Accounting Policies of Senores Pharmaceuticals Ltd. Company

Mar 31, 2025

3. MATERIAL ACCOUNTING POLICIES

3.1 Revenue Recognition:

Revenue from contracts with customers is
recognised when control of the goods or services

are transferred to the customer at an amount that
reflects the consideration entitled in exchange for
those goods or services. The Company is generally
the principal as it typically controls the goods or
services before transferring them to the customer.

3.1.1 Sale of Goods

Revenue is generated primarily from Selling of
Pharmaceuticals and other related products.
Revenue is recognised at the point in time when
the performance obligation is satisfied and control
of the goods is transferred to the customer in
accordance with the terms of customer contracts.
Generally, control is transferred upon shipment of
goods to the customer or when the goods 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 goods shipped.
Revenue is adjusted for variable consideration
such as discounts, rebates, refunds, credits, price
concessions, incentives, or other similar items in
a contract when they are highly probable to be
provided.

In revenue arrangements with multiple performance
obligations, the Company accounts for individual
products and services separately if they are distinct
- i.e. if a product or service is separately identifiable
from other items in the arrangement and if a
customer can benefit from it. The consideration is
allocated between separate products and services
in the arrangement based on their stand-alone
selling prices. Revenue from sale of by products are
included in revenue.

A contract liability is the obligation to transfer
goods to the customer for which the Company has
received consideration from the customer. Contract
liabilities are recognised as revenue when the
Company performs under the contract.

3.1.2 Sale of Services

Revenue is recognized from rendering of services
when the performance obligation is satisfied
and the services are rendered at point in time or
over the period of time in accordance with the
terms of customer contracts. In certain instances,
income from Licensing arrangement arises from
the Completion of certain milestones over certain
period of time and recognised and when the
performance obligation is satisfied. Revenue is
measured based on the transaction price, which is
the consideration, as specified in the contract with

the customer. Revenue also excludes taxes collected
from customers.

A contract liability is the obligation to render
services to the customer for which the Company
has received consideration from the customer.
Contract liabilities are recognised as revenue when
the Company performs under the contract.

3.1.3 Export Incentive

Export incentives are accounted on accrual basis
at the time of export of goods, if the entitlement
can be estimated with reasonable accuracy and
conditions precedent to claim are fulfilled.

3.2 Other Income

a. Interest Income

I nterest income is recognized using effective
interest rate method. The effective interest
rate is the rate that exactly discounts estimated
future cash receipts through expected life of
the financial asset to the gross carrying amount
of the 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
but does not consider the expected credit
losses.

b. Dividend income

Dividend are recognised in the Statement of
Profit and 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.

Gain or loss on derecognition of Financial
Assets

Gain or Loss on derecognition of financial asset
is determined as the difference between the
sale price (net of selling costs) and carrying
value of financial asset.

All other Incomes are recognised and
accounted for on accrual basis

3.3 Property, Plant and Equipment

All other items of property, plant and equipment
are stated at historical cost less accumulated
deprecation and accumulated impairment losses,
if any. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
The cost comprises the purchase price, borrowing
cost if capitalization criteria are met and directly
attributable cost of bringing the asset to its working

condition for its intended use. Any trade discounts
and rebates are deducted in arriving at the purchase
price.

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

All other expenses on existing fixed assets, including
day-to-day repair and maintenance expenditure
and cost of replacing parts, are charged to the
statement of profit and loss for the period during
which such expenses are incurred.

For transition to Ind AS, the carrying value of
Property Plant and Equipment under previous
GAAP as on April 01,2021 is regarded as its cost. The
carrying value was original cost less accumulated
depreciation and cumulative impairment.

Property, Plant and Equipment not ready for the
intended use on the date of the Balance Sheet are
disclosed as "Capital work-in-progress".

Gains or losses arising from derecognition of fixed
assets are measured as the difference between the
net disposal proceeds and the carrying amount of
the asset at the time of disposal and are recognized
in the statement of profit and loss when the asset is
derecognized.

Depreciation on Tangible Assets is calculated on
written down value method basis using the ratio
arrived as per the useful life prescribed under
Schedule II to the Companies Act, 2013.

