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In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. 5. SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES In the process of applying the Group’s accounting policies, the following judgments have been made apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial information: Judgements are based on the information available at the date of statement of financial position. Leases The Group has evaluated each lease agreement for its classification between finance lease and operating lease. The Group has reached its decisions on the basis of the principles laid down in IAS 17, “Leases” for the said classification. The Group has also used IFRIC 4, “Determining whether an arrangement contains a lease” for determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and based on the assessment whether: a) fulfillment of the arrangement is dependent on the use of a specific asset or assets (the asset); and b) the arrangement conveys a right to use the asset. Deferred Tax Management judgement is required in determining provisions for income taxes, deferred tax assets and liabilities and the extent to which deferred tax assets can be recognised. If the final outcome of these matters differs from the amounts initially recorded, differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Research and developments costs Management monitors progress of internal research and development projects by using a project management system. Significant judgement is required in distinguishing research from the development phase. Development costs are recognised as an asset when all the criteria are met, whereas research costs are expensed as incurred. Management also monitors whether the recognition requirements for development costs continue to be met. This is necessary as the economic success of any product development is uncertain and may be subject to future technical problems after the time of recognition. To distinguish any research-type project phase from the development phase, it is the Group’s accounting policy to also require a detailed forecast of sales or cost savings expected to be generated by the intangible asset. The forecast is incorporated into the Group’s overall budget forecast as the capitalisation of development costs commences. This ensures that managerial accounting, impairment testing procedures and accounting for internally-generated intangible assets are based on the same data. Held-to-maturity investments Management has confirmed its intention and ability to hold the bonds that are classified as held-to-maturity investments until they mature. This is based on the Group’s current liquidity and capital maintenance requirements and plans. 6. STANDARDS AND INTERPRETATIONS NOT YET APPLIED The following new Standards and Interpretations have not been applied in Glenmark’s consolidated financial statements for the year ended 31 March 2011. Standard or Interpretation Effective dates IFRS 9: Financial Instruments – Recognition and Measurement 1 January 2013 IFRS 2: Group Cash Settled Share Based Transactions (Amendments to IFRS 2) 1 January 2011 IFRS 9: Financial Instruments – Recognition and Measurement The IASB aims to replace IAS 39 Financial Instruments - Recognition and Measurement in its entirety by the end of 2011, with the replacement standard to be effective for annual periods beginning 1 January 2013. IFRS 9 is the first part of Phase 1 of this project. The main phases are: Phase 1: Classification and Measurement Phase 2: Impairment methodology Phase 3: Hedge accounting In addition, a separate project is dealing with de-recognition. Management is yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of the IAS 39 replacement have been published and they can comprehensively assess the impact of all changes. IFRS 2: Group Cash Settled Share Based Transactions (Amendments to IFRS 2) The Group does not currently have any cash settled transactions and the Management does not expect material impact on Glenmark’s Group Financial Statements when the interpretation becomes effective. 92 GLENMARK PHARMACEUTICALS LIMITED
