Haleos Labs Ltd. కంపెనీ అకౌంటింగ్ విధానాలు

Mar 31, 2025

3. Summary of Significant Accounting
Policies:

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

3.1 Revenue Recognition:

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

(1) identify the contract with a customer,

(2) identify the performance obligations in the
contract,

(3) determine the transaction price,

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

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

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

The Company''s revenue is derived from sale of
goods, sale of services. Most of such revenue is
generated from the sale of goods. The Company
has generally concluded that it is the principal
in its revenue arrangements.

(i) Revenue from Sale of Goods:

Revenue from sale of goods is recognized when

a promise in a customer contract (performance
obligation) has been satisfied by transferring
the control over the promised goods to the
customer. Control is usually transferred upon
shipment, delivery to, upon receipt of the
goods by the customer, in accordance with
the delivery and acceptance terms agreed
with the customers. The amount of revenue
to be recognized is based on the consideration
expected to be received in exchange of goods,
excluding applicable discounts sales returns
and any taxes or duties collected on behalf
of the government such as GST where ever
applicable.

Any additional amounts based on terms of
agreement entered into with customers is
recognized in the period when the collectability
becomes probable and reliable and measure of
the same is available.

(ii) Revenue from Sale of Services:

Revenue from Sale of services is recognised as
per the terms of the contracts with customers
when the related services are performed or the
agreed milestones are achieved.

(iii) Export incentives:

Export incentives are recognized 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.

(iv) Dividend Income:

Dividends are received from financial assets at
fair value through profit or loss and at FVOCI.
Dividends are recognised as other income in
profit or loss when the right to receive payment
is established. This applies even if they are
paid out of pre-acquisition profits, unless the
dividend clearly represents a recovery of part
of the cost of the investment.

(v) Interest Income:

Interest income from financial assets at fair
value through profit or loss is disclosed as

interest income within other income. Interest
income, on financial assets at amortised cost
and financial assets at FVOCI, is calculated
using the effective interest method and the
same is recognized in the statement of profit
and loss as part of other income. Interest
income is calculated by applying the effective
interest rate to the gross carrying amount of a
financial asset except for financial assets that
subsequently become credit-impaired. For
credit-impaired financial assets, the effective
interest rate is applied to the net carrying
amount of the financial asset (after deduction
of the loss allowance).

3.2 Foreign Currency Transactions:

i. Functional and Presentation Currency:

The standalone financial statements are
presented in Indian Rupee (''INR'' or ''?'') which
is also the functional and presentation currency
of the Company.

ii. Initial Recognition:

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

iii. Conversion on Reporting Date:

Transactions in foreign currencies are initially
recorded by the Company at its functional
currency spot rates at the date the transaction
first qualifies for recognition. Monetary assets
and liabilities denominated in foreign currencies
are translated at the functional currency spot
rates of exchange at the reporting date.

iv. Exchange Differences:

Exchange differences arising on monetary items
on settlement, or restatement as at reporting
date, at rates different from those at which
they were initially recorded, are recognized in
the statement of profit and loss in the year in
which they arise.

3.3 Property, Plant and Equipment:

(a) Recognition and Initial Measure¬
ment

Property, Plant and Equipment are stated at
their cost of acquisition. 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. Any trade discount and rebates are
deducted in arriving at the purchase price.

Cost includes non-refundable taxes, duties,
freight, borrowing costs and other incidental
expenses related to the acquisition and
installation of the respective assets.

Assets under installation or under construction
as at the Balance Sheet date are shown as
Capital Work in Progress. Advances paid towards
acquisition of assets are shown as Capital
Advances.

Borrowing Cost relating to acquisition of
Property, Plant and Equipment to get ready for
its intended use are also included to the extent
they relate to the period till such assets are ready
to put to use.

Subsequent Costs are included in the asset''s
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company. All other
repair and maintenance costs are recognized in
statement of profit or loss as incurred

(b) Subsequent Measurement (Depre¬
ciation and Useful Lives)

Depreciation on property, plant and equipment
is provided on the straight-line method,
computed on the basis of useful lives as
estimated by the management which coincides
with rates prescribed in Schedule II to the
Companies Act, 2013.

Depreciation on addition to/deletion from fixed
assets made during the year is provided on pro¬
rata basis from/up to the date of such addition/

deletion as the case may be. In case of assets
costing less than Rs.5,000/- purchased during
the year also depreciation has been provided at
normal rates on pro-rata basis from the date of
purchase.

Cost of the leasehold land is amortized on a
straight-line basis over the term of the lease.
Depreciation on landscape is being provided
@10% under straight line method.

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

(c) De-recognition

An item of Property, Plant and Equipment
and any significant part initially recognized
is derecognized upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the statement of profit and loss
when the asset is derecognized.

(d) Capital advances

Advances paid towards acquisition of tangible
fixed assets outstanding at each balance sheet
date are shown under other non-current assets
as capital advances.

(e) Capital work-in-progress

Capital work-in-progress includes cost
of property, plant and equipment under
installation/development as at the balance
sheet date.

3.4. Intangible Assets:

Intangible assets consists of goodwill, other
intangibles, and product development costs.

3.4. A. Goodwill:

Goodwill represents the excess of purchase
consideration over the net book value of assets
acquired of the subsidiary companies as on the date
of investment. Goodwill is not amortised but is tested
for impairment on a periodic basis and impairment
losses are recognised wherever applicable.

3.4 B. Other Intangible Assets:

(a) Recognition and Initial Measure¬
ment

Intangible assets are stated at their cost of
acquisition. 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. Any trade discount and rebates are
deducted in arriving at the purchase price.

(b) Subsequent measurement (amor¬
tization):

The cost incurred on Intangible Assets is
amortized over a period of 6 years in case of
Computer Software and 4 years for Patents on
Straight Line Method.

3.5 Leases:

At inception of a contract, the company assesses
whether a contract is, or contains, a lease. 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:

• The contract involves use of an identified
asset, whether specified explicitly or
implicitly;

• The Company has the right to obtain
substantially all of the economic benefits
from use of the asset throughout the
period of use;

• The Company has right to direct the use of
the asset by either having right to operate
the asset or the Company having designed
the asset in a way that predetermines how
and for what purpose it will be used.

Company as a lessee

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

representing the right to use the underlying
assets. Lease liability and ROU asset have been
separately presented in the Balance Sheet
and lease payments have been classified as
financing cash flows.

i) Right-of-use assets

The Company recognizes right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any measurement
of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities
recognized, initial direct costs incurred,
and lease payments made at or before the
commencement date less any lease incentives
received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the
lease term and the estimated useful lives of the
assets, as follows:

If ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset.

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.
The lease payments also include the exercise
price of a purchase option reasonably certain
to be exercised by the Company and payments
of penalties for terminating the lease, if the
lease term reflects the Company exercising the
option to terminate.

