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)
2.27: CONTINGENT LIABILITIES AND COMMITMENTS (CONTINUED)
Additionally, the Company is in receipt of various show cause notices from the Indian Sales Tax authorities. The disputed amount is ` 43. The Company
has responded to such show cause notices and believes that the chances of any liability arising from such notices are less than probable. Accordingly,
no provision is made in the Company’s consolidated financial statements as at 31 March 2015.
(o) Direct taxes related matters
During the year ended 31 March 2014, the Indian Income Tax authorities disallowed for tax purposes certain business transactions entered into by
the parent company with its wholly-owned subsidiaries. The associated tax impact is ` 570. The Company believes that such business transactions are
allowed for tax deduction under Indian Income Tax laws and has accordingly filed an appeal with the Income Tax Appellate Authorities.
The Company further believes that the probability of succeeding in this matter is more likely than not and therefore no provision was made in the
Company’s consolidated financial statements as of 31 March 2015.
Additionally, the Company is contesting various other disallowances by the Indian Income Tax authorities. The associated tax impact is ` 611. The
Company believes that the chances of an unfavorable outcome in each of such disallowances are less than probable and accordingly, no provision is
made in the Company’s financial statements as of 31 March 2015.
(p) Additionally, the Company is involved in other disputes, lawsuits, claims, governmental and/or regulatory inspections, inquiries, investigations and
proceedings, including patent and commercial matters that arise from time to time in the ordinary course of business. Except as discussed above,
the Company does not believe that there are any such contingent liabilities that are expected to have any material adverse effect on its financial
statements.
(B) Commitments:
Estimated amount of contracts remaining to be executed on capital account and not provided for
(net of advances)
4,177 2,925
2.28: ACCOUNTING FOR INTEREST IN A JOINT VENTURE (JV)
Kunshan Rotam Reddy Pharmaceuticals Company Limited (“KRRP”)
The Company has 51.33 % interest in KRRP, a joint venture (JV) in China. KRRP is engaged in manufacturing and marketing of active pharmaceutical
ingredients and intermediates and formulations in China. The contractual arrangement between shareholders of KRRP indicates joint control as the
minority shareholders, along with the Company, have significant participating rights such that they jointly control the financial and operating policies of
KRRP in the ordinary course of business.
The Company has, in accordance with Accounting Standard27 “Financial Reporting of Interests in Joint Ventures”, accounted for its 51.33% interest in the
JV by the proportionate consolidation method. Thus the Company’s statement of profit and loss, balance sheet and cash flow statement incorporate the
Company’s share of income, expenses, assets, liabilities and cash flows of the JV on a line-by-line basis.
The aggregate amount of the assets, liabilities, income and expenses related to the Company’s share in the JV included in these financial statements as at
and for the year ended 31March2015 and 31 March 2014 are given below:
Balance Sheet (extract)
PARTICULARS
AS AT
31 MARCH 2015
AS AT
31 MARCH 2014
Fixed assets, net 188 157
Deferred tax assets, net 1 2
Inventories 171 195
Trade receivables 258 216
Cash and bank balances 496 271
Short term loans and advances 152 223
Trade payables 180 273
Other current liabilities 235 189
Estimated amount of contracts remaining to be executed on capital account and not provided
for (net of advances) 4 5
200