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The following reconciliations and explanatory notes thereto describe the effects of the transition on the IFRS opening
statement of financial position as at 1 April 2010. All explanations should be read in conjunction with the IFRS accounting
policies of Glenmark Group as disclosed in Note A-3.
The reconciliation of the Group’s equity reported under Indian GAAP to its equity under IFRS as at 1 April 2010 may be
summarised as follows:
Note Amount
Shareholders’ Equity as per Indian GAAP 23,552.34
Adjustments to additional paid-in capital
Recognition of finance costs on foreign currency convertible bonds EE.2 485.58
Adjustments to Stock compensation reserve
Recognition of share based compensation costs EE.3 133.91
Adjustment to Non-controlling interest
Non-controlling interest EE.5 264.24
Adjustments to Retained Earnings
Recognition of costs on foreign currency convertible bonds EE.2 (526.60)
Recognition of share based compensation costs EE.3 (133.91)
Net adjustment to Fixed assets (including intangibles assets) EE.4 (5,919.86)
Adjustments to non-controlling interest EE.5 (134.16)
Reversal of proposed dividend EE.6 125.86
Deferred tax adjustments relating to above adjustments EE.7 (325.71)
Total Adjustment (6,030.65)
Shareholders’ Equity as per IFRS 17,521.69
Notes to the reconciliation
2. Foreign currency convertible bonds (FCCBs)
The Company had outstanding ‘zero coupon’ FCCBs as on 1 April 2010. Under Indian GAAP, the Company had
chosen to adjust these premium payable on redemption to the additional paid-in capital. As per IAS 32, FCCBs
issued by the Company are treated as a liability with an embedded derivative for the call option for conversion to
equity shares. Finance costs for the period and the related liability has been computed using the effective interest rate
method. The liability is re-measured at amortised cost at each reporting period. Further, the embedded derivative is
fair valued at the date of transition. Accordingly, the adjustments have been made to retained earnings.
3. Share based compensation
According to IFRS 2 – Share Based Payments, the Group has recognised share based payments on fair value and
has made an adjustment in the opening statement of financial position by charging such cost to retained earnings.
Under Indian GAAP the Group had an option to account for these options at intrinsic value and therefore no such cost
was required to be recognised in the Income statement.
4. Fixed Assets (Including Intangible assets)
a) Intangible assets
Derecognition of intangible assets
On transition to IFRS, the Group undertook a detailed evaluation of its portfolio of product development assets
and intangibles under development, which were previously classified as intangibles and capital work-in-progress
under Indian GAAP. Based on such evaluation, the Group determined that certain products/projects had been
de-prioritised and that no future economic benefits were expected to flow to the Group from these products or
products being developed under such projects. Accordingly such products/projects did not qualify to be carried
forward as intangible assets and accordingly have been derecognised. The Group also determined that the
de-prioritisation and the conditions considered for this evaluation existed prior to the date of opening statement
of financial position and accordingly, these intangible assets have been derecognised in the preparation of the
opening statement of financial position with a corresponding adjustment to retained earnings as this adjustment
relates to earlier periods. (Also refer note I on Intangible Assets).
Reclassification of intangible assets
On transition to IFRS, the Group has reclassified certain assets into intangible assets. These assets were
previously classified as fixed tangible assets and their classification has been rectified on preparation of the
opening statement of financial position. (Also refer Note H on ‘Property, Plant and Equipment’)
b) Property, plant and equipment
Election to use of fair value as deemed cost
At the date of transition, the Group elected to measure some items of assets within property, plant and equipment
at fair value as deemed cost. The items of assets fair valued include freehold land, factory and other buildings,
plant and machinery and equipments. Depreciation under IFRS is based on this deemed cost (Also refer Note H
on ‘Property, Plant and Equipment’).
108 GLENMARK PHARMACEUTICALS LIMITED