In calculating the present value of lease
payments, the Company uses its incremental
borrowing rate at the lease commencement
date because the interest rate implicit in the
lease is not readily determinable. After the

commencement date, the amount of lease
liabilities is increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of
lease liabilities is premeasured if there is a
modification, a change in the lease term, a
change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset.

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

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

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

3.6 Inventories:

Raw materials, packaging materials, are carried at
cost. Stores and spares are being charged to revenue
as and when purchased. Cost includes purchase price
excluding taxes those are subsequently recoverable
by the company from the concerned authorities,
freight inwards and other expenditure incurred in
bringing such inventories to their present location
and condition. Cost of Raw Materials, packaging
materials is determined using the weighted average
cost method.

Finished goods and stock in process are valued at
the lower of cost and net realizable value. Cost of
stock in process and manufactured finished goods
is determined on weighted average basis and
comprises cost of direct material, cost of conversion
and other costs incurred in bringing these
inventories to their present location and condition.

Cost of traded goods is determined on weighted
average basis.

Net realizable value is the estimated selling price in
the ordinary course of business less the estimated
costs of completion and the estimated costs
necessary to make the sale.

Spare Parts, Stand-by Equipment and Servicing
Equipment are recognized in accordance with
this Ind AS-16 when they meet the definition of
property, plant and Equipment. Otherwise, such
items are classified as inventory and are valued at
Cost.

The carrying cost of raw materials, packing materials
are appropriately written down when there is a
decline in replacement cost of such materials and
finished products in which they will be incorporated
are expected to be sold below cost.

3.7 Cash and Cash Equivalents:

Cash and Cash equivalents include cash on hand
and at bank, deposits held at call with banks, other
short-term highly liquid investment with original
maturities of three months or less that are readily
convertible to a known amount of cash which
are subject to an insignificant risk of changes in
value and are held for meeting short-term cash
commitments.

For the Statement of Cash Flows, cash and cash
equivalents consists of short term deposits, as
defined above, net of outstanding bank overdraft
as they are being considered as integral part of the
Company cash management.

3.8 Trade Receivables:

Trade receivables are amounts due from customers
for goods sold or services performed in the
ordinary course of business. Trade receivables are
recognized initially at the amount of consideration
that is unconditional unless they contain significant
financing components, when they are recognized at
fair value. The Company holds the trade receivables
with the objective of collecting the contractual cash
flows and therefore measures them subsequently at
amortised cost using the effective interest method,
less loss allowance.

3.9 Financial Instruments
(a) Financial Assets

(i) Initial recognition and mea¬
surement:

All financial assets are recognised initially
at fair value and transaction cost that
is attributable to the acquisition of the
financial asset is also adjusted.

(ii) Subsequent measurement

a) Debt instruments -

A ''debt instrument'' is measured at the
amortised cost if both the following
conditions are met:

• The asset is held within a business
model whose objective is to hold
assets for collecting contractual cash
flows, and

• Contractual terms of the asset give
rise on specified dates to cash flows
that are solely payments of principal
and interest (SPPI) on the principal
amount outstanding

After initial measurement, such financial
assets are subsequently measured at
amortised cost using the effective interest
rate (EIR) method.

b) Equity investments -

All equity investments in scope of Ind-AS
109 are measured at fair value. Equity
instruments which are held for trading are
generally classified as at fair value through
profit and loss (FVTPL). For all other equity
instruments, the Company decides to
classify the same either as at fair value
through other comprehensive income
(FVOCI) or fair value through profit and
loss (FVTPL). The Company makes such
election on an instrument by instrument
basis. The classification is made on initial
recognition and is irrevocable.

Investment in Associates,
Subsidiaries and Joint Venture:

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

(iii) De-recognition of 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.

(b) Financial liabilities

(i) Initial Recognition and Mea¬
surement:

All financial liabilities are recognized
initially at fair value and transaction cost
that is attributable to the acquisition of the
financial liabilities is also adjusted. These
liabilities are classified at amortized cost.

(ii) Subsequent Measurement

These liabilities include borrowings and
deposits. Subsequent to initial recognition,
these liabilities are measured at amortized
cost using the effective interest method.

(iii) De-recognition of Financial
Liabilities:

A financial liability is de-recognised
when the obligation under the liability is
discharged or cancelled or expires. When
an existing financial liability is replaced
by another from the same lender on
substantially different terms, or the terms

of an existing liability are substantially
modified, such an exchange or modification
is treated as the de-recognition of the
original liability and the recognition of
a new liability. The difference in the
respective carrying amounts is recognised
in the statement of profit or loss.

(c) Financial Guarantee Contracts

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

(d) Offsetting of Financial Instruments

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

(e) 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 for financial assets.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the Company expects to receive.
When estimating the cash flows, the Company
is required to consider -

• All contractual terms of the financial assets
(including Prepayment and extension)
over the expected life of the assets.

• Cash flows from the sale of collateral held
or other credit enhancements that are
integral to the contractual terms.

(f) Other Financial Assets

For recognition of impairment loss on other
financial assets and risk exposure, the
Company determines whether there has been a
significant increase in the credit risk since initial
recognition and if credit risk has increased
significantly, impairment loss is provided.

3.10 Impairment of Non-Financial Assets

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

3.11 Income Taxes:

Current Income Tax

Tax expense comprises of current and deferred
tax. Current income tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the respective laws of the state.
Current tax includes taxes to be paid on the profit
earned during the year and for the prior periods, if
any.

Deferred Income Tax

Deferred income taxes are provided based on the
balance sheet approach considering the 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 measured based on the tax rates
and the tax laws enacted or substantively enacted
at the balance sheet date. Deferred tax assets are

recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will
be available against which such deferred tax assets
can be realised. In situations where a component
has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if
it is probable that they can be utilised against future
taxable profits.

The Carrying amount of deferred tax assets are
reviewed at each balance sheet date. The Company
writes-down the carrying amount of a deferred tax
asset to the extent that it is no longer probable that
sufficient future taxable income will be available
against which deferred tax asset can be realised.
Any such write-down is reversed to the extent that
it becomes reasonably certain that sufficient future
taxable income will be available.

The effect of changes in tax rates on deferred tax
assets and liabilities is recognized as income or
expense in the period that includes the enactment
or expense in the period that includes the enactment
or substantive enactment date

Minimum alternate tax (MAT)

Minimum alternate tax (MAT) paid in a year is
charged to the statement of profit and loss as
current tax. The Company recognizes MAT credit
available as an asset only to the extent that there
is convincing evidence that the Company will pay
normal income tax during the specified period, i.e.,
the period for which MAT credit is allowed to be
carried forward. The Company reviews the "MAT
credit entitlement" asset at each reporting date and
writes down the asset to the extent the Company
does not have convincing evidence that it will pay
normal tax during the specified period.

