DRIVIN G ROWTH - Dr. Reddy's

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schedule to the balance sheet and profit and loss account
Management’s estimates of the useful lives for various categories of fixed assets are given below:
Years
Buildings 30
Plant and machinery
– Computer equipment 3
– Other plant and machinery 5 to 15
Electrical equipment 5 to 15
Laboratory equipment 5 to 15
Furniture and fixtures 4 to 8
Patents, trade marks and designs (including marketing know-how) 6 to 10
Vehicles 4 to 5
Library 2
e) Investments
Long-term investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in
the value of long-term investments. Current investments are carried at the lower of cost and fair value.
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all cost of purchase, cost of
conversion and other costs incurred in bringing the inventories to their present location and condition.
The methods of determining cost of various categories of inventories are as follows:
Raw materials First in first out (FIFO)
Stores and spares Weighted average method
Work-in-process and finished goods (manufactured) FIFO and an appropriate share of production overheads
Finished goods (traded) Cost of purchase
Goods in transit At actual cost
g) Research and development
Revenue expenditure on research and development is expensed as incurred. Capital expenditure incurred on research and
development is capitalised as fixed assets and depreciated in accordance with the depreciation policy of the Company.
h) Retirement benefits
Contributions payable to an approved gratuity fund, determined by an independent actuary, is charged to profit and loss
account. Leave encashment cost which is a defined benefit, is accrued based on actuarial valuations at the balance sheet date
carried out by an independent actuary, and is charged to profit and loss account.
Contributions payable to the recognised provident fund and approved superannuation scheme, which are defined contribution
schemes, are charged to the profit and loss account.
i) Foreign exchange transactions
Foreign exchange transactions are recorded using the exchange rates prevailing on the dates of the respective transactions.
Exchange differences arising on foreign exchange transactions settled during the year are recognised in the profit and loss
account except that exchange differences related to acquisition of fixed assets are adjusted in the carrying amount of the
related fixed assets.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at year-end rates.
The resultant exchange differences (except those related to acquisition of fixed assets) are recognised in the profit and loss
account.
Income and expenditure items at representative offices are translated at the respective monthly average rate. Monetary items
at representative offices at the balance sheet date are translated using the year-end rates. Non-monetary assets are recorded
at the rates prevailing on the date of the transaction.
The premium or discount on forward exchange contracts is recognised over the period of the contracts. The premium or
discount in respect of forward exchange contracts related to acquisition of fixed assets is adjusted in the carrying amount of
the related fixed assets. In respect of other contracts, it is recognised in the profit and loss account.
DR. REDDY’S LABORATORIES LTD. | FINANCIALS | ANNUAL REPORT 2001-2002