DRIVIN G ROWTH - Dr. Reddy's

notes to financial statements – DECEMBER 31, 2001
1. PRINCIPAL ACCOUNTING POLICIES
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in, first-out basis. Net realisable
value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.
Foreign currency transactions
The Company’s financial records are maintained and the financial statements stated in United States Dollars.
Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction dates. Monetary assets and
liabilities denominated in foreign currencies at the Balance Sheet date are translated at the applicable market rates of exchange
ruling at that date. Exchange differences are dealt with in the Profit and Loss Account.
Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Company as and when the revenue can be
measured reliably on the following bases:
(a) on the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that
the Company maintains neither managerial involvement to the degree usually associated with ownership, nor effective control
over the goods sold; and
(b) interest income on a time proportion basis.
Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are
subject to common control or common significant influence. Related parties may be individuals or corporate entities.
Cash equivalents
For the purpose of the cash flow statement, cash equivalents represent short term highly liquid investments which are readily
convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from
banks repayable within three months from the date of the advance. For the purpose of Balance Sheet classification, cash at bank
represent assets which are not restricted as to use.
2. CORPORATE AFFILIATION AND RELATED PARTY TRANSACTIONS
The Company is a wholly-owned subsidiary of Dr. Reddy‘s Laboratories Limited, a Company incorporated in India, which is
considered by the Directors to be the Company‘s ultimate holding Company.
The registered office of Reddy Pharmaceuticals Hong Kong Limited is 11/F, Tower 2, The Gateway, 25-27 Canton Road, Tsimshatsui,
Kowloon, Hong Kong.
A portion of the Company’s business is represented by transactions to which other members of the Dr. Reddy’s Laboratories Limited
group are parties and these financial statements reflect the effect of these transactions on the bases determined within the group.
The significant transactions are summarised below:
US$
2001 2000
Agency income received from holding company – 2,350
Purchases of goods from holding company 4,201,529 1,789,253
The balances with related companies as at December 31, 2001 are listed as follows:
Holding company (1,336,581) 399,323
Related companies 632,361 547,141
(704,220) 946,464
REDDY PHARMACEUTICALS HONG KONG LTD. | FINANCIALS | ANNUAL REPORT 2001
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