3.12 Non-current assets held for sale

Assets are classified as held for sale and stated at the
lower of carrying amount and fair value less costs to
sell if the asset is available for immediate sale and
its sale is highly probable. Such assets or group of
assets are presented separately in the Balance Sheet
as "Assets Classified as held of Sale". Once classified
as held for sale, intangible assets and property,
plant and equipment are no longer amortised or
depreciated.

3.13 Segment Reporting:

Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker. The Chairman
and managing director has been identified as being
the Chief Operating Decision Maker (CODM). The
Company is engaged in manufacturing and sale of
Active Pharma Ingredients and their Intermediates
and operates in a single operating segment.
Revenues are attributed to geographical areas
based on the location of the customers.

3.14 Government Grants:

Government grants are recognized where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.

Government grants relating to income are deferred
and recognized in the profit or loss over the period
necessary to match them with the costs that they
are intended to compensate and presented within
other income.

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

Government grants relating to loans or similar
assistance with an interest rate below the current
applicable market rate are initially recognized and
measured at fair value. The effect of this favorable
interest is regarded as a government grant and
is measured as the difference between the initial
carrying value of the loan and the proceeds
received. The loan is subsequently measured as
per the accounting policy applicable to financial
liabilities

3.15 Borrowings:

Borrowings are initially recognized at fair value,
net of transaction cost incurred. Borrowings are
subsequently measured at amortized cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognized
in profit or loss over the period of the borrowings
using the effective interest method.

Borrowings are removed from the balance sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial liability
that has been extinguished or transferred to another
party and the consideration paid, including any non¬
cash assets transferred or liabilities assumed, is
recognized in profit or loss as other gains/(losses).

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a
material provision of a long-term loan arrangement
on or before the end of the reporting period with
the effect that the liability becomes payable on
demand on the reporting date, the entity does not
classify the liability as current, if the lender agreed,
after the reporting period and before the approval
of financial statements for issue, not to demand
payment as consequence of the breach

.3.16 Borrowing Cost

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 asset. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

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Mar 31, 2024

3. Summary of Significant Accounting Policies:

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

3.1 Revenue Recognition:

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

(1) identify the contract with a customer,

(2) identify the performance obligations in the contract,

(3) determine the transaction price,

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

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

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

The Company''s revenue is derived from sale of goods, sale of services. Most of such revenue is generated from the sale of goods. The Company has generally concluded that it is the principal in its revenue arrangements.

(i) Revenue from Sale of Goods:

Revenue from sale of goods is recognized when a promise in a customer contract (performance

obligation) has been satisfied by transferring the control over the promised goods to the customer. Control is usually transferred upon shipment, delivery to, upon receipt of the goods by the customer, in accordance with the delivery and acceptance terms agreed with the customers. The amount of revenue to be recognized is based on the consideration expected to be received in exchange of goods, excluding applicable discounts sales returns and any taxes or duties collected on behalf of the government such as GST where ever applicable.

Any additional amounts based on terms of agreement entered into with customers is recognized in the period when the collectability becomes probable and reliable and measure of the same is available.

(ii) Revenue from Sale of Services:

Revenue from Sale of services is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(iii) Export incentives:

Export incentives are recognized 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.

(iv) Dividend Income:

Dividends are received from financial assets at fair value through profit or loss and at FVOCI. Dividends are recognised as other income in profit or loss when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits, unless the dividend clearly represents a recovery of part of the cost of the investment.

(v) Interest Income:

Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest

income, on financial assets at amortised cost and financial assets at FVOCI, is calculated using the effective interest method and the same is recognized in the statement of profit and loss as part of other income. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

3.2 Foreign Currency Transactions:

i. Functional and Presentation Currency:

The standalone financial statements are presented in Indian Rupee (''INR'' or ''?'') which is also the functional and presentation currency of the Company.

ii. Initial Recognition:

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

iii. Conversion on Reporting Date:

Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

iv. Exchange Differences:

Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.

3.3 Property, Plant and Equipment:

(a) Recognition and Initial Measurement

Property, Plant and Equipment are stated at their cost of acquisition. 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. Any trade discount and rebates are deducted in arriving at the purchase price.

Cost includes non-refundable taxes, duties, freight, borrowing costs and other incidental expenses related to the acquisition and installation of the respective assets.

Assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress. Advances paid towards acquisition of assets are shown as Capital Advances.

Borrowing Cost relating to acquisition of Property, Plant and Equipment which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to put to use.

Subsequent Costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.

(b) Subsequent Measurement (Depreciation and Useful Lives)

Depreciation on property, plant and equipment is provided on the straight-line method, computed on the basis of useful lives as estimated by management which coincides with rates prescribed in Schedule II to the Companies Act, 2013.

Depreciation on addition to/deletion from fixed assets made during the year is provided on prorata basis from/up to the date of such addition/

deletion as the case may be. In case of assets costing less than Rs.5,000/- purchased during the year also depreciation has been provided at normal rates on pro-rata basis from the date of purchase.

Cost of the leasehold land is amortized on a straight-line basis over the term of the lease. Depreciation on landscape is being provided @10% under straight line method.

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

(c) De-recognition

An item of Property, Plant and Equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.

(d) Capital advances

Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheet date are shown under other non-current assets as capital advances.

(e) Capital work-in-progress

Capital work-in-progress includes cost of property, plant and equipment under installation/development as at the balance sheet date.

3.4. Intangible Assets:

Intangible assets consists of goodwill, other intangibles, and product development costs.

3.4. A. Goodwill:

Goodwill represents the excess of purchase consideration over the net book value of assets acquired of the subsidiary companies as on the date of investment. Goodwill is not amortised but is tested for impairment on a periodic basis and impairment losses are recognised wherever applicable.

3.4 B. Other Intangible Assets:

(a) Recognition and Initial Measurement

Intangible assets are stated at their cost of acquisition. 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. Any trade discount and rebates are deducted in arriving at the purchase price.

(b) Subsequent measurement (amortization):

The cost incurred on Intangible Assets is amortized over a period of 6 years in case of Computer Software and 4 years for Patents on Straight Line Method.

3.5 Leases:

At inception of a contract, the company assesses whether a contract is, or contains, a lease. 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:

• The contract involves use of an identified asset, whether specified explicitly or implicitly;

• The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use;

• The Company has right to direct the use of the asset by either having right to operate the asset or the Company having designed the asset in a way that predetermines how and for what purpose it will be used.

Company as a lessee

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

representing the right to use the underlying assets. Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

i) Right-of-use assets

The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:

If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.

