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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. 64 GLENMARK PHARMACEUTICALS LIMITED
Schedules annexed to and forming part of the Financial Statements (All amounts in millions of Indian Rupees, unless otherwise stated) xii) Leases Finance Leases Assets acquired under finance lease are recognised as assets with corresponding liabilities in the Balance Sheet at the inception of the lease at amounts equal to lower of the fair value of the leased asset or at the present value of the minimum lease payments. These leased assets are depreciated in line with the Company’s policy on depreciation of fixed assets. The interest is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Operating Leases Lease rent in respect of assets taken on operating lease are charged to the Profit and Loss Account as per the terms of lease agreements. xiii) Employee Stock Option Schemes (ESOS) The Company accounts for compensation expense under the Employee Stock Option Schemes using the intrinsic value method as permitted by the Guidance Note on “Accounting for Employee Share-based Payments” issued by the Institute of Chartered Accountants of India. The difference between the market price and the exercise price as at the date of the grant is treated as compensation expense and charged over the vesting period. xiv) Provisions and Contingent Liabilities The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. 2. As per the transitional provision given in the notification issued by Ministry of Corporate Affairs dated 31 March 2009, the Company had opted to adjust the exchange difference on long-term foreign currency monetary items. The notification was in effect till 31 March 2011. In the current year, the Company has amortised the entire balance of exchange differences accumulated in the ‘Foreign currency monetary item translation difference account’ (‘FCMITDA’) and taken effect of such differences to the profit and loss account. Further, in accordance with the provisions of the notification, the exchange differences arising on restatement of long term loans utilised on acquiring capital assets were adjusted to the cost of such assets. The depreciation on such assets has been charged to the Profit and Loss Account. Accordingly, exchange differences of ` 289.56 (2010 - ` 26.37) have been transferred to Profit and Loss Account and ` 0.56 (2010 - ` 10.55) have been adjusted to cost of capital assets. 3. CONTINGENT LIABILITIES AND CAPITAL COMMITMENT NOT PROVIDED FOR 31 March 2011 31 March 2010 (a) Bank guarantees 20.28 20.77 Disputed income tax/excise duty/sales tax 27.37 26.77 Claims against the Company not acknowledged as debts (Refer Note i) 0.15 0.39 Open letters of credit 6.39 5.27 Indemnity bond 260.25 345.37 Call money payable to Glenmark Pharmaceuticals (Thailand ) Co. Ltd. (16,415 shares @ THB 50 per ordinary share) 1.23 1.15 Corporate guarantee (Refer Note ii) 5,687.13 8,283.01 Corporate guarantee (Refer Note iii) 1,206.36 1,218.78 Note: i) In respect of labour/industrial disputes ii) Corporate guarantee given on behalf of various subsidiaries: Citibank (Glenmark Holding SA, Switzerland (GHSA)) - 4,514.00 ICICI Bank (Glenmark Holding SA, Switzerland (GHSA)) 638.92 645.50 Citibank (Glenmark Pharmaceuticals S.R.L Romania) 5.44 5.20 ALD Automotive (Glenmark Impex L.L.C., Russia) 102.41 98.03 ING Vysya Bank (Glenmark Generics Ltd., India) - 430.00 Central Bank of India (Glenmark Generics Ltd., India) 1,500.00 1,500.00 Citibank (Glenmark Farmaceutica Ltda, Brazil) 89.36 90.28 Yes Bank Ltd. (Glenmark Generics Ltd., India) - 500.00 Yes Bank Ltd. (Glenmark Generics Ltd., India) - 500.00 Citibank (Glenmark Impex L.L.C., Russia) 536.16 - Annual Report 2010-2011 65
Page 35 and 36: Profiles of Directors Mr. Gracias S
Page 37 and 38: DIRECTORS Mr. D. R. Mehta, Mrs. B.
Page 39 and 40: 3. Metformin ER Tablets 1000 mg 4.
Page 41 and 42: ANNEXURE - B Disc losure in the Dir
Page 43 and 44: Report on Corporate Governance Purs
Page 45 and 46: 5. Shareholders’/Investors’ Gri
Page 47 and 48: Distribution Schedule as on 31 Marc
Page 49 and 50: Market Price Data: High, low during
Page 51 and 52: Certification by the Chief Executiv
Page 53 and 54: Auditors’ Report To, The Members
Page 55 and 56: (b) The dues outstanding in respect
Page 57 and 58: Profit and Loss Account (All amount
Page 59 and 60: Cash Flow Statement (All amounts in
Page 61 and 62: Schedules annexed to and forming pa
Page 67: Schedules annexed to and forming pa
Page 81 and 82: Additional information as required
Page 83 and 84: Consolidated Statement of Financial
Page 85 and 86: Consolidated Statement of Comprehen
Page 87 and 88: Notes to Consolidated Financial Sta
Page 89 and 90: the foreign entity and translated i
Page 91 and 92: The Group’s internal drug develop
Page 93 and 94: Financial liabilities are recognise
Page 95 and 96: In those cases where the possible o
Page 97 and 98: NOTE B - BASIS OF CONSOLIDATION The
Page 99 and 100: NOTE H - PROPERTY, PLANT AND EQUIPM
Page 101 and 102: Working Capital Facilities is secur
Page 103 and 104: NOTE R - MATERIALS CONSUMED Materia
Page 105 and 106: Net compensated absence cost for th
Page 107 and 108: NOTE Y - SEGMENT REPORTING The Chie
Page 109 and 110: The Group’s trade and other recei
Page 111 and 112: As at 31 March 2011, the Group’s
Page 113 and 114: Depreciation Further, depreciation
Page 116 and 117: GLENMARK PHARMACEUTICALS LIMITED Re
Page 118:
GLENMARK PHARMACEUTICALS LIMITED Re
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