DRIVIN G ROWTH - Dr. Reddy's

schedule to the consolidated balance sheet and profit and loss account
schedule 20: notes to accounts
1. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation of consolidated financial statements
The consolidated financial statements have been prepared and presented under the historical cost convention on the accrual
basis of accounting in accordance with the accounting principles generally accepted in India (“GAAP”) and comply with the
mandatory Accounting Standards (“AS”) issued by the Institute of Chartered Accountants of India (“ICAI”) to the extent
applicable. The consolidated financial statements are presented in Indian rupees rounded off to the nearest thousand.
b) Use of estimates
The preparation of the consolidated financial statements in conformity with GAAP requires 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 consolidated financial statements and reported amounts of revenues and expenses for the year. Actual results could
differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods.
c) Principles of consolidation
The consolidated financial statements include the financial statements of Dr. Reddy’s Laboratories Limited (“DRL” or “the
Company”), the parent company and all of its subsidiaries (collectively referred to as “the Group” or “DRL Group”), where
DRL has more than one-half of the voting power of an enterprise or where DRL controls the composition of the Board of
Directors or of the governing body. (Refer Note 2 for the description of the Group).
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 group. 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 excess of cost to the parent company of its investment in the subsidiaries over its portion of equity in the subsidiaries
at the respective dates on which investment in the subsidiaries was made is recognised in the financial statements as
goodwill. The parent company’s portion of equity in the subsidiaries is determined on the basis of the book value of assets
and liabilities as per the financial statements of the subsidiaries as on the date of investment and if not available, the
financial statements for the immediately preceding period adjusted for the effects of significant transactions.
� 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.
� The financial statements of OOO JV Reddy Biomed Limited, a consolidated foreign subsidiary, is included for the financial
year ended December 31, 2001. Adjustments have been made for the effects of significant transactions and other events
that might have occurred between this date and March 31, 2002, the reporting date of the parent company.
d) New accounting standards
The Institute of Chartered Accountants of India has issued the following Accounting Standards during the year, which are
effective for the accounting periods commencing on or after April 1, 2001. The Group has adopted each of these Accounting
Standards with effect from April 1, 2001.
AS 17 “Segment Reporting”: The standard requires an enterprise to disclose financial information about the different types
of products and services it provides and the different geographical areas in which it operates. This helps in better
understanding of the performance, better assessment of risks and returns and making more informed judgements about the
enterprise as a whole.
AS 18 “Related Party Disclosures”: The standard establishes the requirements for disclosure of related party relationships and
transactions between a reporting enterprise and its related parties.
AS 19 “Leases”: The standard prescribes accounting policies and disclosures in relation to finance and operating leases.
AS 20 “Earnings Per Share”: The standard prescribes principles for the determination and presentation of earnings per share.
CONSOLIDATED FINANCIALS | FINANCIALS | ANNUAL REPORT 2001-2002
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