Good Health Can’t Wait.

Good Health Can’t Wait.
Dr. Reddy’s Laboratories Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in Indian Rupees millions, except share data and where otherwise stated)
• The excess / deficit of cost to the parent company of its investment in the subsidiaries, joint ventures and associates over its portion of equity at
the respective dates on which investment in such entities were made is recognised in the financial statements as goodwill / capital reserve.
• The consolidated financial statements are presented, to the extent possible, in the same format as that adopted by the parent company for its
separate financial statements.
• The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar
circumstances.
e) Tangible fixed assets and depreciation
Tangible fixed assets are carried at the cost of acquisition or construction less accumulated depreciation. The cost of tangible 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 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 leasehold improvements are depreciated over the period of the lease agreement or the useful life whichever
is shorter. Land is not depreciated.
The Management’s estimates of the useful lives for various categories of fixed assets are given below:
Buildings
Factory and administrative buildings 20 to 50
Ancillary structures 3 to 15
Plant and machinery 3 to 15
Electrical equipment 5 to 15
Laboratory equipment 5 to 15
Furniture, fixtures and office equipment 3 to 10
Vehicles 4 to 5
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 different from those prescribed in the
Schedule.
Depreciation methods, useful lives and residual values are reviewed at each reporting date.
Gains or losses from disposal of tangible fixed assets are recognised in the statement of profit and loss. 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.
f) 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.
g) 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 on 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.
Years
174