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Schedules annexed to and forming part of the Financial Statements
(All amounts in millions of Indian Rupees, unless otherwise stated)
of inventory and introduction of competitive new products, to the extent each of these factors impact the
Company’s business and markets. The Company adjusts the inventory provision to reflect its actual experience
on a periodic basis.
viii) Employee Benefits
Long-term Employee Benefits
In case of Defined Contribution plans, the Company’s contributions to these plans are charged to the Profit and
Loss Account as incurred. Liability for Defined Benefit plans is provided on the basis of valuations, as at the
Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used for measuring the
liability is the Projected Unit Credit method. The estimate of future salary increases considered takes into account
the inflation, seniority, promotion and other relevant factors. The expected rate of return on plan assets is the
Company’s expectation of the average long-term rate of return expected on investments of the fund during the
estimated term of the obligations. Plan assets are measured at fair value as at the Balance Sheet date.
ix) Revenue Recognition
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer,
recovery of the consideration is probable, the associated costs and possible return of goods can be estimated
reliably. Revenue from the sale of goods includes excise duty and sales tax and is measured at the fair value of
the consideration received or receivable, net of returns and applicable trade discounts and allowances.
Revenue from contract research is recognised in profit and loss account when right to receive a non-refundable
payment from out-licensing partner has been established.
The Company accounts for sales returns by recording a provision based on the Company’s estimate of expected
sales returns. The Company deals in various products and operates in various markets. Accordingly, the
Company’s estimate of sales returns is determined primarily by its experience in these markets. In respect
of established products, the Company determines an estimate of sales returns provision primarily based on
its historical experience with such sales returns. Additionally, other factors that the Company considers in
determining the estimate include levels of inventory in the distribution channel, estimated shelf life, product
discontinuances, price changes of competitive products and introduction of competitive new products, to the
extent each of these factors impact the Company’s business and markets. The Company considers all these
factors and adjusts the sales return provision to reflect its actual experience. With respect to new products
introduced by the Company, those have historically been either extensions of an existing line of products where
the Company has historical experience or in therapeutic categories where established products exist and are
sold either by the Company or its competitors.
Services
Revenue from services rendered is recognised in profit and loss account as the underlying services are
performed.
Export entitlements
Export entitlements from government authorities are recognised in profit and loss account when the right to
receive credit as per the terms of the scheme is established in respect of the exports made by the Company,
and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
Dividend and Interest Income
Dividend income is recognised when the unconditional right to receive the income is established. Income from
interest on deposits, loans and interest bearing securities is recognised on the time proportionate method.
x) Research and Development Expenditure
Capital expenditure on Research and Development (R & D) is capitalised as fixed assets. Development cost
relating to the new and improved product and/or process development is recognised as an intangible asset
to the extent that it is expected that such asset will generate future economic benefits. Other research and
development costs are expensed as incurred.
xi) Taxation
Current Tax
Current tax is determined as the amount of tax payable in respect of taxable income for the year.
Deferred Tax
Deferred tax is recognised, subject to the consideration of prudence, on timing differences being the difference
between taxable income and accounting income that originate in one period and are capable of reversal in
one or more subsequent period. Deferred tax assets are not recognised on unabsorbed depreciation and carry
forward of losses unless there is virtual certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised.
Deferred tax assets/liabilities recognised as above is after excluding the amounts, which are getting reversed
during the tax holiday period.
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GLENMARK PHARMACEUTICALS LIMITED