DRIVIN G ROWTH - Dr. Reddy's

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schedule to the balance sheet and profit and loss account
2. COMMITMENTS AND CONTINGENT LIABILITIES
(Rs. thousand)
As at As at
March 31, 2002 March 31, 2001
i) Commitments / Contingent liabilities:
a) Bills discounted with banks – 88,324
b) Guarantees given by banks 121,536 25,459
c) Guarantees given by the Company 782,340 800,270
d) Letters of credit outstanding
ii) Claims against the Company not acknowledged as debts in respect of:
a) Demands for payments into the credit of the Drug Prices Equalisation
Account under Drugs (Price Control) Order, 1979, which are contested
by the Company in respect of its product “Norfloxacin”. The Company
has filed a legal suit against the notification, where interim stay has been
181,973 288,404
granted by the Andhra Pradesh High Court in favour of the Company.
b) Income tax matters, pending decisions on various appeals made by the
148,562 134,546
Company and by the Department 163,180 173,837
c) Excise matters, under dispute 47,673 41,509
d) Sales tax matters, under dispute
iii) Estimated amount of contracts remaining to be executed on capital account
1,470 1,472
and not provided for (net of advances) 819,130 312,764
iv) The Company is also involved in other lawsuits, claims, investigations and proceedings, including patent and commercial
matters, which arise in the ordinary course of business. However, there are no such matters pending that the Company expects
to be material in relation to its business.
3. CHANGES IN ACCOUNTING POLICIES
The Company has changed the accounting policy on treatment of expenditure incurred on product development, market
development etc. collectively referred to as “development expenditure”. Such development expenditure, hitherto written-off over
the estimated period over which the benefit was expected to accrue, is now written-off fully in the year it is incurred. The
management believes that the change in the accounting policy would result in a more appropriate presentation of the results of
the Company. Accordingly, a sum of Rs. 931,354 thousand, being the expenditure not written-off as at April 1, 2001 has been
written-off during the year. Further, development expenditure incurred during the year amounting to Rs. 662,665 thousand has
also been expended as incurred.
Had the Company continued to follow the old accounting policy on treatment of the development expenditure, the profit for the
year and the accumulated reserves as at March 31, 2002 would have been higher by Rs. 1,194,961 thousand.
4. DEFERRED TAXATION
Deferred tax liability included in the balance sheet comprises the following:
(Rs. thousand)
As at
March 31, 2002
Deferred tax assets
Sundry Debtors 9,309
Investments 256
Provisions 20,118
Others
Deferred tax liabilities
1,981
31,664
Fixed assets 466,637
Deferred tax liabilities (net) 434,973
DR. REDDY’S LABORATORIES LTD. | FINANCIALS | ANNUAL REPORT 2001-2002