity scheme. The Company recognises the net obligation of a defined benefit plan as a liability in its standalone balance sheet. Gains or losses through re-measurement of the net defined benefit liability are recognized in other comprehensive income and are not reclassified to profit and loss in the subsequent periods. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation is recognised in other comprehensive income. The effect of any plan amendments are recognised in the standalone statement of profit and loss. The net interest on net defined benefit liability which reflects the change in net defined benefit liability that arises from the passage of time is considered as employee cost and disclosed under “Employee benefits expense”.

Compensated absences

The Company''s policy permits employees to accumulate and carry forward a portion of unutilized compensated absences and utilize them in future periods or receive cash in lieu thereof in accordance with the terms of such policy. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet.

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The grant date fair value of equity settled share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as expense is based on the estimate of the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesting date.

p. Provisions, contingent liabilities and contingent assets

Provisions are recognized only when there is a present obligation, as a result of past events, and when a reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their present values, where the time value of money is material.

Contingent liability is disclosed for:

• Possible obligations which will be confirmed only by future events not wholly within the control of the Company; or

• Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.

q. Income taxes

Tax expense recognized in standalone statement of profit and loss consists of current and deferred tax except to the extent that it relates to items recognised in OCI or directly in equity, in which case it is recognised in OCI or directly in equity respectively.

Calculation of current tax is based on tax rates and tax laws that have been enacted for the reporting period and any adjustment to tax payable in respect of previous years. Current tax assets and tax liabilities are offset where the Company 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.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax liability are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.

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. Withholding tax arising out of payment of dividends to shareholders under the Indian Income tax regulations is not considered as tax expense for the Company and all such taxes are recognised in the statement of changes in equity as part of the associiLteidividend payment.

r. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding during the year for the effects of all dilutive potential equity shares.

s. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

t. Goods and Service Tax Input credit

Goods and Service tax input credit is accounted for in the books in the year in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

u. Operating cycle

As mentioned in paragraph 1 above, the Company is into contract research and manufacture of pharmaceutical products. Based on the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months. The above basis is used for classifying the assets and liabilities into current and non-current as the case may be.

1

Use of estimates and judgements

2

The preparation of standalone financial statements in conformity with Ind AS requires management to make

3

judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the standalone Ind AS financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the standalone financial statements in the period in which such changes are made and in any future periods affected.

4

Critical judgements in applying accounting policies

5

The following are the critical judgements, apart from those involving estimations, that the directors have made