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. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the

commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is premeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

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

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

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

3.6 Inventories:

Raw materials, packaging materials, are carried at cost. Stores and spares are being charged to revenue as and when purchased. Cost includes purchase price excluding taxes those are subsequently recoverable by the company from the concerned authorities, freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. Cost of Raw Materials, packaging Materials is determined using the weighted average cost method.

Finished goods and work in progress are valued at the lower of cost and net realizable value. Cost of work in progress and manufactured finished goods is determined on weighted average basis and comprises cost of direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition.

Cost of traded goods is determined on weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Spare Parts, Stand-by Equipment and Servicing Equipment are recognized in accordance with this Ind AS-16 when they meet the definition of property, plant and Equipment. Otherwise, such items are classified as inventory and are valued at Cost.

The carrying cost of raw materials, packing materials are appropriately written down when there is a decline in replacement cost of such materials and finished products in which they will be incorporated are expected to be sold below cost.

3.7 Cash and Cash Equivalents:

Cash and Cash equivalents include cash on hand and at bank, deposits held at call with banks, other short-term highly liquid investment with original maturities of three months or less that are readily convertible to a known amount of cash which are subject to an insignificant risk of changes in value and are held for meeting short-term cash commitments.

For the Statement of Cash Flows, cash and cash equivalents consists of short term deposits, as defined above, net of outstanding bank overdraft as they are being considered as integral part of the Company cash management.

3.8 Trade Receivables:

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are recognized initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognized at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.

3.9 Financial Instruments (a) Financial Assets

(i) Initial recognition and measurement:

All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.

(ii) Subsequent measurement

a) Debt instruments -

A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:

• The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

• Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.

b) Equity investments -

All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are generally classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL). The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.

Investment in Associates, Subsidiaries and Joint Venture:

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

(iii) De-recognition of 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.

(b) Financial liabilities

(i) Initial Recognition and Measurement:

All financial liabilities are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified at amortized cost.

(ii) Subsequent Measurement

These liabilities include borrowings and deposits. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.

(iii) De-recognition of Financial Liabilities:

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms

of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

(c) Financial Guarantee Contracts

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

(d) Offsetting of Financial Instruments

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

(e) 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 for financial assets.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company is required to consider -

• All contractual terms of the financial assets (including Prepayment and extension) over the expected life of the assets.

• Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

(f) Other Financial Assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.

3.10 Impairment of Non-Financial Assets

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

3.11 Income Taxes:

Current Income Tax

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the respective laws of the state. Current tax includes taxes to be paid on the profit earned during the year and for the prior periods, if any.

Deferred Income Tax

Deferred income taxes are provided based on the balance sheet approach considering the 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 measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are

recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where a component has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if it is probable that they can be utilised against future taxable profits.

The Carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

The effect of changes in tax rates on deferred tax assets and liabilities is recognized as income or expense in the period that includes the enactment or expense in the period that includes the enactment or substantive enactment date.

Minimum alternate tax (MAT)

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

3.12 Non-current assets held for sale

Assets are classified as held for sale and stated at the lower of carrying amount and fair value less costs to sell if the asset is available for immediate sale and its sale is highly probable. Such assets or group of assets are presented separately in the Balance Sheet as "Assets Classified as held of Sale". Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.

3.13 Segment Reporting:

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Chairman and managing director has been identified as being the Chief Operating Decision Maker (CODM). The Company is engaged in manufacturing and sale of Active Pharma Ingredients and their Intermediates and operates in a single operating segment. Revenues are attributed to geographical areas based on the location of the customers.

3.14 Government Grants:

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

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

Government grants relating to loans or similar assistance with an interest rate below the current applicable market rate are initially recognized and measured at fair value. The effect of this favorable interest is regarded as a government grant and is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities

3.15 Borrowings:

Borrowings are initially recognized at fair value, net of transaction cost incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.

Borrowings are removed from the balance sheet when the obligation specified in the contract is

discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognized in profit or loss as other gains/(losses).

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of financial statements for issue, not to demand payment as consequence of the breach.

.3.16 Borrowing Cost

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 asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

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Mar 31, 2023

3. Summary of Significant Accounting Policies:

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

3.1 Revenue Recognition:

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

(1) identify the contract with a customer,

(2) identify the performance obligations in the
contract,

(3) determine the transaction price,

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

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

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

The Company''s revenue is derived from sale of
goods, sale of services. Most of such revenue is
generated from the sale of goods. The Company
has generally concluded that it is the principal
in its revenue arrangements.

(i) Revenue from Sale of Goods:

Revenue from sale of goods is recognized when
a promise in a customer contract (performance

obligation) has been satisfied by transferring
the control over the promised goods to the
customer. Control is usually transferred upon
shipment, delivery to, upon receipt of the
goods by the customer, in accordance with
the delivery and acceptance terms agreed
with the customers. The amount of revenue
to be recognized is based on the consideration
expected to be received in exchange of goods,
excluding applicable discounts sales returns
and any taxes or duties collected on behalf
of the government such as GST where ever
applicable.

Presented below are the points of recognition
of revenue with respect to the Company''s sale
of goods:

(ii) Revenue from Sale of Services:

Revenue from Sale of services is recognised as
per the terms of the contracts with customers
when the related services are performed or the
agreed milestones are achieved.

(iii) Export incentives:

Export incentives are recognized 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.

(iv) Dividend Income:

Dividends are received from financial assets at
fair value through profit or loss and at FVOCI.
Dividends are recognised as other income in
profit or loss when the right to receive payment
is established. This applies even if they are
paid out of pre-acquisition profits, unless the
dividend clearly represents a recovery of part
of the cost of the investment.

(v) Interest Income:

Interest income from financial assets at fair
value through profit or loss is disclosed as
interest income within other income. Interest
income, on financial assets at amortised cost
and financial assets at FVOCI, is calculated
using the effective interest method and the
same is recognized in the statement of profit
and loss as part of other income. Interest
income is calculated by applying the effective
interest rate to the gross carrying amount of a
financial asset except for financial assets that
subsequently become credit-impaired. For
credit-impaired financial assets, the effective
interest rate is applied to the net carrying
amount of the financial asset (after deduction
of the loss allowance).

3.2 Foreign Currency Transactions:

i. Functional and Presentation Currency:

The standalone financial statements are
presented in Indian Rupee (''INR'' or ''?'') which
is also the functional and presentation currency
of the Company.

ii. Initial Recognition:

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

iii. Conversion on Reporting Date:

Transactions in foreign currencies are initially
recorded by the Company at its functional
currency spot rates at the date the transaction
first qualifies for recognition. Monetary assets

and liabilities denominated in foreign currencies
are translated at the functional currency spot
rates of exchange at the reporting date.

iv. Exchange Differences:

Exchange differences arising on monetary items
on settlement, or restatement as at reporting
date, at rates different from those at which
they were initially recorded, are recognized in
the statement of profit and loss in the year in
which they arise.

