Goldline Pharmaceutical Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

(b) Significant accounting policies.

1. Basis of Preparation

The financial statements of the Company have been prepared in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards
prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies
(Accounts) Rules, 2014. The financial statements have been prepared on accrual basis under the
historical cost convention.

Accounting policies are consistently applied except where a newly issued accounting standard is
initially adopted or a revision to an existing accounting standard requires a change in accounting
policy hitherto in use. Where a change in accounting policy is necessitated due to changed
circumstances, detailed disclosures to that effect along with the impact of such change is duly
disclosed in the financial statements.

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

2. Use of Estimate

The preparation of the financial statements in conformity with Indian GAAP requires the
Management to make estimates and assumptions considered in the reported amounts of assets and
liabilities and disclosures relating to contingent liabilities as at the date of the financial statements
and the reported amounts of income and expenditure during the year. Examples include provisions
for doubtful debts, provision for employee benefits, provision for taxation, useful lives of depreciable
assets, provision for impairment, provision for contingencies, provision for warranties / discounts etc.
The management believes that the estimates used in preparation of the financial statements are
prudent and reasonable.

Future results could differ from those estimates. The effect of changes in accounting estimates are
reflected in the financial statements in the period in which results are known and, if material, are
disclosed in the financial statements.

3. Revenue recognition

Revenue from the sale of pharmaceutical products is recognized when the significant risks and
rewards of ownership have been transferred to the buyer, and no significant uncertainty exists
regarding the amount of consideration that will be derived from the sale.Transfer of risks and rewards
typically coincides with the delivery of goods to the customer''s premises or dispatch to the carrier,
governed by the specific contractual shipping terms. Revenue is recognized net of trade discounts,
volume rebates, and sales tax/Goods and Services Tax (GST)

Variable Consideration and Estimation Uncertainties: In accordance with the conservative
principles of AS 9 and the recognition criteria of AS 29, revenue is adjusted for variable factors where
reasonable estimates can be made:

Trade Discounts, Rebates, and Incentives: Trade discounts, volume-linked rebates, and prompt
payment incentives offered to wholesalers or distributors are deducted directly from the turnover to
arrive at net sales, provided the obliging event or volume threshold is met within the reporting period.
Sales Returns and Product Expiries: The company faces obligations for product returns arising
from shelf-life expiries, transit damages, or commercial return agreements. Gross turnover is
recognized upon transfer of risks and rewards, while a separate Provision for Sales Returns is
concurrently created.

Measurement of Provision: This provision is measured based on a reliable estimate using historical
return trends, product expiry profiles, and current market inventory levels. It is charged directly to
the Statement of Profit and Loss as a reduction from revenue or as an expense, ensuring that revenue
is not overstated

4. Inventories

Basis of Measurement: Inventories are valued at the lower of cost and net realizable value.

Cost Formula (FIFO Method): The cost of inventories is determined using the First-In, First-Out
(FIFO) formula. Under this method, items of inventory that are purchased or received first are
assumed to be sold or issued first. Consequently, the items remaining in inventory at the end of the
period are treated as those most recently purchased.

Components of Cost: Cost comprises all costs of purchase, costs of conversion, and other costs
incurred in bringing the inventories to their present location and condition. Trade discounts, rebates,
subsidies, and other similar items are deducted in determining the costs of purchase.

Net Realizable Value: Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs necessary to make the sale.

5. Property, plant and equipment

Property, Plant and Equipment are stated at cost of acquisition/construction less accumulated
depreciation and impairment losses, if any. Cost comprises purchase price, duties, taxes and any
directly attributable expenditure incurred in bringing the asset to its working condition for its intended
use.

Goods and Services Tax (GST) paid on acquisition of Property, Plant and Equipment is accounted
for as follows:

where input tax credit of GST is available, the GST component is excluded from the cost of the asset
and recognized as an input tax credit receivable; and where input tax credit of GST is not available
or is subsequently disallowed, the related GST amount is capitalized as part of the cost of the
respective asset in accordance with Accounting Standard (AS) 10 - “Property, Plant and Equipment
/ Fixed Assets”.