NOTE B - BASIS OF CONSOLIDATION The subsidiaries which consolidate under Glenmark Pharmaceuticals Limited (‘GPL’) comprise the entities listed below: Name of the Entity Year End Date Country of Incorporation Holding Company Effective Group Shareholding (%) Glenmark Pharmaceuticals Europe Ltd. 31 March 2011 United Kingdom GHSA 100% Glenmark Generics (Europe) Ltd. 31 March 2011 United Kingdom GGL 100% Glenmark Pharmaceuticals S.R.O. (GP S.R.O.) 31 March 2011 Czech Republic GHSA 100% Glenmark Pharmaceuticals SK, S.R.O. 31 March 2011 Slovak Republic GP S.R.O. 100% Glenmark Pharmaceuticals S. A. 31 March 2011 Switzerland GHSA 100% Glenmark Holding S. A., (GHSA) 31 March 2011 Switzerland GPL 100% Glenmark Generics Holding S. A. (GGHSA) 31 March 2011 Switzerland GGFSA 100% Glenmark Generics Finance S. A. (GGFSA) 31 March 2011 Switzerland GGL 100% Glenmark Pharmaceuticals S.R.L 31 March 2011 Romania GHSA 100% Glenmark Pharmaceuticals Eood 31 March 2011 Bulgaria GHSA 100% Glenmark Distributors SP z.o.o. 31 March 2011 Poland GHSA 100% Glenmark Pharmaceuticals SP z o.o. 31 March 2011 Poland GHSA 100% Glenmark Generics Inc. 31 March 2011 USA GGHSA 100% Glenmark Therapeutics Inc. 31 March 2011 USA GHSA 100% Glenmark Farmaceutica Ltda 31 March 2011 Brazil GHSA 100% Glenmark Generics SA 31 March 2011 Argentina GGHSA 100% Glenmark Pharmaceuticals Mexico, S.A. DE C.V. 31 March 2011 Mexico GU S.A. 100% Glenmark Pharmaceuticals Peru SAC 31 March 2011 Peru GU S.A. 100% Glenmark Pharmaceuticals Colombia Ltda 31 March 2011 Colombia GU S.A. 100% Glenmark Uruguay S.A. (GU S.A.) 31 March 2011 Uruguay GH S.A. 100% Glenmark Pharmaceuticals Venezuela, C.A 31 March 2011 Venezuela GU S.A. 100% Glenmark Dominicana SRL 31 March 2011 Dominican Republic GPL 100% Glenmark Pharmaceuticals Egypt S.A.E. 31 March 2011 Egypt GPL 100% Glenmark Pharmaceuticals FZE 31 March 2011 United Arab Emirates GPL 100% Glenmark Impex L.L.C 31 March 2011 Russia GPL 100% Glenmark Philippines Inc. 31 March 2011 Philippines GPL 100% Glenmark Pharmaceuticals (Nigeria) Ltd. 31 March 2011 Nigeria GPL 100% Glenmark Pharmaceuticals Malaysia Sdn Bhd 31 March 2011 Malaysia GPL 100% Glenmark Pharmaceuticals (Australia) Pty Ltd. 31 March 2011 Australia GPL 100% Glenmark South Africa (pty) Ltd (GSAPL) 31 March 2011 South Africa GHSA 100% Glenmark Pharmaceuticals South Africa (Pty) Ltd. 31 March 2011 South Africa GSAPL 100% Glenmark Pharmaceuticals (Thailand) Co. Ltd. 31 March 2011 Thailand GPL 49% Glenmark Exports Ltd. 31 March 2011 India GPL 100% Glenmark Generics Ltd (GGL) Glenmark Generics B.V. Glenmark Arzheimittel Gmbh NOTE C - CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise the following: 31 March 2011 31 March 2011 31 March 2011 India Netherlands Germany GPL GGHSA GGHSA 97.46% 100% 100% Particulars 31 March 2011 Cash in hand 4.82 Balances with banks in current /cash credit accounts and deposit accounts 1,943.90 Total 1,948.72 NOTE D - RESTRICTED CASH Restricted cash comprise the following: Particulars 31 March 2011 Current Dividend accounts 3.66 Time deposits 5.92 Total 9.58 Non-current Time deposits 27.96 Total 27.96 Annual Report 2010-2011 93
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NOTE B - BASIS OF CONSOLIDATION<br />
The subsidiaries which consolidate under <strong>Glenmark</strong> Pharmaceuticals Limited (‘GPL’) comprise the entities listed below:<br />
Name of the Entity<br />
Year End Date<br />
Country of<br />
Incorporation<br />
Holding<br />
Company<br />
Effective<br />
Group<br />
Shareholding<br />
(%)<br />
<strong>Glenmark</strong> Pharmaceuticals Europe Ltd. 31 March 2011 United Kingdom GHSA 100%<br />