3.3 Property, Plant and Equipment:

(a) Recognition and Initial Measurement

Property, Plant and Equipment are stated at
their cost of acquisition. 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. Any trade discount and
rebates are deducted in arriving at the purchase
price.

Cost includes non-refundable taxes, duties,
freight, borrowing costs and other incidental
expenses related to the acquisition and
installation of the respective assets.

Assets under installation or under construction
as at the Balance Sheet date are shown as
Capital Work in Progress. Advances paid
towards acquisition of assets are shown as
Capital Advances.

Borrowing Cost relating to acquisition of
Property, Plant and Equipment which takes
substantial period of time to get ready for its
intended use are also included to the extent
they relate to the period till such assets are
ready to put to use.

Subsequent Costs are included in the asset''s
carrying amount or recognized as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company. All other
repair and maintenance costs are recognized in
statement of profit or loss as incurred.

(b) Subsequent Measurement (Deprecia¬
tion and Useful Lives)

Depreciation on property, plant and equipment
is provided on the straight-line method,
computed on the basis of useful lives as
estimated by management which coincides
with rates prescribed in Schedule II to the
Companies Act, 2013.

Depreciation on addition to/deletion from fixed
assets made during the year is provided on pro¬
rata basis from/up to the date of such addition/
deletion as the case may be. In case of assets
costing less than Rs.5,000/- purchased during
the year also depreciation has been provided at
normal rates on pro-rata basis from the date of
purchase.

Cost of the leasehold land is amortized on a
straight-line basis over the term of the lease.
Depreciation on landscape is being provided
@10% under straight line method.

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

(c) De-recognition

An item of Property, Plant and Equipment
and any significant part initially recognized
is derecognized upon disposal or when no
future economic benefits are expected from
its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is
included in the statement of profit and loss
when the asset is derecognized.

(d) Capital advances

Advances paid towards acquisition of tangible
fixed assets outstanding at each balance sheet
date are shown under other non-current assets
as capital advances.

(e) Capital work-in-progress

Capital work-in-progress includes cost
of property, plant and equipment under
installation/development as at the balance
sheet date.

3.4. Intangible Assets:

Intangible assets consist of goodwill, other
intangibles, and product development costs.

3.4. A. Goodwill:

Goodwill represents the excess of purchase
consideration over the net book value of assets
acquired of the subsidiary companies as on the
date of investment. Goodwill is not amortised
but is tested for impairment on a periodic basis
and impairment losses are recognised wherever
applicable.

3.4 B. Other Intangible Assets:

(a) Recognition and Initial Measurement

Intangible assets are stated at their cost of
acquisition. 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. Any trade discount and rebates are
deducted in arriving at the purchase price.

(b) Subsequent measurement (amortiza¬
tion):

The cost incurred on Intangible Assets is
amortized over a period of 6 years in case of
Computer Software and 4 years for Patents on
Straight Line Method.

3.5 Leases:

At inception of a contract, the company assesses
whether a contract is, or contains, a lease. 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:

- The contract involves use of an identified
asset, whether specified explicitly or
implicitly;

- The Company has the right to obtain
substantially all of the economic benefits
from use of the asset throughout the
period of use;

- The Company has right to direct the use of
the asset by either having right to operate
the asset or the Company having designed
the asset in a way that predetermines how
and for what purpose it will be used.

Company as a lessee

The Company applies a single recognition and
measurement approach for all leases, except
for short-term leases and leases of low-value
assets. The Company recognizes lease liabilities
to make lease payments and right-of-use assets
representing the right to use the underlying
assets. Lease liability and ROU asset have been
separately presented in the Balance Sheet
and lease payments have been classified as
financing cash flows.

i) Right-of-use assets

The Company recognizes right-of-use assets at
the commencement date of the lease (i.e., the
date the underlying asset is available for use).
Right-of-use assets are measured at cost, less
any accumulated depreciation and impairment
losses, and adjusted for any measurement
of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities
recognized, initial direct costs incurred,
and lease payments made at or before the
commencement date less any lease incentives
received. Right-of-use assets are depreciated
on a straight-line basis over the shorter of the
lease term and the estimated useful lives of the
assets, as follows:

If ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated
useful life of the asset.

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.

The lease payments also include the exercise
price of a purchase option reasonably certain
to be exercised by the Company and payments
of penalties for terminating the lease, if the
lease term reflects the Company exercising the
option to terminate.

In calculating the present value of lease
payments, the Company uses its incremental
borrowing rate at the lease commencement
date because the interest rate implicit in the
lease is not readily determinable. After the
commencement date, the amount of lease
liabilities is increased to reflect the accretion
of interest and reduced for the lease payments
made. In addition, the carrying amount of
lease liabilities is premeasured if there is a
modification, a change in the lease term, a
change in the lease payments (e.g., changes
to future payments resulting from a change in
an index or rate used to determine such lease
payments) or a change in the assessment of an
option to purchase the underlying asset.

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

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

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

3.6 Inventories:

Raw materials, packaging materials, are carried at
cost. Stores and spares are being charged to revenue
as and when purchased. Cost includes purchase price
excluding taxes those are subsequently recoverable
by the company from the concerned authorities,
freight inwards and other expenditure incurred in
bringing such inventories to their present location

and condition. Cost of Raw Material, packaging
material is determined using the weighted average
cost method.

Finished goods and work in progress are valued
at the lower of cost and net realizable value. Cost
of work in progress and manufactured finished
goods is determined on weighted average basis and
comprises cost of direct material, cost of conversion
and other costs incurred in bringing these
inventories to their present location and condition.
Cost of traded goods is determined on weighted
average basis.

Net realizable value is the estimated selling price in
the ordinary course of business less the estimated
costs of completion and the estimated costs
necessary to make the sale.

Spare Parts, Stand-by Equipment and Servicing
Equipment are recognized in accordance with
this Ind AS-16 when they meet the definition of
property, plant and Equipment. Otherwise, such
items are classified as inventory and are valued at
Cost.

The carrying cost of raw materials, packing materials
are appropriately written down when there is a
decline in replacement cost of such materials and
finished products in which they will be incorporated
are expected to be sold below cost.

3.7 Cash and Cash Equivalents:

Cash and Cash equivalents include cash on hand
and at bank, deposits held at call with banks, other
short-term highly liquid investment with original
maturities of three months or less that are readily
convertible to a known amount of cash which
are subject to an insignificant risk of changes in
value and are held for meeting short-term cash
commitments.

For the Statement of Cash Flows, cash and cash
equivalents consists of short term deposits, as
defined above, net of outstanding bank overdraft
as they are being considered as integral part of the
Company cash management.

