Good Health Can’t Wait.

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Good Health Can’t Wait. Dr. Reddy’s Laboratories Limited NOTES TO FINANCIAL STATEMENTS (All amounts in Indian Rupees millions, except share data and where otherwise stated) NOTE 1: SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The financial statements of Dr. Reddy’s Laboratories Limited (“DRL” or “the Company”) have been prepared and presented in accordance with the accounting principles generally accepted in India (Indian GAAP). Indian GAAP comprises Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI) (Collectively referred to as “IGAAP”). The financial statements are presented in Indian Rupees rounded off to the nearest million. b) Use of estimates The preparation of the financial statements in conformity with IGAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and reported amounts of revenues and expenses for the year. Examples of such estimates include estimation of useful lives of tangible and intangible assets, valuation of inventories, assessment of recoverable amounts of deferred tax assets and cash generating units, provision for sales returns, provision for obligations relating to employees, provisions against litigations and contingencies. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in the current and future periods. c) Current and non current classification All the assets and liabilities have been classified as current or non current as per the Company’s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Assets: An asset is classified as current when it satisfies any of the following criteria: a) it is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle; b) it is held primarily for the purpose of being traded; c) it is expected to be realised within twelve months after the reporting date; or d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. Liabilities: A liability is classified as current when it satisfies any of the following criteria: a) it is expected to be settled in the Company’s normal operating cycle; b) it is held primarily for the purpose of being traded; c) it is due to be settled within twelve months after the reporting date; or d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. Current assets / liabilities include the current portion of non current assets / liabilities respectively. All other assets / liabilities are classified as non current. d) Tangible fixed assets and depreciation Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation. The cost of fixed assets includes non refundable taxes, duties, freight and other incidental expenses related to the acquisition and installation of the respective assets. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increases the future benefits from the existing assets beyond its previously assessed standards of performance. Depreciation on tangible fixed assets is provided using the straight-line method based on the useful life of the assets as estimated by the Company’s management. Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed. Assets acquired on finance leases and lease hold improvements are depreciated over the period of the lease agreement or the useful life whichever is shorter. 118
Standalone Financial Statements Annual Report 2014 - 15 NOTES TO FINANCIAL STATEMENTS (All amounts in Indian Rupees millions, except share data and where otherwise stated) The Management’s estimates of the useful lives for various categories of fixed assets are given below: Buildings - Factory and administrative buildings 20 to 30 - Ancillary structures 3 to 10 Plant and machinery 3 to 15 Electrical equipment 5 to 15 Laboratory equipment 5 to 15 Furniture, fixtures and office equipment 3 to 8 Vehicles 4 to 5 Gains or losses from disposal of tangible fixed assets are recognised in the statement of profit and loss. Schedule II to the Companies Act, 2013 (“Schedule”) prescribes the useful lives for various classes of tangible assets. For certain class of assets, based on the technical evaluation and assessment, the Company believes that the useful lives adopted by it best represent the period over which an asset is expected to be available for use. Accordingly, for these assets, the useful lives estimated by the Company are differentfrom those prescribed in the Schedule. Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheet date are shown under long term loans and advances. Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work-in-progress. e) Borrowing costs General and specific borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. Borrowing costs are interest and other costs incurred by the Company in connection with the borrowing of funds. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred. f) Intangible assets and amortisation Intangible assets are recorded at the consideration paid for acquisition including any import duties and other taxes (other than those subsequently recoverable by the enterprise from the taxing authorities), and any directly attributable expenditure in making the asset ready for its intended use. Intangible assets are amortised on a systematic basis over the best estimate of their useful lives, commencing from the date the asset is available to the Company for its use. The Management’s estimates of the useful lives for various categories of intangible assets are given below: Years Customer contracts 2 to 5 Technical know-how 10 Product related intangibles 5 to 10 Copyrights and Patents (including marketing / distribution rights) 3 to 10 Others 3 to 5 The amortisation period and the amortisation method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from previous estimates, the amortisation period is changed accordingly. An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use and disposal. Gains or losses arising from the disposal of intangible assets are recognised in the statement of profit and loss. g) Investments Investments that are readily realisable and are intended to be held for not more than 12 months from the date, on which such investments are made, are classified as current investments. All other investments are classified as non current investments. Current investments are carried at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each individual investment. Non current investments are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment. The reduction in the carrying amount is reversed when there is a rise in the value of the investment or if the reasons for the reduction no longer exist. Any reduction in the carrying amount and any reversal in such reductions are charged or credited to the statement of profit and loss. Years 119
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ANNUAL REPORT 2014-15 Good Health C
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Notice Annual Report 2014 - 15 NOTI
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E-Voting Annual Report 2014 - 15 IN
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Dr. Reddy’s Laboratories Limited
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The future belongs, not to those wh
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