DRIVIN G ROWTH - Dr. Reddy's

schedule to the consolidated balance sheet and profit and loss account
d. The Group has following amounts due from/to related parties:
(Rs. thousand)
As at March 31, 2002
i) Due from related parties (included in loans and advances)
Significant interest entities 274
ii) Due to related parties (included in current liabilities)
Significant interest entities 1,935
Enterprise owned by relative of a director 175
e. Details of remuneration paid to the whole time and non-whole time directors are given in Note 12 of schedule 20.
f. Equity contribution in an affiliate has been disclosed under “Investments”. Share application money paid to the affiliate by the
Company for which shares are yet to be allotted has been disclosed under “Loans and advances”.
g. The Group undertakes research and development through Research Foundation, an entity incorporated under section 25 of
the Companies Act, 1956. The Research Foundation currently conducts research and development activities primarily of the
Group. The Group funds the operations of the Research Foundation.
10.TRANSFER PRICING
The Group is in the process of reviewing its system of maintenance of information and documents as introduced by the newly
introduced transfer pricing legislation under sections 92-92 F of the Indian Income Tax Act, 1961 which require existence of these
records latest by October 2002. The management is of the opinion that its international transactions are at arm’s length so that
the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that
of provision for taxation.
11.SEGMENTAL INFORMATION
The primary and secondary reportable segments are business segments and geographic segments respectively.
Business segments
For management purposes, the Group is organised on a worldwide basis into five strategic business units (SBUs);
� Formulations; � Active Pharmaceutical Ingredients and Intermediates (API);
� Generics; � Diagnostics, Critical Care and Biotechnology; and
� Drug Discovery.
The SBUs are the basis on which the Group reports its primary segment information. Formulations also referred to as finished
dosages, consist of finished pharmaceutical products ready for consumption by the patient. Active pharmaceutical ingredients and
intermediates, also known as active pharmaceutical products or bulk drugs, are the principal ingredients for formulations. Active
pharmaceutical ingredients and intermediates become formulations when the dosage is fixed in a form ready for human
consumption such as a tablet, capsule or liquid using additional inactive ingredients. Generics are generic finished dosages with
therapeutic equivalence to formulations. Diagnostic pharmaceuticals and equipment and specialist products are marketed by the
Group primarily for anti-cancer and critical care. The Group is involved in drug discovery. The Group commercialises drugs
discovered with other products and also licenses these discoveries to other companies.
Geographic segments
The Group’s business is organised into five key geographic segments. Revenues are attributable to individual geographic segments
based on the location of the customer.
Segment revenues and expenses: All segment revenues and expenses are directly attributable to the segments.
Segment assets and liabilities: According to the internal organisation and management structure of the Group and its system of
internal financial reporting, the management does not review the total assets and liabilities for each reportable segment. The assets
and liabilities are not fully identifiable / allocable with / to individual reportable segments. Consequently, the management believes
that it is not practicable to provide segmental disclosures relating to assets and liabilities since allocation among the various
reportable segments is not possible.
Inter-segment transfers: Segment revenue, segment expenses and segment result include transfers between business segments.
Inter-segment transfers are accounted for at the cost to the transferring segment. Such transfers are eliminated on consolidation.
Accounting policies: The accounting policies consistently used in the preparation of the financial statements are also applied to
revenues and expenditure in individual segments.
Unallocable and Head office expenses: General administrative expenses, head-office expenses, and other expenses that arise at the
segment level and relate to the Group as a whole are shown as unallocable items.
CONSOLIDATED FINANCIALS | FINANCIALS | ANNUAL REPORT 2001-2002
157