3.8 Trade Receivables:

Trade receivables are amounts due from customers
for goods sold or services performed in the
ordinary course of business. Trade receivables are

recognized initially at the amount of consideration
that is unconditional unless they contain significant
financing components, when they are recognized at
fair value. The Company holds the trade receivables
with the objective of collecting the contractual cash
flows and therefore measures them subsequently at
amortised cost using the effective interest method,
less loss allowance.

3.9 Financial Instruments
(a) Financial Assets

(i) Initial recognition and measurement:

All financial assets are recognised initially
at fair value and transaction cost that
is attributable to the acquisition of the
financial asset is also adjusted.

(ii) Subsequent measurement

a) Debt instruments -

A ''debt instrument'' is measured at the
amortised cost if both the following
conditions are met:

• The asset is held within a business
model whose objective is to hold
assets for collecting contractual
cash flows, and

• Contractual terms of the asset
give rise on specified dates to cash
flows that are solely payments of
principal and interest (SPPI) on the
principal amount outstanding

After initial measurement, such
financial assets are subsequently
measured at amortised cost using the
effective interest rate (EIR) method.

b) Equity investments -

All equity investments in scope of Ind-
AS 109 are measured at fair value.
Equity instruments which are held
for trading are generally classified
as at fair value through profit and
loss (FVTPL). For all other equity
instruments, the Company decides
to classify the same either as at fair
value through other comprehensive

income (FVOCI) or fair value through
profit and loss (FVTPL). The Company
makes such election on an instrument
by instrument basis. The classification
is made on initial recognition and is
irrevocable.

Investment in Associates, Sub¬
sidiaries and Joint Venture:

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

(iii) De-recognition of 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.

(b) Financial liabilities

(i) Initial Recognition and Measurement:

All financial liabilities are recognized
initially at fair value and transaction cost
that is attributable to the acquisition of the
financial liabilities is also adjusted. These
liabilities are classified as amortized cost.

(ii) Subsequent Measurement

These liabilities include borrowings and
deposits. Subsequent to initial recognition,
these liabilities are measured at amortized
cost using the effective interest method.

(iii) De-recognition of Financial Liabilities:

A financial liability is de-recognised
when the obligation under the liability is

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

(c) Financial Guarantee Contracts

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

(d) Offsetting of Financial Instruments

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

(e) 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 for financial assets.

ECL is the difference between all contractual
cash flows that are due to the Company in
accordance with the contract and all the cash
flows that the Company expects to receive.
When estimating the cash flows, the Company
is required to consider -

• All contractual terms of the financial assets
(including Prepayment and extension)
over the expected life of the assets.

• Cash flows from the sale of collateral held
or other credit enhancements that are
integral to the contractual terms.

(f) Other Financial Assets

For recognition of impairment loss on other
financial assets and risk exposure, the
Company determines whether there has been a
significant increase in the credit risk since initial
recognition and if credit risk has increased
significantly, impairment loss is provided.

3.10 Impairment of Non-Financial Assets

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

3.11 Income Taxes:

Current Income Tax

Tax expense comprises of current and deferred
tax. Current income tax is measured at the amount
expected to be paid to the tax authorities in
accordance with the respective laws of the state.
Current tax includes taxes to be paid on the profit
earned during the year and for the prior periods, if
any.

Deferred Income Tax

Deferred income taxes are provided based on the
balance sheet approach considering the 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 measured based on the tax rates
and the tax laws enacted or substantively enacted
at the balance sheet date. Deferred tax assets are
recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will
be available against which such deferred tax assets
can be realised. In situations where a component
has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if
it is probable that they can be utilised against future
taxable profits.

The Carrying amount of deferred tax assets are
reviewed at each balance sheet date. The Company
writes-down the carrying amount of a deferred tax
asset to the extent that it is no longer probable that
sufficient future taxable income will be available
against which deferred tax asset can be realised.
Any such write-down is reversed to the extent that
it becomes reasonably certain that sufficient future
taxable income will be available.

The effect of changes in tax rates on deferred tax
assets and liabilities is recognized as income or
expense in the period that includes the enactment
or expense in the period that includes the enactment
or substantive enactment date.

Minimum alternate tax (MAT)

Minimum alternate tax (MAT) paid in a year is
charged to the statement of profit and loss as
current tax. The Company recognizes MAT credit
available as an asset only to the extent that there
is convincing evidence that the Company will pay
normal income tax during the specified period, i.e.,
the period for which MAT credit is allowed to be
carried forward. The Company reviews the "MAT
credit entitlement" asset at each reporting date and
writes down the asset to the extent the Company
does not have convincing evidence that it will pay
normal tax during the specified period.

3.12 Non-current assets held for sale

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

plant and equipment are no longer amortised or
depreciated.

3.13 Segment Reporting:

Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker. The Chairman
and managing director has been identified as being
the Chief Operating Decision Maker (CODM). The
Company is engaged in manufacturing and sale of
Active Pharma Ingredients and their Intermediates
and operates in a single operating segment.
Revenues are attributed to geographical areas
based on the location of the customers.

3.14 Government Grants:

Government grants are recognized where there is
reasonable assurance that the grant will be received
and all attached conditions will be complied with.

Government grants relating to income are deferred
and recognized in the profit or loss over the period
necessary to match them with the costs that they
are intended to compensate and presented within
other income.

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

Government grants relating to loans or similar
assistance with an interest rate below the current
applicable market rate are initially recognized and
measured at fair value. The effect of this favorable
interest is regarded as a government grant and
is measured as the difference between the initial
carrying value of the loan and the proceeds
received. The loan is subsequently measured as
per the accounting policy applicable to financial
liabilities.

3.15 Borrowings:

Borrowings are initially recognized at fair value,
net of transaction cost incurred. Borrowings are
subsequently measured at amortized cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognized

in profit or loss over the period of the borrowings
using the effective interest method.

Borrowings are removed from the balance sheet
when the obligation specified in the contract is
discharged, cancelled or expired. The difference
between the carrying amount of a financial liability
that has been extinguished or transferred to another
party and the consideration paid, including any non¬
cash assets transferred or liabilities assumed, is
recognized in profit or loss as other gains/(losses).

Borrowings are classified as current liabilities unless
the Company has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a
material provision of a long-term loan arrangement
on or before the end of the reporting period with
the effect that the liability becomes payable on
demand on the reporting date, the entity does not
classify the liability as current, if the lender agreed,
after the reporting period and before the approval
of financial statements for issue, not to demand
payment as consequence of the breach.

3.16 Borrowing Cost

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 asset. All other borrowing
costs are expensed in the period in which they
occur. Borrowing costs consist of interest and other
costs that an entity incurs in connection with the
borrowing of funds. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing costs.