Depreciation on Tangible Assets is calculated on
written down value method basis using the ratio
arrived as per the useful life on the basis of expert
opinion received from chartered Engineer ,the same
is as under :

on a pro-rata basis from the date on which such
asset is ready to use.

The residual value, useful live and method of
depreciation of Property, Plant and Equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.

Intangible Assets

Intangible assets are recognised when it is
probable that the future economic benefits that are
attributable to the asset will flow to the Company
and the cost of the asset can be measured reliably.
Intangible assets are stated at original cost net of
tax/duty credits availed, if any, less accumulated
amortization and cumulative impairment. All
directly attributable costs and other administrative
and other general overhead expenses that are
specifically attributable to acquisition of intangible
assets are allocated and capitalized as a part of the
cost of the intangible assets.

Research and Development
Expenditure on research activities is recognised
in statement of profit and loss as incurred.
Development expenditure is capitalized as part of
the cost of the resulting intangible asset only if the
expenditure can be measured reliably, the product
or process is technically and commercially feasible,
future economic benefits are probable, and the
Company intends to and has sufficient resources
to complete development and to use or sell the
asset. Otherwise, it is recognised in statement of
profit and loss as incurred. Subsequent to initial
recognition, the asset is measured at cost less
accumulated amortization and any accumulated
impairment losses.

Depreciation on Intangible Asset is calculated as
per Straight Line method (SLM) based on useful life
of the asset as under;

3.4 Financial Instruments
3.4.1Initial recognition

The company recognizes financial assets and
financial liabilities when it becomes a party to the
contractual provisions of the instrument.

All financial assets and liabilities are recognized at
fair value on initial recognition.

Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial

liabilities, which are not at fair value through profit
or loss, are added to or deducted from the fair value
of financial assets or financial liabilities on initial
recognition.

Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities
at fair value through profit or loss are recognised
immediately in profit or loss.

Regular way purchase and sale of financial assets
are accounted for at trade date.

3.4.2. Subsequent Measurement

a. Non-derivative financial instruments

i. Financial assets measured at amortized
cost

A financial asset is subsequently measured
at amortized cost if it is held within a
business model whose objective is to hold
the asset in order to collect contractual
cash flows and the contractual terms of the
financial asset give rise on specified dates
to cash flows that are solely payments
of principal and interest on the principal
amount outstanding.

ii. Financial assets measured at fair value
through other comprehensive income
(FVOCI)

A financial asset is subsequently measured
at fair value through other comprehensive
income if it is held within a business
model whose objective is achieved by
both collecting contractual cash flows and
selling financial assets and the contractual
terms of the financial asset give rise on
specified dates to cash flows that are
solely payments of principal and interest
on the principal amount outstanding.

iii. Financial assets measured at fair value
through profit or loss (FVTPL)

A Financial Asset which is not classified in
any of the above categories are measured
at FVTPL. Financial assets are reclassified
subsequent to their recognition, if the
Company changes its business model for
managing those financial assets. Changes
in business model are made and applied
prospectively from the reclassification
date which is the first day of immediately
next reporting period following the
changes in business model in accordance
with principles laid down under Ind AS
109 - Financial Instruments.

iv. Financial liabilities

Financial liabilities and equity instruments
issued by the Company are classified
according to the substance of the
contractual arrangements entered into
and the definitions of a financial liability
and an equity instrument.

Interest bearing bank loans, overdrafts
and issued debt are initially measured at
fair value and are subsequently measured
at amortized cost using the effective
interest rate method. Any difference
between the proceeds (net of transaction
costs) and the settlement or redemption
of borrowings is recognised over the term
of the borrowings in the statement of
profit and loss.
b. Equity instruments

An equity instrument is a contract that
evidences residual interest in the assets of the
company after deducting all of its liabilities.
Incremental costs directly attributable to the
issuance of equity instruments are recognized
as a deduction from equity instrument net of
any tax effects.