<strong>Glenmark</strong> Generics (Europe) Ltd. 31 March 2011 United Kingdom GGL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals S.R.O. (GP S.R.O.) 31 March 2011 Czech Republic GHSA 100%<br />
<strong>Glenmark</strong> Pharmaceuticals SK, S.R.O. 31 March 2011 Slovak Republic GP S.R.O. 100%<br />
<strong>Glenmark</strong> Pharmaceuticals S. A. 31 March 2011 Switzerland GHSA 100%<br />
<strong>Glenmark</strong> Holding S. A., (GHSA) 31 March 2011 Switzerland GPL 100%<br />
<strong>Glenmark</strong> Generics Holding S. A. (GGHSA) 31 March 2011 Switzerland GGFSA 100%<br />
<strong>Glenmark</strong> Generics Finance S. A. (GGFSA) 31 March 2011 Switzerland GGL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals S.R.L 31 March 2011 Romania GHSA 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Eood 31 March 2011 Bulgaria GHSA 100%<br />
<strong>Glenmark</strong> Distributors SP z.o.o. 31 March 2011 Poland GHSA 100%<br />
<strong>Glenmark</strong> Pharmaceuticals SP z o.o. 31 March 2011 Poland GHSA 100%<br />
<strong>Glenmark</strong> Generics Inc. 31 March 2011 USA GGHSA 100%<br />
<strong>Glenmark</strong> Therapeutics Inc. 31 March 2011 USA GHSA 100%<br />
<strong>Glenmark</strong> Farmaceutica Ltda 31 March 2011 Brazil GHSA 100%<br />
<strong>Glenmark</strong> Generics SA 31 March 2011 Argentina GGHSA 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Mexico, S.A. DE C.V. 31 March 2011 Mexico GU S.A. 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Peru SAC 31 March 2011 Peru GU S.A. 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Colombia Ltda 31 March 2011 Colombia GU S.A. 100%<br />
<strong>Glenmark</strong> Uruguay S.A. (GU S.A.) 31 March 2011 Uruguay GH S.A. 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Venezuela, C.A 31 March 2011 Venezuela GU S.A. 100%<br />
<strong>Glenmark</strong> Dominicana SRL 31 March 2011 Dominican Republic GPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Egypt S.A.E. 31 March 2011 Egypt GPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals FZE 31 March 2011 United Arab Emirates GPL 100%<br />
<strong>Glenmark</strong> Impex L.L.C 31 March 2011 Russia GPL 100%<br />
<strong>Glenmark</strong> Philippines Inc. 31 March 2011 Philippines GPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals (Nigeria) Ltd. 31 March 2011 Nigeria GPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals Malaysia Sdn Bhd 31 March 2011 Malaysia GPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals (Australia) Pty Ltd. 31 March 2011 Australia GPL 100%<br />
<strong>Glenmark</strong> South Africa (pty) Ltd (GSAPL) 31 March 2011 South Africa GHSA 100%<br />
<strong>Glenmark</strong> Pharmaceuticals South Africa (Pty) Ltd. 31 March 2011 South Africa GSAPL 100%<br />
<strong>Glenmark</strong> Pharmaceuticals (Thailand) Co. Ltd. 31 March 2011 Thailand GPL 49%<br />
<strong>Glenmark</strong> Exports Ltd. 31 March 2011 India GPL 100%<br />
<strong>Glenmark</strong> Generics Ltd (GGL)<br />
<strong>Glenmark</strong> Generics B.V.<br />
<strong>Glenmark</strong> Arzheimittel Gmbh<br />
NOTE C - CASH AND CASH EQUIVALENTS<br />
Cash and cash equivalents comprise the following:<br />
31 March 2011<br />
31 March 2011<br />
31 March 2011<br />
India<br />
Netherlands<br />
Germany<br />
GPL<br />
GGHSA<br />
GGHSA<br />
97.46%<br />
100%<br />
100%<br />
Particulars 31 March 2011<br />
Cash in hand 4.82<br />
Balances with banks in current /cash credit accounts and deposit accounts 1,943.90<br />
Total 1,948.72<br />
NOTE D - RESTRICTED CASH<br />
Restricted cash comprise the following:<br />
Particulars 31 March 2011<br />
Current<br />
Dividend accounts 3.66<br />
Time deposits 5.92<br />
Total 9.58<br />
Non-current<br />
Time deposits 27.96<br />
Total 27.96<br />
Annual Report 2010-2011 93
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