---

Mar 31, 2018

1. Summary of Significant Accounting Policies:

The financial statements have been prepared using the accounting policies and measurement basis summarized below:

1.1 Revenue Recognition:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the Government.

Excise duty is a liability of the Company as a manufacturer, which forms part of the cost of production, irrespective of whether the goods are sold or not. Therefore, the recovery of excise duty flows to the Company on its own account and hence revenue includes excise duty.

Sales Tax/ Value Added Tax [VAT] is not received by the Company on its own account. Rather, it is tax collected on value added to the Goods by the Company on behalf of the Government. Accordingly, it is excluded from revenue.

The Goods and Services Tax (GST) Act, 2017 has come into force with effect from 01^st July, 2017. Accordingly, in compliance with Indian Accounting Standard (Ind AS) 18 - ‘Revenue’, Revenue from operations for the year ended 31^st March, 2018 includes Excise Duty and excludes Sales Tax up to 30^th June, 2017. Revenue from operations of earlier years are also included Excise Duty but excluded Sales Tax which are now subsumed in GST. From 01-07-2017 onwards GST is excluded from Revenue as nature of tax was collection on behalf of the Government.

The specific recognition criteria described below must also be met before revenue is recognized.

i) Sale of Products:

Revenue from sale of goods is recognized when the significant risks and rewards of ownership of goods have passed to the buyer, usually on delivery of the goods. Revenue from export sales is recognized on the date of bill of lading, based on the terms of export.

ii) Service Revenue:

Service income is recognized as per the terms of contracts with the customers when the related services are performed or the agreed milestones are achieved and are net of service tax, wherever applicable.

iii) Interest:

Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR) method. Interest income is included in Other Income in the Statement of Profit and Loss.

iv) Dividend Income:

Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.

v) Export Benefits:

Export Benefits are recognized on accrual basis and Export Incentives are recognized on receipt basis.

vi) Other Sundry Income:

Income claims and conversion escalations are accounted for on realization.

1.2 Foreign Currency Transactions:

i. Functional and Reporting Currency:

The financial statements are presented in Indian Rupee (‘INR’ or ‘‘‘) which is also the functional and presentation currency of the Company.

ii. Initial Recognition:

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

iii. Conversion on Reporting Date:

Transactions in foreign currencies are initially recorded by the Company at its functional currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

iv. Exchange Differences:

Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.

1.3 Property, Plant and Equipment:

(a) Recognition and Initial Measurement

Property, Plant and Equipment are stated at their cost of acquisition. 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. Any trade discount and rebates are deducted in arriving at the purchase price.

Cost includes non-refundable taxes, duties, freight, borrowing costs and other incidental expenses related to the acquisition and installation of the respective assets.

Assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress. Advances paid towards acquisition of assets are shown as Capital Advances.

Borrowing Cost relating to acquisition of Property, Plant and Equipment which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to put to use.

Subsequent Costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.

(b) Subsequent Measurement (Depreciation and Useful Lives)

Depreciation on property, plant and equipment is provided on the straight-line method, computed on the basis of useful lives as estimated by management which coincides with rates prescribed in Schedule II to the Companies Act, 2013.

Depreciation on addition to/deletion from fixed assets made during the year is provided on pro-rata basis from/up to the date of such addition/deletion as the case may be. In case of assets costing less than Rs.5,000/-purchased during the year also depreciation has been provided at normal rates on pro-rata basis from the date of purchase.

Cost of the leasehold land is amortized on a straight-line basis over the term of the lease.

Depreciation on landscape is being provided @10% under straight line method.

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

(c) De-recognition

An item of Property, Plant and Equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.

(d) Transition to IND AS

On transition to IND AS, the Company has elected to continue with the carrying value of all its Property, Plant and Equipment recognized as at 01^st April 2016 measured as per the Provisions of previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.

1.4 Investment Property:

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where its applicable borrowing costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.

Subsequent expenditure is capitalized to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

Investment properties are depreciated using the straight-line method over their estimated useful lives. The useful life of buildings, classified as Investment properties, is considered as 30 years. The useful life has been determined based on technical evaluation performed by the management’s expert.

Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their use. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de- recognition.

1.5 Intangible Assets:

(a) Recognition and Initial Measurement

Intangible assets are stated at their cost of acquisition. 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. Any trade discount and rebates are deducted in arriving at the purchase price.

(b) Subsequent measurement (amortization):

The cost incurred on Intangible Assets is amortized over a period of 6 years in case of Computer Software and 4 years for Patents on Straight Line Method.

1.6 Leases:

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

Classification on inception of lease:

a. Operating Leases:

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases.

b. Finance Lease:

A lease is classified as a finance lease where the lessor transfers substantially all the risks and rewards incidental to the ownership of the leased item.

Accounting of Operating Lease:

Where the Company is the Lessee:

Lease Payment in case of operating lease is charged to Statement of Profit and Loss on straight line basis over the lease term. In case the escalation in operating lease payments are in line with the expected general inflation rate then the lease payments are charged to Statement of Profit and Loss instead of Straight Line Method.

Where the Company is the Lessor:

Lease income is recognized in the Statement of Profit and Loss on a Straight line basis over the lease term. Assets subject to operating leases are included in fixed assets. Costs, including depreciation are recognized as expense in the Statement of Profit and Loss.

1.7 Inventories:

Raw material, packaging material, are carried at cost. Stores and spares are being charged to revenue as and when purchased. Cost includes purchase price excluding taxes those are subsequently recoverable by the Company from the concerned authorities, freight inwards and other expenditure incurred in bringing such inventories to their present location and condition. Cost of Raw Material, packaging material is determined using the weighted average cost method.

Finished goods and work in progress are valued at the lower of cost and net realizable value. Cost of work in progress and manufactured finished goods is determined on weighted average basis and comprises cost of direct material, cost of conversion and other costs incurred in bringing these inventories to their present location and condition. Cost of traded goods is determined on weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Spare Parts, Stand-by Equipment and Servicing Equipment are recognized in accordance with this Ind AS-16 when they meet the definition of property, plant and Equipment. Otherwise, such items are classified as inventory and are valued at Cost.

The carrying cost of raw materials, packing materials, stores and spare parts are appropriately written down when there is a decline in replacement cost of such materials and finished products in which they will be incorporated are expected to be sold below cost.

1.8 Cash and Cash Equivalents:

Cash and Cash equivalents include cash on hand and at bank, deposits held at call with banks, other short-term highly liquid investment with original maturities of three months or less that are readily convertible to a known amount of cash which are subject to an insignificant risk of changes in value and are held for meeting short-term cash commitments.

For the Statement of Cash Flows, cash and cash equivalents consists of short term deposits, as defined above, net of outstanding bank overdraft as they are being considered as integral part of the Company’s cash management.

