Good Health Can’t Wait.

Consolidated Financial Statements
Annual Report 2014 - 15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in Indian Rupees millions, except share data and where otherwise stated)
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation of consolidated financial statements
The consolidated financial statements h ave 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, rebates and
chargebacks, 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) Principles of consolidation
The consolidated financial statements include the financial statements of Dr. Reddy’s Laboratories Limited (“DRL” or the “parent company”), and all of
its subsidiaries (collectively referred to as “the Company” or “the Group”), in which the parent company has more than one-half of the voting power
of an enterprise or where the parent company controls the composition of the board of directors. In accordance with AS 27 – “Financial Reporting
of Interests in Joint Ventures”, the Company has accounted for its proportionate share of interest in joint venture by the proportionate consolidation
method. The consolidated financial statements have been prepared on the following basis:
• The financial statements of the parent company and the subsidiaries have been combined on a line-by-line basis by adding together the book
values of like items of assets, liabilities, income and expenses after eliminating intra-group balances / transactions and resulting unrealised profits
in full. Unrealised losses resulting from intra-group transactions have also been eliminated except to the extent that recoverable value of related
assets is lower than their cost to the Company. The amounts shown in respect of reserves comprise the amount of the relevant reserves as per the
balance sheet of the parent company and its share in the post-acquisition increase in the relevant reserves of the subsidiaries.
• The proportionate share of Company’s interest in Joint Ventures is combined on a line-by-line basis by adding together the book values of like
items of assets, liabilities, income and expenses after eliminating intra-group transactions and resulting unrealised profits, to the extent it pertains
to the Company.
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