DRIVIN G ROWTH - Dr. Reddy's

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schedule to the consolidated balance sheet and profit and loss account
AS 21 “Consolidated Financial Statements”: AS 21 is effective for the accounting periods commencing on or after April 1,
2001 for enterprises which are required to prepare and present consolidated financial statements. The standard lays down
principles and procedures for preparation and presentation of consolidated financial statements, which provides financial
information about the economic activities about the Company and its consolidated subsidiaries.
AS 22 “Accounting for Taxes on Income”: The standard establishes financial accounting and reporting standards for the
effects of income taxes (both current and deferred taxes) that result from an enterprise’s activities during the current and
preceding years.
e) Fixed assets, depreciation and amortisation
Fixed assets are stated at the cost of acquisition less accumulated depreciation. The cost of fixed assets includes taxes, duties,
freight and other incidental expenses related to the acquisition and installation of the respective assets. 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. The cost of fixed assets also includes the exchange differences arising in
respect of foreign currency loans or other liabilities incurred for the purpose of their acquisition or construction.
Advances paid towards the acquisition of the fixed assets outstanding at each balance sheet date and the cost of fixed assets
not ready for their intended use before such date are disclosed under capital work-in-progress. Pre-operative expenses directly
or indirectly attributable to fixed assets pending capitalisation are included under capital work-in-progress.
Depreciation on fixed assets is provided using the straight-line method based on the useful life of the assets as estimated by
management. Additions are depreciated on a pro-rata basis from the date of installation till the date the assets are sold or
disposed off. Individual assets costing less than Rs. 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are given below:
Goodwill 5 to 10
Buildings
Plant and machinery
20 to 39
– 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
Leasehold land is being amortised over the primary period of the lease.
f) 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.
g) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, cost
of conversion and other costs incurred in bringing the inventories to their present location and condition.
The method of determining cost of various categories of inventories are as follows:
Raw materials First in first out (FIFO)
Work-in-process and finished goods (manufactured) FIFO and an appropriate share of production overheads
Finished goods (traded) Cost of purchase
Stores and spares Weighted average method
Goods in transit At actual cost
CONSOLIDATED FINANCIALS | FINANCIALS | ANNUAL REPORT 2001-2002
Years