ಕಂಪನಿಯ ಅಕೌಂಟಿಗ್ ಪಾಲಿಸಿ Sai Parenterals Ltd.

4 Summary of Material Accounting Policies

The material accounting policies adopted in the
preparation of these standalone financial statements
are set out below. These accounting policies have
been applied consistently to all periods presented,
unless otherwise stated.

a. Current and non-current classification

The Company presents assets and liabilities in the
Balance Sheet based on current and non-current
classification.

An asset is classified as current when it is:

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

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

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

A liability is classified as current when:

• It is expected to be settled in normal
operating cycle

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

• There is no unconditional right to defer the
settlementof the liability for atleasttwelve months
after the reporting date

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

b. Foreign currency transactions

Transactions denominated in foreign currencies are
recorded in the functional currency of the Company
at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate
the exchange rates prevailing at the date of
the transaction.

The date of the transaction for the purpose of
determining the exchange rate on initial recognition
of the related asset, expense or income (or part
thereof) arising from the payment or receipt of
advance consideration is the date on which the
Company initially recognises the non-monetary
asset or non-monetary liability arising from such
advance consideration.

Monetary assets and liabilities denominated in
foreign currencies are translated into the functional
currency at the exchange rates prevailing at the
reporting date.

Exchange differences arising on settlement or
translation of monetary items are recognised in
the Statement of Profit and Loss in the period in
which they arise.

Non-monetary items measured at historical cost
in a foreign currency are translated using the

exchange rate at the date of the transaction.
Non-monetary items measured at fair value
in a foreign currency are translated using the
exchange rate at the date when the fair value was
determined.”

C. Revenue recognition

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

Revenue is recognised upon transfer of control
of promised goods or services to customers in an
amount that reflects the consideration to which the
Company expects to be entitled in exchange for
those goods or services.

Sale of Pharmaceutical Products

Revenue from the sale of products is recognised
at a point in time when control of the products is
transferred to the customer in accordance with the
terms of the contract.

Contract Development and Manufacturing
Services

Revenue from contract development, manufacturing
and other service arrangements is recognised when
the related performance obligations are satisfied.

Where performance obligations are satisfied over
time, revenue is recognised by measuring progress
towards complete satisfaction of the performance
obligation using an appropriate method that faithfully
depicts the transfer of control to the customer.
Where performance obligations are satisfied at a
point in time, revenue is recognised when control of
the service output is transferred to the customer.

Contract assets are recognised when the Company
has transferred goods or services to a customer
before the customer pays consideration or before
payment becomes due. Contract liabilities represent
consideration received from customers for which
the related performance obligations have not yet
been satisfied.

Revenue from contracts with customers is
recognised when control of the promised goods
is transferred to the customer in an amount that
reflects the consideration to which the Company
expects to be entitled in exchange for those goods.

Control of the products is generally transferred
upon shipment or delivery of the products to the

customer, or when the products are made available
to the customer, in accordance with the terms of the
underlying contract and upon transfer of title and
significant risks and rewards of ownership.

Revenue is measured at the transaction price
and is recognised net of trade discounts, volume
rebates, sales returns, incentives and other similar
allowances. Amounts collected on behalf of third
parties, including Goods and Services Tax (GST),
are excluded from revenue.

The Company recognises revenue only when it is
probable that the economic benefits associated
with the transaction will flow to the Company and
the amount of revenue can be measured reliably.

''Bill and hold'' sales, in which delivery is delayed
at the buyer''s request but the buyer takes title
and accepts billing, revenue is recognised when
the buyer takes title, provided: (a) it is probable
that delivery will be made; (b) the item is on hand,
identified and ready for delivery to the buyer at the
time the sale is recognised; (c) the buyer specifically
acknowledges the deferred delivery instructions;
and (d) the usual payment terms apply. Revenue
is not recognized when there is simply an intention
to acquire or manufacture the goods in time
for delivery.

Interest income

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

Dividend income

Dividend income is recognised when the Company''s
right to receive payment is established, which
is generally when the shareholders approve the
dividend or when the Company''s right to receive
the dividend is otherwise established in accordance
with the applicable laws and regulations.

Dividend income is recognised in the Statement of
Profit and Loss under Other Income.

Export incentives

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

d. Property, plant and equipment (PPE) and
depreciation

Recognition and measurement

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

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

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

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

Depreciation

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

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

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

The residual values, useful lives and method
of depreciation are reviewed at each financial

year-end and adjusted prospectively, if
appropriate.

e. Intangible assets and amortisation

Intangible assets acquired separately

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

The intangible assets are amortized over the
estimated useful life of the asset, on a straight
line basis.

Estimated useful economic life of Intangibles
are as follows:

f. Impairment

Impairment of tangible and intangible assets

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

The recoverable amount of an asset or cash¬
generating unit is the greater of its value in use and
its fair value less costs to sell. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the time
value of money and the risks specific to the asset or
the cash-generating unit for which the estimates of
future cash flows have not been adjusted. For the
purpose of impairment testing, assets are grouped
together into the smallest group of assets that
generates cash inflows from continuing use that
are largely independent of the cash inflows of other
assets or groups of assets.

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

Impairment of financial assets

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

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

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

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

g. Inventories

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

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

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

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

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

h. Measurement of fair values

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

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

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

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

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

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

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

i. Financial instruments

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

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

Classification and subsequent measurement
Financial assets

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

- amortised cost,

- Fair value through other comprehensive income
("FVOCI") - debt investment

- FVOCI - equity investment; or

- FVTPL

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

Amortised cost

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

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

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

After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount
or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation
is included in Other Income in the standalone
statement of profit and loss. The losses arising
from impairment are recognised in the standalone
statement of profit and loss.

FVOCI - debt investment

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

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

- the contractual terms of the financial asset give
rise on specifieddatestocashflowsthatare solely
payments of principal and interest on the principal
amount outstanding

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

FVTOCI - Equity investment

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

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

FVTPL

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

Financial liabilities

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

De-recognition

Financial assets

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

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

Financial liabilities

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

Offsetting of financial instruments

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

Derivative financial instruments:

Derivatives are initially recognised at fair value
on the date a derivative contract is entered into

and are subsequently re-measured to their fair
value at the end of each reporting period. The
accounting for subsequent changes in fair value
depends on whether the derivative is designated
as a hedging instrument, and if so, the nature of
the item being hedged and the type of hedge
relationship designated.

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

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

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

J. Cash and cash equivalents

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

k. Government Grants

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

l. l. Borrowing costs

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

m. Employees benefits

Gratuity

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

Compensated absences

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