3.4.3 Effective Interest rate (EIR) method

The effective interest method is a method of
calculating the amortized cost of a financial
instrument and of allocating interest income or
expense over the relevant period. The effective
interest rate is the rate that exactly discounts future
cash receipts or payments through the expected life
of the financial instrument, or where appropriate, a
shorter period.

3.4.4 De-recognition

The company derecognizes a financial asset when
the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset
and the transfer qualifies for derecognition under
Ind AS 109. A financial liability is derecognized when
obligation specified in the contract is discharged or
cancelled or expires.

3.4.5 Off-setting

Financial assets and liabilities are offset and the net
amount is presented in the balance sheet when the
company currently has a legally enforceable right to
offset the recognized amounts and intends either
to settle on a net basis or to realize the asset and
settle the liability simultaneously.

3.5 Fair Value Measurement

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 assumes that the
transaction to sell the asset or transfer the liability
takes place either:

- In the principal market for the asset or liability,
or

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

A fair value measurement of a non-financial asset
takes into account a market participant''s ability to
generate economic benefit 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 is available to measure fair value,
maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorized within the fair value hierarchy. The
fair value hierarchy is based on inputs to valuation
techniques that are used to measure fair value that
are either observable or unobservable and consists
of the following three levels:

Level 1 - inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities
Level 2 - inputs are other than quoted prices
included within level 1 that are observable for the
asset or liability either directly (i.e. as prices) or
indirectly (i.e. derived prices)

Level 3 - inputs are not based on observable
market data (unobservable inputs). Fair values are
determined in whole or in part using a valuation
model based on assumption that are neither
supported by prices from observable current
market transactions in the same instrument nor are
they based on available market data.

3.6 Lease

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. The Company uses significantjudgement
in assessing the lease term (including anticipated
renewals) and the applicable discount rate.

The company applies single recognition and
measurement approach for all leases, except for
short term leases and leases of low- value assets.
At the date of commencement of the lease, the
Company recognizes 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 leases of low value assets.

I. Right of Use Assets

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. In case of rent deposits carried at rate
less than market rate, Initial direct costs of right
of use assets includes the difference between
present value of the Right of Use Assets and
Nominal Amount of the deposit. 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:

Useful life of the asset is as follows:

II. Lease Liabilities:

At the commencement date of the lease, the
Company recognizes 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. In calculating
the present value, the lease payments are
discounted using the interest rate implicit in
the lease or, if not readily determinable, using
the Company''s incremental borrowing rates.

III. Short Term Leases and Leases of Low-Value
Assets

The Company determines the lease term as
the non-cancellable period of a lease, together
with both periods covered by an option to
extend the lease if the Company is reasonably
certain to exercise that option; and periods
covered by an option to terminate the lease
if the Company is reasonably certain not to
exercise that option. In assessing whether the
Company is reasonably certain to exercise an
option to extend a lease, or not to exercise an
option to terminate a lease, it considers all
relevant facts and circumstances that create
an economic incentive for the Company to
exercise the option to extend the lease, or not
to exercise the option to terminate the lease.
The Company revises the lease term if there
is a change in the non-cancellable period of a
lease. For these short-term and leases of low
value assets, the Company recognizes the
lease payments as an operating expense on a
straight-line basis over the term of the lease.

3.7 Income Tax

The income tax expense or credit for the period
is the tax payable on the current period''s taxable
income based on the applicable income tax rate,
adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and
to unused tax losses.

3.7.1 Current Tax

The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the end of the reporting period. Management
periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes
provisions, wherever appropriate, on the basis of
amounts expected to be paid to the tax authorities.
Current tax is recognised in the Statement of Profit
and Loss, except to the extent that it relates to
items recognized in Other Comprehensive Income
or directly in equity. In this case, the tax is also
recognised in Other Comprehensive Income or
directly in equity, respectively.

Current tax for current and prior periods is
recognized at the amount expected to be paid to
or recovered from the tax authorities, using the
tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date.

Current tax assets and current tax liabilities are
offset, where company has a legally enforceable
right to set off the recognized amounts and where
it intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously.

