Form 6-K - Dr. Reddy's

DR. REDDY’S LABORATORIES LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(in thousands, except share and per share data)
3. Significant accounting policies (continued)
f. Leases (continued)
g. Inventories
subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the
outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability.
Operating leases
Other leases are operating leases and the leased assets are not recognized on the Company’s balance sheet. Payments made under
operating leases are recognized in profit or loss on a straight-line basis over the term of the lease.
h. Impairment
Inventories consist of raw materials, stores and spares, work in progress and finished goods and are measured at the lower of cost and
net realizable value. The cost of all categories of inventories, except stores and spares, is based on the first-in first-out principle.
Stores and spares is comprised of packing materials, engineering spares (such as machinery spare parts) and consumables (such as
lubricants, cotton waste and oils), which are used in operating machines or consumed as indirect materials in the manufacturing
process, where cost is based on a weighted average method. Cost includes expenditures incurred in acquiring the inventories,
production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of
finished goods and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. Net
realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling
expenses.
Financial assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss
in respect of an available-for-sale financial asset is calculated by reference to its fair value.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
All impairment losses are recognized in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset
recognized previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and
available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial
assets that are equity securities, the reversal is recognized directly in equity.
Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax 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. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable
amount is estimated each year at the same time.
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
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