DRIVIN G ROWTH - Dr. Reddy's

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schedules forming part of the balance sheet and profit & loss account
schedule – 7
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS
Company review
Aurigene Discovery Technologies Ltd., is promoted by the Dr. Reddy’s Laboratories Ltd., as a drug discovery Company in biotechnology.
The Company is in the stage of setting up its facility in Bangalore. During the year the Company has incurred expenses in the nature
of construction and expenses prior to the date of commercial production.
SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention under accrual method of accounting, in accordance with
Indian Generally Accepted Accounting Principles comprising the mandatory standards issued by the ICAI and the provisions of the
Companies Act, 1956.
Fixed assets
Fixed assets are stated at cost. Direct costs are capitalised until the assets are ready for use. The expense upto the date of commercial
production is to be apportioned subsequently.
Capital work in progress
Advances paid to acquire fixed assets and the cost of assets not put to use before the year-end are disclosed under work-in-progress.
Depreciation
Depreciation on fixed assets is determined using the straight-line method on pro rata basis, on the useful lives of the assets estimated
by the Management. Individual assets acquired for less than Rs. 5,000/- is entirely depreciated in the year of acquisition. Management
estimates the useful life of various fixed assets as follows:
Buildings 30 years
Computer equipment 3 years
Furniture & fixtures 8 years
Office equipments 8 years
Foreign currency transaction
The foreign currency expenses are recorded at cost based on the exchange rate as of the date of purchase as these expenses would
be capitalised subsequent to the commencement of commercial production.
NOTES TO ACCOUNTS
Capital commitments
The estimated amount of contracts remaining to be executed on capital account and not provided for net of advances is Rs. 202 lacs
as at March 31, 2002.
Expenditure in foreign currency on payment basis
Particulars Rs.
Travel 194,282.05
Professional charges 3,948,240.55
Others 106,120.67
Total 4,248,643.27
Expenses incurred by Dr. Reddy’s Laboratories
Expenses amounting to Rs. 43,063,607/- have been incurred by Dr. Reddy’s Laboratories during the year. These expenses have been
accounted on the basis of the statements provided by Dr. Reddy’s Laboratories and are revenue in nature, pending capitalisation.
Sundry creditors
Sundry creditors mainly represent retention money payable to the contractors and amounts accrued for various other operational
expenses.
AURIGENE DISCOVERY TECHNOLOGIES LTD. | FINANCIALS | ANNUAL REPORT 2001-2002