3.7.2 Deferred Tax

Deferred tax is recognized in profit or loss, except
when it relates to items that are recognized in
other comprehensive income or directly in equity,
in which case, the deferred tax is also recognized in
other comprehensive income or directly in equity,
respectively.

Deferred tax liabilities are recognized for all taxable
temporary differences, except to the extent that the
deferred tax liability arises from initial recognition
of goodwill; or initial recognition of an asset or
liability in a transaction which is not a business
combination and at the time of transaction, affects
neither accounting profit nor taxable profit or loss.

Deferred tax assets are recognized for all deductible
temporary differences, carry forward of unused
tax losses and carry forward of unused tax credits
to the extent that it is probable that taxable profit
will be available against which those temporary
differences, losses and tax credit can be utilized,
except when deferred tax asset on deductible
temporary differences arise 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 accounting profit
nor taxable profit or loss.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply to the period
when the asset is realized or the liability is settled,
based on the tax rules and tax laws that have been
enacted or substantively enacted by the end of the
reporting period.

Deferred tax assets and deferred tax liabilities are
offset, where company has a legally enforceable
right to set off the recognized amounts and where
it intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
Deferred tax assets are reviewed at each reporting
date and are reduced to the extent that it is no
longer probable that the related tax benefit will be
realized.

3.8 Impairment

3.8.1Financial assets

The Company recognizes loss allowances for
expected credit losses on financial assets measured
at amortized cost.

At each reporting date, the Company assesses
whether financial assets carried at amortized cost is
credit impaired. A financial asset is ''credit -impaired''
when one or more events that have a detrimental
impact on the estimated future cash flows of the
financial asset have occurred.

Loss allowances for trade receivables are always
measured at an amount equal to lifetime expected
credit losses. The Company follows ''simplified
approach'' for recognition of impairment loss
allowance on trade receivables. Under the
simplified approach, the Company is not required
to track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime
expected credit losses together with appropriate
management estimates for credit loss at each
reporting date, right from its initial recognition.

The Company uses a provision matrix to determine
impairment loss allowance on the group of trade
receivables. The provision matrix is based on its
historically observed default rates over the expected
life of the trade receivable and is adjusted for
forward looking estimates. At every reporting date,
the historical observed default rates are updated
and changes in the forward-looking estimates are
analyzed.

3.8.2 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 the company
estimates the asset''s recoverable amount.

An asset''s recoverable amount is the higher of an
assets net selling price and its value in use. The
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 groups of assets.

Where the carrying amount of an asset exceeds
its recoverable amount, the asset is considered
impaired and is written down to its recoverable
amount. The impairment loss is recognized in the
statement of profit and loss.

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 net selling price, recent market
transactions are taken into account, if available. If no
such transactions can be identified, an appropriate
valuation model is used.

3.9 Borrowing Costs

Borrowing cost includes interest and other costs
that company has incurred in connection with the
borrowing of funds.

Borrowing costs directly attributable to the
acquisition, construction or production of an asset
that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized
as part of the cost of the respective asset.

All other borrowing costs are charged to the
Statement of Profit and Loss for the period for
which they are incurred.

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

3.10 Employee Benefits

3.10.1 Short Term employee benefits

Short term employee benefits for salary and wages
including accumulated leave that are expected to
be settled wholly within 12 months after the end of
the reporting period in which employees render the
related service are recognized as an expense in the
statement of profit and loss.

3.10.2 Post- employment benefits
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 salary and the tenure
of the employment with the Company.

Liability with regard to the Gratuity Plan are

determined by actuarial valuation,

performed by an independent actuary, at each

balance sheet date using the projected unit credit

method.

The Company recognises the net obligation of a
defined benefit plan as a liability in its balance sheet.
Gains or losses through re-measurement of the net
defined benefit liability are recognised in other
comprehensive income and are not reclassified to
profit and loss in the subsequent periods. Actuarial
gains and losses arise due to difference in the
actual experience and the assumed parameters
and also due to changes in the assumptions used
for valuation. The Company recognizes these

remeasurements in the Other Comprehensive
Income (OCI).

Provident Fund

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 have
no further obligation to the plan beyond its monthly
contributions.

3.10.3 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.