Depreciation is provided on the depreciable amount of assets over their useful lives in the manner
prescribed under Schedule II to the Companies Act, 2013 / on the basis of management’s estimate of
useful life, as applicable.

In case of certain assets included in above table, the Company uses useful life different from those
specified in Schedule II of the Act which is duly supported by technical evaluation of management.
The management believes that these estimated useful lives are realistic and reflect fair approximation
of the period over which the assets are likely to be used.

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

Depreciation methods, estimated useful lives and residual values are reviewed at each reporting date.
Depreciation on addition to PPE or on disposal of PPE is calculated pro-rata from the month of such
addition or up to the month of such disposal as the case may be. The residual values are not more
than 5% of the original cost of the asset. Capital work-in-progress includes PPE under construction
and not ready for intended use as on the balance sheet date.

6. Investment

Investments are either classified as current or long-term, based on Management’s intent at the time
of making the investment. Current investments are carried individually, at the lower of cost and fair
value. Long-term investments are carried individually at cost less provision made to recognise any
diminution, other than temporary, in the value of such investment. Cost of investments includes
acquisition charges such as brokerage, fees and duties. Provision is made to recognise any reduction
in the carrying value of long-term investments and any reversal of such reduction is credited to the
Statement of Profit and Loss.

6. Employee Benefits

Employee benefits include provided fund, superannuation fund, employee’s state insurance scheme,
gratuity fund and compensated absences.

Defined contribution plans

Contributions in respect of Employees Provident Fund and Pension Fund which are defined
contribution schemes, are made to a fund administered and managed by the Government of India and
are charged as an expense based on the amount of contribution required to be made and when service
are rendered by the employees.

Defined benefit plans

The Company also provides for other retirement benefits in the form of gratuity. The Company
accounts for its liability towards Gratuity based on actuarial valuation made by an independent
actuary as at the balance sheet date based on projected unit credit method. Actuarial gains and losses
are recognised in the Statement of Profit and Loss in the period in which they occur.

Other short-term employee benefits

Other short-term employee benefits, performance incentives expected to be paid in exchange for the
services rendered by employees are recognised during the period when the employee renders service

7. Taxes on Income

A provision is made for income tax annually, based on tax liability computed, after considering tax
allowances and exemptions. Tax expense for a year comprises of current tax and deferred tax.

Deferred tax is provided using the Balance Sheet method on temporary differences between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date. Deferred tax is recognised on timing difference, being the difference between the
taxable income and the accounting income that originate in one period and are capable of reversal in
one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted
or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing
differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed
depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient
future taxable income will be available to realise the assets. Deferred tax assets and liabilities are
offset if such items relate to taxes on income levied by the same governing tax laws and the Company
has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet
date for their realisability.

MAT credit

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is
convincing evidence that the Company will pay normal income tax during the specified period. In
the year in which the MAT credit becomes eligible to be recognised as an asset, in accordance with
the provisions contained in the Guidance Note on Accounting for Credit Available under Minimum
Alternate Tax, issued by the ICAI, the said asset is created by way of a credit to the Statement of
Profit and Loss and shown as ‘MAT Credit Entitlement’. The Company reviews the same at each
Balance Sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent
there is no longer convincing evidence to the effect that the Company will pay normal income tax
during the specified period.

Advance taxes and provisions for current income taxes are presented in the balance sheet after off¬
setting advance tax paid and income tax provision arising in the same tax jurisdiction and the intention
is to settle the asset and liability on net basis.

8. Earning Per Share

Basic earnings per share are calculated by dividing the net profit or loss (excluding other
comprehensive income) for the period attributable to equity shareholders by the weighted average
number of equity shares outstanding during the period. The weighted average number of equity shares
outstanding during the period is adjusted for events such as bonus issue, bonus element in a right
issue, share split and reserve share splits (consolidation of shares) that have changed the number of
equity shares outstanding, without a corresponding change in resources. For the purpose of
calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income)
for the period attributable to equity shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

10. Exceptional items

When items of income and expense within profit or loss from ordinary activities are of such size,
nature or incidence that their disclosure is relevant to explain the performance of the enterprise for
the period, the nature and amount of such material items are disclosed separately as excepti onal items.