1.9 Financial Instruments

(a) Financial Assets

(i) Initial recognition and measurement

All financial assets are recognised initially at fair value and transaction cost that is attributable to the acquisition of the financial asset is also adjusted.

(ii) Subsequent measurement

a. Debt instruments -

A ‘debt instrument’ is measured at the amortised cost if both the following conditions are met:

- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.

b. Equity investments -

All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are generally classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company decides to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL). The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.

c. Mutual Funds

All mutual funds in scope of Ind-AS 109 are measured at fair value through profit and loss (FVTPL).

(iii) De-recognition of 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.

(b) Financial liabilities

(i) Initial Recognition and Measurement

All financial liabilities are recognized initially at fair value and transaction cost that is attributable to the acquisition of the financial liabilities is also adjusted. These liabilities are classified as amortized cost.

(ii) Subsequent Measurement

These liabilities include borrowings and deposits. Subsequent to initial recognition, these liabilities are measured at amortized cost using the effective interest method.

(iii) De-recognition of Financial Liabilities

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

(c) Financial Guarantee Contracts

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

(d) Offsetting of Financial Instruments

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

(e) 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 for financial assets.

ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company is required to consider -

- All contractual terms of the financial assets (including Prepayment and extension) over the expected life of the assets.

- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

(f) Trade Receivables

The Company applies approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of receivables.

(g) Other Financial Assets

For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.

1.10 Income Taxes:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the respective laws of the state. Current tax includes taxes to be paid on the profit earned during the year and for the prior periods.

Deferred income taxes are provided based on the balance sheet approach considering the 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 measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where a component has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if it is probable that they can be utilised against future taxable profits.

The Carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

1.11 Segment Reporting:

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Chairman and managing director has been identified as being the Chief Operating Decision Maker (CODM). The Company is engaged in manufacturing and sale of Active Pharma Ingredients and their Intermediates and operates in a single operating segment. Revenues are attributed to geographical areas based on the location of the customers. Refer note 48 for the segment information presented.

1.12 Government Grants:

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

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

Government grants relating to loans or similar assistance with an interest rate below the current applicable market rate are initially recognized and measured at fair value. The effect of this favorable interest is regarded as a Government grant and is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.

1.13 Borrowing Cost

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 asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

1.14 Provisions

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

Provision for litigation related obligation represents liabilities that are expected to materialize in respect of matters in appeal.

1.15 Dividends

Annual dividend distribution to the shareholders is recognized as a liability in the year in which the dividend is approved by the shareholders. Any interim dividend paid is recognized on approval by Board of Directors. Dividend paid/payable and corresponding tax on dividend distribution is recognized directly in equity.

1.16 Share Issue Expenses:

Share issue expenses are charged first against balance available in the Securities Premium.

1.17 Research and Development:

Revenue Expenditure on Research and Development is charged to revenue in the year in which it is incurred. Capital Expenditure on research and development is added to Property, Plant and Equipment and depreciated in accordance with the policies of the Company.

1.18 Retirement and Other Employee Benefits:

(a) Defined Contribution Plan:

The Company’s contribution to provident fund and employee state insurance schemes is charged to the statement of profit and loss. The Company’s contributions towards Provident Fund are deposited with the Regional Provident Fund Commissioner under a defined contribution plan.

(b) Defined Benefit Plan:

The Company has gratuity as defined benefit plan where the amount that an employee will receive on retirement is defined by reference to the employee’s length of service and final salary. The liability recognized in the balance sheet for defined benefit plans as the present value of the defined benefit obligation (DBO) at the reporting date. Management estimates the DBO annually with the assistance of independent actuaries as per the requirements of IND AS 19 “Employee Benefits”. Actuarial gains and losses resulting from re-measurements of the liability are included in other comprehensive income.

The Company has subscribed to a group gratuity scheme of Life Insurance Corporation of India (LIC). Under the said policy, the eligible employees are entitled for gratuity upon their resignation, retirement or in the event of death in lump sum after deduction of necessary taxes upto a maximum limit as per the Gratuity Act, 1972. Liabilities in respect of the Gratuity Plan are determined by an actuarial valuation, based upon which the Company makes contributions to the Gratuity Fund.

(c) Other Long-Term Employee Benefits

The Company also provides benefit of compensated absences to its employees which are in the nature of long -term benefit plan. Liability in respect of compensated absences becoming due and expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date as per the requirements of IND AS “Employee Benefits”. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of profit and loss in the year in which such gains or losses arise.

(d) Short-Term Employee Benefits

Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.

1.19 Earnings per Share:

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events including a bonus issue.

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

1.20 Contingent Liabilities and Commitments:

Where it is not probable that an outflow of economic resources will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statement of balance sheet and is disclosed as a contingent liability.

Possible outcomes on obligations, whose existence will only be confirmed by the occurrence or nonoccurrence of one or more future events are also disclosed as contingent liabilities.

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

1.21 Investment in Associates and Subsidaries:

In respect of Equity Investments, while preparing separate financial statements, IND AS 27 requires it to account for its Investments in Subsidaries and Associates either:

(a) At cost ; or

(b) in accordance with Ind AS 109.

If a first time adopter measures such an investment at cost in accordance with IND AS 27, it shall measure that investment one of the following amounts in its opening Ind AS Balance Sheet

(a) Cost determined in accordance with Ind AS 27; or

(b) Deemed Cost. The deemed cost of such an investment shall be its

(i) Fair Value at the entity’s date of transition to Ind AS.

(ii) Previous GAAP carrying amount at that date.

A first time adopter may choose either (i) or (ii) above to measure its Investment in each Subsidiary or Associate that it elects to measure using a deemed cost.

Since the Company, is a first time adopter it has measured its Investment in Subsidiary/Associate at deemed cost in accordance with IND AS 27 by taking previous GAAP Carrying amount.

1.22 Fair Value Measurement

The Company measures Financial Instruments at fair value at each Balance Sheet Date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset or liability, or in the absence of a principal market, in the most advantageous market which is accessible to the Company.

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

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

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, 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, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

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

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurements is directly or indirectly observable.

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

1.23 Estimates and Assumptions

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 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.

(i) Recognition of Deferred Tax Assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company’s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

(ii) Recognition of Deferred Tax Liability on Undistributed Profits:

The extent to which the Company can control the timing of reversal of deferred tax calculation on undistributed profits of its subsidiaries requires judgement.

(iii) Evaluation of Indicators for Impairment of Assets:

The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

(iv) Recoverability of Advances/Receivables:

At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding receivables and advances.

(v) Useful lives of Depreciable/Amortisable Assets:

Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, customer relationships, IT equipment and other plant and equipment.

(vi) Defined Benefit Obligation (DBO):

Management’s estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, medical cost trends, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

(vii) Fair Value Measurements:

Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

(viii) Provisions:

At each balance sheet date the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from this judgment.